May 22, 2022

Business Operating Systems are Important

Manufacturing plants looking for a robust business operating system that ensures they responsibly produce products and services should utilize the B Impact Assessment from B Lab.
Advice from Goldilocks

I have worked on the two extremes of unwritten and ever-changing rules and the other where it seemed likely that a job instruction likely existed for wiping one's derriere.  Goldilocks would probably agree that there must be something in between that is "just right." Eighty percent of the pendulum swing to the side of a clearly defined and adhered to set of policies, procedures, and job instructions is probably the ideal state.  So it might be more or less for a particular operation.  However, the 80-20 rule came to mind when picking a number where eighty percent of the business operating system (BOS) ensures that things happen seamlessly.  In contrast, the other twenty percent allows the workforce flexibility to adapt to meet stakeholder needs.  

"If you can't describe what you are doing as a process, you don't know what you're doing." – W. Edwards Deming
A BOS Definition

A definition of a BOS that I like is "a company guidebook that outlines the what, how, when, and why regarding company responsibilities."   I once had a leader ask me why I spent so much time focusing on our operating system as it did not matter.  As you can guess, the organization faced many challenges as no one knew their responsibilities.  As a result, the employees were inefficient and ineffective as they try to do their jobs.

The Work is Worth the Effort

Implementing a fully functioning BOS requires a great deal of time and energy.  However, the result is a BOS that should eliminate many forms of waste by implementing standardization across the organization.  In addition, the allocation of resources must align with its central "why," vision, and mission.  It defines the activities employees can expect while carrying out their various responsibilities.  Finally, it drives continuous improvement of the organization.

A BOS Analogy

I see the human body having comparable elements to an effective BOS.  Each part of the human anatomy depends on all other body parts to carry out a defined role, as does an organization count on each employee to meet or exceed the requirements of their position.  The brain constantly monitors and adjusts body functions and scans the external environment through two-way communication to maintain a healthy life.  Inputs like oxygen and nutrients should arrive promptly with proper levels.  When a cut occurs, the body responds by clotting the blood to reduce blood flow to prevent further harm.

The Factory as a Body

Similar actions and reactions are necessary to maintain an efficient and effective production environment.  All inputs need to arrive on time in the right amounts from a highly functional supply chain.  Manufacturing the product requires the ideal number of production operators producing at a rate that meets customer requirements.  The products should then be shipped to arrive to the customer just in time.  All support services need to be ready to respond to and repair breakdowns on a manufacturing line or resolve other issues that hamper productivity.  The external environment also needs ongoing scanning to monitor potential negative impacts on the organization.  Essentially, manufacturing operation success depends on proper planning and care to maintain them at an optimal state to compete in an ever-increasingly competitive industry.  

SpaceX on Pexels
The B Corp Movement

Organizations have various frameworks to choose from to implement an internal operating system.  The one I have found that most closely aligns with the humanist manufacturing framework is from B Lab.  B Lab is "transforming the global economy to benefit all people, communities, and the planet."  They are leading the B Corp movement as a means to offer a concrete, market-based and scalable solution to our societal challenges.  The legal framework ensures that the company can continue to practice its mission through stakeholder governance even after leadership changes, capital raises, or a potential sale.  The commitment is to be accountable to all stakeholders.  In addition to shareholders, the organization is responsible to the community, customers, the environment, suppliers, and workers.  Ultimately, continued protection is in place to create a lasting commitment and accountability to its stakeholders to support an economy that works for everyone.

B Impact Assessment

The resultant standard is the B Impact Assessment (BIA), which measures a company's environmental and social impact.  The BIA has five categories with a possible total of 200 points.  The following is a brief description  of the criteria for each category and a sample BIA question in italics:

1. Community – The impact of an organization on their local community relates to initiatives like charitable giving; civic engagement; cooperative models; diversity, equity, and inclusion; fair trade sourcing, local economic development; and poverty alleviation.  What % of your total cost of materials in the last fiscal year came from underserved suppliers that have received the above capacity-building support?

2. Customers – The quality of products and services that ethically address a particular social issue directly or through its customers to improve the social impact of other businesses or organizations.  In what ways do you determine whether the organizations you serve directly support underserved populations?

3. Environment – Provides measurements of a company's environmental impact on the air, biodiversity, climate, land, and water.  Additional points are available for organizations that provide products and services with a positive environmental impact.  Which of the following environmental metrics does your company track regarding the environmental impact of your product or service?

4. Governance – Defines the company's environmental or social impact, ethics, mission, and transparency.  Additionally, the ability of the organization to protect the mission and incorporate stakeholders in its decision-making.  How does your company integrate social and environmental performance into decision-making?

5. Workers – Ensures the contribution to employee well-being related to career development, engagement and satisfaction, financial security,  health and safety, and wellness.  Furthermore, companies gain additional points to support community members with employment barriers or non-executive ownership of 40% or more.  What percentage of employees on an FTE (Full Time Equivalent) basis are paid at least the equivalent of a living wage for an individual?

Organizations that score 80 or more points upon verification by B Lab can become a Certified B Corporation.  B Lab provides several ways to support businesses with benchmarks, standards, and tools for companies that choose to pursue certification.  I profile several manufacturers with this certification status in my book, further evidence of the fit between the framework and humanist manufacturing.  Furthermore, I plan to work toward achieving this goal for my consulting company.

Key Takeaway

Manufacturing plants looking for a robust business operating system that ensures they responsibly produce products and services should utilize the B Impact Assessment from B Lab.  The result of becoming a Certified B Corporation is a solid commitment to adopting practices with measures that showcase the company's environmental and social impact across the five categories of the BIA.  To date, 721 manufacturing companies can confirm their commitment to helping address society's critical challenges.  

Next Step

A short video on the B Corp movement provides an overview of how companies can "benefit all people, communities, and planet." If that causes you to want to learn more, go to the B Corp website to find a Certified B Corp that may have a manufacturing operation similar to yours and reach out to them.  It has been my experience that those achieving this status are willing to help those coming behind them.  

My Gratitude

I was intrigued by the company name of ChopValue Manufacturing Ltd while looking at Certified B Corps in this sector.  They have recycled over 30 million chopsticks into a high-performance material that supports innovative product and design solutions.  I am grateful to entrepreneurs that have the vision to take something like a disposable chopstick and turn it into valuable products.

Sneak Peek

Next week's blog will look at how B Lab is integrating the United Nations Sustainable Goals into the B Impact Assessment that aligns well with the humanist manufacturing framework.  

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Cover Image Credit: Ricardo Esquivel on Pexels

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