Business Process Thinking
and Flawless Execution
For some time now, expert opinion has been divided with respect to the question, "What's more critical; 'strategy formulation' or 'strategy implementation'"?
While both are essential to achieving superior, sustainable organizational performance, an increasing number of experts have recently stressed that implementing strategy or 'flawless execution' is where companies either succeed or fail.
In spite of recent events which provide the basis for cautious optimism, the current business environment is still one of the most unpredictable that leaders have faced in their careers - and the search is on for new answers.
What's needed to enable 'flawless execution' is a practical approach to the alignment of strategy with key organizational capabilities. That is where business process thinking can make a critical difference.
Business process thinking and the application of business process management [BPM] practices can provide the missing link in creating a corporate atmosphere such that it is easy for customers to do business with the company and easier for employees to better serve the company's customers.
But there are obstacles to overcome. Arguably, the traditional functional mindset, so common in many corporations, and prevalent since the industrial revolution, is the single greatest obstacle to flawless execution. The traditional functional mindset - call it 'silo' thinking or 'stovepipe' thinking if you wish, - has been nurtured by both the academic and corporate community for decades. Most of today's corporate leaders received their education in an area of functional specialization, be it marketing, finance, engineering or information technology. Far too few experienced broad cross-functional business experience in their climb to the top.
So we shouldn't be surprised that this traditional mental model has spawned a couple of flawed beliefs and counterproductive behaviors which can sap organizational energy when it comes to execution.
The first of these is a disproportionate pre-occupation with organization structure and the belief that if one could somehow fill in the boxes on the org chart with the right names then everything would automatically be alright. Perhaps that explains why corporate leaders select reorganization or restructuring as the single most frequently practiced method of change management. To test this out, simply ask yourself how often your company has changed the organization chart in the top two to three levels during the past three years? If you answered less than twice, you are probably in the minority. Further, ask yourself whether your strategic direction and/or customer requirements were the drivers of those reorganization efforts?
The fact is that the traditional mental model has resulted in corporate reorganization becoming one of the most frequently attempted, and yet one of the most poorly executed, of all business management activities.
Turf protection is the second legacy of the traditional functional mindset and may indeed be one of the most Machiavellian inhibitors of customer focused performance improvement. Just think of the number of improvement efforts in your organization which were thwarted or stalled due to turf wars. Consider the number of IT systems designed and implemented to serve the perceived and sometimes narrow needs of a given functional area.
So ask yourself the following. Do your corporate leaders focus more on reporting relationships and protecting their domain than on the flow of activities in delivering products and services to customers? Do you find that improvement projects such as TQM, Six Sigma, and reengineering are often defined in terms of functional boundaries, leading to sub-optimal results, duplication of effort, and implementation challenges? Is there a greater focus on traditional financial measures of 'plan versus budget' as opposed to the sought-after measures of the quality, timeliness and cost of services provided to customers? Are information systems projects defined in terms of functional boundaries, and do you find that various IT systems don't communicate well with one another?
If you answered two or three of the above in the affirmative, then you have a leadership team mental model challenge. Since business is truly a team sport - this matters enormously when it comes to enabling or impeding execution.
Why does business process thinking represent the foundation for a viable alternative mental model to traditional thinking?
First and foremost, it is based on one simple truth. Organizations create value for customers and shareholders through a series of activities which cross organizational boundaries.
Next, it offers a powerful framework to test the feasibility of organizational strategy through identification of critical issues or the size of the performance gap which needs to be bridged to deliver on strategic initiatives.
Best accomplished by developing a relationship map of the organization in the context of the core business processes which create value for customers, this mental model facilitates asking meaningful questions around what level of business process performance needs to be attained to deliver on strategic direction. This can be a refreshing change from the cluster of buzzwords and jargon which often accompany strategy discussions. Questions such as "What is our current performance in delivering 'perfect orders' or 'perfect service delivery' and what does it need to be?" and "What is our recent performance in new product or service introductions, and what does it need to be?" can inject the type of realism that organizations need to evaluate the feasibility of delivering on strategic direction.
Then, business process thinking and the real time application of BPM can be instrumental in developing clarity around cross group interdependencies and the type of organizational alignment which facilitates execution of strategic initiatives.
