Tag Archives: strategic planning

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.

Economy Prods Business To Recognize Necessity Is Mother Of Invention And BPM Is Her First Born

There are some fabulous examples of companies who get it. “It” is the urgent and important need to do things differently. It’s so simple, in fact, that it trips otherwise smart people up and is sending more businesses of all shapes and sizes to the brink. Simplicity is so elusive.  We crave complexity – particularly in our work – so we can show off our unique skills and maintain our competitive advantage as individuals. That lust for complexity, individual notoriety and competition among our own ranks is what is killing us off, my friends. Striving for simple and cooperative when conditions are such as they are is what saves us. Your competition is out there, not in here. Your customer wants your product, not you. Your price comes down and your quality goes up when you get simple. You get simple when you learn to manage your business process with the right intentions, motivations and vision.

Learn From Example

The very best example I have seen this year is that of Hyundai. Not only are they making a far better product than in the past, they have applied process innovation to their marketing and sales strategy at a time when every other major car manufacturer is bailing out. The adage that you can leverage economic crisis to your advantage with marketing and sales is true. They have stepped up sales to rental agencies, launched a new advertising campaign and re-engineered their financing allowing customers to return financed cars they can no longer afford without any penalties and without any credit score blemish. I was floored when I read about it in Business Week magazine (February 23, 2009).

What If?

What Hyundai has done – and what many other companies out there are doing – is successfully asked “what if?” The rules are changing in very big ways and you need to change and innovate just as quickly (if not faster). Hanging on to old notions of how things are done (the very essence of BPM’s mission is to slay that kind of thinking) is what will drag you down. Your business cannot outlast transformed environmental conditions. These economic conditions, this climate is having the same chilling effect on Circuit City (RIP) as the last ice age had on the sabre-toothed tiger. A once feared creature that refuses to adapt will soon die. Look around and ask “what if” until you find an adaptation you can build consensus around. Then overcome your fears and resistance and act. Take the bold step Hyundai took with their financing terms. Do something “unheard of”.

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.

 

BPM Must Align with the Business Model

I have witnessed several very strong process-related projects fall  flat in the wake of our economic conditions. That’s not surprising given the spate of lay-offs and bankruptcies. What is surprising is the lack of fundamental integration I bear witness to. BPM and related projects, when they stand on their own, are weak, fragmented, vulnerable and will be deemed to lack business viability  in a heart beat (especially during an economic heart attack). Failure to fully integrate and demonstrate inherent value in the business model is the surest path to obsolescence.

I believe firmly in the practice, art, science and discipline of BPM and all of its cousins (Lean, Six Sigma, workflow, etc.) however, I remain steadfastly concerned that IT is much more akin to BPM than are operations people and executives. That has to change. Unfortunately, the projects I have seen shrink and dissolve these past few weeks were mission-critical.  However, it is only reasonable to expect that executives must make the best decisions they know how with the information they have. I hope we, as a field and as a discipline, can do more to demonstrate value and weave BPM into the very fabric of our organizations. As a consultant, I hope I can find new ways to better and more fully make the case for the integration of BPM within and throughout organizations so it matures into a business fundamental and not a “project”. I sincerely hope that you and your peers can provide your executives with the most succinct case for continuous process management in order that they might make the most informed decisions.

Business Modeling – the Essence of Viability

The latest Harvard Business Review (December 2008) has a section dedicated to the development of Business Models. Bear in mind that a business model is not a business plan and it is not a business case. Somewhere in between though. A business model is akin to a logic model in that it quickly establishes the logical connections or relationships between who you are, what you do, how you do it, and the effect you want to have. A business model (in particular, the model suggested in HBR by M. Johnson and C. Christensen) is best boiled down to 4 big chunks:

  1. Customer Value Proposition
  2. Financial Formula
  3. Key Resources
  4. Key processes

Now, if you’re paying attention and you think BPM is pretty swell, you noticed #4. Let’s start at the top though.

Customer Value Proposition

  • who is your targeted customer?
  • what problem are you going to solve with your product/service?
  • what is your product/service and how does it solve the problem?
  • who else is doing anything similar (the competition)?

Financial Formula

  • how do you propose making money/generating revenue?
  • what are your costs?
  • what will your profit margins be?
  • how long will it take you to generate revenue and make a profit?

