Tag Archives: performance

Smart Business Process: Wal-Mart Proves (Again) That Reducing Costs & Adding Customer Value Leads to Profits

Wal-Mart aired its latest performance data today and revealed that, despite the recession, they have maintained profitability. Shining a light on Wal-Mart is kind of silly given that virtually no other organization in the world (and most countries, for that matter) are in the same league.  The point is that we can all learn from their lessons. The lessons this week are absolutely central to the argument for  smarter business process management. Wal-Mart applied several elegant tactics with what appears to be precision execution. Firstly, they reduced their inventory which contributed to the goal of reducing costs by 6%. Secondly, they recognized that their customers are facing deep income cuts of their own and identified which product discounts would be perceived as most helpful. They leveraged their world-class inventory data to identify specific products and discounted prices considerably. The result was an influx of new customers who compensated for lower sales per customer thereby producing profits that exceeded everyone’s expectations.

Lessons Learned – What Small Business, Non-profits and Governmental Organizations Can Take-Away From Wal-Mart (without stealing)

In the spirit of keeping it simple, the following lessons can be brought home to your organization:

  1. Visualize, illustrate and understand your supply-chain
  2. Negotiate discounts with your suppliers
  3. Reduce your inventory and reduce inventory costs
  4. Ask your customers what they believe will add value to their lives and modify your offering to reflect that demand…now
  5. Let your prospects and customers know that you have satisfied their demands – promote yourself effectively
  6. Establish clear and specific performance expectations including those for positive financial results
  7. Measure and report results openly (even the bad news)

It doesn’t matter how big or small you are and it is frankly irrelevant which industry you hail from…you can apply all of these lessons and tactics. I have done so in commercial for-profit enterprises, governmental programs as well as in non-profit settings.

BPM – whether it is enabled by software or not – is key to each and every one of these tactics.

  • If you cannot “see” your supply chain;
  • if you cannot model how you will reduce inventory;
  • if you cannot illustrate how you will engage and interact with customers to understand where and how you can create value in your value-stream;
  • if you cannot develop a straightforward mechanism for gathering, measuring and reporting performance data, then you will find managing your business very difficult compared to those who can.

The best strategy and the best intentions will be trumped by lousy, inefficient and absent business processes. Between you and me – when I run across reasonably successful organizations that lack identifiable and manageable business process and controls, I know they are successful quite by accident. Ignorance in managing organizations and performance is not bliss.

Prioritizing BPM Projects is a Sign of Effective, Experienced Leadership

I received an email from a friend of mine today lamenting the projects he’s had to wave good-bye to. The email read: “That other process improvement stuff is nice, however, right now…revenue generation is the only process that matters. We have to keep the doors open”.  It made me think deeply about my clients and the projects we’re working on. How many of  them have leaders who’ve called emergency meetings in the past 12 months to reconsider and re-prioritize their approach and focus? None. How many of them have since been panicking and flailing? All of them. Most of them have reduced schedules and laid people off lately. Not a single one ever stopped to prioritize and shift attention when they could.

What’s a Priority?

First of all, if you’re still slogging through 4-6 month process improvement projects, you’re braver than I am. Get lean in your approach, folks. Secondly, if you don’t know how to prioritize in this economy and are struggling to choose which of your projects should “rise to the top of the list”, please ask your peers and ask the big boss. Go to the executive team and ask them to help you decide if you need help. But no matter what, show some initiative and demonstrate that you’re thinking like an executive. If not, you’re setting yourself up for disappointment.

Short answer: it’s a priority if it will immediately help us make more money (sales) or save on costs (making us more profitable). Sales are tough now so anything that can reduce costs is a big hit with executives and shareholders. If you’re a non-profit, cost reductions are popular with boards and donors. Toot your horn. If you’re a government entity, you have serious challenges too. You must get costs under control. Government doesn’t often lay people off but I have seen it happen in the past 6 weeks. I have seen it happen where people dragged their heels, hemmed and hawed, went to far too many meetings, and took too many vacation days. They complained and wondered who was in charge. They failed to prioritize and act swiftly and assertively. Now they’re looking for work.

Inventory your projects, identify the revenue generators and cost-efficiency opportunities and move them to the top of your to-do list. Everything else takes a back-seat until your executive team gives you the green light to relax and do something interesting. That may be months from now so get comfortable fighting fires.

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.

Business Process Data: On Dashboards and Windshields

Reading about IBM’s “Stream Computing” in Business Week magazine this week, I am reminded of a time in a meeting several years ago when I groaned: “I don’t want a better dashboard; I want a cleaner windshield. I want to know what’s coming and a dashboard can’t tell me that. Those are lagging indicators.  At best, a dashboard tells me what I have done in the recent past. I want to know what my suppliers and customers are doing as they approach…before they get here.”

