Business Process Improvement Involves Tremendous Risk Management

PMBOK (the project management book of knowledge) gives us a wonderful (and comprehensive) outline for managing risk in any project. Now more than ever, you and I have a lot of risk to manage and mitigate – especially if we are managing a portfolio of business processes and/or are expected to treat our process improvement initiatives as though they are full-fledged projects (which I believe they are).

Here’s the basic outline and a few tools (credit goes to PMBOK). As you read, notice how much emphasis there is on access to information, data and analysis. Risk management is a series of actions and exercises. It is very much a verb! Those of us who are tasked with improving workflow and business processes need to be mindful of the risks involved in our work and bright ideas as much as we need to be aware of the broader environment we are working in. Be vigilant for risks inherent in your inputs, process, outputs (deliverables) as well as your assumptions.  Nobody wants to make a mess of something they were asked to improve.

Risk Management Outline

1. Risk Management Planning – approach to and plan for risk management as well as the approach an organization takes to execution of plans

2. Risk Identification – determining risks and identifying the characteristics of those risks

3. Qualitative Risk Analysis – prioritizing risks responses based on probability of occurrence and impact

4. Quantitative Risk Analysis – analyzing effect of risks should they come to fruition

5. Risk Response Planning – developing options and actions to minimize risks and their effects

6. Risk Monitoring & Control – tracking risks, monitoring residual risks, identifying new risks, executing risk response plans and evaluating effects of those plans

Note: PMBOK states some risks are positive and refers to them as Opportunities. Some risks are negative and are commonly  referred to as Threats. I think it is a stretch to call a risk an “opportunity.”  I prefer that you conduct a SWOT analysis.

I  am including a couple of simple tools (since its Thanksgiving!)

Impact	Very Low	Moderately Low	Neutral	Moderately High	Very High
Cost
Time
Scope
Quality

Measuring Probability

Probability	Threats	Opportunities
Very High
Moderately High
Neutral
Moderately Low
Very Low

Risk Assessment Tool

Dimension	Risk
Technical	· Requirements · Technology · Complexity & interfaces · Performance & reliability · Quality
External	· Subcontractors & suppliers · Regulatory · Market · Customer · Weather
Organizational	· Project dependencies · Resources · Funding · Prioritization
Project Mgmt	· Estimating · Planning · Controlling · Communication

Lean Process Improvements Demand Lean Workload

I will try to be sensitive to the mixed feelings and opinions on this topic. However, our economic crisis is growing worse daily so it’s time to dispense some tough love. There are mission-critical, core competency processes in your organization that require immediate, exacting and concerted attention and effort in order to eliminate any remaining waste. Eliminating waste reduces your cost and liberates valuable resources making you a bit more profitable. You must be lean or leaner as soon as humanly possible. If you are successful in this endeavor, you will save someone’s job. Perhaps your own. You will contribute to valuable cost reductions while you stimulate innovation and improved competitiveness. Sounds good doesn’t it?

You Have A Problem

Getting lean now must become your singular focus. Organizations of all kinds make the common mistake – all year long though especially in crisis – of heaping too many responsibilities and priorities atop their managers and directors. By over-committing their time, you effectively neuter their ability to affect change effectively. A manager or director who finds themselves assigned to several new crisis management initiatives (en vogue these past weeks) while remaining married to their regular crop of assignments will struggle to decide which task, which meeting, which fire deserves their attention. Your problem is most likely an executive leadership problem.

You Need A Prioritized Inventory

Every manager, director and executive needs to make a list of all their responsibilities. This sounds so silly but in crisis mode, simple thinking seems to be the first casualty so I don’t mind reminding you. Schedule a stand-up meeting and share your lists with one another. Make strategic decisions as to what is priority and what is not. Priority = urgent + important. If a task or commitment is a priority then you must attend to it at the exclusion of something else. You will scratch something off your list being careful to delegate it to someone else or save it on your list of to-do’s for later. You should only have as many commitments as can be effectively executed right now.

Don’t Be An Oxy-Moron – Lean Means Lean

If you hope to pull the right people into the room and effectively execute lean process improvements, you need to know that their participation is a priority; their participation will require that they stop doing something else; and that their participation will require as little wasted time as possible.

