How to Structure a Business for Efficiency and Cost Savings.
By Brian Dickinson, President Logical Conclusions, Inc.
For years I’ve taught and consulted with many fortune 500 companies as well as many large government agencies on how to structure and run an efficient, cost-effective business. I’ve written many technical books and developed a methodology on this subject.
I show organizations how to replace old, outdated methods and organizational structures with modern methods and an organizational structure more suited to today’s fast moving, efficient, customer focused environment.
That’s the subject of this article.
As I go through this article I’ll show you what I see in large organizations that has caused many customer service problems and also show you what they should have done to avoid those problems. More importantly I’ll show you what you can do now to avoid falling into the same traps.
AN IMPORTANT CONCEPT-
I use something called “Event-Driven” concepts in order to obtain many benefits for an organization. Basically “Event-Driven” means focusing on whomever or whatever is your customer.
Let me start with a basic premise:
All systems we encounter, be they human, computer or in nature, have a fundamental characteristic in common – they’re all “Stimulus-Response mechanisms”.
A customer wants to buy your product (the Event), this produces a Customer Order (the Stimulus), which results in the product being sent to the customer (the Response).
As part of its mission, every organization simply selects a set of customer needs that it wishes to respond to from the external world.
Each external need to which the organization responds is called an “Event”.
Now, it’s the “Event” happening outside your business that Stimulates the action(s) that your business takes. The reaction to the Event inside your business may go through a whole bunch of people tasks (even different departments), and/or a bunch of computer programs (even different computer systems). It may be recorded and retrieved in and out of manual files or even computer databases and so on before it becomes a Response out of your business.
The total set of individual processes, their data and files that are triggered by the customer stimulus makes up what I call an “Event-Driven Reaction or Stream” – one initiated by the customer. I want to add here that the “Customer” my not be a human being. We may be stimulated by time of day or a date on the calendar e.g. End-of- year. Or we may have a stimulus such as a wildfire that triggers a government department into action.
Please note, the best context within which to view an Event-Driven Reaction is from a whole business point of view rather than from any one person/department or computer program/system context. Taking this view will also give the most benefits to the organization.
Having said that last statement what appears to be very obvious in an all-too-typical large organization structure is our Event response usually gets sliced-up (partitioned) for very different reasons than around a customer’s need. In fact the predominant partitioning/structure seems to be based on human skills and computer software package reasons rather than a customer-focused reason. On top of this the total response gets controlled by a classical, boss-subordinate, military style hierarchical structure; a left over from the industrial-age and earlier design.
In an efficient, customer-focused business we should not perpetuate this “fragmented” structure.
If you are a small business owner reading this then as far as un-fragmenting an existing business you’re in great shape; you won’t have big established departments and systems to restructure. It will be relatively easy for you create an unbeatable infrastructure from the ground up using my methodology, which I call an Event-Driven Methodology.
Now if you are a medium or large sized business you will benefit even more with my Event Driven methodology. However, you are probably going to need to do some restructuring to obtain a streamline, customer-focused, cost efficient business.
USING ANALYSIS MODELS-
To gain the benefits from using an Event Driven structure you will have to do some analysis modeling on your existing business. There are many models you can use to formally document your business, for example:
A Business Process view -- A Process Model showing process workflow
A Business Information view -- An Information Model showing file/data storage
I recommend at least you produce a Business Process Model for your business. It depicts the essential individual processing flows through your business.
I believe we should strive to produce a “natural response” view to the fulfillment of a customer’s need. Using an Event Driven process model results in a “seamless” business response view to your customer’s need.
As I said before I recommend you don’t break up your Event-Driven Reactions into classical departments and computer systems when creating a new design/implementation. The old industrial-age, internal structure of your business will cause customer delays and introduce potential problems when future changes are needed. In other words it won’t result in an efficient, cost-effective business.
So now I can give you my definition of an Event-Driven Reaction:
“An Event-Driven Reaction consists of a set of business components required to completely satisfy one need of a Customer.”
The words “business components” in that definition consists of Stimulus, Processing, Transient data, Stored data and Response.
One organization where I had the privilege to teach hundreds of people Event-Driven concepts was at the package courier company Federal Express, they already acknowledged their main Event Stimulus – the package – and that any internal department boundary and especially a file that stopped the processing of the package would slow down the response to their customer. So the package (their main Event Stimulus) was “king” and needed to be kept flowing as much as possible in implementation without any internal boundaries (e.g. departments/holding files) slowing it down.
So obviously this concept works with large as well as small businesses.
IMPLEMENTING EVENT DRIVEN REACTIONS-
We can and should take the Event Driven structures depicted in the analysis process models and make them run without any unnecessary partitioning in the real world, i.e. in our new design of the organization. I call the implemented structures Event-Driven Compartments.
Event-Driven partitioning concepts coupled with the new technology available to implement them today, such as the internet, will allow you to create “efficient, customer-focused systems”, not just “technologically faster industrial age systems”.
Another way of viewing this implemented result is we want to end up with a functional unit from the point of view of a customer. Most importantly by keeping the implemented Event-Driven Compartment whole and specific to one analysis Event-Driven Reaction we will have implemented the ultimate structure, i.e. the shortest distance between two points – the customer’s request and our response.
Today we have a computer literate customer base. Mobile devices and personal computers are common and customers know their capability and are less likely to accept slow response excuses from an organization. They can spot industrial age systems both manual and computer oriented. When industrial age, unnatural boundaries are removed there is no reason why our implemented Event Reaction should not be a continuous flow performed in a minimum time frame.
If you are lucky enough to be applying Event-Driven concepts to a small business you’re going to avert a lot of problems in the future. More importantly you’re going to implement a business that will be agile/easy to change and one that I believe no other business can beat because it’s the most responsive to its customers. Of course Event-Driven concepts work on any size business.
I believe Event-Driven, Customer Focused organizations should be the rule not the exception and that they will be the ones that will grow and survive in economic hard times. I hope the contents of this article will play a part in guiding your business to be one of them.
This article is extracted from my Digital ebook " How to Analyze a Business"
Using a Customer Focused, Event Driven Methodology.
Link to our other video website:
Logical Conclusions Inc.
Logical Conclusions Inc.