Process and Information Management
Chapter 1: Introduction
Competitive advantage of an enterprise lies in the ability of the enterprise business to
understand conditions and adapt to create fitting, smart solutions.
Solutions of GE & Toyota are built upon invisible patterns of thinking and acting, and
consistent strategic improvement and adaptation.
Objective of most businesses: increase revenues, reduce expenses and increase profits
How these goals will be met in the short term and sustained in the long term?
Continuous Improvement transformation, a popular concept (alternative to Continous
Beatings).
Start a Continuous Improvement transformation:
- to generate more profits and make your enterprise business more competitive.
- Increase profits in the short term and sustain these gains in the long term.
- is not optional; a condition of survival
- Improvement efforts in both the continuous improvement philosophy and break-through
improvement methodology.
DO NOT start Continuous Improvement transformation: to improve customer satisfaction or
employee morale.
Chapter 2: Defining “Continuous Improvement”
The profit formula is the blueprint that defines how your enterprise business creates value
for itself while providing value to the customer:
1. Revenue Model: equals the price required to deliver CVP times the respective volume of
products and services.
2. Cost Structure: direct/indirect costs, economies of scale. Focus is on the key elements that
create value for the customer and company, and the way those elements interact. Generic
resources DO NOT create competitive differentiation.
3. Margin Model: expected volume of products and services and cost structure, contribution
needed from each transaction to achieve desired profits.
4. Resource Velocity: how fast you need to turn over inventory, fixed assets, and other
assets. Overall, how well you need to utilize resources.
Why do most enterprise business executives and managers so often choose to make
decisions that systematically decrease the long-term value of their businesses?
* captives to “zero-sum” thinking: define enterprise business interests too narrowly.
Narrow view is powerfully reinforced by financial accounting systems that were well adapted
to the industrial economy, but are inadequate in today’s economy.
* “Zero-sum” thinking of self-interest: enterprises may stumble into a downward spiral of
poor decision-making, difficult to reverse.
3 areas where “zero-sum” thinking rears its consequences in the enterprise business arena:
1. Squeezing supplies: cost-cutting, enterprise business executives and managers have
,focused on squeezing the prices of their suppliers as much as possible. Results: deteriorating
trust and relationships with key business partners.
2. Growing focus on intellectual property protection: protect existing stocks of knowledge at
the expense of the opportunity to participate in broader relationships that cloud significantly
refresh these stock.
3. Marginalizations of innovation: quest for cost-cutting opportunity to create new forms
of value through innovation has been shunted aside. Innovation has been placed in
compartment into R&D departments that have been squeezed for cost-savings along with
everyone else.
If enterprise business executives and managers define the enterprise business’ self-interest
broadly enough to include the interests of customers and employees, and equally powerful
spiral of value creation can occur. Fig. 2.1 can work in reverse.
, “How these goals will be met in the short term and sustained in the long term? “
Continuous Improvement as alternative to Continuous Beatings with stuttering failure of
the traditional approach described above and illustrated in Fig. 2.2.
2.1 “What is Continuous Improvement? “
--> System Thinking: deterministic entity comprising an interacting collection of discrete
elements. System must have some purpose.
System is made up subsystems that interact. System is not equal to the sum of its parts. If
the performance of any part changes , the system itself also changes. Important point:
determining factors changes be made as a result of a system improvement, new system so
resulting will have to be subjected to an improvement of its own.
Steady state will only end when one of the determining factors changes. Achieve ‘maturity’
is the goal of all systems; is the phase when value creation and wealth creation is
maximized, when the most surplus cash is generated, when the enterprise business achieves
its position of greatest power and influence, and when the enterprise business should be
able to focus, with the least inhibition and interruption on the achievement of its long-term
intended objectives. ‘Maturity’ connotes experience, wisdom and effectiveness.
Successful mature enterprise business is likely to generate substantial surplus funds which
are not required in order to maintain the status quo.
Enterprise business exists primarily for its own survival and improvement: fulfil its potential
and become mature as it can be think as maturity as the progressive realization of the
enterprise full potential; process of continuously innovative course of actions of
improvement, introducing the new, eliminating waste, reducing costs, improving quality and
give customers better deal than competitors.
“Continuous Improvement” : state of ‘being’ beyond the state of ‘becoming’. It is the
highest stage of maturity that an enterprise business as a whole can attain. Attaining this
highest stage of maturity does not happen overnight; it takes time!
System thinking provides the basis for a structured and consistent way of thinking and
managing an enterprise business to improve performance and yet, allows for creativity and
adaptation. Creativity and adaptation must always be built into the system and ad-hoc
decisions can be taken when the need arises. System approach to transformation builds on
an understanding of the interaction and interdepencies within and across the constituent
subsystems. Highlights the ability to analyze subsystems interconnections, identify system
improvement opportunities, and create strategies to translate those opportunities into
value.
4 situations that make achievement of systems thinking and acting difficult or impossible to
achieve:
1. Cannot achieve your target unless you manage it.
2. Cannot manage what you do not measure.
3. Cannot improve without management.
4. No alignment without governance: process governance must ensure that the target,
execution, management and improvement activities are aligned.
