In the previous article, we emphasized the importance of understanding the problem you’re trying to solve before implementing technology solutions. Technology should be seen as a tool that supports your business objectives, and without a clear understanding of the problem, it’s challenging to leverage technology effectively. Instead, we recommend focusing on analyzing and improving your business processes before considering technology implementation. This will allow you to make informed decisions about how technology can best address the challenges your business faces.
Today, we’ll delve into the first phase of business process analysis: discovering what your business does. While it may seem obvious that you know what your business does, formal documentation and summarization of your business activities are crucial, particularly as your business grows. Even if you’re a sole proprietor or a single-member LLC offering freelance services, it’s essential to document all the tasks involved in operating your business. However, as your business expands and you have more employees, it becomes increasingly difficult to have a comprehensive understanding of everyone’s contributions.
To ensure you have a complete picture of your business, it’s not enough to simply list the tasks. While that’s a good starting point, there are additional benefits to be gained by handling the results of this phase in a certain way. We’ll explore these benefits and discuss the methodologies and lessons we’ve learned in the discovery phase of business process analysis.
By taking a structured approach to discovering what your business does, you can gain valuable insights into the intricacies of your operations. This understanding forms the foundation for optimizing and improving your processes, enabling you to make informed decisions about technology adoption and its role in enhancing your business. Stay tuned for future posts in this series, where we’ll continue to explore the different phases of business process analysis for small businesses.
Methodology
When it comes to the discovery phase of business process analysis, there are two main approaches: top-down and bottom-up. In my experience, for small businesses, the top-down approach tends to be more effective. Let’s take a closer look at each approach and their implications for the discovery phase. (Wikipedia)
The bottom-up analysis involves conducting workshops or interviews with every member of the organization to gather detailed information about the tasks they perform in their roles. This information is then organized into a list of processes, which are further grouped into functional areas of the business. These functional areas, or business components, are then associated with the teams responsible for managing them. While this approach provides a comprehensive understanding of the business at an early stage, it can be time-consuming and tedious. It requires significant effort to organize the gathered information into a well-structured representation of the organization. This level of detail can sometimes make it challenging to see the bigger picture and may complicate the overall analysis process.
On the other hand, the top-down analysis approach focuses on assessing the roles and responsibilities of each staff member in the organization and organizing them into business components that represent the functional areas of the organization. This approach is less intensive and offers additional benefits, such as clarifying responsibilities with your staff and confirming the reporting structure within your organization. By starting with a high-level view and gradually breaking it down into smaller components, you can gain a clearer understanding of the overall structure and functions of your business. This approach is often more efficient, especially for small businesses, as it provides a solid foundation for further analysis and improvement.
Ultimately, the top-down approach allows you to define and understand the key components of your business and their relationships, providing a framework for future analysis and process improvement. It helps you see the organization from a strategic perspective while still capturing essential operational details. In subsequent articles in this series, we will delve deeper into the top-down approach and explore how to effectively analyze and optimize your business processes for improved efficiency and effectiveness.
Maximizing Discovery Results
Creating work products during the discovery phase of business process analysis can provide valuable insights and benefits for your organization. One recommended work product is a single-page diagram that represents your organization’s business components organized by teams. This diagram serves multiple purposes and offers several advantages.
Firstly, the diagram helps identify any gaps in your organization’s operational capabilities or organizational structure. By visually mapping out the business components and their relationships, you can easily spot areas where certain functions or responsibilities may be missing or insufficiently covered. This allows you to address those gaps and ensure a more robust and well-rounded operational setup.
Secondly, the diagram serves as a valuable tool for answering various questions about your organization. For instance, it can be used to assess the level of risk associated with single points of failure. By evaluating whether there are multiple individuals knowledgeable about the tasks within each business component and applying a color-coding system (such as Red, Amber, Green) to indicate their status, you can quickly gauge the extent to which your organization is vulnerable to disruptions caused by the absence of backup resources or knowledge.
This single-page picture provides a clear overview of potential risks and areas that require mitigation. It helps you understand the distribution of knowledge and expertise within your organization, enabling you to take proactive measures to address single points of failure and reduce operational risks.
By leveraging this work product, you can gain valuable insights into your organization’s operational capabilities, identify potential weaknesses or gaps, and make informed decisions to enhance resilience and efficiency. It provides a visual representation that aids in communication, decision-making, and the identification of improvement opportunities.
Creating a spreadsheet containing definitions for each business component is a valuable work product that complements the single-page diagram and enhances communication and understanding.
The definitions in the spreadsheet provide clear explanations and descriptions of each business component represented in the diagram. They serve as a reference document that ensures a common understanding of the purpose and scope of each component across the organization. This helps eliminate any ambiguity or confusion that may arise when interpreting the diagram.
By providing detailed definitions, you enable stakeholders, employees, or anyone reviewing the diagram to have a comprehensive understanding of what each business component entails. It ensures consistency in communication and facilitates discussions, decision-making, and collaboration within the organization.
The spreadsheet can include additional information such as the responsibilities, tasks, and objectives associated with each business component. This further clarifies the role and function of each component, allowing for a deeper understanding of the organization’s operations.
Having this document alongside the diagram enables individuals to easily refer to the definitions while reviewing or discussing the diagram. It enhances communication, reduces misunderstandings, and promotes a shared understanding of the organization’s structure and processes.
Overall, the spreadsheet with definitions complements the single-page diagram by providing clear and concise explanations of each business component. It aids in effective communication, eliminates ambiguity, and ensures a consistent understanding of the organization’s structure and functions.
Conclusion
That concludes the discussion on the first phase of business process analysis for small businesses, which focuses on understanding what the business does. By documenting and summarizing the business components and their relationships, you can gain valuable insights and improve communication within the organization. However, it is important to continue with the subsequent phases to gain a more comprehensive understanding of your business processes.
In the next article of this series, we will delve into the second phase, which aims to answer the question, “How do we do it?” This phase will explore the detailed processes and activities involved in carrying out the tasks identified in the discovery phase. Understanding the intricacies of your business processes will allow you to identify inefficiencies, bottlenecks, and areas for improvement.
Stay tuned for the upcoming blog post, where we will delve into the second phase of business process analysis and provide insights on how to effectively analyze and improve your small business processes.