Nathaniel: Thank you for joining us! Today we’re joined by Dr. Mathias Kirchmer, CEO and managing director at BPMD. Mathias is also a speaker at our upcoming BPM in Banking event. Dr. Kirchmer is a visionary leader in the field of BPM, somebody I’ve known for two decades and been a great fan of his work. He is the author of six books, including his most recent, “Value-Driven Business Process Management: he Value-Switch for Lasting Competitive Advantage”. He is also a faculty member at the University of Pennsylvania.
Dr. Kirchmer, thank you for joining us today.
Dr. Kirchmer: Thank you very much for having me, Nathaniel.
Nathaniel: Our pleasure. To start, you’ve spoken quite eloquently and wrote in your books and other work about the value of BPM and really establishing that. With our upcoming event, that’s a core theme really talking to the business side of BPM. Could we start with your thoughts on the value of BPM and how you demonstrate that in the organization?
Dr. Kirchmer: Yeah. It’s a great topic. About five or six years ago, the typical BPM practitioner was the person sitting in a dark room and inventing a new repository tool, a way of describing business processes, but there was little to no real business effect on that. That’s why many top executives always smiled a little bit when they heard about process and process management, as well as the hobby of some of our guys. That has changed very much in the last four or five years.
A key reason for that is now the process management-related methods, tools and approaches has achieved a maturity level that you can really focus on the outcome by applying them and not just on developing the tools. That’s why more and more organizations really use process management in a more systematic way.
I lead a little research months ago together with the University of Pennsylvania and Queensland University of Technology about the value of BPMs. What do companies do when they get out of it? It was very interesting to see that, basically, each of those 96 companies that we interviewed mentioned that BPM has done greatly to achieve a much higher transparency over their business, which again has to take a vast well-informed decision and act on them.
But even more importantly, this transparency helps to manage and mitigate the trade-offs of other very important business goals like quality and efficiency, like agility and standardization and compliance, like innovation and conservation of good practices or like internal alignment and external integration into company networks. So BPM has become a powerful outcome-focused and value driven management, basically.
Nathaniel: That’s a really interesting point. One of the things that stood out in what you were describing is this notion of transparency, which is a goal for many organizations; generally, though, from the perspective of compliance and good, corporate citizenship, not so much as a value-generating activity.
What I was hearing in what you were saying is it really can be a leverage point at least for value creation.
Dr. Kirchmer: That’s exactly it. Imagine, for example, the call center operations of a bank. If you then use BPM you can figure out which part of those related processes are really important for the client, and these are the areas that you would focus on quality. And each part of the entire process are purely administrative and no clients really care about. In those areas, we would focus on efficiency, on cost and time reduction.
And at the end, you end up with a process that achieves both quality where it really makes sense and efficiency where it’s required, and all that is enabled through the transparency that BPM delivers, or it tends to figure out where it really makes sense to be flexible, to be agile when you deal with clients and you develop new financial products. Where does this make more sense, or even if required to standardize and to follow compliance requirements? You, for example, don’t want to have people be too creative in the financial department where they just have to follow a little requirement.
And again, business process management and the transparency it provides helps you to manage a degree of freedom that you give people so that, in an overall picture, you achieve the necessary and required agility, but also the required compliance.
Nathaniel: That’s a great point. I liked your characterization at the beginning about how we’ve evolved from the role of BPM in the organization as being something really sequestered to the shadowy back office and being something that is much more front-and-center and much more of a strategic focus.
There’s still this issue. And I think for those of us who have been involved in the industry since the era of BPR and process reengineering back in the ‘90s, there’s still this bias against BPM where it’s seen as being overly-prescriptive, people that don’t really know the business coming in and telling you how to do your work as opposed to tools for those that are the subject matter experts, are the domain experts, to be able to respond better, respond more quickly.
Are you seeing that bias still or something that has to be overcome in selling the concept of BPM to stakeholders and executives?
Dr. Kirchmer: Yeah. That’s another great point. Of course I see that bias still in organizations, but I see more and more companies overcoming this and considering BPM a real management discipline. A management discipline that helps them to move strategy into IT and people-based execution and do that fast and at lowest risk possible.
In order to do that, of course there are areas where BPM prescribes or suggests to use certain approaches, certain methods perhaps that is the same in any other management discipline. Look at your HR departments. Your HR department also prescribes how to hire people, how to handle retirement, how to handle a promotion. Everybody’s organization is kind of glad to have that support because that means that not everybody has to reinvent the wheel
And business process management is exactly the same. BPM helps you to work in an efficient way with your processes to get really value out of it, as discussed before, and therefore it provides some standards and guidelines, but those standards and guidelines lead, as explained, to a situation that you manage the degree of freedom that people have, so that people who need a lot of flexibility and creativity, for example in dealing with their clients, they can get that, for example, by defining processes on a very high, very trusted general direction.
Whereas in other parts where you want people to follow some legal requirement really step-by-step where you would not give them that flexibility to be a creative, where you would really have them work according to specifically-described processes.
And BPM is all about focusing and defining the right degree of freedom. It really helps and is crucial to make strategy happen.
