An Analogy: The Activation Energy and Catalysis in Business Operations

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When I ventured into the asset management industry after years of training as a chemical engineer in both the industry and academia, associations began to form in my mind. One of these associations, which I personally find very interesting, is the similarity between activation energy during catalysis and the execution of projects or business activities.

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Activation Energy

Activation energy is widely used in chemical engineering (along with other kinetic parameters in the Arrhenius equation) to model the behaviour of reactors and other operation units where physicochemical changes take place (Fogler, 1999). To put it simply, during a chemical reaction the chemical bonds in the reactant molecules (X) must be broken so new bonds can form and products generated (Y). In order to allow these molecules to break, the molecule must be contorted into an unstable high-energy transition state. The amount of energy necessary to reach the transition state is defined as the activation energy Ea (Levenspiel, 1999, Fogler, 1999). Generally, the transition state has a higher energy level than the reactant or products, and thus, in the transition state, the molecules proceed to the next state with lower energy (Figure 1). The energy difference before and after the reaction is what we call the reaction enthalpy (∆H), which is positive for endothermic reactions (reactions that require energy) and negative for exothermic reactions (reactions that produce energy).

An analogy can be constructed if we think of a business operation as a chemical reaction: a set of resources such as personnel, skills, ideas or equipment (reactants) undergo a series of changes (reaction mechanisms) to generate tangibly or intangibly valuable assets for the organisation (products). As reactants, resources possess low value by themselves and some extend of energy (time or money) must be put into the system to move to the transition state and utilise resources accordingly. Even though this transition state has a higher energy, the operation will then proceed to lower energy levels. This high energy state of can be ascribed to the lack familiarity or experience in personnel, generating new knowledge, establishing or updating new procedures, and other general issues associated with new business activities, such as incorrect selection of resources and unknown external conditions (e.g. market conditions, human behaviour, weather, etc.). As a result, the amount of energy for a business process will eventually decrease as new outcomes are achieved. In addition, most business operations can be viewed as endothermic, requiring external energy (money or time) to transform resources into desired products. In fact, from the beginning of the life cycle of any asset or business operation, energy is constantly introduced into the system, and, therefore, it is imperative to manage and minimise expenditure.

Against this framework, another interesting concept can be introduced: catalysis. Some reactions require substantial amounts of energy, and their usual reaction mechanisms are difficult to control. Catalysis occurs when external reagents, which are not consumed in the reaction, provide an alternative pathway for the reaction to take place. If the new mechanism has lower energy, both time and the activation energy are reduced (Figure 1). This concept of catalysis can also be used in business to improve operations. For instance, sufficient planning, resource allocation and the application of standard procedures may all be viewed as “catalysts” in business operations. Allocating resources correctly and preparing the execution of tasks before a project or venture is undertaken may add extra steps in the “reaction mechanism”, but generally lowers how much energy is required and lessens execution time further down the track. Likewise, the use of standard operating procedures and best practices reduces dead time by ensuring the pathway does not diverge and avoiding unnecessary reprocesses due to low quality. There are, in fact, numerous ways to catalyse business operations including leadership, technology, training, risk management, six sigma, and lean processes, among many others (Gulati and Smith, 2009).

The beauty of this analogy is that it can be further extended into many other areas outside of business operations: even into your everyday life. As a cog in a wheel, every organisation member should be involved in operations and decision making and develop “catalysts” for their processes. A degree in chemistry is not even necessary, just be creative and think about catalyst-like elements that can help to reduce your activation energy and improve your performance. After all, energy is neither created nor destroyed, it just changes from one form to the other.

FOGLER, H. S. 1999. Elements of Chemical Reaction Engineering. 3 ed.: Prentice Hall.

GULATI, R. & SMITH, R. 2009. Maintenance and Reliability Best Practices, Industrial Press.

LEVENSPIEL, O. 1999. Chemical Reaction Engineering. 3 ed.: John Wiley & Sons.