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Strategic Business Process |
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Riverside Business Solutions Ltd PO Box 823, Banstead, Surrey, SM7 1BR Phone 020 8393 6168 Fax 020 8393 6217 email info@rmcl.co.uk © Riverside Business Solutions Ltd 2006. |
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SBP is the key to developing a business so that it runs more effectively and efficiently. “ Effectiveness is doing the right things, efficiency is doing things right”. This may involve developing different products, services or markets. It does not consider the aspects of changing the kind of business you are in - for example, pulling out of the clothing business and going into the financial services business. For small to medium sized companies SBP is the best and most effective process for developing the business to achieve the objectives of the directors and owners. The framework of the process ensures that a clear understanding of the business and what the directors want the business to become is produced and can be discussed and communicated. The real value of SBP lies in the planning process: discussion, developing new understanding and generating new ideas for the business. This process should be continuous, not a one-off exercise. The first time the directors use the process they set up a framework that should last for about 3 years, although it will be challenged at least every year. SBP is about setting a direction for the business: a direction to which everybody, directors and employees, can become committed; a direction that will ensure every part of the company is in harmony, moving towards a clear business purpose that will give it competitive advantage and improve its performance. There is a well known rule in business called the 80/20 rule, or the Pareto principle, which states that 80% of results come from 20% of their possible causes. Some examples are, 80% of sales come from 20% of the customers, 80% of the problems come from 20% of the product lines, 80% of stock value is in 20% of stock items, 80% of a manager’s impact comes from 20% of his or her actions Actions or decisions with high impact are those that affect the company strategically, rather than those that merely concern its normal operating routine. They concern, for example, fundamental improvements in customer service, or investment decisions, or obtaining a better return on research and development expenditure. Such actions or decisions affect the company’s longer-term performance and enable it to achieve a competitive advantage. The nature of the SBP is such that the directors will focus far more on strategic issues which address the future of the company and which will automatically increase the effectiveness of their contribution. SBP is an iterative and ongoing activity which has to take account of both internal and external changes. |