Business System – Brief Management Guidelines

In my previous posts, I proved – hopefully, beyond the reasonable doubt – that the fundamental objective of managing a business is to create the maximum possible amount of aggregate value – financial, functional, emotional and spiritual – for all of its stakeholders.

To accomplish this objective, business managers must (1) build (‘engineer’) an optimal business system of corporate objects and processes and (2) maximize its performance by maximizing performance of individual objects and processes and the synergy between them.

Engineering an optimal business system means making sure that it (1) is complete and no key corporate objects or processes are missing; (2) does not have excessive objects or processes; (3) is well-structured and cohesive; and (4) is easily adaptable to, alas, inevitable and continuous changes in its environment.

The last requirement means that your company must have – at all times – a detailed and easy-to-use description – visual and textual - of its business system. A description that must be comprehensive, logical, well-structured, easy-to-use and, of course, matching the reality. Ideally, of course, object-oriented – as our world is object- not process-oriented.

It also means that the re-engineering and kaizen – continuous improvement of a business system – is a permanent process and thus requires a highly efficient business process and a highly competent business engineer (internal or outsourced).

If you are just starting a business, you must engineer your business system from scratch (perform a strategic business engineering). If you are running an existing, established business, you must first perform a comprehensive business audit (CBA) and then – a strategic business re-engineering (SCR).

It is also very important that the description of the business system must be used in making strategic business decisions (to take into account the realities of internal and external business environment).

You can download the template for engineering/re-engineering of your business system (in MS Visio format) here.