Managing Processes And Organizations As Systems

Labor can do nothing without capital, capital nothing without labor, and neither labor nor capital can do anything without the guiding genius of management. —W. L. Mackenzie King

You shouldn’t expect most of your managers to exhibit “guiding genius.” However, you should expect guiding competence. A competent manager understands the way his or her organization functions and is able to manage the variables that can make it better. We believe that organizations (at all levels) function as adaptive systems. Because your organization operates as a system, you will be most effective if you manage it as a system.

Now that we have presented a methodology for and the pitfalls in Process Improvement and have covered the measurement system that needs to underlie continuous Process Management, we can address Phase 4 of the framework presented here as Figure 14.1.

Process Management

The first part of Phase 4 is ensuring that an individual core process, in most cases one that has been through Phases 1 to 3, is continuously improved. 

While most of Phase 2—Process Analysis and Design—is carried out by nonexecutive personnel, Phase 4 is the responsibility of the people who run the business. To effectively carry out this role, executives need 

  • To understand the what, why, and how of both Process Improvement and Process Management
  • To develop a Process Improvement and Management plan, which is the primary output of Phase Ø
  • To provide the communication, measures, resources, skills, rewards, and feedback (the Human Performance System components) necessary to reinforce Process Management
  • To establish the infrastructure and take the actions described below

Selecting Core Processes. While a long-range goal may be to establish a Process Management plan for every process, most organizations begin by identifying the critical few processes that warrant the investment in ongoing Process Management. These processes are those that have the greatest impact on the strategic success of the organization.

Therefore, the seeds of Process Management are sown in Phase Ø, in which “core processes” are identified. During Phase Ø, executives agree upon a specific, up-to-date strategy. They then use Critical Success Factors to identify the core processes from their inventory of primary, support, and management processes.

As you can see in Figure 14.1, some core processes, because they need either substantial or incremental improvement, go through Phases 1 to 3 before entering Phase 4. While the other core processes could be improved, they are not priorities for Process Improvement Projects; they go directly to Phase 4.

A core process is one that influences either a competitive advantage that must be overcome or a competitive advantage that senior management wants to establish, reinforce, or expand. For example, if order-cycle time is a potential competitive advantage, order processing is a strategic process. If the quality of customer service is a competitive advantage, the customer service process is core. If new products are central to the competitive advantage, product development and product introduction are core processes.

These examples of core processes are all primary processes (those that produce a product or service visible to the customer. Support and management (purely internal) processes can also be strategic. For example, if the cost of producing a product or service is a competitive advantage, the budgeting and capital expenditure processes may be as strategic as design, material management, and manufacturing. If the ability to quickly respond to the needs of a rapidly changing market is a competitive advantage, market research and planning are probably core processes. Similarly, training, forecasting, and safety management could be core processes.

Process Measures. If we had to select the single action that would make the greatest contribution to lasting Process Management, it would be the development and installation of a process-based measurement system which is linked to Organization Level and Job/Performer Level measures.

Process Owners. To ensure that someone with clout is looking at and taking action to improve the performance of an entire cross-functional process, many organizations are appointing an individual as the Process Owner of each core process. A Process Owner plays some or all of these roles: