Management by Process

John Jeston,Johan Nelis

• Editorial: Routledge
• Año: 2008
• ISBN:
  9781136386381
• Edición: 1
• Categoría: Business
• Categoría: Business General

Business Processes are one of the critical drivers for any organisation in realizing their organizational strategic objectives. This means that management must constantly review and realign organizational processes to reflect the massively unfixed nature of business demands, such as changing market circumstances; the changing demands of new customer and existing customers; new products and pricing; changes in strategy; and linking processes to new partners and suppliers. Establishing and maintaining a process-focused organization is critical as organizations are pressured to keep achieving further growth and profitability, preferably in double digits, whilst the avenues available for achieving this growth are getting more and more restricted due to legislation, global competition and saturation in the market place.
This highly accessible book provides a clear and thorough exposition of the six key dimensions necessary for the creation of a process-focused organization: * process governance * strategic alignment * methods (execution/implementation) * people * culture * technology.Each of these critical Dimensions are given a systematic and revealing treatment, examining each Dimension in terms of: * Importance * Key trends in this area * Elements that comprise the dimension * Detailed description of the elements that comprise the ideal or visionary position * Road map of how to get there from various starting positions.

Part I

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Management overview

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In this part of the book we discuss two aspects from a management view. Firstly, we briefly discuss the importance of business processes to an organization. We then go on to demonstrate, via a number of detailed case studies, how various organizations around the world have taken a business process-focused perspective and dramatically benefitted from it.

These case studies are from Europe, South Africa, Australia and the USA and include large and prestigious organizations such as Citibank, Nedbank, Aveant Home Care services and Air Products and Chemicals Inc. All but two of the organizations has provided us with permission to use its name.

While you may find some of the case studies long and detailed, we felt it was better to provide you with all the detail than not enough. You can always scan them and come back and read them in detail at your leisure. We would however draw your attention to one aspect when you read the cases - the role of the organizations leader in the process-focused journey.

Chapter 1

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Introduction

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In the introduction we would like to address four topics which focus on the broad context of business processes and how they impact upon the performance of the organization. The topics are:

• 1 The importance of business processes.
• 2 A brief discussion of Systems Thinking and why this is important in the context of business processes.
• 3 The Management System within an organization proposed by Kaplan and Norton in their Harvard Business Review article (January, 2008).
• 4 Characteristics of a High Performance Organization.

In discussing the topics, we will provide a brief introduction and then provide more detail in Chapter 3 and map the suggestions to the framework proposed in this book for the sustainability of business process management.

Importance of business processes

Most executives struggle with the concept of why business processes are important to an organization. Let’s face it historically there has been little formal tertiary management education on the opportunities that business processes bring to an organization or the impact on an organization if they are sub-optimal.

Some of the recent literature in the process world has suggested that business processes are so important that the organization structure should be turned upside down to be a process-centric organization, rather than functionally based. It is argued that changing from the traditional functional, hierarchical orientation to a process-centric orientation will mean that our organizations will function with greater efficiency and effectiveness, to the benefit of management, staff, customers and all other stakeholders.

After all, a functional organizational structured view creates a silo effect within an organization, and this often leads to selfish or self-centred behavior by the management and staff of each silo, sometimes to the detriment of other silo’s and the organization as a whole.

Most organizations continually complain about the impact of organizational silos and the harm it is having upon its business. There is often significant effort expended attempting to minimize, or eliminate, this silo effect but it can take years and years to orientate all the management to a more holistic approach and behavior. If successful, the challenge then is to maintain this new found focus as the management and staff come and go from the organization. If this is not successfully passed from one manager to another, then the organization can regress back again to a silo’ed situation. After all, this is how business has successfully functioned for decades.

While a process-centric structured organization can, in certain circumstances significantly benefit an organization, is this always true?

We wonder if the same people who stand up at business process management (BPM) conferences singing the praises and necessity of having a totally process-centric organizational structure will, several years after its adoption, be complaining equally and vigorously about this structure, in a similar manner to the way they currently complain about functionally based organizations.

Even if an organization achieved the perfect organizational structure, this is still not a ‘silver bullet’ for the future success of an organization. Business organizations are complex and intertwined organisms with no one aspect being dominant or the ‘silver bullet’ to solve all its challenges and issues.

