Lee Iacocca said “in the end, all business operations can be reduced to three words: people, product, and profits.”

If you asked someone to define “operations”, what answers would you get? Probably statements ranging from “processes” to “getting stuff done” or “I’m not sure.”

Business books may define it as the tasks that produce the products or services a business sells to customers.  That’s not a bad answer, but it isn’t as succinct as Mr. Iococca and it doesn’t capture the whole of how I view operations.

For me, operation is the “collection of all activities required to keep the business running.”  That’s not entirely different from the general business definition above, but don’t stop there.

Operations has a purpose: to extract value from the resources of the organization.

Putting it all together, operations is the collection of activities that businesses perform to get the most of out their raw materials, processes, people, and capital in order to provide goods and services.

If that is correct, operations should focus on efficiently using the highest and best purpose of all resources while eliminating waste, ineffectiveness, low performing resources, and low value products.  Conversely, if operations are efficient, every person, every role, every tool, and every process have value to the organization.  And wouldn’t that be a great place for your business to be?

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Process is the most basic element of operations.  In a nutshell, it is how you deliver your products or services.  You probably have several processes that define the steps your teams perform the essential tasks that produce revenue and drive customer satisfaction.

But it doesn’t end there.  Your business has many other processes that you may not think about much or realize they even are processes.

Your sales process is one of the more obvious ones.  Your sales team should have a structured way in which they uncover leads, develop customers and opportunities, and communicate the closed deals to the rest of your team.

Other processes include invoicing your customers, for example.  How you hire and onboard new employees are both processes, and how you separate them from your organization when the time comes is a process too.

Why Process is vital

To start, well-defined processes make your business more effective and efficient in several ways:

  • Adds clarity – Everyone understands their role and how it fits into the bigger picture.  They know their deliverables and how other teams use their output (the “knowledge assembly line”) to serve your customers.
  • Saves time – It keeps people from expending brain power on re-inventing the wheel over and over and allows them to focus their energies on delighting your customers and preventing or solving problems that inevitably arise.
  • Reduces waste – Documented processes remove ambiguity and help prevent re-work.
  • Enables training – Defined processes and best practices can and should be used when training new employees so they can contribute to the organization quicker at the level you expect.

Having defined processes contributes directly to the bottom line.  If they are optimized and everyone is using best practices, you may save time, materials, or even do more with fewer people.

Beyond that, employees thrive when they know what to do and have the tools to do it.  Knowing what is expected can improve morale too.