Some of the first questions that a business must answer are:
• Why do we exist?
• Who are our customers?
• What is our mission or purpose?
• What is our vision?
To understand the importance of the answers to these questions, we must first understand that different stakeholders in a business have different perspectives. The stockholders wish to get a return on their investment. Workers wish to get a good wage for their work. Managers and officers wish to meet the business performance metrics set forth by the owners (stockholders, etc). The community wishes to have a neighbor that provides jobs, pays taxes, supports the community, and has no negative environmental impact. These are just a few.
Understanding the answers to these questions from the stakeholders’ perspective helps to define problem areas within the business and its ambient environment. It allows the business to have clearer vision. In the final analysis though, there are two high level purposes of a business. In a capitalistic society, businesses exist to make money, to make a profit. Without this, the business would not exist. Secondly, when the business is profitable, it ideally gives back stability to the community in which it exists.
When a business correctly defines its problem areas, from the customer and business points of view, it is ready to take the next step to improve processes connected to the problem areas.
So what does process improvement mean to the business? It means lower cost, higher efficiency, and higher profits. These manifest themselves in higher customer satisfaction, improved market share, and larger margins. The tie between customer satisfaction and profitability is evident.
Similar metrics apply to organizations like non-profits. For them the metrics may be lower cost and higher efficiency. These may manifest themselves as lower dependence on outside funding and improved margins. The commonality between businesses and non-profits is that the focus is upon doing more with less, thus returning more margin to the stakeholders and more value to the customers.
These bottom-line metrics in a healthy business are in alignment with their strategic planning. Furthermore, when strategic planning is in alignment with customer expectations, improvement projects will improve customer satisfaction and profitability.