Process thinking and the application of BPM practices are equally instrumental in creating more balance in the organization's performance measurement system as qualitative measures of timeliness and quality are juxtaposed against traditional financial metrics.
Clarity around the cross functional relationships of core business processes also offers a performance based framework to test the logic of corporate policy, and the means to align reward systems with desired results in creating value.
It can also be instrumental in creating an atmosphere where individuals' allegiance can be shifted from a departmental or group focus to a business performance focus. Ask yourself the following. Is it more compelling to be 'part of the call center organization' or 'be responsible for taking perfect orders'? Is it more meaningful to be 'part of the R&D organization' or 'accountable for delivering innovative new products'?
Process thinking also places information technology deployment into the proper perspective as a means to enable business process performance. It takes IT projects out of the realm of the 'big bang' and makes it possible for operational goals to drive IT investments. When line executives adopt the business process mental model there is a greater likelihood that the tough questions will get asked and less chance that they will delegate the responsibility for fundamental decisions around IT systems to the CIO.
Perhaps most importantly, when a leadership team genuinely adopts a mental model based on business process thinking, the theoretical benefits offered by improvement initiatives such as TQM, Six Sigma, Continuous Improvement, Activity Based Costing, Reengineering and others are more likely to be realized.
But let's be clear - transforming the mental model of the leadership team is the task of the leader. It requires passion around the concept that the creation of sustainable, competitive advantage requires exemplary business process performance supported by of a unique mix of values, policies, structures, technology and rewards.
It demands that the leadership team get their hands just a wee bit dirty and work hands-on to develop a shared understanding of the enterprise level business processes and organizational relationships which drive performance.
Some might argue that business process thinking is not new. Well, that's certainly true. It was implicit in the much of the quality work of the '70's and '80's and explicit by the early '90's in articles and books by Dr. Thomas Davenport, Dr. Michael Hammer, Dr. Geary A. Rummler and Alan Brache, and others.
Why is it that business process thinking hasn't yet replaced traditional functional thinking as the predominant business mental model?
One of the major culprits is arguably the IT community. In the early 1990's, when executives asked whether their IT systems can routinely measure the timeliness and quality of business process output performance, they got the, by now famous Hertz commercial, answer - 'Not exactly'. Then ERP systems came on the scene with outsized promises of unprecedented flexibility and robustness in IT systems. Many companies realized all too late that what appeared to be adaptable in the design phase became more than slightly rigid after implementation.
Now, advances in technology offer new hope. Some IT experts believe that the capability already exists to automate what business process advocates have been asking for over a decade. It is argued that the dual forces of globalization and commoditization which demand that cross company systems communicate will inevitably drive BPM. [Business Process Management, the third wave, Howard Smith and Peter Fingar, Meghan-Kiffer Press, 2003]
One might say that it is a tribute to the durability of the business process mental model that it hasn't gone away. Instead, quite the opposite is happening. There's a groundswell building in both the academic and business community as people who were originally drawn to business process thinking years ago refresh their knowledge and interest. Leaders looking for ammunition to fire up their troops are finding the combination of logic and emotion in business process thinking attractive and compelling. During the past couple of years we have seen resurgence in the promotion of business process thinking and BPM technologies.
So the stage is set for business process thinking to take its rightful place in the boardrooms of the nation. The key question is not if - but when.
Maybe process thinking and BPM is nearing its 'tipping point'. It surely has a growing core of ardent advocates - or change agents. Its simple elegance makes it both effective and memorable. The key determinant of the rate of adoption may well be determined by the context provided in both the external business environment and the IT community. [Malcolm Gladwell, The Tipping Point, Little Brown & Company, 2000]
Is now the time to begin transforming the leadership team's mental model and employ process thinking so as to provide the missing link between a company's aspirations and its results? Is it worth the effort? The decision is yours to make!
Andrew Spanyi is the managing director of Spanyi International Inc., a consulting and training company that operates in the field of organization and process design. He has worked with executive teams at global organizations for nearly two decades, assisting them in transforming the way they tend to think about their business. He is the author of 'Business Process Management is a Team Sport, Play It to Win!' Visit the book's Web site at http://www.anclote.com/spanyi.html. You can also reach Andrew at email@example.com or (905) 302-4061.
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