Tag Archives: strategy

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?

Advertisements

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.

Market Roller-Coaster Ride Strongest Justification For Business Process Management, Analysis and Re-Engineering

Business Process Resiliency

The past week’s tumultuous downward spiral, global banking interventions and stock market spike speak to the need for organizational resiliency everywhere. I’m speaking primarily to those of you who are scrambling this week to get your shop under some semblance of control in the wake of your market’s turbulence. You’re desperately seeking answers and you’ve heard or read somewhere that workflow management and business process management (inclusive of documentation, analysis, design and re-engineering) can transform the way you do business. The promises are lofty but, like technology, workflow management and BPM are essential tools. The difference is not in saying “we do BPM” but in the way that you implement BPM in the social, cultural, and operational fabric of your organization. The value and benefit is in HOW you use BPM. But the bottom-line is BPM produces a degree of resiliency not possible without it. That may be a strong opinion but I will stand by it. One cannot adapt to invisible conditions. BPM makes conditions visible and adaptable. You do the math.

BPM Builds Resiliency

To contend that BPM builds resiliency is not quite complete. It makes resiliency possible. It is the lens through which you can identify your resiliency needs. Without visible processes, you have to rely entirely on anecdotes, opinions and assumptions concerning your strengths, weaknesses, productivity and efficiency. All of which vary from one employee, supervisor or director to another. Social constructs like that are always relative. BPM is the closest thing we have to a mechanical view of your enterprise and much less susceptible to relative interpretation. A business process model is the shortest and potentially most accurate model depicting what you do and how you do it. Imagine military leaders discussing strategy and tactics in the midst of battle rather than at the perimeter of a table housing a model of their battlefield and you begin to get the picture. If you’re in the thick of the trees, it’s tough to see the forest and your place in it. If you’re slogging it out in the muck, it’s tough to develop an adaptive strategy with your mates.

Resiliency is about adapting to conditions and bouncing back from blows. Adaptation requires knowledge of conditions in the environment or ecosystem as much as it requires knowledge of ones own capabilities, traits and resources. There is no substitute or alternative at the moment for BPM in demonstrating, reflecting, modeling and measuring conditions in both the company and its market. It’s the shortest route to a complete assessment and planning.

Measures and Metrics Count

Notice that adaptation is also a function of measuring conditions. Unlike natural selection processes which might favor traits and capabilities honed over decades, centuries, and millenia, we need immediate access to accurate data concerning our strengths and weaknesses. Our environment is changing much too fast to wait for year-end results. BPM will equip you with deep knowledge of what it is you need to measure. A high-performance entity measures in surprising ways and – of course, – what gets measured varies widely across industries. However, what gets measured gets managed. It’s not what you expect that will change deliberately. It’s what you inspect.

Break The Rules?

Our experience with economic upheaval ought to be having the effect of causing you to challenge your assumptions, myths and deep-seated beliefs in the rules you follow. Not sure what rules govern your business? Don’t worry, that’s what BPM will help you discover. BPM establishes the rationale for process and articulates the business rules you follow. Upon identifying your business rules, challenge them. If you can break them and establish new rules without breaking the law or any ethical/moral codes and without compromising your quality, customers, employees or mission then you will be participating fully in your own adaption and resiliency. How about that!

If the rules you live by don’t change while the economic and market forces around you are changing at the speed of light (as they have been for a month or two) then, my friends, you will get left behind. Don’t let this happen.

Up and Down

Like the roller-coaster we’re on, you need to assess what you’re up to at the macro levels of strategy and economic/market factors as much as you do at the more micro levels of business process and key performance metrics. Inside, out, up and down. Many of you are new to this field. Some of you are new analysts and some of you are executives. All of you may be wondering if business process management is right for you. The answer is that it is essential.

Strap It On: Competing In An Economic Quagmire

CNN, today, reported “a key measure of consumer confidence dropped in May to the lowest level in 16 years, as Americans grew more concerned about their jobs and more pessimistic about business conditions. The New York-based Conference Board said Tuesday that its Consumer Confidence Index dropped to 57.2, the lowest level since October 1992.” This is either the genesis of an economic apocalypse or it’s the perfect storm for lean, mean competitors. I prefer to think it’s time to gear up for strong competition. The strong, intelligent, strategic, agile, and innovative will survive and thrive in this economy.

It’s time for every organization – business, governmental and non-profit – to open its playbook and check the bench. Dust off your strategic plan and begin asking the tough questions:

  • if we have to navigate a recession for a year or two while fending off global competition, do we have the right people on the bench?
  • are we manifesting our mission every day and staying true to our core ideology?
  • do we stick to what we’re deeply passionate about and execute as best we can?
  • is there anything we can do with respect to workflow and processes to gain some efficiencies and improve the quality of our work-product?
  • how can we harness loyal customers to grow?
  • are our people properly trained and motivated? Do I risk losing the most valuable people on my team if we cultivate a climate of fear?
  • what do my competitors do that I might emulate and incorporate into my production/services?
  • what can I do with my branding, marketing and sales process to reach new markets and customers?
  • what can I do with my supply-chain to reduce cost and inventory?
  • which of my partners can I turn to to develop new distribution and sales channels?
  • what can we do to surprise the market and our opponents? (think of all the clever last-minute plays you’ve seen in college football…those that allowed a smaller club to defeat their much larger and stronger opponents)

All-Process Team

I’m no expert in all of those areas (nobody is) but I do know that process is integral to each and every one. For every core business practice listed above, it’s incumbent upon leaders to convene their managers and begin acting on any available data and desire to improve the game-plan.

If you drag your feet and hem and haw, you’ll have been complicit in the erosion of your own market share. We still, after all, operate in a $14 trillion marketplace and this recession will only tackle those who aren’t prepared. You can either avoid the tackle by aggressively participating in your own offense or you can rest on your laurels and hope for the best. I, for one, think it’s time (if you haven’t already) to call in the big-guns, stack the back-field and plow straight up the middle where your opposition is weakest. Yet another reason to harness workflow and business process improvements for reasons other than information technology. IT is a player in this game. It’s just one of the players on the field – as crucial to your strategic game-plan as all of your other assets.