Nathaniel: That’s a really great point. That’s one that I think is lost very often. A term I have heard in connection to that is “guardrails” – that we’re providing organizational guardrails, so that organizational leaders, stakeholders, subject-matter experts, those that have know-how and need creativity can perform to the best of their ambition and ability, but the guardrails are in place to keep them going off the cliff completely.
Dr. Kirchmer: Yes. I think that’s a great picture. You know that it’s the same with a jazz band. If you listen to a jazz band and then you see that the musicians can improvise, but they improvise within a specific framework. They have to stay within the harmonies and the chord changes. The tune, overall, still makes sense. Then, even further, when they have finished their solo, they take a step back to support others. They are just following their guidelines, more or less.
So that’s real management of that large degree of freedom that leads overall to the best result possible from the band, and that’s exactly how a company would function.
Nathaniel: That’s a great point. And that’s a great metaphor of the jazz band. I like that. Part of that, when we’re talking about the organizational structure and the leadership and management structure of the organization as it relates to BPM, there’s this notion of the CPO (Chief Process Officer). Is that a role that you’re seeing that is a viable role? Are you seeing it materialize in organizations?
Dr. Kirchmer: You mentioned before that business process management has been migrating to a real management discipline, especially in the last five or six years. It has become very obvious. If you have such a management discipline whose job it is to bring your strategy into action, to orchestrate that across the different functional organization units in the company, then you need of course somebody who leads the entire effort.
Therefore, we’re seeing more and more organizations emerging top management role that I like to call a Chief Process Officer. [14:59 inaudible]. There are different ways of calling it. I know several companies that call it Chief Process and Innovation Officer, so they combine the classical CIO with what I call the CPO. I saw companies call the role Senior Vice President of Process Performance or VP of Process Excellence. A different name, but it’s a very, very clear trend that companies put such top management positions in place to manage that BPM visibly.
Nathaniel: That’s a really interesting point. As we close out this conversation, perhaps you can talk a bit more about the notion of BPM as a discipline and offer some lessons that can be applied to running a BPM discipline.
Dr. Kirchmer: If you want to build such a BPM discipline, many of the approaches of course depends heavily on the situation in the specific company. A very traditional company where people are not at all used to change will approach the setup of such a discipline in a different way than an organization where people are used to change on a daily basis, so it’s not that easy to have very general lessons learned.
While working with many small, but also very, very big organizations, over the last years – and I have worked with 15 organizations in the last three years to set up such a BPM – one key point that became very clear is that you of course need real top management support. If you want to introduce a management discipline, and especially if it’s a new one like process management, then you need the top management support, ideally of course, the CEO; but if you do that on a division level, at least by the division head. So top management support, absolutely a key. Otherwise, you cannot realize the full potential of such discipline.
Second, of course, if you put such discipline in place, as you mentioned earlier, Nathaniel, there will be lots of people in the organization who are very skeptical. It’s absolutely key to convince those people and you can only convince them by producing quick benefits.
That is a clear, clear lessoned learned. Those organizations who try to take the first 8-12 months just to set up the infrastructure without really having an impact, they normally fail. You need to find a BPM process agenda that combines both achieving quick benefits, and by doing that, building sustainable BPM capability that you can keep on using in the future. But quick benefits is a very, very key topic.
A third one that I want to throw in is try not to boil the ocean. I know when I talk about the BPM discipline it sounds like now we have to change everything and to transform the entire company and turn every process that we have around. I can only tell you most of the companies who tried that trained and gave up, and nothing happened at all.
A key task of BPM is that they figure out where to focus on. Where are the high-impact, low-maturity processes that we can make a difference? Start there and roll out discipline step-by-step over the organization. The pace really depends on what your company can digest, but as a general rule, don’t try to boil the ocean. Focus on the most important.
Nathaniel: Those are really great points. Maybe if we could close out with one last thought to your first point about the critical importance of having top-level sponsorship. How do you gain that sponsorship? What is your best advice for winning sponsors?
Dr. Kirchmer: I think that leads back to the beginning of our conversation. You cannot win over a CEO or Chief Strategy Officer by explaining a repository function or what a process automation engine is. Those people don’t care.
The only thing that top executives are about are the business outcomes. That’s why when I talk with key-level persons about process management, I generally don’t even use the term “BPM” but I just discuss the outcome. I discuss how to combine quality and efficiency, how to make agility and compliance happen, how to figure out where you need process innovation to grow your business and where you better conserve practices, how to align people behind your strategy and how to get a partner, customers, and suppliers included in your enterprise network.
These are topics that top executives will think about. And once we agree on the values that we want to get out of BPM, then as process management practitioner, you can line up the methods and tools and infrastructure and everything you need behind it. But if you want to win over top executives, think about the outcomes, explain the value that can be created and agree on the result you do want to achieve in your organization, and then you will get C-level people into the boards and gain their support and respect.
Nathaniel: Perfect. Dr. Kirchmer, thank you very much.
Dr. Kirchmer: Thank you very much, Nathaniel. I’m very much looking forward to the conference at the end of September.
Nathaniel: Great. So are we. Thank you for joining us. That concludes our podcast.