Business Process Management (BPM) Core to Business Models Capable of Succeeding in this Economy

Reading the newspaper or watching TV news lately is an exercise in developing a blistering case of depression or anxiety or both. At the close of business this week we learned about record numbers of unemployment claims as well as lay-offs at Kodak, Ford, Starbucks, Caterpillar and Home Depot. Nearly twice as many people are unemployed today as were 12 months ago. The Dow dropped more than 8% this week and new home sales dropped almost 15% in December to their lowest point ever. How can anyone envision improved business prospects in this climate?

There’s Hope!

You can find examples of success if you look in the right places, folks. While the International Air Transport Association was reporting record losses for airlines this past year, they (in a January 30 USA Today story) acknowledged that “the only major carrier to report a profit in 2008 was Dallas-based discount giant Southwest Airlines.” Another story this week confirmed that while retailers continue to count the change in their pockets (and Circuit City says good-bye), this side-bar managed a small mention: “Citing its best holiday season ever, Amazon.com reported 4th quarter profits of $225M. The retailer said revenue rose 18% to $6.7 billion exceeding analysts estimates.”

This is Still an Economy After All

Those of us who remain in business must remember that we are in business. This is not family and it is not a social event. Nothing is certain in business and it is rich with risk and speculation. We are involved in developing and continuously massaging business models and business plans. If ever there was a bell weather event demanding BPM, this recession is it.  I have heard people tell me (this week!) that they do not want to “lose the art” involved in how they conduct themselves and execute their core processes. They “prefer the judgment and reflection involved in making choices as to how to proceed” and want to “preserve that unique and individualized process”…while they go out of business!

BPM is not and should not be about hard-coding anything. Rather, it enables you to design work and process that can more easily be tweaked and simulated to suit conditions assuming you stay on top of both the conditions and the process. This is active, dynamic and organic stuff.

Several people have commented that Southwest, Amazon, Wal-Mart and Costco are thriving right now because they have a different business model than their competitors. I want to suggest that that is the point. It is past time for all of us to question our business model and challenge (aggressively) our enshrined assumptions concerning the way we do business.  Each of these companies challenged their entire industry and introduced unparalleled and disruptive innovation.

When, in healthcare for instance, professionals wonder why their patients seek health education online at WebMD rather than making an appointment, someone is evidently not paying attention.  1,000,000 medical tourists will take their hard-earned money to Thailand, India and Mexico for that hip replacement. Wal-Mart sells prescriptions for $4 and Minute Clinics are popping up in malls and grocery stores by the hundreds. Times have changed so it’s best to invest in change.

Innovate or Die?

Most of us can find plenty of evidence for what it is our customers and prospects don’t want to buy. How many of us are working as hard as we can to discover what it is they do want to buy? How many of us are innovating our business processes so that we can drive a new business model in a new business and economic environment? Using BPM to bring a visual/graphic dimension to what you do and how you do it will allow you to unlock the “Special Sauce” potential in your business. Until you can look into the core of your business machinations, you lack the perspective to see how it is that you can discover quality and efficiency gains while incorporating the voice of your customer in the process.

Some people argue with the “Innovate or Die” adage. Ok. Try this: Adapt to rapidly changing conditions by changing your business model (customer value proposition, resource mix, processes, financial formula). Choose your market carefully and sell what your customers want to buy at a price they can afford.

Remember: there are still many trillions of dollars in the economy! What can you do to tap into that? How can BPM support your mission?

Managing Costs with BPM Hinges on Identifying the Right Process Metrics from the Beginning

The opportunity to manage, control and cut costs in a process improvement context is well-known but for those of you who are new to the practice, the savings may be as elusive as they are in high demand right now. 

 

There is no shortage of evidence in our economy that costs must be controlled. As much as I detest lay-offs, it is clear that many hundreds of thousands of workers are losing their jobs every month. Therefore, every ounce of process cost management may translate into pounds of saved jobs. Of course, there is only so much you can do to create efficiency. Some jobs will have to be trimmed until consumers can afford to consume again. The urgency with which you approach your process improvement project in a lean economy (to say the least) is critical for a number of reasons:

·        You’re likely to save jobs by creating process efficiency

·        You’ll innovate and disrupt the market to some degree, attracting much needed positive attention

·        You’ll become more competitive in the process

·        You’ll learn something valuable about the people you involve in the process which may make staffing decisions easier

 

Having made the decision to improve your processes and discover efficiency this year, make cost core to your analysis. While you may have focused squarely on throughput, volume, inventory reduction, pull rates, time in queue and other metrics just a few short months ago, I am suggesting you calculate the costs associated with everything you measure, and modify today.

 

Establish cost-cutting and control goals. Communicate them clearly in your project charter and hold everyone accountable for measuring impact and results. All of the more sophisticated BPM suites include cost factors in their application. If you’re running Visio in your shop, analyze your costs using simple Excel calculators. As long as your math isn’t flawed, it doesn’t matter how you collect and report your findings.

 

Present and report cost control findings and recommendations. Measuring quality improvements in a BPM initiative? Tell your story inclusive of costs.  

 

Costs can be identified in terms of:

• Level (pay scale) of staff performing tasks
• Number of staff and impact on capacity
• Resource allocations (high, low)
• Technology in use (high, low)
• Automation of manual tasks
• Time
• Cost of raw materials (suppliers)
• Cost of inventory
• Cost of marketing and sales in bringing products and services to customers

Now more than ever, executives and board members will be looking to justify everything and every decision in terms of cost. Sad but true. BPM analysts and process owners must be sure to lead from a position of cost control before they’re made to.

 

Let me know what you think.