A Rational Approach to Business Design: Strategy & Re-Engineering by Design

"A Rational Approach to Business Design" presents a rigorous and tested approach to business re-engineering. The author presents five tools, deemed an absolute minimum, that enables a consultant or manager to re-engineer companies in an objective and consistent manner. These tools are, process mapping, network diagrams, control diagrams, transformation diagrams and primal-dual matrix diagrams.

The book was written specifically for fully informed, practicing managers who know that there is a better way to run their business, but are not sure how to proceed or how to nurture consensus within their companies for this need.

The author’s intention in writing this book was, to present the real hard stuff of business re-engineering, so that anyone can re-engineer their own business. It explains the, what and how of business re-engineering so that business re-engineers can be consistently successful in their projects.

The book starts off with a discussion of factory operations. Based on the author’s work at Texas Instruments, the author demonstrates that both push and pull systems are equivalent. This is major departure from current thought in both operations management and business re-engineering.

Given this equivalency, several inferences and questions come to mind. First, if they are equivalent how can companies gain a competitive advantage by switching from push to pull? They can’t! The answer lies in understanding planning complexity. One of many new concepts explained in this book. The second, is there a kanban system for push system? Yes! It is detailed in the book.

The third, with push and pull equivalence, why then does Just-In-Time work? JIT de-couples the production-scheduling problem into many smaller problems that can be 'transparently' solved in real time. The author proceeds to explain that scale economy is a function of wip management systems and lot-to-machine assignment systems.

The book clearly explains how to use transformation diagrams to map the logic of the business. There is no guessing or fuzziness. There are only an even number of key success factors, usually 2 rarely 4; and it is "commitment" that determines these factors.

The author presents a radically new approach to business strategy. The Holistic Business Model consists of the Operations Layer, Revenue Transaction Layer and Business Management Layer.

Porter’s five forces model is based on the premise that businesses use strategy to respond to competitive forces. The Holistic Business Model, however, shows how business design determines business structure; business structure in turn determines the competitive forces. That is, on the one hand design determines forces and on the other, strategy is used to manage competitive forces. Management will find this significantly more empowering than current strategy models.

The book shows how to map the logic of the business, industry rivalry, and one’s business strategies to evaluate strategy (not financial) sensitivity analysis. This sensitivity analysis, enables one to determine how sensitive one’s strategies are to price wars, new entrants and the economy.

Unlike other business strategy models, the Holistic Business Model enables one to infer your competitor’s strategic options from public information. The upshot of this is that the Game of Business is now one, where every player knows the others’ hand!