1 Understanding your organisation and how it creates value

There are good reasons why you should not stop your investigation at the edge of the organisation, but continue to zoom in through organisational boundaries to explore the activities and processes within. From the outside, two organisations may appear to be delivering equivalent services or products in the same way. They may have broadly similar suppliers and workforce size, their location and other large-scale features may even be comparable. Yet the costs incurred by processes inside these two apparently similar ‘black boxes’ may be vastly different. So although what goes into each organisation and what comes out may seem pretty much the same, the ways in which they create value could be radically distinct.

Figure 1 Although the product (pancakes) may be the same, the means of production in each case is very different.

Only by looking at their inner workings, is it possible to understand why one organisation outperforms another one, and why one has ‘competitive advantage’ over the other (Porter, 1985).

The organisation in which you are likely to have most interest – and the one you may think you know the best – is your own. But remember that an insider’s perspective is just one perspective. Being immersed in an organisational culture can mean you overlook certain features of that organisation (good, bad and neutral) that would immediately be apparent a newcomer. Your current impressions of your organisation (what it is, how it works, what it does well and poorly) will be heavily influenced by the particular position you hold in it, and the subjective experiences you’ve had.

To be commercially aware, you must often break free from your organisation to consider it in a wider external context – but in this course you will look internally. We encourage you to fully recognise, and then break free from, your own position inside the organisation, then imagine yourself in other positions, to try to explore the organisation afresh.