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Organizing Around Process Is Not Practical

Organizing Around Process Is Not Practical

A process organization structure merely creates a different kind of white space . . . between processes. Furthermore, it may require additional people, obstruct sharing of learning and resources, and erect career path barriers. In most process-based organizations, functions remain as “centers of excellence.”

How does an organization establish effective vertical and horizontal structures? In our experience, the key is measurement. Establishing customer-focused, process-driven measures is the first step. In a process-driven environment, each functional manager is still responsible for achieving results, allocating resources, and developing policies and procedures.

Line managers have as much authority as in any traditional organization. There is no tug-of-war between two bosses, as in many matrix-managed organizations.

Going Beyond Process Improvement

Going Beyond Process Improvement

Question:
How do you know when an organization has gone from merely improving processes to institutionalizing process management?

Answer:
Each key process will have:

  • A map that documents steps and the functions that perform them.
  • A set of customer-driven measures, which are linked to organization-level measures and drive functional measures. In an institutionalized process management environment, functions cannot look good against their measures by hurting other functions and the process as a whole.
  • A process owner.
  • A permanent process team, which meets regularly to identify and implement process improvements.
  • An annual business plan, which includes, for each core process, expected results, objectives, budget, and nonfinancial resource requirements. . . .
Your Organization's Future Lies In Its Processes

Your Organization's Future Lies In Its Processes

Tomorrow’s results will be determined largely by today’s approach. By the way we tackle our work.

Sure, our strategy must be solid. Our people must be capable of performing. But that won’t make us competitive if our processes are clumsy. To succeed in this demanding and chaotically changing marketplace, we have to accelerate our output. Slash costs. Bring higher quality and better value to our customers. But how do we achieve this competitive triple play of “faster-better-cheaper”?

The most promise will be found in process improvement.

If we scan the competitive landscape, we’ll see old competitors who relentlessly keep improving. We’ll be shocked at the new competition springing up from innovative outsiders who come from other fields. And we’ll note that customers keep upping the ante by always expecting more.

So let’s take a hard look at how we do things around here. Shall we stick with the same old habits and techniques? Or do we decide it’s time to start doing things differently?

Balance the Three Process Components

Balance The Three Process Components: Plan, Perform, and Measure & Manage

A process requires three separate but interdependent efforts. First, there’s the need for planning. Next comes performance, or execution. The third effort involves measurement and management support. The power of the overall process depends on a healthy balance between all three.

Historically, most of the effort invested in process improvement has been spent on component #2: Perform. Organizations polish their process execution to a high sheen. They eliminate unnecessary steps. They reduce the number of handoffs. They minimize the amount of time wasted on low-valueadding work. Eventually, the process itself becomes a work of art. Problem is, this bright and shiny process that’s receiving so much attention is more or less an orphan. Both the front-end effort (planning) and the back-end work (measurement and management support) are missing to a large degree. As a result, the process is misdirected . . . disconnected from the company strategy . . . or impotent due to a lack of follow through.

This tendency to over-focus on process execution is unfortunate. Organizations spend roughly 80 to 90 percent of their time there. But our experience suggests that the greatest opportunities for gain exist in the other two areas....

 

To be Customer-Focused, We Have to be Process-Focused

Since the people we serve and sell to are truly the ones in charge, a customer orientation should drive all of the organization’s activities. We need to start with the customers’ wishes, with what they want from us, with what they consider value. 

It’s not our opinion that counts. As the supplier, our perspective on what represents value, quality, or worthwhile work may be quite different from the customers’ thinking. But if we’re smart, and if we take a process-centered approach, we’ll start by determining what customers really want from us.  Then we’ll work backward from there.

A process is a series of related steps or tasks that together create value for the customer. The most important word here is “customer.” A process perspective on a business is the customer’s perspective. That’s because processes are the means by which an organization produces its products and services. And the only things that customers really care about are these outputs. Our results. Customers are totally uninterested in our organization chart, strategic plan, personnel policies, or such. The important thing to them is the value we deliver. So if we’re going to be customer-focused, we have to be process-focused ...

