iSixSigma

Critical Business Requirement (CBR)

Definition of Critical Business Requirement (CBR):

« Back to Glossary Index

A critical business requirement (CBR) is a condition, resource or asset that is necessary to continue basic operations. For most companies, basic operations are the processes required to produce a profit-yielding product or service. Specific CBRs depend on context, but can cover anything from equipment and personnel to supplies and capital.

Overview: What is a critical business requirement (CBR)?

If the human body was a business, the critical business requirements would include heart and lung function. These are vital activities that are absolutely essential to survival. Much like the human body, businesses also have many interdependent systems and operations that can make it hard to choose the ones that are truly critical.

3 benefits of critical business requirements

Designating critical and non-critical business requirements is a necessary step for lean management practices. Efficiency demands prioritizing important activities over non-essential ones.

1. Efficient investments

There’s an endless number of things a business can spend its money on, but there are only a few things that are actually worth it. Knowing your critical business requirements is a straight path towards smart internal investment.

2. Harnessing real data

Defining CBRs and separating them from non-essential activities requires careful analysis, research and data collection. This creates a perfect opportunity for leaders to start consistently collecting and processing data regarding internal operations to inform their decisions.

3. Real priorities

Understanding your critical requirements means you understand the significance and value of each process. This gives you a strong foundation for shaping policy and prioritizing solutions.

Why are critical business requirements important to understand?

How you define your critical requirements shapes perspective and can influence the overall trajectory of the company.

1. It’s all about value

Most companies generate value in the form of a product or service. Ultimately, all the processes and employees in a business are organized around this goal of delivering value and gaining profit. This is the starting point for tracing each CBR. It also means that you can really start appreciating the relative value of each process and their impact on each other.

2. Wants and needs

You can’t set critical requirements if you aren’t being honest. Anything that is not absolutely essential to generating profit is a “want” and not a “need.” There are plenty of “wants” that are well-worth having, but there’s still an important difference.

3. Thinking in a box

It’s easy to get stuck thinking inside the box when dealing with critical business requirements. Don’t be afraid to consider major changes or solutions that shake things up.

An industry example of a CBR

A small car maintenance and tire shop serves customers every day with minor repairs, oil changes and sales from their store. As the company adopts lean management practices, they decide to assess the flow of money, use of time and cost-value relationship of each part of their business.

In this assessment, tools for the garage, supplies of oil and technicians to serve customers are a few examples of critical business requirements. The shop cannot serve customers without basic supplies related to vehicle maintenance, qualified personnel and an adequate workspace.

These tasks are essential in contrast to many of the other investments. The company documented numerous non-essential tasks ranging from maintaining a self-serve coffee station in the lobby to putting up colorful signs in the window. These activities may be worthwhile, but they are still not truly essential to the company’s core mission of fixing and maintaining cars.

3 best practices when thinking about critical business requirements

Identifying your critical requirements is really just the first step. The only way to really get value of out of this process is to take action.

1. Make it lean

Knowing your CBRs is the beginning of lean management and six sigma strategy. Once you know what’s really important, and how important each thing is compared to the others, you can start investing and protecting the parts of your company that can provide the most benefit.

2. Be merciless

Don’t look for reasons to make something critical. Instead, look for reasons to cut it from the list. The hardest part of defining critical requirements is accepting what truly counts as essential. Comforts and conveniences rarely make the list.

3. Get consulting

Don’t be afraid of outside consulting. A fresh perspective can be exceptionally valuable when assessing, prioritizing and understanding a CBR.

Frequently Asked Questions (FAQ) about CBRs

1. What are the different types of business requirements?

There are actually several different types of business requirements depending on the context of the perspective. Critical requirements for stakeholders are not always the same as those of leadership.

2. What counts as a critical business requirement?

Pretty much anything can be a CBR. Common examples include physical supplies and equipment, the application of professional expertise and mandatory licensing or permits.

3. How many CBRs do companies have?

There is no definite answer besides “as few as possible.” A company can have as many or as few critical requirements as it takes to generate revenue.

Keep it critical

Lean management practices revolve around prioritizing critical requirements and selectively investing in non-critical when appropriate. This kind of constant improvement means companies need to constantly re-evaluate their CBRs. These requirements can change suddenly and create big opportunities for growth and streamlining for businesses poised to seize them.

« Back to Dictionary Index