The Evolution of Business

If you want to understand the evolution of business, you need only look as far as the evolution of engineering. That’s just the way it is – and for good reason. If certain systems and practices can make a jet with three million parts fly, then surely those systems and practices can help make a corporation fly too.  Your typical Fortune 500 company has more than a few working parts!

Let’s test this assumption a little, and see if world-class engineering principles do evolve into world-class management practices over time.

Once the engineering-based concepts and tools of quality were applied only to improve products in isolated areas and circumstances. But then the use of these tools expanded into non-manufacturing departments and functions. Then they expanded more to encompass the improvement of processes, transactions and services. Eventually, quality engineering know-how became organized into a total package for total business transformation – not just the transformation of products, processes and operations.

Enter TQM and the Toyota Production System, and later Six Sigma, then Lean Six Sigma. What started in the laboratory and engineering disciplines migrated up through the organization into the management mind.  And then into the realm of the Corporate Initiative.

As we look at other aspects of engineering, we see similar phenomena.  For example, systems engineering was once considered  a specialized discipline for engineers, but evolved into systems thinking for business success – understanding the complex dynamics of society and organizations, and how different parts of a business all must play together to be effective.  Now the systems discipline is taught in business schools, not just engineering schools.

Take a look at another tool—FMEA (Failure Mode Effect analysis).  Initially a tool of risk analysis developed in the 1960s for the Apollo Space Program, today FMEA is used to evaluate everything from business risk to customer satisfaction to new legislation.

Even within the evolving field of innovation, what was once considered something for scientists and engineers—invention—is now considered just as important for business people.  Business model and business process innovation is at the forefront of considerations for every CEO today.

This technical to managerial trend became remarkably apparent not long ago when Bill Swanson, Chairman and CEO of Raytheon, was called to account for himself by an HP Blogger.  The blogger found that Swanson’s book—Bill Swanson’s Unwritten Rules of Management—bore a remarkable similarity to a work dating back to 1944 titled, “The Unwritten Rules of Engineering.”  Needless to say, a good-sized scandal erupted over the purported plagiarism. Raytheon discontinued distribution of the book, and Bill Swanson was fined by Raytheon’s board of directors.

The point is that these so-called rules of engineering, simply restated, nearly put Bill Swanson in the league of a mere few management gurus. In creating his book, he highlights the axiom that scientific discovery and practice at the micro level ends up defining best practice at the macro level.  Maybe we should simply remember that all natural principles apply universally, even though they’re discovered and developed locally.

The line between engineering and business is becoming increasingly blurred, because designing, building and evolving a business is really nothing more than designing, building and evolving a highly complex product or service. And so we should constantly be looking to engineering principles to better understand how to conduct business.