Lean Project Waste:

• over-processing = too much time in meetings talking in a non-value add fashion.
• transport waste = making people travel to meetings when they could join by phone or video conference.
• motion waste = the time required to walk from end of the building to another, from the airport terminal to the rental car desk, from the restaurant to the office building. Too many ineffective meetings (be honest!) are cause for many thousands of wasted dollars simply moving around.
• inventory waste = when too many meetings result in too many tasks and commitments, those tasks tend to pile up and remain “almost done” don’t they? Too many people in the meeting? What does that inventory cost you? Could the extra people be out selling?
• over-production = too many meetings with too many people who wind up with too many assignments.
• waiting waste = waiting for the meeting to begin, waiting between meetings, waiting for the meeting to end, waiting for the deliverable that is “almost done”. Assume each manager or director in a meeting costs you $50 per hour. If you have 10 people in a meeting and the non-value add time they waste is roughly an hour (getting there, interrupted workflow, sitting around the table before and after), then you can surmise that your meeting cost the company $500 above and beyond the cost of the meeting. Multiply this number by the number of meetings per day and per week in your organization. Get the picture?
• defect waste = all the meetings that don’t produce new outcomes, new rules, better decisions or anything that is actually 100% DONE.

Leading Lean Process Improvements

Your organization requires leadership and thoughtful execution of high-priority work. People need to be honest, respectful yet objective and assertive. Here are some suggestions as you move forward:

1. assign an executive full responsibility for your lean process improvement initiative.
2. assign multiple project managers and process owners. One each if need be.
3. clear the deck. show everyone what is not going to get done.
4. create a common area or new work space for the lean team.
5. create a dedicated, cross-functional team or circle of excellence and brand their efforts (the “Lean Machine” or whatever)
6. temporarily contract for missing expertise. Bring a consultant on-board with a limited scope of work for a limited time and negotiate a hard bargain. Buyers rule right now.
7. eliminate the internal competition for resources. If someone in leadership does not understand that the lean team is committed or does not agree to participate when called upon, send the responsible executive after them. This is serious business. Nip it in the bud.
8. establish performance metrics, benchmarks and a baseline. Measure what matters most as often as is appropriate and broadcast results. Celebrate victories.
9. hint: start with sales process improvement. Make that lean and everything else gets a bit easier.
10. tell your customers. Tell your story and listen to what matters most (adds value) in their minds.

We are living through an unprecedented economic upheaval. One that likely will redefine our business and careers indefinitely. As conditions worsen before they improve, we must focus on those thoughts, words and deeds that add value and move us toward safer shores. I am not advocating working conditions that burn people out, however, time wasted is lost forever. When we look back on this chapter, we want to know that we contributed our very best to the solution. Prioritize and dedicate yourself and your people. Six and twelve months from now, you’ll be proud and happy that you did.

BPM and Project Management Require More Honesty

As economic bailouts, uncertainty, stock market plunges, job losses and Chapter 11 filings proliferate, the bad habits of procrastination, workplace pandering and conflict avoidance must be addressed. This is as true among project managers, business and systems analysts, IT directors, CIOs, and consultants as it is anywhere else in the organization. It is not the responsibility of shareholders or boards of directors to ask the difficult, prying questions. That job falls on all of us. My experiences of late have reminded me that one of the most important ingredients in the field of BPM – whatever your role – is honesty. Sadly, the kind of candor we need so desperately is lacking and, sadder still, it is lacking by virtue of fear.

The Veil of IT

I have long been a critic of approaches to business challenges that lead with IT. I know it’s not really endemic but it feels like IT – with all its complexity and constant change, foreign languages and virtual qualities – easily shrouds and conceals reality from the lay-person and the executive suite. I have advocated from my humble beginnings that business process improvements are not IT projects. Not because I am a purist and believe singularly in the capabilities of operations folks but because I have worked with too many IT people who were challenged in the process of bridging theoretical, conceptual, linguistic and practical gaps between parties. I also believe that BPM stands a fair chance of overcoming those gaps but it is no guarantee. An honest, plain language approach is best.

Just the Brutal Facts

The act of watching banks, retailers and they-once-were-giants automobile manufacturers beg for financial aid and close their doors ought to be sending a piercing, shrill alarm through every organization and project team: tell the truth. It should also be establishing a new order: if this project is a high priority, then it will be first on your list and you will attend to it as though your livelihood depends on it. Thirdly, if you know something that has enterprise-wide, bottom-line, life or death implications, you must speak up and let your immediate superiors know about it.