Key Resources

  • People
  • technology, systems and other tools
  • information and R&D
  • brand, reputation, relationships, allies, market data and sales channels

Key Processes

  • core processes and process owners
  • business rules
  • performance metrics
  • other norms and standards

BPM’s “Must Do”

While business modeling, planning and the like are not usually in the domain of your average analyst or IT staffer, it is imperative that support be generated for the fourth dimension of business models. This is especially true in smaller organizations…the vast majority of companies. You must make your case and educate people within your organization. The best way to do this is to become fluent in business-speak (to refine your business acumen). Approaching your peers with a business model in-hand, making the case for improved Key Processes to enhance the overall business model – complete with simple examples and data-driven ROI scenarios – is your best bet. Demonstrate the relationships and dependencies between these four moving parts and move away from fragmented and discretionary “projects” until you are firmly ensconced as an unequivocal  fundamental. A business is a 4-legged animal. You must become one-fourth of the team that will lead your organization to victory.

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.

Time For Serious Strategic Planning, Widening Process Improvement & Balanced Scorecard

If there was ever a time to call your executive and leadership teams together for some mission-critical thinking, this is that time. I am slightly biased toward making those process-oriented meetings but that’s besides the point. The market – globally, nationally, locally as well as from a unique, individual consumer standpoint – is taking a beating. A mugging really. The capital we thought we had to conduct business with is not there the way we thought it was months ago when all we feared was a recession. With recession eclipsed by fears of a deeper, longer meltdown, it’s time to think and talk about survival of the fittest.

Who’s Fittest?

How is fitness defined in your industry? We know stock price alone isn’t the answer. If that were the case, nobody would be considered fit today. Is it profitability? Productivity? Innovation? Customer satisfaction? How is the strongest competitor in your field or in your market deemed the strongest? How long can they sustain in a down economy?

You must be able to define fitness and bear in mind that definition will vary from one industry to another. What makes a great hospital does not make a great publication or a great restaurant or a great garment factory.

There is an argument to be made for reading Colins’ Built to Last before the end of the month. Preserve the core and change the tactics and process as it is called for in order to adapt to this new environment.

Build On Core Competencies & Core Processes That Work

Want to widen your process-orientation? Want to document, design and implement more efficiency, productivity and innovation? Start by pinning down and understanding what you do best. Start by identifying what your core competencies are and deeply understanding what makes them so. Take an inventory of what it is you do best and how it is that came to pass. Do not change a thing in these areas right now if you can help it – except to do more if you can.

Is there some aspect of your core competencies that can be expanded to other areas of your work, product-line or service? Can you become the outsource provider of these services to another firm? To a competitor? Can you market and promote your core competencies in new ways? Can you take them into new markets and embed what you do in an entirely new supply-chain? The point is to identify what you have 100% confidence in and do as much of it as possible during tough times. This is your greatest survival tactic. Don’t under-estimate your need to survive right now. Read Zook’s Profit from the Core before the end of the month while you’re at it.

Balancing Your Scorecard

As I mentioned earlier in this post, you must begin identifying your most meaningful performance metrics. Collectively, we do an abysmal job of this. We rely too much on financial measures or quality measures or employee satisfaction measures or none at all. Too often, we measure one dimension of our business at the exclusion of others. If you haven’t already done so, pick up Niven’s Balanced Scorecard. The implementation of a balanced set of metrics can be relatively straightforward and will do wonders for you if you can stick to it.

Do yourself and your organization a favor this week and make a commitment to measuring at least one  from each of the four dimensions of: customer satisfaction; financial performance; internal process improvement; and employee growth. If you make this commitment today while times are tough and while your employees are looking to your for leadership, then you will instill in them an abiding belief in your ability to see and appreciate the big picture. You will also be setting in motion the machinery that will set you far apart – so far as to be in a different league  – from your competitors when the dust of this economy settles. You will thrive.

Do These Things

Leverage your process improvements, your new skills and your deep desire to outlast the bad news of late. Bring your people together. Have frank and hard-working sessions together. Plan like professionals. Work more and work smarter. Apply your process-orientation as widely as possible and make a commitment to measuring what matters. Then what matters will get done in some surprising ways and you’ll be glad you made these commitments 1, 2 and 3 years from now – long after your competition has thrown in the towel.

Make The Tough Decisions

As you plan, apply yourselves to the core of your business, and begin measuring your performance in new ways, I assure you that weaknesses will become apparent. You will certainly be faced with difficult decisions to make. Resist the impulse of simply making deep cuts. If you manage to discover you have resources at your disposal, think of them as an investment before you think of them as a savings. This may, in fact, be the best time in your industry to provide exceptional customer service or it may be best to expand into a new market. The very people you may have otherwise shed may be the best people to take you in a new direction. Lead outside the box. If you do have people to let go of and you cannot justify any other conclusion, make the decision, be compassionate about it and help everyone through the transition. By all means, keep your high performers who “get” your vision and mission.