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You may have come across the saying by Dwight David Eisenhower, which reminds us that it is not only necessary to do the right thing, but to do it in the right way also.
By aligning the process excellence to business strategy you can make sure that everyone in the organisation is contributing to the same goals. Many times business strategy is just a fluffy word to employees and does not bear real meaning to them. By focusing on business from an Outside-In perspective using customer centric processes techniques, you can make the strategy come alive in daily work.

 

First, let’s define the term process excellence used here. PEX Network has made a video about that which says that process excellence is the way that businesses create and deliver value to customers. So, when we ask how can you align your business strategy to process excellence, we actually ask how can we guide everything that is done in an organisation for the customers in a standardized and meaningful way?

To be able to do this, we may have to redefine how we create our business strategies. Traditionally, a business strategy is the means by which it sets out the organisation’s mission, vision and policies to achieve its desired objectives. It can simply be described as a long-term business planning that is concerned with the scope of a business’ activities i.e. what and where the company produces products or services.

The problem with this perspective is that it looks at the strategy from the organisation centric perspective (Inside-Out). Since the purpose of process excellence is to control how we deliver products and services to customers from the customer value perspective, these two things do not meet each other.

There is nothing wrong in business strategies as a concept, just in the focus we have when we build them.

So, to align business strategy to process excellence, we need to start building our business strategies from the customer centric perspective, optimising the value we create for the customer through our work. One of the key concepts for the business strategy is customer segmentation. If we use the traditional ways of segmenting such as demographics, psychographics and purchase behaviour, we will miss the opportunities we have in deep understanding of customer outcomes.

Therefore, outcome-based segmentation will be able to identify the gaps between the jobs customers are trying to do and the products and services they have available to achieve that. The traditional segmentation makes the mistake of believing that customers can be put into boxes based on their generalised characteristics. But when you build your business strategy based on identified customer outcomes, your focus will support innovation, marketing and aligning processes to maximum efficiency.

To achieve process excellence through business strategy, it must contain valid information not only about segmentation (who we sell to) but also why we sell. For example, the successful customer outcome (SCO) technique can be used to identify why customers buy our products and how can we offer them unique value. This information can be used as a solid base for process redesign and optimisation projects where everything that is done in an organisation is aligned back to the customer centric business strategy. Many times employees feel disconnected from the customer and that is why they have lost or never build a connection to both the customer outcome and business strategy. After you build your business strategy on serving the customers rather than the organisation, the employees will also see how they are part of the whole system, producing successful customer outcomes.

In summary: To align business strategy to process excellence, firstly you need to build business strategy from the Outside-In perspective using outcome based segmentation and customer identification techniques. Secondly, you need to align those back to everything that is done in your company from top to bottom. You can use e.g. process optimization methods such CEI (Customer Experience Innovation) to do that. You can even use these ideas joined with Lean and Six Sigma process optimization, as long as you take that information as a guideline for the optimization instead of plain organization centric waste removal.

 

Here are some reflective questions for you to ask regarding this topic:

  • What is the value base your business strategy is build on? Is it organization or customer centric?
  • Is everything that is done in your organization aligned to customer outcomes?
  • How do you drive the process excellence, i.e. the way to deliver value to customers?
  • Is strategy a fluffy work to your employees, which does not have true ringing to their daily jobs?
  • Are you still using the traditional segmentation methods, which do not give you proper information to deeply understand your customers?
  • Is your value proposition aligned to customer outcomes?

 

Get Janne Ohtonen's latest BPM book for free at http://addvalueto.me/download-a-free-process-leadership-book/

The pace of technological advancement is creating enormous potential to create and deliver better customer experiences through technology-enabled process innovation. But in order to reap the rewards, organizations need to move beyond the limits of their current business models. Instead, they must look to what they should be doing rather than just improving on what they already do.

We are quite used to running our businesses based on what existing technology enables us to make happen. For instance, today, technological innovations like internet-enabled mobile devices have allowed businesses to innovate news ways of doing things that were previously unthinkable.

But in many cases, we do not innovate enough – we need to start thinking about what kind of technology we actually should have in order to get the outcome we are seeking.

Many process and innovation methods contain a phase where you are supposed to evaluate how you can utilize existing technology to do your business in a more clever way. The challenge with this kind of approach is that we are already limiting our thought patterns to what is possible.

