Every missing hat has its own symptom. One business is beautifully organised and sells nothing. Another works without a pause and wears down. A third collapses at the very moment it succeeds. On top of those there is one mistake that almost everybody makes when they hire their first person.
Organising without producing
Three hats run in every business. Someone drives production (the Product Officer), someone arranges the flow (the Organizing Officer), and someone builds the foundation and maintains it (the Establishment Officer). When one is missing, the business fails in a particular way, and you can learn to recognise it.
The booklet opens with a familiar feeling. You run all day and nothing gets easier. According to the booklet, that probably means you are wearing only the first of the three hats, and small businesses can live like this for years.
The first failure sounds like a virtue: a business in perfect order that produces nothing. The source says you can organise forever and never get a single valuable final product.
The booklet ties it to people who find sorting more comfortable than selling. Another system always needs implementing, another procedure writing, another folder arranging, and each of them feels like progress.
Suppose an online jewellery shop that spent six months on a customer management system, filing and procedures. It ended up very well organised, with zero sales and zero cash flow.
Or an owner who put off a new product line until everything was ready. Two years later, he is still getting ready.
Producing without organising
The opposite failure is far more common in small businesses: you produce, and cope with whatever comes.
Here the source is exact about the wording: producing without organisation works, and it works badly. Valuable final products do come out, yet the volume, the quality and the viability will be dreadful, and the overload will soon swamp the business.
The booklet treats the two failures as equally serious. Both end in a collapse, and only the pace differs.
It also answers the question this owner asks, which is why it still works for them. It does work, and it also wears you down. You feel the tiredness, and the structure behind it never gets examined.
Suppose a freelance graphic designer who puts in fourteen-hour days on projects, with no contract template and no tidy folder for each client. One day it turns out she forgot to send an invoice for a whole month, and she loses a large client.
The booklet's point is that a business still working proves nothing about its structure. That is exactly how one wears down slowly enough that nobody notices.
Growing without establishing
The booklet calls the third failure the cruellest, because it arrives exactly when you succeed. In the rush to get the product out and expand, the business becomes unestablished. Once it starts to boom, the boom itself collapses.
In a small business it looks like this. Clients multiply and the procedures stay the same. New staff arrive and the training stays the same. Income rises and the systems stay the same. According to the booklet, the point that breaks first is always the one nobody maintained.
Suppose a physiotherapy clinic that grew from one therapist to four within a year, with no written induction. Two of them left within three months, because nobody had explained how things work there.
Or a restaurant that added delivery without building a separate line for it. The dining-room service had been excellent, and bad reviews began to arrive. The growth broke the part that already worked.
The mistake at the first hire
The booklet says this is the most specific failure of all, and it strikes just as a small business hires its first person.
At last the owner takes on someone to sort things out. That is the start of an establishment hat. Then the owner stops organising, because the new post seems to have swallowed the old one.
The source warns against this directly. Taking the person who organises out of a unit and making him the one who establishes is, in its words, “a guarantee of a crash”. It practically destroys the unit and crashes its statistics. These are two different hats, and neither can stand in for the other.
Suppose an insurance broker who made his secretary the client manager and stopped following up policy renewals himself, on the assumption that she had them covered. Policies lapsed and nobody noticed.
And the opposite: an owner who hired an office manager and made it explicit that she builds and maintains, while he goes on arranging the weekly flow. Both hats kept existing.
What the booklet has on this
This chapter of the booklet has two exercises, a diagnose exercise and an analyse exercise. The booklet describes the chapter as the one it was written for. After it, the booklet shows why the three hats work only together.
None of the three failures feels like failure from the inside. The first feels like order, the second like tiredness, and the third like success, until it collapses.