New Processes Require New Communication Routes

New Processes Require New Information Routes

A process approach must be supported by different arteries that facilitate cross boundary communication. Information has to cut horizontally across the system, instead of following the traditional pathways up and down the organization hierarchy.

Processes just don’t work well when the various functions are walled off from one another. If information has to struggle up through the chain of command in one department, make it over to another area, then dribble back down that silo to the people actually doing the work, the process is far too sluggish. So the vertical communication patterns must yield to more sideways give and take.

Word can get around a lot better moving laterally.

This means the slow-moving routes must be bypassed. Just as an interstate freeway cuts around or over a city’s clogged traffic patterns to speed travel, you have to help construct new arteries that accelerate and enrich information flow. Fast and accurate communication across the entire process, and between processes ...

 

Maintain Powerful Processes

The One Thing You Must Do Well to Maintain Powerful Processes

Introduction

The right measures can trigger dramatic improvement in the performance of cross-functional work flows.

In fact, if you want to single out the one management act that can make the greatest contribution to successful and enduring process management, it would be developing and installing a process-based measurement system. Unless you do that-and do it well-you don’t have a prayer of maintaining powerful processes.

Good measurement is crucial for a variety of reasons. Let’s start with the fact that it signals what’s important. That positions people to get their priorities straight. It focuses everybody’s efforts on what counts the most. It makes it possible for them to evaluate their performance ... to make improvements ... to allocate their time and effort to produce maximum payoff ...

 

 

"Fix" The System Rather Than The People

Let’s talk about management ROI—the return on investment you can expect from your management efforts.

What offers the best payoff? Experience proves that you’ll enjoy the biggest benefits when you focus on system changes, rather than trying to improve the various people who work for you.

Nobody’s arguing here against training. People definitely need coaching and development to make sure their skills measure up. The point we’re making is about leverage. About playing the odds. About investing management time and energy for maximum return ...

Don't Expect Employees To Love A New Process Just Because It Is Better Than The Old One

Process re-designers often bank on the idea that everybody will buy into proposed changes just because they make good economic sense. But that rarely happens. People don’t automatically fall in love with a nice process, even if it’s brilliantly designed.

That’s understandable. Just consider what all we’re asking people to do here. Comfortable and familiar ways of doing business must be ditched. Working relationships will get reshaped. The boundaries between departments need to come down. Power and authority among different functions and across levels will be redistributed. People face new performance requirements that call for new skills, different work habits, and a shift in mindset ...

 

How Jobs are Different in Process-Focused Organizations

Processes work best when they’re simple. You want to keep them lean, elegant, and efficient. How do you go about this streamlining? You get the complexity out of the process and move it into people’s jobs. 

This means the scope of people’s work has to change.They need to assume responsibility for a broader range of activities. Instead of being focused on one or two single tasks, their jobs should be designed around outcomes. Toward overall end results. They must migrate from specialized labor to more general, wide-spectrum duties. This requires an expanded set of competencies. It calls for know-how in multiple disciplines. It may be that the individual needs to understand and be able to perform all the steps in a given process.

As their jobs become bigger and more complex, people need a fuller understanding of their own process and of the organization at large. They need to be able to see the big picture . . . how the system works . . . how all the activities in their process fit together and interconnect with other processes to ultimately serve the customer...

5 Key Steps in a Process Improvement Project

1. Determine the Critical Business Issue

You shouldn’t pursue Process Improvement because it’s conceptually logical or a noble objective; you should do it to solve a high-impact problem. The driving force of a Process Improvement project is a Critical Business Issue (CBI) that may be centered on revenue, quality improvement, cost reduction, and/or cycle time reduction. (Since most of these variables are in the mix, you need to agree on which one or two are the primary motivations for the project.)

