Operations

Types of Process

Types of Process Jonathan Poland

A process is a systematic, controlled, and repeatable way of working that is used to achieve specific goals or outcomes. Processes are commonly used by businesses, teams, and individuals to increase productivity, create consistent and high-quality work products, and promote transparency. A process typically involves a series of steps or tasks that are performed in a specific order, and it may include inputs, outputs, and decision points. By following a well-defined process, businesses and organizations can improve efficiency and reduce the likelihood of errors or mistakes. Examples of processes include manufacturing a product, completing a project, or providing a service. The following are the basic types of process with examples of each.

Procedures

Procedures are a series of repeatable instructions for accomplishing a task. A procedure is a simple type of process. Likewise, more complex processes can include multiple procedures. For example, a procedure for showing a guest to their room that is part of a greater check-in process.

Procedure:
Showing a hotel guest to their room

1. Take the guest’s luggage.
2. Direct them to the elevator.
3. Direct them to the room.
4. Gently place the luggage on the luggage rack by the door.
5. Explain features of the room as required.
6. Answer any questions.
6. Tell the guest to enjoy their stay and depart by closing the door behind you while facing the guest.

Checklist

A checklist is a process or subprocess that allows steps or tasks to be completed in any order.

Checklist:
Clean Guest Room
□ Change linens
□ Replenish toiletries
□ Collect garbage

Business Rules

Business rules are formal logic that can be applied to work steps, tasks and activities. These are commonly included in processes.

Procedure: Cleaning Entry to Guest Room
Knock twice and wait 40 seconds. Listen for activity.

If the guest is in the room but doesn’t answer the door, call the room later by telephone.

If the guest is in the room, ask for permission to clean the room.

If the guest refuses cleaning, ask what time would be convenient.

If the guest is not in the room, enter to clean the room.

Workflow

A workflow is a process that includes both automation and human steps. For example, a check-in process at a hotel that includes human interaction, user input and computer code that performs tasks such as searching for a suitable room based on a customer request. Business rules are often automated in a workflow. The human steps in the workflow may be associated with procedures and checklists that are system validated to prevent human error.

Each step in a workflow is typically a screen. In the background, a system may do automated processing between each screen or while each screen is in process.

Automation

Processes can be fully automated with no human steps. For example, a cloud service that instructs solar panels to clean themselves as part of a maintenance process.

Continuous Improvement

Continuous improvement is the repeated and ongoing process of measuring, changing and measuring again. Where changes are small, this is a process of optimization. Where changes are big, this is a process of experimentation. Continuous improvement can be applied to any type of work including processes themselves. For example, a designer who changes their creative process a little with each project to try to continually improve their productivity and results.

Management By Exception

It often doesn’t make sense for a process to handle obscure conditions that rarely occur. Management by exception is the practice of implementing processes that handle most cases in a systematic way and allowing human decision making to handle exceptions. For example, an airline where a manager can override business rules implemented by a system where a customer has some reasonable argument as to why they are an exception to a rule.

Examples of Products

Examples of Products Jonathan Poland

A product is something that has value and can be sold on a market. In order for a product to be sold, it must be standardized and produced at a large enough scale to meet the demand of consumers. A product can be a tangible item, such as a car or a piece of clothing, or it can be a service, such as a massage or a haircut. The value of a product is determined by the market, which is the group of people or organizations who are willing to buy it. Products are an essential part of the economy, as they allow businesses to generate revenue and provide consumers with the goods and services they need. The following are illustrative examples.

Convenience Products

Convenience products are products that customers buy without much of a decision making process. These are mostly everyday inexpensive things. In this category, brand recognition is important as customers are likely to buy products they recognize.

  • Beverages
  • Candy
  • Cosmetics
  • Food
  • Over-the-counter Medicine
  • Small Household Items

Shopping Products

Products that often involve a relatively intensive decision making process on the part of the customer. In this category, there is some room for brands that customer’s don’t recognize simply because they are thinking more about the purchase.

  • Appliances
  • Clothing
  • Electronics
  • Hobby Supplies
  • Home Improvement Goods
  • Sporting Goods
  • Tools
  • Vehicles

Heterogeneous Products

Shopping products that are differentiated with functions, features and customer experience. This allows niche producers to compete if barriers to entry aren’t too high.

