Starting up a Business? Focus on the Business Process
6 steps to designing a Business Process from Scratch
Business process is one of the most important aspects of new business planning. Usually, a need or an idea lights the new business fire but it is the process that keeps the business alive and enables it to grow. Business process is the HOW of implementing a new business.
We experience a part of business process daily while engaging with any product or service. It is important for entrepreneurs to have a good level of understanding of business process(BP) as it is the BP which drives product/service delivery.
So here I have come up with a simple 6 step procedure to help entrepreneurs understand and design a business process from scratch.
1. Define the Objective:
The first step to designing any business process is to define the objective. Exploring the WHY behind the BP.
I will come up with a simple definition of BP here. BP is a collection of activities that produce a specific service or product for a particular market segment. It typically changes the state of data or a product and generates some type of output. It comprises of 3 elements:
- Input: Data, material, product, information that goes in the process.
- Process: Set of activities that adds value to the input.
- Output: Value added product or service.
Define the Input, Process and the Output.
Say you want to start a pizza delivery outlet and you are on your way to design the BP. In your case customer request will be the input and delivered pizza at the customer’s address will be the output. The process will be the one which converts customer request into pizza delivery.
2. Gather expectations of all touchpoints:
This is the step where you gather expectations of all the touchpoints. You define the process requirements here.
Touchpoints refer to all the entities who are affected by the output of the BP. Generally, touchpoints comprise of the company, its partners, and its target customers.
Sit with the touchpoints, gather their expectations and note them down. Take into consideration the set expectations of your competitors. Also, capture the reason behind the expectations.
This is where you spend most of the time to understand the WHAT and WHY of the expectations. Expectations will usually revolve around Quality, Cost and Time.
Write the touchpoint type followed by their expectations and the reason behind them.
Touchpoints in your case will be you, your co-founders or partners and your target customers. Discuss among you and interview your target customers to gather their expectations. Also, keep in mind the set expectations of your competitors. Expectations will revolve around:
Company: low cost, good taste, different taste, good quality, better customer service.
Customer: Cheap price, more flavours, fast delivery, better quantity, better service, money back guarantee, customisation options, served hot.
3. Validate, Prioritise and Objectify the expectations:
This is where you validate the expectations captured in the above step. The important thing here is to analyse not only the expectations but also the reasons behind them. If they feel unreasonable, unrelated or unpractical, just remove them.
The next step is to prioritise them. Sit with the Business team and prioritise them based on the Company’s USP, Competitor’s product/service and USP, Depth and Demand of customer expectations and Urgency. You can use the following categorisation :
- Must have : Must and Urgent
- Should have: Must but Non-Urgent
- Could have: Desirable but Non-Urgent
- Won’t have: Desirable but beyond limitations
Now, You have a set of expectations that your BP must satisfy. Its time we objectify them as we cannot track things until and unless they are in numeric format. Numbers defined here will be the Target that we need to achieve via the BP.
Prioritise and objectify the expectations of all the touchpoints.
Try to objectify the expectations captured in the above step and then categorise them based on their priority.
Must have: Low cost and cheap price: How low? What can be the maximum cost per pizza? Cheaper than the competitor? Rs 200 per regular pizza?
Must have: Fast delivery: How fast? What can be the maximum delivery time? Delivery time of competitor? 45 mins if the location within 5 km radius?
4. Design the process and Set the expectations:
After defining the Objectives and Numbers to be achieved, its time we design the process. Process is the HOW of achieving numbers i.e. Targets.
Divide the process into phases depending upon the occurrence of a major change in state of the input.
We have divided the overall process into many sub-processes. It’s time we set expectations for each sub-process. Set expectations will be driven by the must have expectations defined for the overall process.
Divide the process into sub-processes and set expectations for them.
Design the process keeping in mind the must haves i.e. price less than Rs 200 and delivery time less than 45 mins. Divide the pizza ordering process into sub-processes and set expectations for each one of them.
5. Map the requirements with the expectations:
We have defined the expectations from the process and its sub-process in the above steps. In this step, we figure out the requirements for fulfilling the set expectations. Requirements involve figuring out the following things:
- Skill-set of workforce
- Marketing Strategy
- Sales Strategy
- Post Sales Strategy
- Operations Strategy
- Product Strategy
- Business Development Strategy
- Supplier Strategy
All these things will be driven by the set expectations defined above. Accumulate just enough resources required for running the process and fulfilling the must haves. There is no point in investing capital until test runs are performed as the expectations are bound to change/vary once the process is lived.
Accumulate just enough resources required for running the process and fulfilling the must haves.
For pizza delivery outlet you require:
- Phone: So that people can place their order
- Kitchen and appliances: For making pizza
- Raw materials: For making pizza
- Delivery person, cook, and a manager
- Packaging material
- A mode of transport for the delivery person
All the above things are required for making the process operational. Procurement of these things should satisfy the must haves i.e. price of regular pizza should not exceed Rs 200 and delivery time should be less than 45 mins.
6. Test it on real customers:
So we have accumulated just enough resources to make the process operational and fulfil the must haves. Now its time we test it on real customers. But before that, It is always better to perform in-house test runs and rectify the problems then and there.
After performing the required test runs, deriving learnings and solving the identified problems its time we make the process live.
Track the must haves and compare them with the Target. Also, keep track of expectations of all the touchpoints. Be flexible and open to changes as some new expectations will arise, old expectations will be modified or changed.
With the new set of expectations go back prioritise, objectify, map the requirements, track and iterate until they are met.
Make your pizza delivery outlet live. Keep track of the cost incurred, the delivery time and customer expectations.
One thing I would like to quote here: “Fulfil customer expectations and keep driving new expectations.”
And with that, I will close for the week. I am open to suggestions and feedback on the technical details of the blog. Also, you can join my group “PushStart” to get access to more such readings. You can comment here to share what you think.
I got motivation to write about this from the readings of Nir Eyal, Eric Ries, Dan Norris, Sangeet Paul Choudary, steve blank, Sujan Patel, Dan Pedersen, Erik Devaney, Derek Andersen and from the blogs of Matter, The Startup, Startup Grind, Startups Co, The Mission, Mashable, Techcrunch, Inc.com, The Verge and Wired.
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