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Not only globalisation, but also today's social and economic paradigms and their consequences, such as sustainability, digitalisation or the circular economy, present companies and managers with difficulties that need to be overcome. This is all the more complex as all these paradigms are partly accompanied by new legal requirements or have become a purchasing argument for many customers. Most of the support for managers and companies to move forward lies in the design of their business. Change, business organisation and management development, and business strategies are some of the factors that managers deal with to keep businesses on track. In this context, we want to understand if and how discrete management of products and the company is possible.

In order for us to better understand the difference between product and enterprise, their definitions are necessary.

 By product we mean services, systems, benefits or goods that are made available to consumers. 

By enterprise we mean an organisation that has the task of providing services with high customer value in order to satisfy the needs of customers. In other words, an enterprise is an association that includes at least resources and stakeholders and pursues one or more specific goals. Resources include internal and external processes and facilities.

The two definitions (of the enterprise and the product) clearly show that both are in a regressive relationship to each other, i.e. product and enterprise are strongly causally dependent on each other. Both form the basis of an enterprise, but are different in nature. While the products with their benefits for the target customers are the lynchpin of a business model, the company or its processes ensure that the entire structure or the company functions in order to achieve the defined goals. All this can be realised excellently if the necessary business processes are mastered and strategically aligned. 

From this brief summary it is clear that the company and the product are structurally and factually different. They should therefore be explicitly managed differently to enable clarity and effective and efficient management of value creation in the company. This applies to both small and large companies of all kinds. After all, most companies need two different departments to manage both products and processes. 

What does this mean for entrepreneurs? 

  Products and company processes, are strategic factors for the existence and economic success of a company. A company can therefore be managed more successfully if the operators explicitly take care of the QUALITY of their products and processes separately. Whereby QUALITY is to be understood as the ability of the products to always reflect customer needs, to master processes as well as to fulfil other requirements of the organisation.  Companies and products must be treated equally, since both companies and products can be or are transaction objects for the entrepreneur. The entrepreneur must therefore always manage both aspects of his enterprise individually in order to create more transparency and achieve the strategic goals more efficiently. The granularity of business activities thus gained now supports the strategic and operational management of the enterprise by providing clarity on strategic questions. Strategic questions can be asked as follows:

  • Are product and process efforts still economical?
  • Which processes have a negative impact on customer requirements?
  • Which sub-processes influence fluctuations in the company's performance?
  • Which processes/products cause more variable costs?
  • For which processes are digital transformations necessary/economic?

All these questions can be answered more easily if the entrepreneur masters the granularity of his company in terms of a clear discrete distinction between product and company processes. Products and company, i.e. internal and external processes, must be developed and optimised to the same extent in order to secure the company's long-term raison d'être and current success.

About the author:

Dipl.-Ing. Celestin Fayet