  • Bicycles
  • Drills
  • Fishing Equipment
  • Mobile Devices
  • Speakers & Headphones
  • Toys
  • Vacuum Cleaners
  • Video Games

Homogeneous Products

Products that don’t have meaningful differences in functions and features but are worth a decision making process due to quality, brand, price or style. Not to be confused with a commodity.

  • Backpacks
  • Cutlery
  • Fashion
  • Footwear
  • Jewelry
  • Sunglasses

Commodities

A commodity is a product that customers view as interchangeable and identical. In this case, consumers purchase on price alone such that producers have to accept a market price.

  • Apples
  • Chemicals
  • Economy Flights
  • Electricity
  • Gold
  • Low Tech
  • Paper
  • Wood

Premium Products

Products that offer greater quality than a standard item. This can include any type of product, including commodities whereby a producer tries to stand out from the crowd based on quality. Small firms can often compete using this strategy.

  • Artisanal Food
  • Fine Dining
  • Handcrafted Items
  • Healthy Food
  • High Quality Tools
  • Limited Edition Books

Luxury

Expensive products that target customers with little or no price sensitivity. This includes products that target the wealthy and product categories where people like to overspend such as weddings and fashion.

  • Events
  • Jewelry
  • Luxury Cars
  • Luxury Fashion
  • Luxury Home Furnishings
  • Luxury Travel
  • Posh Restaurants
  • Spas

Affordable Luxury

Successful luxury brands come to symbolize various types of social status, particularly wealth. It is common for such brands to leverage this status with somewhat less expensive versions of products that are sold on brand image alone, often with a minimum level of quality. Such brands are often careful to differentiate between the luxurious and affordable versions of their products so as to retain their luxurious image.

  • Chocolates
  • Compact Sized Cars From a Luxury Brand
  • Cosmetics
  • Fashions
  • Handbags
  • Jewelry
  • Perfumes
  • Tiny Rooms in a Posh Hotel

Inferior Goods

An inferior good is a product that people purchase less as their income rises. This indicates high price sensitivity, although inferior goods aren’t necessarily commodities.

  • Convenience Foods
  • Fast Food
  • Payday Lending
  • Secondhand Goods

Fast Moving Consumer Goods

Fast moving consumer goods are supplies that run out quickly such that customers purchase them frequently. This tends to be lucrative and therefore highly competitive such that large firms dominate.

  • Bottled Water
  • Bread
  • Breakfast Cereal
  • Cleaning Products
  • Milk
  • Shampoo
  • Soft Drinks
  • Toothpaste

Latent Need

A latent need is a customer need that customers don’t know they have until an innovative product arrives that represents a leap forward in some way. Discovering a latent need can create a large new market. The following are historical examples.

  • Automobile
  • Home Computer
  • Internet Connectivity
  • Microwave Oven
  • Radio
  • Smart Phone
  • Streaming Media
  • VCR

Unsought Goods

Unsought goods are products and services that are no fun to buy such that customers have low motivation and interest. This includes depressing things like your funeral and the replacement of expensive capital that consumers and businesses would prefer to defer until absolutely necessary.

  • Airplanes
  • Fire Extinguishers
  • Funeral Services
  • Infrastructure Maintenance
  • Life Insurance
  • New Pipes (Plumbing Renovation)
  • Roofing Renovation
  • Safety Equipment

Complementary Goods

Products and services that can be used together in some way such that their demand is related. This may allow small firms to benefit from the products of large firms. In many cases, large firms also benefit from this situation whereby small firms add variety and value to their products.

  • Homes & Real Estate Agents
  • Mobile Phones & Apps
  • Movies & Merchandise
  • Printers & Ink
  • Razors & Blades
  • Snowboards & Snowboard Cases
  • Software & Consulting
  • Streaming Music Apps & Music

Specialty Products

Specialty products, also known as niche products, target relatively obscure customer needs. This strategy may be adopted by small firms hoping to avoid direct competition with larger firms. Some large firms compete in this area by creating large numbers of product variations to serve different niches they refer to as segments.

