Every company operates in relationship to an environment that surrounds it. A company both acts upon its environment and is acted upon by its environment. For this reason, the effort to improve a company’s internal processes should be guided by a vantage point that reflects the reciprocal relationship between a company and its environment.
The appropriate vantage point is a systems approach. That is, to look at a company as one part of a larger, multi-part, continuously interacting system. This larger system is the business environment within which a company exists and functions. A company’s business environment consists of at least five elements: the company itself, customers, non-customers, suppliers and regulatory organizations. This business environment provides various inputs to a company and also receives the company’s outputs. The drawing shows the interactive relationship between a company and its business environment.
Examples of a company’s inputs include payments of its invoices, orders or executed contracts, requests for information about its products or services, requests for its proposals or quotes, invoices for products and services sold to the company, regulatory requirements and various resources such as utilities, office supplies and the materials used to produce products and/or deliver services.
The systems vantage point asks these questions for each input.
- What standards must this input meet for quality, quantity, timeliness and cost?
- Ideally, what should the internal process for this input look like when it is flow-charted to ensure that the input consistently meets its standards?
- When the currently existing internal process for this input is flow-charted, does it look like the ideal flow chart created to answer Question 2?
- Does the currently existing internal process result in this input consistently meeting its standards?
- If the answer to Question 3 and/or 4 is “no,” what changes must be made to the currently existing process so it looks and functions like the process that was flow-charted to answer Question 2?
By identifying inputs required for a company to succeed and the standards these inputs must meet, the systems vantage point helps a company’s management team to develop and maintain internal processes that ensure the required inputs are consistently available in appropriate quantity and quality when they are needed at a cost acceptable to the company.
The systems approach identifies the outputs the business environment receives from a company and the standards these outputs must meet. That’s why the systems vantage point helps a company’s management team develop and maintain internal processes. These processes should ensure the outputs the business environment receives from their company are consistently produced in appropriate quantity and quality when they are needed at a cost acceptable to the market.
Applying the five questions to a company’s own internal processes, the systems vantage point helps ensure that the company’s own competencies are documented, controlled, involve minimal waste, or their deviation from ideal is known and measured. The knowledge of the company’s process status created by the five questions provides proactive, anticipatory management action, ensuring consistent performance, rather than merely taking reactive, catch-up steps when the process fails.
The systems vantage point offers a way of ensuring that a company’s internal processes consistently result in the availability of both those inputs that are critical to the company’s continued growth and competitive success, while also consistently producing outcomes that are valued by customers and prospects.