I have several clients at present who have begun mission-critical projects (which truly will make or break their success) only to come up with competing projects and priorities 2 and 3 short months after project initiation. Consequently, SMEs and managers are stretched not knowing what meetings to attend and what homework to do. I have other clients who suffer from the obscuration of truth by virtue of frightened and manipulative IT leaders who continue to speak IT gibberish hoping to buy themselves more time and additional staffing resources to compensate for their own lack. I have other clients who insist on keeping critical information from the CEO or CFO, failing to disclose the true nature of process-related problems in meetings.

Yesterday, for example, I met with a hospital system executive and management team whose CIO insisted that the executive sponsor for a mission-critical IT project was one of his subordinates. I had to remind he and the entire team that sponsorship of a multi-million dollar, do-or-die project is not to be pushed down to a subordinate – particularly one complaining of being over-burdened by external healthcare quality audits and accreditation initiatives. The CIO’s reluctance to accept responsibility for this BPM project was alarming, especially given remarks from the CEO just minutes earlier that reinforced the critical nature of the project. How is it that the CEO and CIO were both so far off the mark in terms of ownership? Why is it that an outsider had to persuade them to reconsider their decisions and approach?

BPM Needs Executive Leadership

These issues – truth, leadership, due diligence, strategic decision-making – speak loudly on behalf of the importance of a BPO or Business Process Officer role. A role that transcends operations and IT and reports directly to the CEO is needed in some organizations if the CIO or COO do not want to or cannot accept full responsibility for it.These projects often involve enterprise-wide resources and decisions that – if not executed properly – can and will ensure success or failure. They need to be treated as such.

On The Importance of BPM Governance

The day after the election seems like a good time to remind ourselves of the critical importance of governance – even in business process management. We must remember that the issue and practice of governance is inextricably linked to leadership and the execution of strategic plans. If we are going to be successful in BPM, we must practice good governance. (Frankly, one of my government clients is experiencing hiccups (to say the least) associated with a total lack of governance so that’s really what compelled me to cover the topic. Still, congratulations to President-elect Obama. May he govern well.)

Good Governance in Business Process Management

What does it mean to govern in BPM? Notwithstanding the management in BPM, governance encompasses several high-level areas of responsibility, any and all of which can make or break your BPM initiative. Phil Gilbert, CTO at Lombardi provides a decent sketch of governance in BPM. I’ll add a few dimensions as well so you have a list you can take with you to your next executive team meeting.

Governance is an institutional framework and formalized approach that defines:

• what BPM projects belong in an initiative
• who the executive sponsors can be as well as who the process owners will be
• how projects become approved
• the division and allocation of labor (human resources)
• what the most appropriate measures of performance will be
• the degree to which projects “fit” the organization’s strategy
• the manner in which the organization will achieve competency and maturity in its BPM orientation

I would add that governance establishes the rules and conditions around communication and it establishes accountability by addressing the issue of consequences in a way few other bodies can.

Governance can tie BPM to other organizational initiatives in a way that maintains their integrity so BPM is not supplanted by other needs. This is important and speaks to what needs to happen beyond the scope of an executive sponsor in some organizations. I think – especially in very large organizations – an executive sponsor can become overwhelmed and lose control of his/her own initiative (even with the best of project managers). Governance allows executives to elevate their initiatives and put them on the table alongside all of the other executive matters. It empowers BPM in terms of stature and importance. That’s quite positive in terms of the attention BPM will recieve and it can prove frightening for the same reason. The choice to progress without good governance is yours.

Good governance also enables the following:

• establishing a budget within the organization’s broader budget
• resolving conflicts
• assigning technology resources
• determining future levels of investment according to strategy
• establishing goals consistent with the strategic plan
• defining the terms and conditions for democracy within the organization

It’s a simple matter of studying your organizational structure and learning how you can create a Governing Body or Committee. You will also need to study your by-laws and be sure you know who your committee chairperson reports to. That reporting is crucial and is best – in my opinion – if it reports to the CEO. Lastly, bear in mind that there exists a relationship between your Governing Committee and other committees in the organization. Draw straight, solid lines between governance and compliance, finance and others.