  • Alpine Snowboard
  • Collectors Items
  • Fashion Styles
  • Gothic Jewelry
  • High Performance Hammers
  • Hobby Goods
  • Traditional Foods

Electronic Products

Products that have no physical form. These can normally be scaled infinitely at close to zero cost such that they have extremely favorable economics. However, they can be expensive to develop and market.

  • Ebooks
  • Mobile Apps
  • Music
  • Software
  • Video Games
  • Virtual Items

Services

Services are products that mostly offer intangible value. For the past 50 years, advanced economies have been shifting towards a service economy whereby services produce more sales than products.

  • Business Outsourcing
  • Coaching
  • Consulting
  • Entertainment
  • Events
  • Financial Services
  • Gyms & Spas
  • Hospitality
  • Insurance
  • Leisure Services
  • Media
  • Mobile Subscriptions
  • Night Economy
  • Recreation Services
  • Restaurants
  • Social Media
  • Software Services
  • Streaming Media
  • Telecom Services
  • Training
  • Transportation
  • Travel Services

Project Management Skills

Project Management Skills Jonathan Poland

Project management skills are a combination of talents, knowledge, and experience that enable an individual to effectively plan and execute projects. This includes the ability to manage a project’s integration, scope, schedule, budget, quality, documents, resources, communications, risk, procurement, performance, and stakeholder relationships. Effective project managers possess a wide range of skills and expertise, including leadership, communication, problem-solving, and organizational abilities, that allow them to successfully deliver projects on time and within budget.

The following is a list of project management skills.

Agile Benchmarking
Budget Control Business Analysis
Business Cases Challenging Assumptions
Change Control Change Management
Coaching & Mentoring Communication
Compliance Continuous Delivery
Continuous Integration Contract Management
Coordination Cost Management
Decision Making Design Thinking
Dispute Resolution Document Control
Earned Value Management Estimation
Feasibility Analysis Financial Analysis
Forecasting Goal Setting
Human Resource Management Influencing
Issue Resolution Knowledge Management
Lessons Learned Managing Expectations
Meeting Management Methodologies
Motivation Negotiation
Onboarding Organization
Performance Management Personal Resilience
Prioritization Problem Solving
Program Management Project Charters
Project Communications Project Controls
Project Integration Management Project Management
Project Management Platforms Project Metrics
Project Monitoring Project Planning
Project Recovery Provisioning
Public Speaking Quality Assurance
Quality Management Recruiting
Request for Proposal Requirements Gathering
Reserve Analysis Return on Investment
Risk Analysis Risk Control
Risk Management Risk Monitoring
SWOT Analysis Schedule Control
Scheduling Scheduling
Scope Baseline Scope Management
Scope Management Scrum
Self-direction Setting Expectations
Stakeholder Management Statement of Work
Statistical Analysis Strategic Thinking
Systems Thinking Task Management
Team Building Time Management
Variance Analysis Waterfall
Work Breakdown Structure

Coding Skills

Coding Skills Jonathan Poland

Coding skills are a combination of talents, knowledge, and experience that enable an individual to create valuable software. This can range from writing simple scripts that automate tasks to being able to lead large, complex development projects. To be a successful coder, one must have a strong foundation in mathematics, computing theory, and logic, as well as experience with various technologies, problem-solving techniques, and project design. These skills allow a software developer to be productive in a business setting.

APIs Algorithms
Application Integration Artificial Intelligence
Audit Trail Back-end Development
Batch Processing Blockchain
CSS Cloud Computing
Code Refactoring Compression
Computation Theory Computational Logic
Computing Infrastructure Configuration Management
Container Technologies Content Management Systems
Continuous Integration Cryptography
Data Integration Data Structures
Database Design Databases
Debugging Deployment Automation
Design Documents Developer Tools
Development Frameworks DevOps
Distributed Systems Edge Computing
Embedded Systems Encryption
Error Detection Error Tolerance
Estimates Event Processing
Front-end Development HTML
Identity & Authorization Incident Management
Information Retrieval Information Security
Javascript Linux / Unix
Load Balancing Logging
Machine Learning Mathematics
Messaging Frameworks Microservices
Mobile Development Networking
NoSQL Datastores Object-oriented Programming
Operating Systems Parallel Processing
Platforms Production Support
Programming Languages Project Planning
Quality Assurance Real-time Computing
Reliability Engineering Requirements Gathering
Reusability Robotics
SQL Scalability
Scientific Computing Scripting
Secure Code Review Secure Coding Practices
Service-oriented Programming Session Management
Software Architecture Software Design
Software Development Lifecycle Software Maintenance
Software Testing Specifications
Standards Statistics
System Administration Systems Analysis
Systems Programming Troubleshooting
Unstructured Data Use Cases
Web Development