On My Windshield

I never did get my Windshield. Today, we’re lucky if we have a dashboard. It would  put many of us in a small minority if we could have near-real-time indicators of what just happened  on our desk-tops. From a business process management perspective, how would life be if I could see changes in my supply chain before they affect me? If I could see my suppliers’ dashboards, would that be enough to give me an idea of what I could expect?  If, instead of relying on marketing, I relied on interoperable business data between my company and my customers, could I see their demand before they pick up the phone and place an order? That information would help me in innumerable ways.I suspect very large companies can afford supply-chain and distribution information management and reporting but what is a mid and small sized organization to do?

Is it possible that my contracts with suppliers and customers might involve strategic dashboard exchange? Of course  it is. In a business-to-business relationship, my clients might even think they were doing business with a pretty smart guy if they knew I needed to know something about their data prior to them needing to know they need me. I bet they would be happy to give me that information in small packets called “Bugs”. Throughout the day, “bugs” would hit my “windshield” and I would know what’s coming down the road. You could have a lot of fun with this metaphor. Landscape, traffic signs, intersections, accidents, traffic jams, you name it.

Operations, Finance, Marketing and Sales: Performance Metrics During the Race

Dashboards are helpful. Don’t get me wrong. I find them especially helpful once I have arrived. I can quickly look back over the course of the trip (or the day at work) and understand where I have been, what my top speed was, how many miles I covered and how much fuel I used (plug your favorite business metrics in here). A windshield, however, lets me calibrate  what is happening in the midst of a high-speed race. As a former football player, I can tell you that my stats after the game were a lot less important to me than was knowing where the line-backer was when I pulled out on a sweep. Failure to see my adversary or my teammates often caused me great pain. Successfully anticipating blows led to touchdowns.

The Importance of Anticipation: Getting Out of the Blind Spot

We are living through the negative consequences of not anticipating what lies ahead. We’ve all become so enamored with the rear-view mirror and the mounted DVD players in our SUVs that we have forgotten to simply out the window in front of us and drive defensively.

This may all seem trite and I may sound like I am beating this metaphor to death but I think we need simple reminders these days. Look outside your vehicle and assess what is happening down the road. Many companies have done this very well and managed to keep staffing levels and inventory at quite safe levels. Other companies were so busy fiddling with their dashboards and cell phones and doing their make-up while they drove that they missed their exit and went over a cliff.

What do you need to know about the road ahead and the drivers around you? What kinds of “bugs” do you want hitting your “windshield”? This is a great question for your next executive team meeting. It’s also a great question for your business analysts and your line staff.

  • what would you need to know about your customers’ “demand behavior” that would allow you to do your job better?
  • what would you need to know about your suppliers and supplies?
  • what would you need to know about the economy?
  • political changes around the state, country, world?
  • currency and credit changes?
  • social trends and patterns?
  • legal developments?

Keep in mind that as you’re driving in LA, for example, you don’t want to know what’s happening on the roads in Brussels. Keep your expectations “close” to you. There is little true and accurate value in looking “down the road” for more than 30-60 days at a time. Conditions on the roads are changing far too quickly. Pay attention to the drivers next to you where it matters most. The next bend in the road is far more important than the bridge several hundred miles away.

Give your data needs some attention, ask your suppliers and customers for data and use it effectively. Good data makes good information. Reliable information becomes intelligence and enough intelligence used appropriately over time makes one wise.

Building The Business Case For Process-Enhanced, Information-Rich Customer Service

We all need to revitalize our customer service, relationships with customers and motivate new levels of consumer confidence. That’s our job as business leaders and small business owners. Business is not a spectator sport. It is a high-speed art and science. Business Process Management offers a special opportunity to raise your customer’s experience to new heights. What I am about to suggest is not singularly going to turn things around for you but it is one thing you can do quickly. The more “mature” your organization is in its BPM development, the easier it ought to be to deploy. What I am talking about is not new. The credit probably goes to FedEx. It’s a standard in the minds of consumers and rightly so.

Take Me Through The Process

I am referring to the manner in which UPS and FedEx have incorporated tracking into every shipment. Information regarding my package can be as important to me as the package itself. Frankly, it’s common for me to feel more importantly about something arriving than is the something. For instance, the first time I used a web-based florist (flowers.com) to send my mother flowers, it was far more important that the flowers arrive on time. I was tickled to know the flowers got there and I never even saw the flowers! The same is true with my online banking. It has to perform flawlessly and reassure me that my mortgage got paid on time. I love my bank for the knowledge that my bill got paid. Every day, I get updates from my bank in my email. I am kept apprised constantly.

Information Is Service

As a customer, information concerning by business interactions is extremely important. By telling me when my dinner will be served in a restaurant, my server is allowing me to judge how long I can take discussing a proposal at the table with a client. When my Lexus dealership’s service center calls to tell me when a part will be in, I can better manage my travel schedule. When United Airlines sends email alerts that flight times have changed my kids’ flight 30 days in advance, I can rest assured that they will be safe and know where they’re supposed to be.

What’s In Your Process?