The continual and sustainable success of an organization is a complex set of interacting events and criteria and much has been written on how to achieve synergy.

Results are driven by many things, but at a high level, it is the organizations leadership that provides the vision, strategy, targets, organizational structure and operational efficiencies to achieve the strategy and objectives.

We would argue that it is predominately business processes that provide an organization’s ability to deliver products and services to customers. Business processes are the link between all aspects of an organization. Processes are the link between an organization and its:

• suppliers
• partners
• distribution channels
• products and services
• people (personnel)
• other stakeholders.

Therefore we see business processes as the central core from which business is conducted, so long as they are supported by the people within the organization.

Organizations exist to supply customers with products and services, and business processes are the means via which this can be achieved to, hopefully, a high level of service and satisfaction. So customers must be the primary focus for business processes. Ultimately, BPM is a community of people working together with a common goal of providing a solution, product or service to customers ensuring they are serviced to a high standard and leave the experience delighted.

It is critical to also say at this point that we do not see process improvement as a silver bullet or the only ‘game in town’ when it comes to achieving results within an organization. While process improvement or redesign can, and will, make a significant difference to an organization, it cannot achieve the results required by an organizations strategy without an organization’s senior management activating other aspects or components that comprise an organization and lead it to success.

An organization may have the best, most efficient and effective, business processes in the world, but unless they have a product or service that customers desire and demand, then ‘who cares’.

Having said this, having sensational business processes will provide an opportunity for what Porter refers to as competitive advantage (Porter, 1980). This is where an organization manages to dominate an industry for a sustained period of time. Porter goes further and suggests that organizations obtain a competitive advantage either by an ‘operational effectiveness’ approach or a ‘strategic positioning’ approach.

What is the difference between these approaches and why does it matter?

Operational effectiveness approach

This is achieved by an organization creating ‘best practice’ within their organization. High achievement means having, or adopting, a best practice approach. But best practice within one organization is not necessarily sustainable because organizations will ‘just copy you’, or at the very least, apply considerable resources to obtain an equally effective operation.

According to Porter if one organization obtains a lead in a competitive marketplace, competitors will move very quickly to match them, especially if that lead has been established via the implementation of a new software application or new business processes.

The difficulty with this approach is that it is premised upon the fact that, in order to be successful, you will need to take market share away from a competitor, and they will not stand by and allow you to do this without a fight. With this type of competition, this approach has the potential of forcing organizations to invest more and more into efficiency gains and therefore driving down profits. This is the ‘red ocean strategy’ described by Kim and Mauborgne (2005).

Strategic positioning approach

An alternative to the above position is to create a unique position within your marketplace that will make it difficult, or ideally impossible, for others to compete. While Porter has called this strategic positioning, of recent times Kim and Mauborgne (2005) refer to this as a Blue Ocean Strategy. The latter argue that an organization should position itself into an untapped marketplace, thus changing the rules of the game being played. Both Porter and Kim and Mauborgne argue that redesigning or positioning an organization’s value chain offering is an essential component in this strategic positioning process.

Customers and investors are looking for organizations to take a leadership position, to show vision and not just to improve on the past.

It is interesting that in today’s business environment constant improvement is not enough - it is not good enough for us to be better than we were last year or better than our competitors.

According to Paul O’Neill, Chairman of Alcoa 1991, in a worldwide letter to Alcoa staff in November 1991:

Continuous improvement is exactly the right idea if you are the world leader in everything you do. It is a terrible idea if you are lagging the world leadership benchmark. It is a disastrous idea if you are far behind world standard - in which case you may need rapid quantum-leap improvement.

The following is an overriding brief that we were given by one of our clients:

We do not wish to implement an incremental change program, but a change program that will place us substantially ahead of our competition, such that it will be difficult for competitors to match the process and systems service levels able to be consistently achieved. This will form the foundation of our competitive advantage in the near and medium term.

The client wished to not only create a leap-frog effect that would place them substantially ahead of its competitors now, but to build an environment to support the continuity of radical change within the organization to maintain a competitive advantage.

This is not achieved by completing process improvement projects. It can only be achieved by a change in focus within the organization and this change in focus may only be commenced by a program of activities that encompasses the entire organization.

Systems thinking

We are str...