Archiv der Kategorie: Business modeling

Business modeling consists of topics like business idea, business concept.

Active and passive components of a deliverable

The products and services that the one company supplies or the other procures, always consist of an actual deliverable with the active components as well as additional deliverables, the passive components, that are provided quasi automatically. Only if all aspects are put on the table, you can compare objectively. On supplier side, you get the arguments for the pricing. On customer side, the criteria for the selection and the decision can be derived. The time for describing the active and passive components of a deliverable and their consideration in the price comparison is well invested on both sides.

PassivAktiv

In order to understand all aspects of a deliverable or to be able to compare them, the active and passive components of an offer should be specified in detail.

  • Active components
    The active components of a deliverable are the functions that are the customer’s major interest. Products are used (e.g. the car, the smartphones, the cooking pot) or spent (e.g. gasoline, food, electricity). Services are executed related to a person (e.g. a consultation or a care) or to an object (e.g. repair, maintenance) and cannot be stored or transferred. Even if all these components are obvious, ALL should be described.
  • Passive components
    The passive components of a deliverable are the aspects that are delivered on top to the obvious active ones. These are essentially the qualities of the deliverable (e.g. the reliability, the safety, the economics, the brand, the experience) and information (e.g. the concepts, the branch knowledge, and the relationships) that are created in the course of providing the deliverable. They are rarely visible and are difficult to prove. For this reason, the absence of these aspects can only be seen, if at all, later in the process, e.g. after a breakdown or a quality check. In order to consider them in the selection process, the passive components should be estimated, e.g. by looking at the risks or by assessing the value-add.

The decline of the prices, due to the cheap production of the active components in countries with favorable production conditions (e.g. low labor costs, lack of environmental standards), leads to an increased importance of the passive components. The value of a brand, safety or the reliability of a deliverable become increasingly part of the value-add for the customer. Thereby, higher prices that have nothing to do with the actual value of the commodity can be argued. The reputation of consumer electronics plays a more important role than its sustainability (e.g. if the battery cannot be changed, like in some Apple products). Safety for the avoidance of dangers or the reduction of the effects of an accident is also important criteria in the purchase process of a car. The same is valid for services. The higher daily rates of renowned management consultations are more accepted, although the assigned employees have a similar education, as the ones of a smaller company that costs less.

Bottom line: The value of products and services is determined more and more by intangible aspects. Therefore, the specification of the requirements and the selection of the deliverables must be well defined in advance, in order to make the offers comparable.

Abandonment improves the process

Even if we can look back on over twenty years of Business Process Engineering, the business processes are still loaded with activities that waste the scarce means, lead to delays and demotivate the employees. For this reason, there is regularly the need to purge the processes by improving procedures through abandonment.

Prozessoptimierung

In order to facilitate them, the procedures should be available in a documented form. If the appropriate descriptions are missing, one cannot help but to determine the flows with the required details. Already on the highest layer, the process map, possible candidates can be found, e.g. entire areas that can be outsourced. Then, the actual business processes can be scanned for unnecessary process steps by looking at the following aspects.

  • Put the emphasis on core tasks
    Originally, enterprises handled the entire value creation internally, from the steel production, to the finished vehicle. Meanwhile, service providers offer almost all functions as services – from the food supply, to the facility and the vehicle fleet management, to the services of IT and product development.
    In order to align the processes to the core tasks, the strategic core is specified and other functions are outsourced. Only the coordination of external partners remains internally.
  • Simplify activities
    Frequently the procedures are contaminated with old activities that are no longer necessary, e.g. administrating documents or distributing minutes. Since the information is stored electronically, with the appropriate access, the required information is available to the employees at any time.
    The activities can be simplified by constantly using the current IT in various places.
  • Eliminate control tasks
    Depending on the existing culture the processes are filled with controls and rework loops. With the Four Eyes Principle the participants are deprived and the flow is slowed down.
    By dissolving the control tasks, the processes will be faster and the quality of the results increases with the authorized self-control of the participants.
  • Shorten Processes
    The tendency to keep the number of processes small leads to overloaded monsters. Quickly different activities are integrated into one process, e.g. the sales process, the HR process, the development process.
    By looking at the natural breaking points, these monsters can be divided and/or shortened.
  • Delete senseless wasting
    Actually, there are no senseless activities, since there are always unquestionable explanations that show the benefit for the one or the other.
    For this reason all activities should be questioned whether they provide a value-add to the results. If this justification is not comprehensible on an objective basis, the activity should be eliminated without replacement.

Bottom line: Business processes can be designed with less friction loss by abandoning activities. They become faster, obtain better results and give the employees enough time to fulfill the core tasks intently.