Once you reach consensus on the CBI, the individual championing the effort should lead the Process Improvement project definition, which results in:

  • Project GOALS, including not only metrics around the CBI, but other measures of project success (e.g., role clarity, systems installation, culture transformation)
  • Process SCOPE (start and stop points)
  • Project CONSTRAINTS, which are the guardrails within which the new process must function. For example, your headcount and safety policies may be givens. Or, perhaps the process must use the enterprise computer system that you just spent $4 million to install.
How Would You Grade These Performance Improvement Programs ?

How Would You Grade These Performance Improvement Programs?

To optimize performance, companies need to improve all Three Levels of Performance:

     1. The Organizational Level (where strategy is established)
     2. The Process Level  (where workflows are streamlined)
     3. The Job/Performer Level  (where individuals do the work)

Typical improvement campaigns (i.e. customer focus, process redesign, TQM, cost reduction, cycle-time reduction, Lean, Six-Sigma) focus on only one level. As a result, these efforts do not optimize overall results. In fact, they can do more harm than good if the “fixes” in one area create unintended, negative side effects elsewhere.

Breakthroughs occur when leaders address all Three Levels of Performance and manage the whole system, not just tinker with a few of its parts.

With that in mind, how would you grade the following four performance improvement programs? (The names of the actual companies have been changed) ...

Shift Perspective 90 Degrees

Shift Perspective 90o

Managing in a process-centered organization calls for a new mindset. We’re dealing with work from a different slant. It’s no longer simply a vertical, top-down, task specific exercise. Management now involves broad spectrum responsibility for facilitating the flow of work from left to right. The old north to south style of management is too one-dimensional. Too localized. A process focus means our perspective must swing around such that we’re mainly thinking west to east...all the way across the company.

Now you’re managing sideways. And it’s a very different drill.

Just as a 90o shift in wind direction announces the arrival of a new weather pattern, this quarter-circle turn on the management dial tells us we’re changing the way we deal with work. Fundamentally. When we make the simple shift in focus from tasks to processes, it profoundly affects our perspective on how we do business. The different departments or functions stop operating as silos. We quit thinking of individual tasks in a singular and disconnected manner. Instead, we consider the overall collection of tasks-that is, the process-that’s involved in producing an end result...

How Does Strategy Relate to Process Redesign?

Introduction

There are a wide variety of models for strategy formulation, strategy execution, and process redesign. How do all three areas link together? 

The Evolution of Process Redesign

When the Rummler-Brache Group began first focusing on process improvement, our thrust was on the development and deployment of tools for analyzing and designing cross-functional processes such as order fulfillment, product development, pricing, and budgeting. It didn’t take us long to discover that our interventions in this area were less likely to be effective and almost certainly to be inefficient if they weren’t preceded by some strong up-front planning. We concluded that any process design/redesign should begin with ... 

 

Seven deadly sins

Overcoming the Seven Deadly Sins of Process Improvement

Introduction

As with other performance improvement efforts (TQM, self-directed teams, Six Sigma, Lean, Just-In-Time inventory, etc.), most organizations can point to the results of their efforts: cost savings, quality improvements, and cycle time reductions. However, there has been more sizzle than steak, more activity than results. In our experience, most failures to realize the potential return on an investment in process improvement arise from committing one or more of the seven deadly sins.

Sin 1: Process improvement is not tied to strategic issues. One company in the food business was proud of its seventy cross-functional process improvement teams. When asked about results, executives mumble vague homilies about “culture change” and “empowerment.” Noble pursuits, no doubt, but what’s the increase in shareholder value? Almost every one of an engineering conglomerate’s dozens of business units has documented its processes. When asked how they’ve used these “maps,” they admit that they haven’t. Too many process improvement teams are convened to address self-selected “backyard” issues that are not  ...

