Process Enterprises
01
History
In the 1990’s, leading companies began to organize their operating structures around their core business processes to create and sustain high performance process designs. One major electronics manufacturer said that the main reason for the change in its business structure to a process-centered organization was that the company realized that it could not overlay high performance processes on a functional organization. They concluded that the process centered structure enabled the company to respond quickly and effectively to a number of different critical business problems.
What We Do
Our services are aimed at assisting business in implementing new processes to become more efficient, increase sales, and decrease expenses.
The problem?
Many contemporary business issues are fundamentally about solving process problems. For instance, the only way to achieve six sigma quality (for which processes are the basic vocabulary) is through careful process redesign. Similarly, e-commerce and e-business are empty fantasies without a process perspective. Connecting with customers and suppliers over the internet is fundamentally an exercise in process integration. A process focus is also a prerequisite for customer focus and customer relationship management. Customers only care about results, and results are created by processes. Even the successful management of mergers and acquisitions is really an issue of process management. Bringing together two companies (as opposed to two balance sheets) means combining and integrating their processes. Equally important is the combining of the different cultures and the need to manage the differences in people issues implicit in combining two cultures.
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Designing a business around its processes enables the business to respond to constant change. The traditional departmentally organized business was designed for execution, not for change. However, it lacks the mechanisms for recognizing and responding to change, and its rigid structure does not easily accommodate change. Among the reasons for this are that the different departments of a functionally organized business generally do not have common goals and their measurement systems are often in conflict with each other. Interdepartmental co-operation, which is a fundamental requirement for every process to operate effectively often focuses on issue of “turf” and “who is in control” rather than dealing directly with serving the customer’s needs. A process enterprise is different. Its intrinsic customer focus and its commitment to outcome measurement make it vigilant and proactive in perceiving the need for change. The process owner, freed from other responsibilities and wielding the power of process design, is an institutionalized agent of change; and employees who have an appreciation for customers and who are measured on outcomes are flexible and adaptable. One CEO of a major manufacturer put it this way: “Process is critical because it allows you to change faster than the competition.”
Processes are becoming the centerpiece of business strategy. In a world of commoditization and short product life cycles, companies can no longer define themselves in terms of their products. They must instead define themselves in terms of their key processes. World-class processes can be extended into customers’ operations to increase differentiation and revenue; they support entry into new markets and new businesses and they can become direct revenue generators, as companies perform their best processes for others on a fee basis or even sell them on a turnkey basis. In a world of unpredictable change, strategy can no longer mean planning for the future. It means creating process capabilities that can be exploited in new ways. In other words, the company that is best positioned to survive is one that has established the means, both in terms of its internal structure and its communication, that permit it to respond immediately to changes in external market conditions.
Well-managed processes are among the business’s most precious assets. When properly structured and managed, they deliver extraordinary customer value in the short term, provide a platform for change in the medium term, and represent the basis for future growth and innovation for the long term. Only a process enterprise will realize these results and thrive in the new economy.
Every business that wishes to convert to a process-centered enterprise requires a critical mass of people who are both committed to the change as well as those who understand how a process enterprise is designed, implemented and managed. These individuals play a critical role in both the transition to the process enterprise and its subsequent operation. They are the catalysts who persuade the company to undertake the initiative, they plan the transition in its implementation, they play leadership roles on process design teams and they are the resources to whom others throughout the company will turn for guidance and counsel. Everyone in a process organization must have a basic understanding of the process concept, and managers need in-depth understanding of their new roles and responsibilities. But the process leaders are the experts who guide all the rest.
Values, Design and Operational Structure
Creating the Customer-Centered Enterprise
In order to create processes that are customer-centered, the following are fundamental:
Everyone in the organization must understand and have a solution-oriented mind-set that focuses on solving customers’ fundamental problems.
The entire organization must present a single face to the customer. There cannot be mixed messages.
Operations must be designed from the customer’s point of view.
The culture must be one that puts customers first.
Customers must be treated as critical business assets.
Every contact that takes place with a customer and everything that is done with a customer must be designed from the perspective of building strong and lasting customer relationships.
Customer Power
The New Economy
Although mastery of technology is critical in the new economy, perhaps the most defining feature of the new economy is the power wielded by customers. Where the power was once centered in the producers of goods and services, the balance of power has now shifted to buyers. Globalization and overcapacity have taken competition to a new level of intensity, while commoditization and information availability means that customers have more choices than ever before. The result is that both consumers and corporate buyers now have the upper hand over their suppliers, and companies that continue to take their customers for granted will not survive for long.
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Customers can no longer be treated as after thoughts. They must lie at the center of how a company is defined, organized and operated. Most companies still describe themselves in terms of their product and service offerings. They see their mission as creating these products and customers as just necessary evils whose role is to buy them. These companies typically organize themselves around these product offerings, and their operating processes are designed for their own convenience. All this may have sufficed when customers could be taken for granted, but it is no longer acceptable in the new economy. Companies must now realign their business models to put their customers first. The essential feature of being customer-centric is to make life easier for your customers. Many businesses given lip service to the concept of having a customer focus, but to truly have a customer focus demands far more than a superficial response. Slogans about delighting customers and distributing smiley-face buttons will not suffice. Every aspect of the business must be rethought and realigned in customer terms. A company must define its basic value proposition in terms of solving customer problems; selling solutions rather than products must be the fundamental strategic message. The business enterprise must present a single face to its customers so that customers do not have to struggle by dealing with a host of different business units with multiple points of contact. Every operating process must also be designed with the customer’s needs in mind. Underlying all of these must be a culture that puts the customer first.
In order to achieve this result, the business must examine and rethink everything that is done in the contact with and delivery of products or services to the customer. The ultimate objective is to redesign the process in order to deliver outstanding customer value and service. The issues that need to be examined in achieving this are the following:
Identifying the voice of the customer.
Identifying the points of contact with the customer.
Fashioning a method of responding to the customer in order to create value.
Reexamining the existing structure to determine whether it is internally focused vs. customer focused.
Identifying whether response to customers is by a series of unrelated tasks or in accordance with a system designed to create a solution.
Reexamining pricing so that it is based on value.
Organizing in terms of markets.
Taking responsibility for customer success.
Approaching all customer contact situations by looking through the customer’s eyes.
Monitoring customers’ changing needs.
Instilling universal appreciation for customers.
Examining cycle time and costs with a view to minimizing cycle times and reducing system costs.
Reexamining measurement systems so that they are centered on the degree to which they result in customer satisfaction
The result of these efforts should be to have customer focus as a discipline practiced by everyone in the business rather than a slogan to which lip service is given; customer loyalty will be built and sustained; everyone who has contact with the customer should become an integral part of the customer’s business activities.
Ultimately all of the foregoing becomes a matter of “how do you accomplish these things?” In other words, how do you:
Create compelling customer value propositions?
Identifying the points of contact with the customer?
Become recognized as easy to do business with?
Put the customer first in everything you do?
Get past the clichés and really focus on customers?
Harness your customer relationships for lasting success?
Align the structure of your organization to produce and sustain the foregoing results?
No Going Back
At a seminar dealing with implementation of a Process-Centered Enterprise, one senior executive remarked that the journey was painful and agonizing, but her company would never go back to the way things were.
