The diagram had three elements.
YOU → PEOPLE → SYSTEMS.
At the beginning, the owner knows how everything works because the owner built it. Then some of that knowledge moves into the heads of key people. The director, a department manager, the person you rely on when something goes wrong.
That is progress. But it is not the end of the problem.
I am not talking about their technical qualifications. I mean the things only that person knows. How a particular customer needs to be handled. Why you use this supplier rather than the other one. Where the document is that somebody needs once a year. How a process actually works, including the exceptions nobody has written down.
From the outside, the company may look organised. In practice, you have moved from one person who knows everything to a few people who each know something indispensable.
The manual warned that this could leave you tied to those people for life. You do not know what will happen to them. They may be wonderfully loyal, but are they not allowed to injure a knee playing padel? What happens to the work then?
The rule I taught was that knowledge must accumulate. It must not disappear every time a person leaves.
A good manager learns more about the business while doing the job. If what they learn stays in their head, their departure takes that knowledge out of the company. It needs to move into something other people can use.
The written process and the actual work
This is why a beautiful operations manual can still leave you exposed.
A manual may describe how the work is supposed to happen. The people doing it know how it actually happens. They know the shortcuts, the exceptions and the small adjustments that make the result possible. Ask them about those things.
For years the instruction was to document the processes. It is a large, unappealing job, and its result is less immediately visible than answering a customer or getting an order out. I understand why it was postponed. Understanding it does not make the knowledge any less vulnerable.
When somebody resolves a problem, the company should keep what was learned. When a procedure changes, the next person doing that work needs to find the changed version. Otherwise each person has to discover the same thing again.
That is what I mean by moving knowledge into systems. Another person has to be able to find it and use it. It cannot depend on knowing whom to interrupt.