Art or Science? – Improve your performance!

Are you one of those who know that their businesses will not strive by making everything alike? If yes, you are probably right. Standardizing core processes might even ruin your business. However, business process management is more than just standardization. It can also offer valuable support in areas, where knowledge, craftsmanship, and experience are essential. The way to success is less obvious, though.

Let us briefly discuss what actually drives the standardization of processes. It will help understanding the differences in dealing with artistic work. Generally, BPM experts apply a scientific approach identifying best practices and eliminating weaknesses optimizing to-be processes. Those are standardized throughout the organization in order to achieve:

- Transparency and predictability,

- Routine,

- Comparability,

- Reproducibility,

- Scalability, and

- High automation.

Processes become easier to be managed and costs can be calculated accurately. Outcome and performance can be measured and benchmarked. Routine improves the performance of employees. It eases training of new hires. Processes can be scaled up and extensive IT support further boosts process performance. In other words, the main objective is efficiency.

Artistic work, whereas, endeavors for effectiveness. The ability to achieve an individual result gets priority. Hall and Johnson [Harvard Business Review- Issue March 2009] suggest in their framework to identify artistic work by conditions of either variable individual input or customer specific output. A third group might be any kind of research driven or creative work with a lot of ambiguity involved. The result can be understood more as an intention rather than a clearly defined service or product.

Nonetheless, survival in today’s business world requires a blend of effectiveness and efficiency. The number of customers who can afford individual service at any price is limited. Research driven start up businesses will have to enter a phase of scalability in order to handle a larger number of projects in different stages in parallel. Planning is required to properly deploy assets and resources at the right time at the right place.

Quite often, an organization will require a combination of artistic processes and standardized ones. In order to identify the right combination two steps should be performed.

Firstly, sequence process chains to end-to-end processes; and secondly, apply the business process objectives (see early blog "Strategy Driven BPM") to the end-to-end process as well as to each individual process chain.

The resulting map provides you with a comprehensive assessment of your process needs. The degree of freedom needed for each process – based on the derived requirements – determines the flexibility required from guidelines and working instructions, control measures, and last but not least ICT tools.

Strategy Driven BPM

Why managing something if you have no vision for it? Do not ask yourself whether or not business process management is something important for your company. Ask about business process leadership. Do you have a vision for your business processes?

Do not worry; I am not calling for a radical change how you develop your strategy or what your management team should aim at. Just consider your business processes as one of your arms at hand deploying your strategy in a competitive environment. There are not too many anyway. The following three models support a meaningful break-down of your strategy into a manageable business process framework.

Business Process Objectives – The External View

Level 1: Strategic Vision
Define where you want to see your business segment at.

Level 2: Strategic Objectives
List the goals which need to be achieved in order to reach your vision.

Level 3: Key Success Factors
Derive all key factors influencing your ability to deliver towards your objectives successfully.

Example: Generics Pharmaceuticals Company

Level 4: Business Process Objectives
Probably the most tricky part of this exercise; describe how your business processes enable or reinforce your key success factors or mitigate risks such as non-compliance and adverse impact on your company’s reputation and brand image.

Business Process Matrix – The Internal View

Many business process management projects fall short in creating the expected value. One reason I identified is the lack of differentiation in the way processes are assessed. Essential for a strategic approach is to focus on the essential process areas and to identify the appropriate method managing your business process landscape. A segmentation can be achieved looking at the impact process design has on its performance. As a second dimension the model evaluates the importance of the business process. Determining latter can be done based on a set of criteria weighted in the context of your business and industry. A typical set would comprise of:

- Strategic relevance

- Tactical relevance

- Unique value proposition (competitive advantage)

- Compliance (legal, SOX, regulatory)

- Value creation

- Total cost of ownership

Based on the score on both dimensions you can now define the suitable management approach.

Optimize processes scoring high on both axes. These are the ones which should be assessed individually. Depending on the nature of your business and the context within your processes are executed art or science might be the appropriate way to improve performance. Latter is well established whereas first mentioned is hampered by ambiguity how to tackle such processes systematically.

The cluster still high on importance but with a relatively low score on impact is best managed by defining a framework rather than detailing processes flows. Such a framework might include specifications of recurring activities, business rules, risk control procedures, and reporting standards and KPIs. The IT department can derive their requirements from this framework for developing an optimal support.

The C cluster is best tackled by identifying best practices within the company. Standardizing processes where applicable will help improving efficiency and cutting costs.

D-processes are often those standardization and re-engineering projects get sidetracked with. Do not spend your project and IT resources on that segment. Define adequate reporting structures.  I have not heard of any company gaining competitive advantage by streamlining the way how to purchase toilet paper globally.

Cause and Effect Diagrams – The Integrated View

Understanding crafting and implementing strategy as an iterative process, it is now time to capture and describe the dependencies that need to be addressed during the fine tuning phase of your strategy. Therefore a holistic model needs to be developed. The cause-effect dependencies illustrate what processes have to be changed and what accompanying actions have to be taken. The model can be enriched by indicating disturbers and risks.

Ishikawa:

Following this methodology will allow you to

- Communicate how to align processes in order to support strategy implementation

- Support facilitating fast business driven adaptations and therefore improve capabilities such
  as agility and flexibility

- Enable the organization to focus their efforts related to continuous process improvements

- Provide guidance and priorities in discussions related to SOWs and business blueprints