Tag Archives: business process improvement

It’s Time for Strategic Business Process Management

I am coming off several weeks’ having to reassure clients that they are doing well and that – so long as they stick to their knitting – they’ll be ok a year from now. I have others who have required some serious, adult discussions. They lack a cohesive strategic plan, therefore, they lack in the areas of discipline, direction, commitment and – frankly – workflow IQ. They struggle with change, flexibility and orientation (“where are we?!”)

The disconnect is rampant. Perhaps it’s in the name. Shall we refer to business process management (BPM) as Strategic Process Management (SPM) from now on? You heard it here first, folks.

Strategy+Goals+Objectives+Metrics

I’ve heard others call it Business Motivation Modeling and agree that we need a deeper understanding of critical business drivers. This field and the broader business interests and stakeholders it serves needs to reminded constantly of the “means”, the “ends”, and the “influences”.  By keeping a strict focus on strategic goals (building the business, becoming #1, being fastest, cleanest, safest, whatever) and tactical objectives, business analysts and process engineers ought to be able to produce the outcome they’re looking for and they ought to be measure whether they’ve achieved their goals or not.

Environmental Analysis

However, failing to manage strategy and failing to carefully and comprehensively assess what is happening economically, politically, socially, technologically, competitively and legislatively will absolutely result in painful surprises. I have seen people very proud to have hit sadly meaningless targets lately.

Strategic and Technical Advisory Groups (STAGs)

I am calling for the formation of STAGs in every organization with 25+ employees. This committee will review and evaluate business process and other organizational change from both a technical standpoint and a strategic standpoint. Strict adherence to strategy (bearing in mind that strategy – not values – can and ought to change to reflect the environment) will be their direct responsibility. There will be an executive on each STAG until and unless every organization recruits a Chief Process Officer. Perhaps then, the brilliance of BPM will have been fully activated.

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Spy: Small Business Process Improvements Based on Process Benchmarks

I have to admit to being a chronic process observer and critic. Every time I sit in a restaurant, go into a store, arrive at a hotel, go to the doctor or shop online I pay attention to what staff and managers are doing and I judge. Sometimes I am deeply fond of what I see and other times I am vicious in my critique. While I am a little obsessive about all this, there is some virtue in the exercise. As a consultant, it’s important to have had exposure to tactics and process that work especially well in order to make stronger recommendations for clients. It’s also important, working across sectors to develop a mental inventory of what doesn’t work, what can be emulated and what can be tweaked to serve cross-purposes. Frankly, I would hope that anyone aspiring to build a business, product or consultancy in this domain would be doing the same kinds of things.

Spy versus Spy: Lean Innovation

Welcome to the age of transparency, reverse engineering and piracy. Watching the equivalent of So You Think You Can Dance on Indian TV broadcast by satellite last night, my Indian friend quipped: “They copy everything we do”. Reading about the new film Duplicity in the latest issue of Fast Company I am reminded that the “leanest” forms of adaptation are mimicry and emulation. It’s called “evolution” folks.It’s the 100th Monkey Theory in blazing sound and technicolor. In some cases, it’s downright criminal so be careful where you draw the line.

I’m sure by now you’ve heard that the sum total information in the world is doubling every 3-6 months or something like that. Similarly, in an open information age, we have the capacity to observe, re-engineer, implement, measure and observe again at dizzying rates. Knowing that competitors are observing and mimicking us should serve as a catalyst for greater and faster innovation (and ever more patent filings).

How About A Small Business?

Small enterprises can’t afford teams of engineers and analysts that prowl the web and deconstruct rival products the way Toyota and Honda tore into the Saturn. There is no virtue in piracy so what’s a small business to do? Give observation and emulation a try. Watch what others do and then think in terms of business process. What process can you borrow and pilot in your own shop?

Process Benchmarking

A Benchmark is a standard and, for our purposes, the Gold Standard. The Best Practice. I want to advocate for an open process exchange that enables up-and-coming enterprises to learn from the best. This idea may never take root in the private sector but it might in government and non-profit sectors. For example, what can my library learn from the Pentagon? What can a Blood Drive learn from the Census? What can the EPA learn from Green peace?