Quality Management

Quality Management Jonathan Poland

Quality management is a process that ensures products and services meet certain standards of quality before they are released to customers. It involves setting quality standards, testing products and services to ensure they meet those standards, and implementing processes to correct any deficiencies. Quality management can help organizations improve customer satisfaction, reduce costs, and increase efficiency.

There are several key principles of quality management that can help organizations achieve these goals. The first is customer focus. This involves understanding the needs and expectations of customers and ensuring that products and services are designed and delivered to meet those needs. The second principle is leadership. Effective leadership is essential for establishing a culture of quality within an organization and for driving continuous improvement.

The third principle is engagement of people. All employees should be involved in the quality management process, and their expertise and knowledge should be leveraged to identify and solve problems. The fourth principle is process approach. This involves treating each product or service as a process, with inputs, outputs, and controls, and identifying and managing the interrelated processes that make up the organization.

The fifth principle is improvement. Quality management should be seen as a continuous process of improvement, with regular assessments of processes and products to identify areas for improvement and the implementation of strategies to address those areas. The final principle is evidence-based decision making. This involves using data and other forms of evidence to make decisions about quality and to measure the effectiveness of quality management strategies.

Implementing a quality management system can help organizations improve their products and services, reduce costs, and increase customer satisfaction. By following the principles of quality management and continuously seeking to improve, organizations can ensure that they are providing the highest level of quality to their customers.

Quality Principles

Quality management is typically based on a set of principles adopted by a firm that define how an organization will prioritize and achieve quality. For example, the well known 14 quality principles used by Toyota to drive every process at the company.

Management by Walking Around

Firms that achieve high levels of quality use techniques such as management by walking around whereby executives are expected to be fully engaged with both customers and operations such that they understand any gaps in quality. Where this doesn’t occur, the quality management team is tasked with aggressively advocating for quality at the executive level.

Management Accounting

Management accounting is the practice of measuring anything that management needs to know. Quality management is largely a practice of measuring, improving and measuring again. This can include measurements that improve operational processes in real time. For example, measuring quality variances at every step of the production process to identify quality problems at the workstation level.

Root Cause Analysis

Determining the root cause of quality problems and addressing the cause as opposed to the symptoms.

Knowledge

Capturing and communicating knowledge so that the same quality mistakes aren’t repeated. Knowledge waste and knowledge loss are common root causes of quality problems.

Training

Giving teams the knowledge they need to produce quality in their role. For example, training front desk staff at a hotel in hopes of improving service quality.

Authority

Designing processes and roles to give employees the authority they need to address quality issues on the spot. The classic example is a worker on an assembly line who has authority to stop an entire production line for a quality problem.

Quality Control

Quality control is the process of testing products and services. This is a tiny part of the quality management process that is too often mistaken as the only step required to achieve quality.

Quality Assurance

Quality assurance is the process of ensuring end-to-end quality including elements such as process design, product design and procurement. Quality management is often separated into two practices: quality assurance and quality control.

Quality Management = Quality Assurance + Quality Control

Incident Management

Incident management is the reactive process of managing quality incidents such as a service that goes down.

Problem Management

Problem management is the corrective process of addressing the root causes of incidents.

Customer Engagement

Engaging customers to understand quality perceptions. This avoids a process of naive quality management whereby quality is viewed as a specification as opposed to a market reality.

Product Design

Quality management feeds into product design to improve quality at the design level.

Process Design

Quality management often takes a design thinking approach whereby all quality problems are designed-out of processes. For example, mistake-proofing a step in a production process.

Technology

Sponsoring changes to technology that design-out quality problems. For example, user interfaces that remove latent human error.

Communication

Advocating for quality with company wide communication. For example, speaking at weekly all-hands meetings to raise awareness of quality issues and recognize individuals who have improved quality.