For example, let’s imagine that you need to improve the way that people deliver their files into your copy shop to be printed. How would you do it? Just imagine that for a second before reading further…

Maybe you were thinking about setting up some kind of web based system such as a form or email to send the files over to be printed. But is there something more innovative that could be done to do that? We will get back to this a bit later in this article.

The best practices offered by these types of technological solutions are only useful for a short period of time, because it is easy for competitors to start using the same technology and to copy the business model.

For that very reason, technology is not a good driver for business and you should look into next practices that bring more value. Actually, it should be that the business and – even more importantly – the customer experience is what will dictate what the technology must be able to achieve. We would not have landed on the moon fifty years ago, if were to use the airplanes that existed at the time, would we?

Technology can improve traditional businesses, if used as a proper enabler. For instance, several years ago photocopy shops in the United States were confronted with a major problem:  people were just not coming to copy shops anymore. The rise of powerful personal computing devices meant that people were able to print, scan, and copy from the comfort of their own homes.

To solve that problem FedEx joined forces with Kinko and came up with another kind of solution. The FedEx Office Printer is a simple application that operates much like the other printer drivers on your computer. Once installed, you will be able to send your files to print with FedEx Office Print Online in just a couple of clicks. Using this streamlined printing option, you can have your documents prepared at the FedEx Office location of your choice and ready for pickup, shipment via FedEx or local delivery. It is like having your own in-house print centre.

But how did they use technological advancements to promote their process innovation?

The classical technological advancement for a copy shop is to get faster, cheaper and better copy machines. Therefore, the business development is about finding better locations for the shop and improving the marketing to make it easy for people to find that specific shop. Process innovation focuses on eliminating waste in producing the prints and improving the in-store customer service.

What FedEx Office has done is looking beyond that classical paradigm. They may have asked: “How can we improve our customer experience through technological advancement?” and as an answer they come up with this idea of creating a printer driver that is easy to install and use directly from your computer. So, instead of finding technological solutions to improve their processes from a traditional perspective, they redesigned the whole way of running a copy shop business. That opened a whole new world of process innovation to them and that is why today they also offer cloud printing.

From a customer perspective, the copy shop has moved from the High Street to their personal computer. It’s more convenient for customers – they now have the flexibility to order copies whenever and wherever they want them; copies can be sent to the printers at any time and FedEx will deliver the prints to wherever they are needed.

From a business perspective FedEx has been able to create a new business model, which is harder for competitors to copy. The technology innovation was to create a new kind of printer driver. It’s a paradigm shift away from looking at what we can do with the technology to what we should be doing.

Of course some ideas are not technologically possible at the moment, but that does not mean that we should not consider them. For that reason a famous elevator company is one of the main investors into a teleportation technology. Even though at the moment we can only move state of atoms from one place to another with laser beams, it does not mean that we could not do more in near future. And if you are part of that development, you will have very strong lead on your competitors.

Customer strategy should be the most important driver of your business strategy, which should drive the process strategy, which, in turn, should be supported by the technology. What you can do is to think, how technology should be used in your organization to enable better customer experiences.

I am sure that in most organizations there are lots of benefits to be gained just by using the existing technology in more intelligent ways. Moreover, if your organization has technology in use that is not useful, get rid of it. That will free up resources for using technological advancements to support process innovation.

Here are some reflective questions for you to ask regarding technology strategy:

  • Is customer strategy driving your technology strategy or the other way around?
  • How should you use technology to do better business?
  • Does the business plan of the organization also take the information systems into consideration?
  • Does the organization extensively use information systems?
  • How could you make more efficient communication channels for transferring information?
  • Should existing information systems be reengineered to support customer experience better?
  • How can information systems be aligned better with the organization’s strategy?

 

Get Janne Ohtonen's latest BPM book for free at http://addvalueto.me/download-a-free-process-leadership-book/

This article is based on the findings in Janne Ohtonen’s PhD thesis called BPMC – Business Process Management Capabilities, which was done for the University of Turkuduring the years 2010-2012. The results presented below are the capabilities that are related to successful BPM initiatives found in over 150 scientific studies conducted over the last 20 years and tested through case studies.

The Business Process Management Capabilities that were identified in this research are presented in the list below. These capabilities are divided into three categories to make it easier to read them. You can benefit from these capabilities by evaluating, how capable your organization is on doing business process management and then improve those areas that were identified as weak.