What information is embedded in your process that would add value to your customers’ lives? If a customer triggers an order, can you tell them where their order stands minutes, days and weeks later? If a decision has been made in process, how quickly and clearly do you notify them? If you must abide by certain rules in the disposition of their interaction with you, do you let them know what rule it is you are referring to? Refer to common BPM metrics (standardized in your industry) for more ideas or ask your competitors what they measure!

What Not To Do

My local hospital’s urgent outpatient unit (open for walk-in visits on weekends) treated me several months ago (May 2008). I paid the same co-pay I have for two years and went home with a prescription for an antibiotic. Very routine. HOWEVER, they failed to mention that they no longer contract with my insurer. My claim was denied by my insurer (naturally) so the hospital sent the unpaid portion of my bill to a collections agency. Said agency calls me and can’t tell me why my claim was denied. They didn’t have that information. I just owed them $113 or I could expect my credit score to take a big hit.

The story here is not the money and it is not the abysmal performance of our local hospital. The story is in the lost opportunity to manage information and contain a customer experience. I regularly refer everyone I know to their competitor.

Customer Service: Seize The Data

Look deep inside, walk through your own processes and find the valuable data. Talk to your customers (really talk to them!) and ask them what they’d like to know and why. This is basic but so few businesses actually take the time to do it. Information is relatively inexpensive so stop being so stingy! If you want my confidence, you will earn it with useful, accurate and timely information. And – by the way – I will tell you what is useful, meaningful, valuable information. I am, after all, the customer.

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.

Addressing Fear and Confabulation In Business Process Management When Times Are Tough

Happy Halloween. I am writing this post in the wake of some pretty harsh economic indicators. This week has not been good for BPM. For the most part, the news has been about consumer confidence and consumption being at all-time lows and news of lay-offs and job losses peaking at nearly 750,000 in this calendar year. BPM initiatives in this climate are deeply challenged to keep people engaged, productive and cooperative. This is especially true if what you’re doing has even the slightest appearance of cutting costs. Executives are thrilled with the idea of cutting costs but you can expect all of your stakeholders will identify themselves as a cost in the process. And what do people do when they’re afraid for their jobs? They modify their behavior.

Fear and BPM?

Fear evokes instinctual reactions in everyone. The very fabric of our being is primed to fight or flee. So much is at stake right now that it is only natural for people to struggle with objectivity and complete honesty. They become protective and defensive. Some people become angry, some blame others, some withdraw and lose their confidence and will to compete, and some lie like there’s no tomorrow. Either way, if fear is running amok in your shop, your BPM hopes for lasting improvement are being compromised.

I met with a public health client this week who is beginning to show signs of wear and tear. It’s more difficult than ever to get subject matter experts in one room with all of the competing agendas they now have. Budgets lack certainty so it’s harder to commit to plans and strategies. Heavy questions like State financing hang over projects like brooding storm clouds. People doubt and that doubt is a mind-killer. Process improvement and doubt are nearly mutually-exclusive phenomena.

Confabulations!

To confabulate is to tell people what you think they want to hear about the way things are and the way things ought to turn out. You’ve heard of people doing this in psychotherapy. Well, it happens in BPM projects even in the best of times and circumstances. People – particularly managers – tell process analysts and consultants what they want based in large part on what they think the rules of the game demand. Basically, if I think you want to model a current state that has certain features, I will make it up as we go along so the model comes out looking like I think you want it to. It’s because people do this that I invite as many experts to process documentation meetings as possible (within reasonable constraints). I want to hear what everybody has to say about the process. It’s also why I don’t include the boss in the first session. They fear for their lives so I bring them in toward the end to validate what their staff have told me. Staff are so much more candid when their boss is out of the room! If this sounds like an intervention on an alcoholic it’s because the approach is similar. Only the problem is not the manager. It’s a less-than-ideal process that some managers believe reflect poorly on them and their performance.

What To Do About Fear and Process Confabulation?

  • Make some strategic decisions at the executive level about the viability of your initiative. If it’s best to hold off for a few months, then wait.
  • Go easy on terminology like “eliminating waste” and even “automation” for that matter (unless you’re clear that is what you’re after and you’re prepared to deal with the fall-out)
  • Communicate, market and promote your BPM initiative in positive terms. Share the benefits, value-add and goals for organization. Have your executive sponsor write a short, persuasive and motivating letter and make sure everybody reads it or hears it.
  • Observe workflow and process by means of direct observation first
  • Document process with the help of non-management experts. Be inclusive and cross-functional in who it is you invite.
  • Validate processes with managers and directors
  • Identify process-related data and metrics and validate your model and assumptions by reviewing the data. The data rarely lies. If you have 100 customer complaint letters and a manager telling you people complain “once in a while” then you can deal with that discrepancy. If a manager tells you their staff processes 10 invoices per hour each and there are 5 staff working 7 hours per day, then somewhere there should be data supporting 350 invoices per day. Close the loop and don’t get snookered into believing without evidence of performance.
  • Be objective, firm and confident.
  • Lead by example and engage others in the same productive, positive behaviors.
  • Believe that BPM projects and initiatives that overlook human behavior and organizational dynamics like these are guaranteed to flop. This is not an IT project.