Culture

Developing norms, expectations, symbols and language that are conductive to quality. For example, the norm that all employees only speak positively about customers in internal conversations in a firm that depends on customer service quality.

Procurement

Managing suppliers to obtain quality inputs. For example, a supplier scorecard whereby suppliers are held accountable for quality failures.

Standards

Quality often requires consistent processes, practices, products and services such that standards compliance is an important element of quality management.

Types of Raw Materials

Types of Raw Materials Jonathan Poland

A raw material is a basic and unprocessed resource that is used as an input in the production of goods and services. Raw materials can include minerals, metals, forest products, agricultural products, chemicals, and other natural resources. These materials are often considered to be the building blocks of the economy, as they are used to produce the products, buildings, and infrastructure that support economic activity. For example, steel is a raw material that is used in the construction of buildings and vehicles, while oil is a raw material that is used to produce a wide range of products, including plastics and fuels. Raw materials are an essential part of the economy, and their availability and quality can have a significant impact on the success of businesses and industries.

In some cases, raw materials are processed and/or manufactured. For example, petrochemicals are used to make plastic but from the perspective of most industries, plastic is a raw material. Rare earths are 17 nearly-indistinguishable soft heavy metals that are difficult to mine because they are seldom found in large deposits. They are considered rare for this reason but are more abundant than copper in the Earth’s crust. Raw materials are extracted at great scale and can have significant environmental and social impact. As such, responsible selection/sourcing of raw materials is a basic sustainability practice.

The following is a list of major raw materials.

  • Abrasives
  • Almonds
  • Aluminium
  • Bamboo
  • Bauxite
  • Beans
  • Butter
  • Cement
  • Chemicals
  • Chromium
  • Clay
  • Cobalt
  • Cocoa
  • Coffee
  • Construction Aggregate (sand, gravel, crushed stone etc..)
  • Copper
  • Corn
  • Cotton
  • Diamond
  • Diatomite
  • Dyes
  • Feldspar
  • Fish
  • Fruit Juices
  • Fruits
  • Gemstones
  • Glass / Silica
  • Gold
  • Graphite
  • Gravel
  • Gypsum
  • Honey
  • Iron
  • Lime
  • Limestone
  • Lithium
  • Lumber
  • Magnesium
  • Manganese
  • Marble
  • Meet
  • Metal Alloys
  • Milk
  • Millet
  • Molasses
  • Molybdenum
  • Natural Gas
  • Natural Rubber (latex)
  • Nickel
  • Nitrogen
  • Nuts
  • Oats
  • Palladium
  • Peanuts
  • Peat
  • Petroleum
  • Phosphate Rock
  • Pigments
  • Plastics
  • Platinum
  • Potash
  • Quartz Crystal
  • Rare Earths
  • Rice
  • Rocks
  • Salt
  • Sand
  • Silicon
  • Silk
  • Silver
  • Soda Ash
  • Sorghum
  • Soybeans
  • Spices
  • Steel
  • Stone
  • Sugar
  • Sulfur
  • Synthetic Fibers
  • Synthetic Rubber
  • Talc
  • Tea
  • Tin
  • Titanium
  • Vegetables
  • Water
  • Wheat
  • Wool
  • Zinc

Research Design

Research Design Jonathan Poland

Research design is the overall plan or approach that a researcher follows in order to study a particular research question. There are many different research designs that can be used, depending on the specific goals and characteristics of the research project.

For example, a researcher might use a descriptive research design to simply observe and describe a particular phenomenon, or a experimental research design to test a hypothesis by manipulating variables and observing the effects. Other common research designs include cross-sectional, longitudinal, and mixed-methods designs. These research designs are used to guide the collection and analysis of data, and to help ensure that the research is rigorous and reliable. The following are common types of research design.

Secondary Research

Review and narrative that is based on existing sources.

Meta-analysis

Analysis that uses existing sources. For example, a review of multiple studies that numerically aggregates and summarizes their findings.

Primary Research

Primary research produces new observations. Also known as original research.

Qualitative Research

Collecting, analyzing, and interpreting non-numerical data such as interviews with people.

Qualitative Research

Collecting, analyzing, and interpreting non-numerical data such as sensor readings.

