A few, cutting edge companies are employing the arcane field of Holistic Business Systems Theory to deliver quantum leaps in sales and profit. For instance, one automotive supplier increased share and saved $80 million in about four weeks. A leading chemical company dissolved a $1.2 billion inventory problem– and most of the solution relied on Marketing and Sales changes, not production. Therein lies the power of the Holistic Business Systems approach: recognizing the impact of seemingly unrelated elements on total corporate performance. Harmonizing a company to maximize performance is no trivial matter. Just like a sleek, new V-12 Bentley, unless each piston is pumping smoothly and in perfect sequence with the others, it won’t leave every other car in the dust like a $170,000 driving machine should. Similar rules apply to the business world. A tremendous competitive edge rewards companies that align all aspects of the operation to a single metric.

But is achieving corporate harmony a Sisyphean effort, chewing up endless resources and bound to fail in the long run? Should senior executives abandon the age old question: if I have one more dollar to spend, where is the best place to spend it to create more sales and profit? Thankfully, the emerging answer is No.

But to make progress companies have to cleave their way through two thorny issues:

1) There is no common measure across the organization. How do you compare reducing headcount in QA to cancelling a planned marketing retreat? It’s like comparing apples to Oldsmobiles.

2) Humans have limited cognitive capacity. Corporations are a masterwork of moving parts, all of which affect each other, and analyzing all the possible permutations of resource allocation surpasses mortals’ mental capabilities.

For example, at a durables manufacturer an investment in R&D would fundamentally shift the marketing message, the manufacturing cycle, distribution costs and potentially even terms and conditions of sale. Yet, that was only one of many opportunities across the major corporate functions the CEO was considering. A quick calculation shows a 5-person team would take three years to determine the optimal place to invest resources. Needless to say, no such team was appointed.

The lack of common measure and limited cognitive capacity has spawned suboptimal approaches such as maximizing productivity of production lines, shooting for six-sigma quality, reorganizing departments, or spending on “high ROI” marketing programs. All noble efforts which produce payback, but none approaching the power a harmonized organization achieves.

The Holistic Business Systems Theory approach, which has only recently been made practicable by advances in computing power, cuts through the two complexity barriers and immediately highlights the biggest opportunities to maximize sales and profit. HBST was developed largely by Laszlo Nemeth one of the architects the Theory of Constraints popularized in the bestselling book The Goal.

Boiled down to its essence, the HBST approach models the sales impact of key business factors– down to the smallest items, like how many people there are on a certain team, or the placement of desks, or the seniority of salespeople– taking into account their interactions. Hence, a New England hardware manufacturer learned that adding three maintenance workers to a shift ultimately created more customer satisfaction and sales than the clever new product features clamored for by Marketing.

At this point, HBST is still cutting edge and there are no off-the-shelf implementations. Nevertheless, companies which have adopted it, particularly business-to-business manufacturing companies in highly competitive markets, have realized impressive results.

Is it worth bringing HBST to your company? Only if you answer “Yes” to two questions: First, are all departments willing to work together if they see the common advantage? Second, do you want to be driving the V-12 Bentley?

How do convert complexity into profit? Learn more at http://www.ascendantconsulting.com
and calling 1-888-822-7236. Ascendant Consulting helps manufacturers grow faster by improving how they make, market and sell their products.