Business Optimization: What It Is and Techniques to Adopt

Written by Coursera Staff • Updated on

Learn what business optimization is and key techniques for your business to adopt for improved efficiency.

[Featured Image] Two people sitting side by side at a desk, while looking at plans on a tablet.

Key takeaways

Business optimization is the process of improving a company's strategy and processes to increase efficiency and productivity.

  • Business optimization can apply to a wide range of areas, including supply chain management, risk management, pricing strategy, and search engine optimization.

  • AI, machine learning, and big data have expanded what's possible in business optimization, enabling companies to analyze and act on data more efficiently than before.

  • You can build the skills needed to lead business optimization efforts by pursuing a background in business analytics.

Learn more about business optimization, types of optimization, and key techniques to optimize your business. If you're ready to start using data to drive business decisions, enroll in the University of Illinois' Business Analytics Specialization. You'll have the opportunity to learn how to collect, analyze, and visualize data to support strategic decision making in as little as two months.

What is the meaning of business optimization?

Business optimization is the process of improving a company's strategy and processes to increase efficiency and productivity, speed up performance, and reduce costs. This can apply to internal operations, such as supply chain management, or to products and services delivered to external customers.

There are a multitude of ways that businesses can “optimize” their strategy and processes. Businesses may choose to elevate the experience and well-being of their employees, identify new revenue streams, reduce supply chain costs, mitigate growing risks, or craft a leaner go-to-market process.

More recently, big data, artificial intelligence (AI), and machine learning have allowed businesses to manage and analyze that data much more efficiently, leading to greater strides in optimization. 

How does business optimization work?

Business optimization works when there is support from leadership to apply strategic changes in an effort to improve. Typically, this process requires either an internal team, such as a business analytics team, or external consultants to audit a company and deliver expert recommendations on improving the current processes, tools, and more. An expert opinion is able to recognize which parts of the business are a priority and which parts can be improved quickly.

Then, the organization sets out to execute those recommendations, usually in a step-by-step fashion. Leaders may hire an organizational change management expert to help facilitate the process or empower internal leaders to participate in the transformation.

Learn more: What Does a Change Manager Do?

What are the 5 steps of optimization?

While approaches to business optimization vary, one widely used five-step framework is DMAIC. This Six Sigma methodology stands for define, measure, analyze, improve, and control.

1. Define: Clearly identify the problem, project scope, and goals.

2. Measure: Establish a performance baseline by collecting data on the current process.

3. Analyze: Identify the root causes of inefficiencies or defects.

4. Improve: Develop and implement targeted solutions to address those root causes.

5. Control: Monitor the updated process to ensure gains are sustained over time.

5 types of business optimization

Because business optimization is a broad topic, we’ll dive deeper into several types of business optimization. 

1. Change management

When an organization is in the process of change management, it involves crafting a strategic plan to assess what change is needed and how to implement it in an integrated manner. Digital transformation is a type of change management that involves adopting cloud technologies and other technological innovations. Other types of change management include leadership turnover, mergers and acquisitions, or changes in staff and structure.

  • Learn how to develop a "change mindset" with Macquarie University's Leading transformations: Manage change course.

2. Supply chain optimization

Supply chain management utilizes supply chain analytics to determine where production, storage, and shipping can be more efficient and productive. That may include implementing new technologies and software, or cost-cutting strategies like adopting a Lean supply chain approach.

  • Learn important techniques, drawing from Six Sigma and Lean, used to optimize flow in the Rutgers University Supply Chain Management Specialization.

3. Search engine optimization

This aspect of top-of-funnel marketing can be a huge lead generator for an organization. Search engine optimization (SEO) involves targeting those searching for content on search engines such as Google or Bing and securing a search result link at the top of the page.

  • Learn how to optimize website content for the best possible search engine ranking with UC Davis' Search Engine Optimization (SEO) Specialization.

4. Risk management

When a company is tasked with managing risk, the process looks similar to other business optimization processes, where risks are identified, evaluated, treated, and monitored.

  • Learn how to build an operational risk assessment program with the New York Institute of Finance's Risk Management Specialization.

5. Pricing optimization

Pricing is critical to a company's success, helping it stay more competitive by attracting new customers and maintaining existing ones. Reviewing data to understand the market, customer needs, and competitors can help a company optimize its pricing strategy.

  • Learn techniques to increase price realization and maximize profits with the University of Virginia's Pricing Strategy Optimization Specialization.

What is business process optimization? + Examples

Recognizable companies have implemented business process optimization in areas such as meeting market demands, improving the credit issuance process, and relocating facilities. Discover more about these examples of optimizing business processes:

  • Tesla: The company needed to increase production of its Model 3 to meet demand, so it employed business optimization strategies to make meetings more efficient, remove contractors who were disrupting productivity, and enhance internal communications. 

  • IBM: After IBM learned that providing credit to customers was a week-long process, the organization implemented business optimization in the form of “deal structurers,” who are employees meant to collaborate on the credit-issuing task. IBM also developed software to automate certain steps in the process.

  • Kraft Foods: When relocating a Life Savers manufacturing plant from Michigan to Quebec, the company, along with another firm, analyzed the entire production process to identify aspects that could be automated. The organization introduced business process optimization in both production and packaging, resulting in a more efficient relocation to Canada.

How to improve business operations: Techniques for business optimization 

Here are some techniques that you can use to optimize your business.

Leverage data insights

The insights you gain from AI and machine learning can be used to elevate your business to increase productivity and efficiency in human resources, finance, marketing, IT, and beyond.

Test and implement cloud-based software

Cloud-based software is one of the easiest ways to save space and storage and reduce costs. Many types of project management and business insight tools can also help your teams work more efficiently.

Conduct a holistic analysis

If you’re serious about business optimization, you might be interested in hiring a consultant to conduct a holistic analysis. Sometimes getting a third-party perspective and expert recommendation is what it takes to understand why and how changes can be made.

Subscribe to our weekly LinkedIn newsletter, Career Chat, for industry insights, career tips, and skill-building resources. Then, check out these free resources for your business career:

Whether you want to develop a new skill, get comfortable with an in-demand technology, or advance your abilities, keep growing with a Coursera Plus subscription. You’ll get access to over 10,000 flexible courses.

Updated on
Written by:

Editorial Team

Coursera’s editorial team is comprised of highly experienced professional editors, writers, and fact...

This content has been made available for informational purposes only. Learners are advised to conduct additional research to ensure that courses and other credentials pursued meet their personal, professional, and financial goals.