Scientific Research

Research that strictly conforms to the scientific method including elements such as a falsifiable hypothesis, empirical evidence and peer review.

Correlational Research

Correlational research looks for correlations between variables without manipulating these variables. Correlation doesn’t equal causation such that these studies can produce misleading impressions that one thing causes another when both may be influenced by some third factor.

Data Dredging

Using software to automatically find correlated variables in datasets. This can be used to produce fraudulent research whereby a researcher misrepresents their method by pretending to start with a research question when they actually worked backwards from automatically discovered correlations. Data dredging also plays a valid role in exploratory research.

Exploratory Research

Research that lays the groundwork for other research. For example, a data analysis that is used to formulate a problem statement, hypothesis or experiment design.

Causal-Comparative Research

Causal-comparative research attempts to use data to establish evidence for a cause and effect relationship. This might use several datasets and detailed controls that aggressively seek to eliminate alternative explanations for an effect. For example, if people who live near busy highways have a higher risk of some health problem a study may control for other factors that may explain this correlation such as income level or lifestyle.

Observational Study

Research where the independent variable isn’t controlled such that it isn’t an experiment. This can be exploratory research, correlational research or causal-comparative research.

Cohort Study

Studies based on groups of people who share a common characteristic, known as a cohort.

Prospective Cohort

Choosing the members of cohorts at the start of a study.

Retrospective Cohort

Cohorts are selected based on historical data. Runs some risk that the researcher will aggressively define the cohort to fit some pattern found in the data.

Case–control Study

A retrospective cohort selected based on outcomes such as comparing the lifestyle of people who get a disease with those who don’t get it. Useful for exploratory research but problematic for establishing cause and effect. For example, if you scan for differences in the lifestyle of people who graduate high school and those who don’t you may find that jelly donut consumption are different between these two cohorts but it is a stretch to suggest this is a cause.

Case Study

A detailed report of a single example. Useful for exploratory research. For example, a doctor who documents an allergic reaction to a chemical that hasn’t been on the market for long.

Longitudinal Study

Measuring the same variables over an extended period of time. Often an observational cohort study that observes a group of people over some time period. However, experimental research can also be a longitudinal study such as an experiment on a field of crops for half a year.

Cross-sectional Study

A study that compares observations at a point in time. For example, comparing the air quality of cities and the rate of a disease in those cities with the most recent data available for each city.

Experimental Research

Experimental research is the testing of a hypothesis or multiple hypotheses with experiments. This involves changing an independent variable to observe corresponding changes to a dependent variable. For example, a researcher who produces different types of stainless steel formulations to test which is most resistant to seawater.

Lab Experiment

An experiment in a lab where many variables can be controlled. For example, testing a fertilizer on plants in a lab where you can control extraneous variables such as light, temperature, humidity and water.

Field Experiment

An experiment that occurs in the real world where some variables can’t be controlled. For example, testing a fertilizer on a farm.

Randomized Controlled Trial

A standard for important experiments such as clinical trials for medical treatments that uses random allocation of participants to treatment and control groups to achieve statistical control over factors that may influence results. For example, if body weight may influence the outcome of a trial, people can be randomly distributed into treatment and control groups such that body weight distributions are likely to be similar in each group.

Natural Experiment

A natural experiment is a real world situation that resembles an experiment. This is useful were experiments would likely be unethical. For example, a factory where workers are currently exposed to a hazardous substance.

Constructive Research

Constructive research addresses a real world problem. For example, computer science research that seeks to design algorithms to perform a computation more efficiently.

Research & Development

Constructive research that designs a process, method, procedure, device, machine, product or service. For example, rapid prototyping of possible battery technologies.

Resource Efficiency

Resource Efficiency Jonathan Poland

Resource efficiency is the process of using resources in a way that maximizes their value and minimizes waste. This can involve using fewer resources to produce the same goods or services, using renewable resources instead of non-renewable ones, or finding new ways to reuse or recycle resources. Resource efficiency is important because it can help to reduce the environmental impact of human activities, conserve resources for future generations, and improve the sustainability and long-term viability of communities and economies. Many organizations and governments around the world are implementing resource efficiency strategies in order to meet these goals.

