Introduction
What is business infrastructure?
Business infrastructure is broadly defined as "basic physical and organizational structures and facilities needed for the operation of a business". That doesn't really narrow it down much, does it? As you can imagine, the breadth of what goes into making an effective business infrastructure is vast. For the sake of understanding and simplicity, let's reword the definition just a bit (without making it inaccurate of course).
Everything within business infrastructure essentially boils down to one of three categories (or some combination of them). They are: Facilities, Functions, and Processes. Our new definition for business infrastructure now becomes "the facilities, functions, and processes needed for a business to operate properly." There are a litany of subcategories within the 3 major segments of business infrastructure, but below we intend to remain focused on the macro.
Why is business infrastructure important?
In order to grow, especially at a rapid pace, a business must have a scalable infrastructure. This isn’t limited to having the physical space to expand, it also means having replicable processes and scalable functions. Replicable processes and scalable functions enable solid support services. Improper coordination of support services like personnel management, IT, administration, accounting, etc. decreases profitability and hinders growth. Solid infrastructure also provides consistency and quality of products and services, which becomes all the more challenging during increased demand and rapid growth.
3 Major Segments of Business Infrastructure
1. Facilities
Perhaps only an afterthought to those who are engulfed in their day-to-day tasks, facilities are key when it comes to business infrastructure. Although planning your space may seem pretty straight-forward, things can become quite complex when it comes time for your organization to scale to meet growing demand.
The term “facilities” is frequently used interchangeably for the word “buildings”, but in business “facilities” refers to much more than that. Facilities are indeed buildings, but here’s the important part: they are buildings where people, material, and machines come together for a stated purpose. Experienced individuals understand that this segment of business infrastructure needs serious focus and consideration when developing Facilities Planning and Management strategies (if a company is to achieve its vision). A Facilities misstep can have serious consequences which affect the whole operation like security breach or potentially serious injury and even loss of life.
There are a few points to consider during Facility Planning and Management in order to avoid catastrophe.
Facility Planning
Location determines proximity to customers, suppliers, employees, and other facilities with which it interfaces.
Facility design determines requirements and efficiencies of building services like gas, power, water, sewer, and air.
Layout determines how much time is saved or wasted moving between equipment, machinery, and furnishings.
The handling system is the crucial mechanism that allows the effective utilization of personnel, information, materials, equipment-handling systems and energy.
Facility Management
Includes things like maintenance and enables other support services.
Includes emergency planning; the facility should be set up in a way that minimizes risk should a disaster take place so no one is hurt or dies.
It is also important to plan for and implement the right security to protect your people, products, and intellectual property.
Government contractors know this all too well. They plan for and implement SCIF (Sensitive Compartmented Information Facilities), rooms which are secure places where sensitive information can be viewed and discussed while preventing outside surveillance or spying. Without the proper security, they would be disqualified from earning future business of a classified nature.
2. Functions
There are certain functions that must exist within a company in order for the company to exist. All companies, whether they realize it or not, have critical functions in need of constant execution. Success varies from organization to organization, that's a given, but the takeaway here is that all companies require these critical functions regardless of size or industry.
In smaller firms, the owner or founder often “wears many hats”, meaning they are responsible for multiple functions within the company. They may serve as President, Marketing Director, Controller, Sales Manager, etc., etc. This scenario is most common in the existence or survival stages of a business and is sometimes unavoidable. Ordinarily, one person cannot fill so many positions nor do they refer to themselves using all the titles. It’s easier to think of functions as “roles” instead of “positions”. This allows people in one position to fill multiple roles like Marketing, Sales, and Operations until the requirements of those roles grow beyond what one person can handle.
Being spread too thin across multiple functions has some serious disadvantages; a reduction in quality for instance due to lack of time, expertise, or desire. Ideally, a leader or founder should delegate functions to their teams when possible so they can concentrate on top-grade execution of the function(s) for which they are accountable. As mentioned, sometimes this isn’t an option for smaller organizations. Small business owners have coped with these capacity challenges by outsourcing some functions to external contractors. No matter which way you slice it, the functions are being conducted by someone (to varying degrees of success) whether it’s a one-man operation, a team, outsourced labor, or a combination of them all.
Functions exist in all companies and are being executed to varying degrees of success. The secret sauce to successful execution has two parts. The first factor of successful execution is having the right people in the organization, in the right roles. In other words, the right people are doing the right functions. The second part of the equation is that the right people must be doing their functions the right way, which leads us to Processes.
3. Processes
Processes enable a business to deliver quality products and services to their customers. The goal of every growing organization should be to reach more people. It takes streamlined processes to accomplish a goal like this. Processes can only become streamlined after fine-tuning and tweaking them through continuous improvement. In order to apply continuous improvement techniques to a process, it requires at least some semblance of consistency.
Greater efficiency is achieved by consistency, improvement of processes, and proper execution. Notice the word “execution” subtly inserted into that sentence. It is not enough just having documented processes alone. Processes are only as good as the discipline of the people who are intended to follow them. Lack of discipline opens the door to waste and is a surefire way to lose control of how the company operates and how it is being perceived by stakeholders.
Successful companies implement operational excellence initiatives to keep people committed to proper execution. These strategies range from lean methodologies to cultural alignment. There is such a thing as having too many documented processes or standard operating procedures (SOPs). Excessive processes and operational excellence bureaucracy can create overwhelm for employees and actually end up reducing efficiency. This is more prevalent in large corporations that have a multitude of processes. Smaller organizations tend to have the opposite problem because they tend not to clearly identify, document, or implement standardized training on their processes.
Organizations of any size, big or small, should at the very least concentrate their efforts to document and train on their core processes. Core processes are the handful of processes which drive the business. Unlike Functions, the core processes will vary from business to business and industry to industry. There is no “one-size-fits-all” package of core processes that will fit every organization. That being said, most businesses need processes for support services like product development, lead generation, recruiting talent, closing sales, collecting payments, and so on. There are best practices associated with these support services and it’s important to use them as a guideline; but the details of each company’s core processes and how they work together will almost always be unique.
Conclusion
Scalable business infrastructure is heavily reliant on all 3 main segments being strong. You cannot have great Facilities and weak Processes (or Functions); or great Processes and weak Functions (or sub-par Facilities) and expect the organization to be very effective when handling growth.
All companies, large and small, should be making efforts to create/maintain a scalable infrastructure regardless if they are in the existence, survival, or growth stages. When unexpected demand comes around, it is not your cue to begin solidifying your infrastructure. Get ahead of it and start bolstering a scalable infrastructure now or you risk hindering your growth.
The beauty of a scalable process is, you’re simply making it replicable. This does not mean go buy 10 warehouses and prepare them, it means prepare the warehouse you have by optimizing it and documenting the processes and functions surrounding it so you can do it again, and again, and again consistently and efficiently, as additional facilities are needed.
Many visionaries and entrepreneurs may realize the need for a scalable infrastructure within their organization, but they may not know where to start. Using an experienced integrator like a Chief Operating Officer is essential. For small businesses however, hiring a COO might not be in the budget. This doesn't mean you are up a creek without a paddle. Business consultants are a great short-term alternative to hiring a COO. They can bring COO-level expertise to an organization without the price tag and long-term commitment of hiring a COO. partnering with a consultant sounds like the best option for you, contact Doxazo Consulting to ensure your organization is outfitted with a scalable infrastructure.
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