 

People BPMC Factors

BPMC1         Managers share vision and information with their subordinates

BPMC2         Managers place confidence between supervisors and their subordinates

BPMC3         Managers constructively use their subordinates’ ideas

BPMC4         Top management generally has realistic expectations about the projects

BPMC5         Top management usually has sufficient knowledge about the projects

BPMC6         Top management frequently communicates with project team and users

BPMC7         Top management generally supports changes in processes

BPMC8         Organization has empowered process owners, who are responsible

BPMC9         The employees are empowered to make decisions

BPMC10       There is open communication between supervisors and their subordinates

BPMC11       Co-workers have confidence and trust in each other

BPMC12       Teamwork between co-workers is the typical way to solve problems

BPMC13       There is performance recognition among co-workers

BPMC14       Management evaluates customer expectations when establishing the organization’s vision

BPMC15       Organization uses external consultants when needed

 

Process BPMC Factors

BPMC16       The performance measurements adequately correspond to the processes and changes into them

BPMC17       Everyone knows the cost of customer acquisition, the annual value of a customer and the cost of a customer complaint

BPMC18       The reward system adjusts to serve the employees after the changes

BPMC19       There are training and/or educational programs to update employees’ skills

BPMC20       BPM concepts and methodologies are known and understood

BPMC21       The project plan for process improvement is adequate

BPMC22       People are eager to improve the existing state of processes

BPMC23       Business process improvement efforts are important for the organization

BPMC24       Organizational structure can be easily changed when needed

BPMC25       No one has to worry about losing their job because of process changes

BPMC26       Employees feel comfortable with the new working environment

BPMC27       Organization has standard methodology for improving processes

BPMC28       Organization is able to respond to changes in markets quickly

BPMC29       Initiatives in organization respect each other and are heading in the same direction.

BPMC30       People know the whole system they are part of

 

Technical BPMC Factors

BPMC31       Information technology is integrated in the business plan of the organization

BPMC32       The organization extensively uses information systems

BPMC33       There are efficient communication channels in transferring information

BPMC34       Legacy information systems are re-engineered if necessary

BPMC35       IT is aligned with business process management strategy

 

The way of using this list of BPM capabilities depends on your needs. The list can be used in various ways for different purposes. If you want to know more about this research, BPM capabilities or applying them, please contact the BPM researcher Janne Ohtonen directly.

Please, if you use or refer to these BPM capabilities, quote the original source as: Janne Ohtonen, BPMC – Business Process Management Capabilities, University of Turku, 2012.  N.B.: this list is protected by copyright laws.

 

Get Janne Ohtonen's latest BPM book for free at http://addvalueto.me/download-a-free-process-leadership-book/

Lean organizational culture helps manufacturing organizations to stay on track with Lean in the long run. The Lean culture is critical for sustainability; and to change it, you have to change your management system. If you stop following through Lean practices because things seem stable and in control, it is certain that you will soon face unstable and out-of-control processes. Lean management culture is crucial to the success of Lean production, because it both sustains and extends the gains from establishing Lean procedures.

The Outside-In perspective expands the traditional way of perceiving Lean, which is very internally focused into organization’s activities. ‘Outside’ means looking at the organization with your customers’ eyes. Thus, Outside-In refers to improving organization’s internal functions with a customer-oriented perspective. Let’s discuss, how Lean organizational culture, i.e. the Lean management system, can be extended with the Outside-In perspective. I will explain the idea of Outside-In Lean in more details later in this article, but in short it’s about expanding the traditional Lean culture with customer-orientation.

 

To get maximum effect for organizational improvement, implement your Lean management system extended with Outside-In perspective as early in your Lean conversion process as possible. Use the techniques related to Outside-In to maximize the value your processes produce to customers and then Lean techniques to optimize those processes from internal perspective.

The basic outline for creating a Lean culture or management system is quite simple. But, keep in mind that, even simple systems require close attention and maintenance to run smoothly. You should build your Lean culture on the following essential elements: make the customer everyone’s business, standardize work for managers, have daily accountability and require discipline.

1. Make the customer everyone’s business: The customer is the very reason for an organization to exist. There is no need for Lean process management without customers, because there would not be any processes to manage, right? So, make the customer everyone’s business, because if their wage is paid by the customer, they should think how what they do contributes to successful customer outcomes that their organization should be producing. Getting rid of useless processes is more effective than tweaking them.