Chapter 1: Introduction
Competitive advantage of an enterprise lies in the ability of the enterprise business to
understand conditions and adapt to create fitting, smart solutions.
Solutions of GE & Toyota are built upon invisible patterns of thinking and acting, and
consistent strategic improvement and adaptation.
Objective of most businesses: increase revenues, reduce expenses and increase profits
How these goals will be met in the short term and sustained in the long term?
Continuous Improvement transformation, a popular concept (alternative to Continous
Beatings).
Start a Continuous Improvement transformation:
- to generate more profits and make your enterprise business more competitive.
- Increase profits in the short term and sustain these gains in the long term.
- is not optional; a condition of survival
- Improvement efforts in both the continuous improvement philosophy and break-through
improvement methodology.
DO NOT start Continuous Improvement transformation: to improve customer satisfaction or
employee morale.
Chapter 2: Defining “Continuous Improvement”
The profit formula is the blueprint that defines how your enterprise business creates value
for itself while providing value to the customer:
1. Revenue Model: equals the price required to deliver CVP times the respective volume of
products and services.
2. Cost Structure: direct/indirect costs, economies of scale. Focus is on the key elements that
create value for the customer and company, and the way those elements interact. Generic
resources DO NOT create competitive differentiation.
3. Margin Model: expected volume of products and services and cost structure, contribution
needed from each transaction to achieve desired profits.
4. Resource Velocity: how fast you need to turn over inventory, fixed assets, and other
assets. Overall, how well you need to utilize resources.
Why do most enterprise business executives and managers so often choose to make
decisions that systematically decrease the long-term value of their businesses?
* captives to “zero-sum” thinking: define enterprise business interests too narrowly.
Narrow view is powerfully reinforced by financial accounting systems that were well adapted
to the industrial economy, but are inadequate in today’s economy.
* “Zero-sum” thinking of self-interest: enterprises may stumble into a downward spiral of
poor decision-making, difficult to reverse.
3 areas where “zero-sum” thinking rears its consequences in the enterprise business arena:
1. Squeezing supplies: cost-cutting, enterprise business executives and managers have
,focused on squeezing the prices of their suppliers as much as possible. Results: deteriorating
trust and relationships with key business partners.
2. Growing focus on intellectual property protection: protect existing stocks of knowledge at
the expense of the opportunity to participate in broader relationships that cloud significantly
refresh these stock.
3. Marginalizations of innovation: quest for cost-cutting opportunity to create new forms
of value through innovation has been shunted aside. Innovation has been placed in
compartment into R&D departments that have been squeezed for cost-savings along with
everyone else.
If enterprise business executives and managers define the enterprise business’ self-interest
broadly enough to include the interests of customers and employees, and equally powerful
spiral of value creation can occur. Fig. 2.1 can work in reverse.
, “How these goals will be met in the short term and sustained in the long term? “
Continuous Improvement as alternative to Continuous Beatings with stuttering failure of
the traditional approach described above and illustrated in Fig. 2.2.
2.1 “What is Continuous Improvement? “
--> System Thinking: deterministic entity comprising an interacting collection of discrete
elements. System must have some purpose.
System is made up subsystems that interact. System is not equal to the sum of its parts. If
the performance of any part changes , the system itself also changes. Important point:
determining factors changes be made as a result of a system improvement, new system so
resulting will have to be subjected to an improvement of its own.
Steady state will only end when one of the determining factors changes. Achieve ‘maturity’
is the goal of all systems; is the phase when value creation and wealth creation is
maximized, when the most surplus cash is generated, when the enterprise business achieves
its position of greatest power and influence, and when the enterprise business should be
able to focus, with the least inhibition and interruption on the achievement of its long-term
intended objectives. ‘Maturity’ connotes experience, wisdom and effectiveness.
Successful mature enterprise business is likely to generate substantial surplus funds which
are not required in order to maintain the status quo.
Enterprise business exists primarily for its own survival and improvement: fulfil its potential
and become mature as it can be think as maturity as the progressive realization of the
enterprise full potential; process of continuously innovative course of actions of
improvement, introducing the new, eliminating waste, reducing costs, improving quality and
give customers better deal than competitors.
“Continuous Improvement” : state of ‘being’ beyond the state of ‘becoming’. It is the
highest stage of maturity that an enterprise business as a whole can attain. Attaining this
highest stage of maturity does not happen overnight; it takes time!
System thinking provides the basis for a structured and consistent way of thinking and
managing an enterprise business to improve performance and yet, allows for creativity and
adaptation. Creativity and adaptation must always be built into the system and ad-hoc
decisions can be taken when the need arises. System approach to transformation builds on
an understanding of the interaction and interdepencies within and across the constituent
subsystems. Highlights the ability to analyze subsystems interconnections, identify system
improvement opportunities, and create strategies to translate those opportunities into
value.
4 situations that make achievement of systems thinking and acting difficult or impossible to
achieve:
1. Cannot achieve your target unless you manage it.
2. Cannot manage what you do not measure.
3. Cannot improve without management.
4. No alignment without governance: process governance must ensure that the target,
execution, management and improvement activities are aligned.