As a small business owner, I can effectively identify the leader in my market, the highest quality product or the lowest priced competitor and I can start studying how they deliver their products and services. Similarly, I can go to the leader in a totally unrelated field and observe them in action.

Benchmarking

Rivals’ and leaders’ strengths my not be in their products (engineering, materials, quality and performance) alone. You can look for benchmarks in the following areas:

  • Suppliers – supply chain, quality, ethics
  • Human Resources – recruiting, hiring and retention
  • Customer Service – walk-in, online and telephone, service responsiveness policies, dress code, etc
  • Marketing and Sales – packaging, pricing, branding, placement, promotions, sales tactics and pitches
  • Finance – pricing, financing, terms

The point is, identify some leaders, grab a pad of paper and a pen and go observe what they do and HOW they do it. Imagine how you could mimic, emulate or adopt what they do.

Keep it Simple

A final word on simple. While their algorithms are crazy complex and probably cannot ever be emulated, Google stands as the single greatest example of simplicity in customer experience. That simple one-box web page with scarcely 50 words on it – as of today – owns 64.2% of the world wide web’s search activity. They are killing their rivals with simplicity. How can you do the same?

Non-Profits Benefit From Business Process Management and Improvements

Non-profit organizations are near and dear to my heart. I have worked for several (hospitals, social service agencies, quasi-governmental) and have volunteered as a board member for three. I am a current board president for a global organization serving children in poverty in India and Cambodia (www.lotusoutreach.org) so this affinity for charitable organizations is fresh.  Not unlike their for-profit counterparts, non-profits want to deliver their services effectively, efficiently and produce the outcomes they’d hoped for at a cost that is at least equal to the revenue (donations) they generate. In other words, in their business model, it’s “ok”  to break even though not ideal. Reserves and income on reserves are much better than breaking even. If that equation sounds familiar to profit-seeking capitalists, it’s because it’s essentially the same equation. What’s different, of course, is the mission, customers are “beneficiaries”, and there are no shareholders to answer to…only a board of directors and donors. Quite daunting, actually.

Like investors, major donors and grantors expect to see results. The demand for performance indicators is, frankly, equal to the demand for metrics in any business. Philanthropists, after all, are almost always successful business people.

Enter BPM

All of the conditions that underlie and are so fundamental to business  – from HR and finance processes to supply-chain and customer service processes – are present in non-profit organizations. The value stream is clear, waste is common and the benefits of automation are real. The role of process improvement – driving waste and inefficiency out of processes while infusing them with information and visibility – is best evidenced in healthcare settings. Hospitals and clinics are the closest cousins to  non-profit agencies and are proving that the application of methods like Six Sigma and Lean in addition to standardizing processes for the sake of quality, compliance and shared services is in every body’s best interest. Emergency rooms around the country are now simulating changes in their workflow using BPM tools like ProModel and Visio diagrams are as common in some public health clinics as PowerPoint presentations. Healthcare has caught on to BPM.

Invest-able Change

I suspect the biggest determinant for hospitals’ and public health agencies’ enthusiasm for BPM has been their ability to pay for the consulting support they receive. It’s quite common to see firms like KPMG, Accenture, FCG, IBM, BCG and other global firms competing for BPM work with large state and federal public health entities related to Medicare and Medicaid as well as large county general hospitals who are taking great strides toward electronic medical records. The money is there so the consultants are eagerly positioned to deliver their BPM offering and support.

Most non-profits are of the social service ilk and have much shallower pockets. $300 and $500 per hour consultants in Italian suits are not an option. Similarly, top-flight MBA grads who have never imagined serving soup in a shelter or working with children in slums are not a good fit when it comes to maintaining the integrity of a process. The truth is, we’re out there. There are seasoned professionals and subject matter experts who bring to bear an abiding commitment to mission-driven work in addition to a proficiency in quality improvement and business process management.

Don’t Let The “B” Fool Ya

I think the hang-up people in the non-profit sector have with BPM is with the B.

