Business Harmonisation – How Common is Common Enough?

by admin on August 18, 2010

In Business Process, KPI, MIS and many other contexts the concept of commonality is seen as being very desirable.  After all, why should separate parts of the same organisation operate differently and use different systems to do so……it just makes things harder and more costly to implement, share, re-use and/or outsource doesn’t it?

Well, there is certainly truth in the preceding sentiment.  Of course you can equally also argue the reverse.  That unique circumstances require unique solutions, that different customers from different cultures need different handling, that there is a not insignificant up-front cost and time implication for multi-site harmonisation…….or just simply that one size does not fit all!

So where does this ‘push-me-pull-me’ debate get us?  Well most frequently, at this high level of discussion, not very far.  It does however help frame a pertinent question…….how common is common enough?

In looking for an answer we need to start from the assumption that some level of commonality is a good thing on the basis that if everything were different just for the sake of it that would be unnecessarily confusing and wasteful.  Equally, we instinctively know that doing everything exactly the same is not really a good answer either on the basis that there are always circumstances and exceptions where variation is desirable or necessary.

In seeking to resolve this conundrum it is often useful to think in terms of ‘first principles’; e.g. breaking things down in ways that might be meaningful in some practical way to the organisation.  For example: physically, geographically, culturally, regulatory / statutory, etc.

For example, there is probably little reason why the same data coding structures could not be re-applied globally, but it is unlikely that you could apply exactly the same sales tactics everywhere in the world.

A little thought into why this somewhat obvious sounding statement may be true is still instructive.  If you think about it the way you structure and code data is often relatively hidden from most people and under your complete control (more or less)…..so you can do what you want with it and treat it largely the same in all locations.

However, selling is in large part determined by cultural preferences and disposable income factors, has a strong personal element for the customer and in the main people are openly exposed to it…….none of which is under your full control.  Hence it is something which needs to be driven by some degree of local custom and practice if it is to be successful.

The key point which emerges from this thought process, if taken to its logical conclusion, is that full commonality is almost always going to be in some way more efficient.  However, balancing this is the fact of life that if there is exposure to factors outside of a single persons or organisations direct control these efficiencies of commonality often need to be sacrificed on the alter of effectiveness.

In other words, some efficiencies of commonality may need to be sacrificed in favour of local realities and issues of practical workability.

This perspective has implications for many important organisational decisions, for example:

  • What services can or should be shared between locations / operations?
  • What are core and non-core business capabilities when seeking to outsource?
  • What sorts of strategic partner collaboration opportunities are appropriate?
  • Should we ‘make’ or ‘buy’ a particular item, product or service?

The list goes on but the above should be more than sufficient to illustrate the point that these sorts of decisions are usually never simple ones and that to some significant extent the apparent answer may vary by location.

Hence answering the question “how common is common enough” across multiple locations and operations is as much an experienced based judgement as a scientific calculation.

Another way of putting this is that there are no ‘wrong’ answers, just ‘better’ ones than others…..and what is ‘better’ will often be relative to where you are standing!

Of course you can apply first principles to the points made above and work out an answer for your own organisation, and probably should do so.  However, it is also instructive to look at the collective decisions of other organisations as a guide to making your own.

In codifying these guidelines it is important to take them in the correct spirit; i.e. they are a (non-exhaustive) collective AVERAGE that seem to be appropriate much of the time and for many organisations.  They are NOT a (comprehensive) EXACT answer that is right for everyone and always!

At the most stringently common end of the spectrum, commonality of action; i.e. those things for which it is often practical and sensible to rigorously pursue a high level of commonality in how business is conducted (e.g. common business processes across locations / operations) for good business reasons.  Here are some typical examples:

  • Blanket or Framework Contracts
  • Bill of Material (BOM) and Quality Standards
  • Business Terms & Conditions
  • Core Business Systems Selection
  • Data Accuracy Standards
  • Distribution Networks
  • Financial Accounting
  • Financial Planning and Budgeting
  • Forecasting
  • Global Data Codification
  • Management Education & Trainig
  • Outsourcing and Supplier SLAs
  • Strategic Sourcing / Procurement

At the next level of commonality, commonality of intent; i.e. those things for which some common level of policies or guidelines makes good sense, but which in practice needs to allow for some degree of local interpretation regarding action (e.g. variations on business processes across locations / operations).  Here are some typical examples:

  • Core Business Systems Implementation (i.e. configuration & operation)
  • Despatch Rules
  • Employee Education & Training
  • Inventory / Stockholding Levels
  • Local Data Codification
  • Local Purchasing / Procurement
  • Management Accounting & Reporting
  • Non-core Business Systems Selection & Implementation (e.g. RT Systems)
  • Product / Service Routings and Testing Requirements
  • Safety Standards
  • Sales & Operations Planning

Finally, at the lowest level of commonality is, locality of action; i.e. commonality, while possibly desirable, is not the main driver of what is done on the ground locally (e.g. business processes are unique to locations / operations).  Here are some typical examples:

  • Breakdown / Predictive Maintenance Scheduling & Execution
  • Item / Material Call-off & Preparation
  • Production Line / Facility Load Balancing
  • Production Line / Facility Scheduling & Execution
  • Product / Service Rework (e.g. faulty production, warranty returns)
  • Regulatory / Statutory Compliance
  • Shift Rota
  • Tax Accounting

Although we at Biz4ge know there can be many variations on the above list, we also know that the principles demonstrated there-in are valid and robust across a large number of organisations, industries and geographies.  At the end of the day commonality can be highly desirable for the efficiencies it brings……but forcing a fit where one doesn’t or only nominally exists is just a recipe for conflict and failure.

In the end the golden rule for deciding an answer to the question of ‘how common is common enough?’ is that it should be based solidly on the balance of efficiency versus effectiveness and what that means for optimising profitability for the organisation as a whole.

It is not about some ivory tower view of theoretical organisational perfection or an exercise in local sub-optimisation.

In summary, differences should be avoided where they add limited value or make little sense, but celebrated where they represent opportunities to put clear blue water between you and the competition in customer terms!

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