The Process of Business

Man inserting gear

Merriam-Webster’s online dictionary defines a process as “a series of actions or operations conducing to an end.”  This definition is not unlike the classical process improvement definition that identifies a process as those certain activities that are undertaken to transform raw materials or inputs into finished products or outputs.  In accordance with the definition, every business, at its highest level, is a process and our economy is simply an interconnected network of those business processes. 

If we understand that a business is indeed a process, then it becomes that much easier for us to see that every business also comes complete with all of the trappings of any other process, to include customers, outputs, inputs, and suppliers.  Even non-profit organizations, since they have requirements for suppliers to provide inputs and obligations to provide specific outputs to their customers, qualify as processes that participate in the economic process network.

It is important to identify the “process” aspect of individual businesses and our economy in order to recognize that every business and even our economy itself lends itself to process improvement strategies at many different levels.  For example, we can measure the output (or Process Y) of any business to determine how well (or poorly) that business is currently performing in light of its customers’ expectations.  Of course, we will need to define the customer expectations and perceived critical-to-quality attributes (CTQs) prior to conducting such a measurement.  We can then analyze the elements and sub-processes within and relating to the business to identify when, where, how, and why variation occurs within the operation of the business and the key elements that are responsible for defects (departures from customer perceived quality or expectations in certain instances of the business output).  Once we have identified the key performance drivers for the business, we can now implement business improvements that will limit the variation in the business process and allow the business to achieve repeatable results that consistently fulfill the business’s value proposition and meet or exceed customer expectations.  Finally, we can develop and implement a process control plan or standing operating procedure for our business that insures that the processes within the business remain “fixed”.

The potential sources of pain within any business can be nearly infinite and can include environmental factors, human factors, environmental factors, technology factors, material factors, supplier factors, or method factors, just to name a few.  The major variation contributors, however, can often be isolated to a small handful of significant causes (Process X’s).  These significant causes are most easily and accurately determined through a thorough understanding of the business operations, data collection, variation and capability analysis, and statistical hypothesis testing.  Far too many business owners and CEOs attempt to resolve their business problems using a gut-feel firefighting approach that relies on only minimal data and, in many cases, only causes additional problems or causes their existing problems to worsen. Even if these types of “solutions” do cause the business pain to subside momentarily, they are only temporary fixes that treat symptoms (as opposed to the underlying disease) since root cause and the major variation contributors are left undetermined and unaddressed.

Every business is a process that relies on suppliers to provide inputs in order for the business to provide an acceptable output to its customers.  The identification of the business as a process and the application of a rigorous and systematic process improvement approach can yield a permanent fix to business problems.  This approach is far more effective than a gut-feel firefighting approach that falls short of addressing root cause.

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One response to “The Process of Business”

  1. David Diatikar

    Great read

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