The Questions that Need to be Answered

Introduction

Before performance at any level can be managed, the expectations for that performance need to be clearly established and communicated. This need is particularly strong at the Organization Level. If we have not clearly defined the business we are in, we certainly cannot effectively design and manage the Organization Level of Performance or establish goals, structure, and management practices at the Process and Job/Performer Levels. Without the guiding hand of a clear strategy, we cannot be sure that we are allocating our resources appropriately, managing our critical business processes, and rewarding the right job performance.

To slightly alter the old Chinese proverb, “If we don’t know where we are going, any processes and jobs will get us there.” We will not add to the vast number of models, theories, and methodologies for strategic planning. Our objective is to identify those questions that need to be answered if an organization’s strategy is going to effectively guide the Three Levels of Performance ... 

Job level performance

The Job/Performer Level of Performance

Introduction

The Job/Performer Level is so named because it looks at jobs at all levels and at the people who serve in those jobs. At this level, we take the same systems view that we take at the Organization and Process Levels. We believe that performance can be improved only if jobs and people are examined in an overall performance context. The need for a systems perspective is best illustrated by an analysis of managers’ typical responses to people problems. Aside from the frequent response of ignoring the problem, the actions we see most often are:  train, transfer, threaten, discipline, or replace them. The common theme through all of these responses is them. Each action assumes that “them” is what’s broken, and therefore “them” is what needs to be fixed. 

Assuming that defective people are at the root of all performance problems is as illogical as assuming that a bad battery is at the root of all automobile malfunctions. While the battery may be at fault, a good mechanic realizes that it is part of an engine system. Even if the battery is performing inadequately, it may be because of another component; the root cause may lie elsewhere ...

The Process Level of Performance

Introduction

We have found the Process Level to be the least understood and least managed level of performance. Processes are rolling along (or, frequently, stumbling along) in organizations, whether we attend to them or not. We have two choices—we can ignore processes and hope that they do what we wish, or we can understand and manage them. We have proposed that the only way to truly understand the way work gets done is to view an organization horizontally (as a system) rather than vertically (as a hierarchy of functions). When you view an organization horizontally, you see business processes.

While the Organization Level provides a perspective, sets a direction, and points to areas of threat and opportunity, our experience strongly suggests that the Process Level is where the most substantive change usually needs to take place. A clear strategy and logical reporting relationships (Organization Level) and skilled, reinforced people (Job/Performer Level) cannot compensate for flawed business and management processes. An organization is only as effective as its processes ...

The Organization Level of Performance

Introduction

A wealthy owner of a baseball franchise will often recruit the most highly skilled (and highly priced) talent and wonder why his or her team doesn’t win the World Series. A championship team often pales in position-to-position matchups; it wins because somehow the whole is greater than the sum of its parts. The distinction is usually that the winning team as a whole, not just each individual player and function (hitting, pitching, defense), is being managed.

Similarly, an organization can be greater than the sum of its parts only if the whole organization is managed. An organization may have people with outstanding experiential and academic credentials. Its functions, such as marketing, production, and research, may look good when benchmarked against those departments in other organizations. However, its results may be less than stellar because its executives manage functions and people without placing them in a larger organizational context. This practice is a prescription for suboptimization, a situation in which the whole equals less than the sum of its parts. Our first step in managing organization performance ...

Overview of the Three Levels of Performance

Introduction

Nineteenth-century environmentalist John Muir found that each component of the ecosystem is in some way connected to all other components. The brouhaha over the snail darter, which ultimately halted construction on the Clinch River breeder reactor, was not just about a tiny fish that affects very few of us; it was about tampering with a small tile in the environmental mosaic. Each tile that is removed or changed alters, if only in a minute way, the balance of the picture.

Similarly, we have found that everything in an organization’s internal and external “ecosystem” (customers, products and services, reward systems, technology, organization structure, and so on) is connected. To improve organization and individual performance, we need to understand these connections. The current mosaic may not present a very pretty picture, but it is a picture. The picture can be changed or enhanced only through a holistic approach that recognizes the interdependence of the Nine Performance Variables ...