Conversion Efficiency

The amount of available sunlight that a solar panel converts to electricity is known as conversion efficiency. This can exceed 20% for modern solar panels.

Energy Efficiency

The amount of energy used by a facility, product, service, process or activity relative to its output. For example, the luminous efficiency of a light source is a measure of how well a light source converts energy into visible light. The luminous efficiency of an LED light bulb can exceed 20%.

Energy Intensity

Another term for energy efficiency measured in terms of value produced. For example, energy per passenger mile is a means for comparing the energy consumption of transport. This can be measured in kilojoules per kilometer.

Design Efficiency

Design efficiency is achieving the desired level of quality of a design with the minimum amount of resources. For example, a safe, luxurious car that weights 4000 kilograms versus an equivalent design that weights 6800 kilograms. Generally speaking, design efficiency improves with time in a large scale trend known as dematerialization.

Building Efficiency

The energy efficiency of a building. For example, smart glass that adapts to available sunlight to help achieve lighting, heating and cooling settings of a room such that they reduce electricity consumption.

Productivity

The efficiency of labor is known as productivity. This can be measured as the amount of value produced in an hour of work. For example, a farmer who improves their efficiency to $50/hour by installing an automated irrigation system.

Crop Yield

Crop yield is the amount of a crop produced relative to land used measured with kilograms per hectare or bushels per acre. This is generally increased with intensive farming techniques that may use land effectively but use a large amount of inputs such as water, chemicals and capital equipment.

Land Footprint

Land footprint is similar to crop yield but can be applied to any industry. For example, the land footprint of a highway could be measured in acres per billion passenger miles and compared to a competing type of infrastructure such as a high speed rail line.

Cost Efficiency

Cost efficiency is the cost per output of something. This is occasionally a reasonable approximation for resource efficiency as costs often map to resource consumption. For example, the dollars per mile may be a reasonable approximation for the total resources consumed by travel if you include all costs such as infrastructure costs and the value of land consumed by infrastructure.

Carbon Footprint

The amount of carbon dioxide and other carbon compounds emitted by a facility, process, product, service, activity or entity. For example, the amount of carbon dioxide emitted per square foot of construction.

Water Footprint

The amount of water consumed by an output such as a ton of agricultural product.

Externalities

Externalities, or economic bads, are negative results of economic activity such as chemicals and gases released into the environment by a farm, ship, factory or vehicle. For example, kilograms of agricultural chemicals used per hectare of farmland.

Business Environment

Business Environment Jonathan Poland

The business environment refers to the external factors and conditions that can affect a company’s operations and performance. It includes elements such as the economic climate, political landscape, technological developments, and competitive landscape. The business environment can have both positive and negative impacts on a company, and it is important for businesses to be aware of the various factors that can affect their operations.

The business environment can be divided into three main categories:

  1. Micro environment: This includes factors that are directly related to the company, such as customers, suppliers, shareholders, and employees.
  2. Macro environment: This includes larger, external factors that can affect the company, such as economic conditions, political climate, and technological advancements.
  3. Global environment: This includes factors that have an impact on the company’s operations on a global scale, such as international trade policies, cultural differences, and global economic trends.

It is important for businesses to carefully monitor and analyze the various elements of the business environment in order to anticipate and respond to changes and opportunities. This can help companies to make informed decisions and stay competitive in their market. The following are illustrative examples.

Economic Environment

An economic environment including the interest rates, credit conditions, growth rate, debt levels and price stability of an economy.

Business Cycle

The state of your industry. For example, an industry that is investing in capital and expanding supply versus an industry that is divesting and reducing supply.

Confidence

The confidence of businesses and consumers. For example, an environment where customers are optimistic about the future such that they are taking out loans, reducing savings and spending.

Competition

The competition and their competitive advantages. For example, a small firm entering a market dominated by a large firm with high brand recognition, a large number of loyal customers and a good reputation.

Political Environment

The political environment including the stability of a government and society.

Economic Security

The resilience of the economies in which you operate. For example, a nation that has poor IT infrastructure that is vulnerable to information security risks.

Culture

The cultures in which you operate including national cultures, communities, business culture and consumer culture.

Values

The values of the societies in which you operate. For example, a society that demands that firms not damage the environment.

