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What is An Organization?

In: APICS
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In management terminology, an organization is defined as a set of people working towards a common goal. But in business process analysis, we would like to slightly modify the above definition to have a greater focus. Hence an organization is a group of people, processes and systems working together to achieve a common goal. The people, processes and systems bring together a set of capabilities. So basically an organization is a set of capabilities that are knit together to deliver capabilities.

Let us understand what is a capability?

A capability is an ability to do certain thing.

People: When someone knows how to drive a car, we will say that he possesses a capability to drive a car.

Process: When the car has a proprietary process to measure the car balance to support high speed operation, then we call that the car has a superior process, which is a capability.

System: When a car has the ability to accelerate from 0 to 100 kilometers per hour in 6 seconds, we say that the car has a powerful engine which is also a capability.

Coming back to the organization discussion, we indicated that group of capabilities deliver capabilities. That is all organizations are delivering capabilities. When we visit a saloon for a facial service, a capability called good look is delivered to us. That means the organization called saloon is delivering a capability called good look. What do they use to deliver that capability? Again they use people, processes and systems. People working in the saloon know what to use, when to use and how to use? They follow a particular sequence (process) to deliver the best results such as rubbing our face. They also use several gadgets (systems) such as steaming etc. Just for our discussion, I am segregating the people, process and systems, but in reality they work together, meaning all the three work in tandem or simultaneously.

Recommend Change

The three stages of bringing change in an organisation:

(1) Business process analysis

(2) System design

(3) Project implementation

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Written by Venkadesh Narayanan

Venkadesh is a Mechanical Engineer and an MBA with 30 years of experience in the domains of supply chain management, business analysis, new product development, business plan and standard operating procedures. He is currently working as Principal Consultant at Fhyzics Business Consultants. He is also serving as President, PDMA-India (an Indian affiliate of PDMA, USA) and Recognised Instructor of APICS, USA and CIPS, UK. He is a former member of Indian Civil Services (IRAS). Fhyzics offers consulting, certification, and executive development programs in the domains of supply chain management, business analysis and new product development.

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