When approached without a clear understanding of the technological possibilities and a relevant examination of the organizational structure and policies (i.e pay) supporting it, Business Process Redesign is a complete waste of time.
In fact, I will go so far as to argue it is a destruction of shareholder value to invest time, human resources and actual cash in pursuit of improvements that will be minimized and/or never realized.
So what are the risks of the so-called “People, Process, Technology” approach?
- You can only contribute your process requirements based on what you know, but you can’t know the possibilities inherent in technology platforms until you’ve explored them
- You might design a process that only stays relevant for a year rather than 5 years and/or necessitates expensive upgrades, training and consulting fees with every step
- You might end up paying people to perform the old process, not the new process
- Your technology may require costly customizations or “work-arounds” to manipulate data outside of system support in order to support the new process
Say your current process involved 4 or 5 steps – it begins with a query to get historical data, extracting that data to a forecasting engine – something like excel or Demantra (no real difference), then running the model, then organizing the output into a useable format, running a series of reality meetings with Sales, Marketing & Operations and then finalizing the execution forecast.
Now, given that background and experience, in a typical process redesign, you would enter a room with big whiteboards or brown paper sheeting taped up and most likely a consultant (internal or external) standing at the front of the room saying – please – give me your requirements so we can design a process. What are you going to pull from in order to provide requirements? Your experience – what you know. Which means in effect you will be paving over cow paths – which might be charming in Verona but not the basis for delivering competitive differentiation for your company.
Perhaps even more frustrating is say that you are able to think out of the box and come up with a truly radical process that cuts out 4 of the 6 steps and if properly executed would increase accuracy by 10% and reduce cycle time by 75% and help improve order fill rates from 90 to 99%? And then you go out and look for a technical platform only to find there is no technology to support your process? Can you say frustrating loud enough?
So what is the right way?
Technology – Process – People
A comprehensive, holistic approach based on the principle that Technology should support Business Process, and Business Process should exploit the capabilities Technology can provide – Davenport & Short dubbed this recursive view of Technology & Process Redesign “the New Industrial Engineering” — Rather than lay out a step by step detailed process (proscriptive process design) you outline specific outcomes for the project (outcome based process design).
This would include:
- Identifying what is wrong with the current process,
- Creating a general vision as to where you think the current process could improve,
- Setting specific measurable goals for improvement – including areas to focus investment and amount or degree of improvement desired.
- Considering your pathway toward maturity – how much will it cost to improve down the line?
Within this framework, you can then invite technology providers in for conversations and focus on finding a partner with a technology that can provide measurable performance improvements as well as a platform that is flexible so that it can stay relevant for this process as well as future required changes as your business continues to grow and evolve.
Once you have a partner chosen based on technological prowess, flexibility, industry knowledge and compatibility, you can then engage in detailed process design in tight partnership with the technical platform you have chosen. You can then also do a review of compensation structures and organizational design to ensure these will be flexible in supporting new process and performance expectations.
[Quick word of warning: This does fly in the face of the normal RFP process where a company says, “Hey, we want to do something but we are not going to share the specific details or outcomes we are going to measure nor any of our criteria for success.” What ensues within the responders is a process of guesswork, misdirection, outrageous claims and leverage which, in many cases isn’t entirely dissimilar from a season of “Survivor.” And yet, after it all, many executives end up choosing based on faulty assumptions about long-term cost savings and NOT business outcomes.]
There has been specific research done on this by a few groups and the statistics are frightening:
70% of process redesign projects fail to deliver on the business case and the budget. Only 30% actually hit the minimum marks!!
The holistic approach, however, produced strikingly different results.
- 50% reduction in total project time,
- 35% reduction in total project cost,
- 70% improvement in technology uptake
- 60% improvement in attaining business case
This really seems like a no-brainer but yet, as noted at the start, people are still approaching corporate performance improvement like it’s 1985.
How can we evolve this conversation beyond old paradigms? What can be done to help drive efforts to improve corporate performance such that our companies not only survive but thrive?
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