Customers

Customers including demand levels, customer needs, preferences and perceptions.

Demographics

The characteristics of current and future populations. For example, a fashion firm that enters a market with a large number of teenagers and young adults.

Regulations & Taxation

The burdens placed on a business by governments including taxation, administrative burden and regulations.

Trade

Access to foreign markets and competition from abroad.

Resources

Access to resources. For example, a trade war that threatens to cut off a critical supply.

Productivity & Efficiency

The output you get for each unit of input. Productivity and efficiency rates can differ greatly from one country to the next based on factors such as working culture, infrastructure and access to education.

Markets

The characteristics of your markets. For example, a product category that is dominated by a single ecommerce company.

Partners

Your network of partners including factors such as partner performance or competition for partnerships. For example, a supply shortage that makes it difficult to secure critical parts.

Change

Changes to business models, technology, values, customer needs, products and competitive capabilities. For example, an energy company that has its business model challenged by a cleaner, less expensive form of energy.

Risk

Uncertainty about change. For example, the risk your competition will release a product that is an order of magnitude better than yours.

Sustainability

Your impact on nature and communities. For example, a hotel that owns land that is critical to an endangered species.

Internal Environment

The term business environment is occasionally extended to include the internal environment of a firm such as its strategy, operations and corporate culture.

Chief Executive Officer Jonathan Poland

Chief Executive Officer

The Chief Executive Officer (CEO) is the top administrator of an organization, responsible for its overall performance. The CEO typically…

Intellectual Capital Jonathan Poland

Intellectual Capital

Intellectual capital is the intangible value of an organization that is derived from the knowledge, skills, and expertise of its…

Production Jonathan Poland

Production

Production is the process of creating goods or services for the purpose of satisfying consumer demand. It involves a range…

What is an Intermediary? Jonathan Poland

What is an Intermediary?

An intermediary is a person or organization that acts as a go-between or intermediary for two or more parties in…

Geographic Segmentation Jonathan Poland

Geographic Segmentation

Geographic segmentation is a marketing strategy that involves dividing a target market into smaller groups based on geographical characteristics such…

Fiduciary Duty Jonathan Poland

Fiduciary Duty

Fiduciary duty refers to the legal obligation of one party to act in the best interests of another party. This…

Product-as-a-Service Jonathan Poland

Product-as-a-Service

The Product-as-a-Service business model involves offering a service in areas that were traditionally sold as products. This model involves ongoing…

Stability Jonathan Poland

Stability

Stability is the ability of a system, organization, or individual to maintain its current state or condition despite external pressures…

Business Cluster Jonathan Poland

Business Cluster

A business cluster is a geographic region that is home to a concentration of companies in a particular industry, and…

Learn More

Test Marketing Jonathan Poland

Test Marketing

Test marketing involves testing different marketing strategies or variations on customers in order to gather data and evaluate their effectiveness.…

Brand Image Jonathan Poland

Brand Image

Brand image is the overall perception that consumers and the public have of a brand. It is the way that…

Advantages vs Disadvantages of Technology Jonathan Poland

Advantages vs Disadvantages of Technology

Technology has brought many advantages to modern society, and has greatly improved the way we live and work. Some of…

Capital Improvements Jonathan Poland

Capital Improvements

Capital improvements are investments in new assets or the improvement of existing assets that are intended to provide a long-term…

Win-Win Negotiation Jonathan Poland

Win-Win Negotiation

Win-win negotiation is a collaborative approach to negotiation that focuses on finding mutually beneficial solutions for all parties involved. This…

Manufacturing 150 150 Jonathan Poland

Manufacturing

Manufacturing is a critical phase in business development, especially for companies that produce physical goods. The synergies between manufacturing and…

What are Tactics? Jonathan Poland

What are Tactics?

Tactics are short-term, immediate strategies that are designed to respond to fast-changing realities and situations. They are focused on taking…

Idea Generation Jonathan Poland

Idea Generation

Idea generation is the process of generating new and original ideas. It is an essential component of the innovation process…

Overhead Costs Jonathan Poland

Overhead Costs

Overhead costs, also known as “indirect costs” or “indirect expenses,” are the costs that a company incurs in order to…