“But we’re not a business. We’re not in business. We need to be effective, not profitable.” – I hear these refrains often and I gently remind folks that they are an organization of people, process, systems and tools organized to deliver a service or product to a consumer. And they get paid to do it (whether they’re volunteers or not, money is coming in the door somewhere). Non-profit does not mean broke. They are just as bound to a continuous need for quality improvement, safety, efficiency and measurable results. Anyone who doubts the future course of non-profits should take a look at the Gates Foundation expectations for efficiency and results. Donors care whether or not their contributions are paying for results or being squandered on wasteful practices.

BPM is in no way incongruous with the purpose, cause and mission of any non-profit. From this day forward, I pledge – when addressing the non-profits in my life – to use the term Organizational Process Management. OPM it is!

I’d love to hear how your non-profit organization benefited from or could benefit from some old fashioned OPM. Chime in…and thanks for listening.

Lean Markets Pulling For Rapid Process Improvements (RPI)

The economic news this morning is not so good. The Institute of Supply Management (ISM) manufacturing report sent the market into another free-fall today (down 425 points at the moment, following last week’s massive rally). The ISM index stands at 36.2% which may not mean much to the lay-person. The important indicator here is that anything below 50% is bad news and 36.2% is as low as it’s been in more than a quarter century. This is a report that measures factory output based on orders for manufactured goods. Only two sectors performed well: apparel and paper. European and Chinese factories are reporting similar output and demand for their goods. We all know how this is playing itself out for Ford, GM and Chrysler. They have a shot at financial support that will bode well for thousands of suppliers and – frankly – millions of employed people. For the remainder of the manufacturing community, there may not be a bail-out. What are small businesses and manufacturers to do?

Time is of the Essence

MarketWatch reports that economists now admit the recession began at least a year ago. Could have fooled me. Experts tell us we can rest assured that it will endure at least another year – maybe two. That said, small business and small manufacturers are faced with the need to get lean very quickly. There is no time for hemming and hawing and this is not the time to simply lay people off. Your path forward is as complex as the path that got you here. No silver bullet. Your costs are a reflection of (among other things) executive pay, labor, benefits, space, utilities, supplies, suppliers, marketing, hardware and – to a great extent – your business processes.

Those of you who are familiar with Lean Methodology or who might be familiar with a consultant who specializes in Lean may now be thinking: “This is the time for it.” I commend you. I agree that Lean can and will deliver the elimination of costs associated with waste in your processes. However, bear in mind that Lean can involve between 6 and 12 weeks’ time for execution.

Lean Liposuction?

Lean is a bit like a diet. You have new habits to learn and you glean life-changing insights from an examination of how you did things in the past. Lean is a lifestyle and it creates a certain culture. I want to suggest that you consider the Lean equivalent of liposuction or getting your stomach stapled. It’s quick, it’s dirty, but it works. It’s commonly referred to as Rapid Process Improvement or RPI.

RPI Works and Works Fast

An RPI event requires: 2-3 days; a core business process suspected of carrying waste (extra fat) and whose repair would make a big cost difference; a team of subject matter experts and decision-makers; the willingness to be brutally honest and trim the waste. In that brief 2-3 days time, the process can be articulated and modeled and business rules can be captured. Basic performance measures can be identified and the team can brainstorm ways that waste can be eliminated from the value stream without any adverse impacts. New, future-state process models can be developed and basic simulations can be conducted to assure you and your customers that quality concerns haven’t been introduced or exacerbated. You want the results to be faster and better.  Once you’ve nailed the future state, a solid RPI process involves mapping your implementation and measuring results over the next 3 to 12 months. Hint: measuring cost savings from the get-go is a must. Remember your baseline!

RPI Now

Rapid Process Improvement should be near or at the top of your list of things to do in the next 4-8 weeks. The small business owner and small manufacturer have got to make the time and prioritize events like this until all of the low-hanging fruit has been harvested. This is not business process management or improvement for the sake of developing software. This is crisis management and RPI may save jobs. Every job saved has an immediate impact on your entire community. A job saved is a person saved and that person may very well be your star player when the economy turns upward in 6 months. Don’t lose them when you could easily trim the fat and waste in your processes.

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.