Rules Describe the Operations- Business Rules OK!

If you have ever worked for someone else then you probably know just how frustrating it can be when your business owner/boss is inconsistent with their demands. One minute it’s this, next day it’s that. You can’t make decisions about your job with confidence for fear of being balled out for doing the wrong thing, your work suffers and you feel dispirited and less motivated to go to work every day. In other words, you become sub-optimally productive and then get blamed by your boss for not using your initiative. Sound familiar?


And have you ever thought that you might be doing the same thing with your own staff? “Not me!” is the indignant reply. Then ask your staff one day and check the responses.


In your own business, the solution lies in formalizing the very decisions you are already making. Formalising means writing down and publishing. Even at you worst you are using business rules, just not consistently. So get some structure in there.


In a business political sense, knowledge of business rules is a source of power. I constantly find staff who are unwilling to divulge how they do their work because they fear they no longer have a bargaining position on their jobs. So don’t be surprised if you have to really pry this sort of information from people.


But owners tend to hoard as much as staff, so check out what you yourself keep back. It’s often about delegation. And sometimes when you fear letting information out you are actually constraining your business growth. Remember, your goal is to become a business owner rather than a business manager so your objective is to delegate everything. And Business Rules are then a key means for you to control your business from the outside.


What are Business Rules?


Business Rules describe the operations, definitions, and constraints that apply to your business.

Business rules describe what a business can do in detail, compared with a strategy that talks about how.

They can apply to people, processes, your business ethics and computing systems in your business.


Some Examples of Business Rules:


  • Preferred Customers: people the boss likes, or people who spend over Rp xx million per month, or known Influencers (read The Tipping Point)
  • Preferred Customers Discount: 10%
  • Order Error Discount: free dessert
  • When to call the boss: when customer won’t accept order error discount
  • Business Units: definitions of profit centers within your organization
  • Head office Allocations: % share of HO costs among business units
  • Pricing: all prices to end in Rp 9,000
  • Sales Labels: Labels to show original price crossed out, plus new price bold, plus sales discount.
  • Credit checks: if repeat customer, not required
  • Credit Card Use Surcharge Visa: 3%
  • Preferred suppliers: see the supplier list preferred indicator.
  • Supplier Payments Priority: inventory, essential services, other


Developing Business Rules


Once upon a time, I was put in charge of a warehouse that held 65,000 different items. The location system was so badly organized that every Christmas 20 extra staff had to be brought in 2 weeks before the orders rush just to memorize the locations. That cost around Rp150 million annually just to prop up a lousy system.


So We Introduced a new Location System:


Biz Rule A:  Locations were defined in logical blocks, generally separated by wider aisles. Standing at the front of the warehouse, the blocks ran left to right (A, B, C), front to back and bottom to top for the mezzanine levels.


Biz Rule B : number aisles not rows of bins. Within each block was a collection of rows of bins or racks. Each aisle between the rows was numbered.


So if the first part of the printed picking slip location said C05 – I need to go find aisle label C05 which was the 5th aisle in Block C.


Biz Rule C: The bins on either side of the aisles were numbered like in a street – odd numbers on the left and even numbers on the right.


Biz Rule D: Shelves were numbered from the bottom just like a lift.


Biz Rule E: Slots on a shelf were lettered from left to right, just like we read.


So if the second part of the printed picking slip location said 06-4C, then I need to look on the right side for Bin 6, Shelf 4 and Slot C.


End results? New staff could be introduced to the new system in 30 minutes and were immediately productive. Longtime staff found that the logical system gave time to focus on things like counting… Putaway staff made fewer location errors.


Some Benefits of Written Business Rules


  • They help you assert the way you want to conduct your business and achieve your goals.
  • This will define your best operating system.
  • They enable you to have the rules separated from the logic of your application so that only one change is necessary to achieve business-wide updates.
  • Business-wide changes to your systems can be achieved without needing IT support.
  • To be agiler in adapting your systems to new market demands
  • Give you the opportunity to see if your rules are customer-focused or restrictive.
  • Help you to check for and eliminate conflicting rules.
  • They help you provide clear guidelines for systems developers
  • They are great for induction of new staff.


How to Gather your Business Rules


The most expensive way is to hire a consultant like me to come in and analyze your business.


The alternative is to have a framework and do it yourself. Create a simple Business Rules Database and add to it as you discover new rules.  Type of rules within the framework:


Definitions of Business Terms:


These help us all talk a common language. “What do you mean by that?” You might maintain these definitions in a Glossary. “A customer is a person who pays for a product or service we offer” What about when a couple or group dine and the only one pays? Are you interested in only the paying person? Try This, “A user is an individual that consumes/uses a product or service we offer.” So a customer may or may not also be a user. Defining Users lends itself to enlarging your marketing database if you have some means of collecting their details.  Certainly the non-paying users are just as capable of helping or hindering your business through their opinions – for example, a business rule of social media is that somebody doesn’t need to have paid for a product or service to pass an opinion on it.


Facts Relating terms to Each other:

“Customers consume our products” is a fact. This helps differentiate behavior of customers from suppliers.



“3-toed tree sloths without shoes are not accepted as customers.” Or “Staff must wash their hands with soap after going to the toilet.”



These are derived from other business rules. A mathematical example (Sales Tax = Bill Amount x Tax Rate)


Published business rules or regulations are also a means of fighting government corruption. But that’s another article, particularly as it affects business.


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