2. Standardize work for managers: People are not machines, so it is impossible to standardize everything. Managers and especially leaders should have sensitive ears and eyes for what is going on around them. However, it is possible to standardize some aspects of managers’ work to make sure that everyone delivers within same levels. Standardized work (for example task list) presents a clearly stated recipe for management, making it easier to evaluate managers’ effectiveness. That standard should not be solely build on internal tasks; it should also include evaluating processes from an Outside-In perspective.

3. Have daily accountability: Having brief accountability meetings every day is a great way to concentrate your efforts on active improvement (for example compare to daily Scrum meetings). In these meetings you can go through shortly what happened yesterday and what you can do today to make things better. Do not hold accountability meetings to share information of low relevance, or to have long discussions. While having these meetings remember to assign responsibility for the necessary tasks. And it is not forbidden to have customers join the meeting if that serves the purpose.

4. Require discipline: you can think of your Lean management system using a motorcycle metaphor. Standardized work is its ‘engine’ and your daily accountability process represents its ‘gas throttle and steering rod’.  Discipline is the ‘fuel’ that keeps the motorcycle running and the customer is ‘the driver’. Having all the elements of your Lean management system in place is not enough, because each has to be observed individually for the system as a whole to work.

 

For the Outside-In Lean methodology to thrive in your organization, it must permeate your culture and earn top management’s support in the same way as any process improvement endeavor. Since both Outside-In and Lean are specific ways of thinking, helping others adopt these mind-sets is a big part of ensuring the success. Transforming your organization requires considerable effort. The traditional and new way vary widely, so a conversion requires you to re-educate everyone in the organization, beginning with yourself. As an Outside-In Lean advocate, you are asking people to adopt habits and practices that are the exact opposite of what they are accustomed to doing.

To educate people (including yourself) about Outside-In thinking I recommend you to participate in a CEM (Customer Expectation Management) method training. You should also train yourself to Lean thinking and combine these two to get the best of both worlds. Do not hesitate to have other professionals help you, because they have knowledge on that kind of projects in other organizations.

 

Get Janne Ohtonen's latest BPM book for free at http://addvalueto.me/download-a-free-process-leadership-book/

Any process development program is a phased program. The first important phase is the launch. You need a plan in which the organization describes how it will roll out the Business Process Management initiative, selects processes for development and trains the people to lead the actual implementation.
Your plan for a successful BPM deployment should include, but is not limited to the following nine steps:

1. Choose a suitable BPM method. Not every process development method is suitable for every organization; you should make sure that you pick the one that helps your organization and then stick with it for long enough to get the benefits. If you have experienced help in BPM, you can combine the best aspects of different methods and make your own mix that best serves your needs. None of the existing BPM methods is the silver bullet.

2. Have executive workshops to train top-level people for BPM. It is very important to have top management on-board all the time. They should understand why BPM is important and how it can help to develop the business strategy further. Business processes are a way of implementing customer strategy and top-level people can be helped to understand that, by having workshops designed for their needs.

3. Training of people is important. If you are in service business, then train people to Customer Expectation Management. If you manufacture something, look into Lean or Six Sigma and train enough champions, master black belts and such. BPM is not any one method, it contains several methods, so train your people to whatever process method you decide to use. As a minimum, have every person in your organization understand the basics.

4. Create a clear statement of goals and a strategy for achieving them. There is no point in doing BPM, unless you have a goal to achieve. And since everything that is done in an organization is BPM, no organization can have success without a clear purpose. Keep your goals clear and your strategy for achieving them even clearer. Make sure that your business development efforts contribute to those. Everyone in your organization should understand what are the common goals and which strategy is implemented to achieve them.

5. Measure process performance and schedule them for review. You get what you measure, so make sure that you measure the outcomes that you want to receive. Many times organizations have KPIs that are internally focused and do not measure the right things. After you measure the right things, you need to follow how those results develop. Organize scheduled reviews for process performance to learn what you can do better and how.

6. Make a communication plan. Nowadays all works require communication and cooperation. You need to have a plan on how you are going to communicate the business developments to different stakeholders. Evaluate what information is important to whom and how to share it. If you manage to do communication well, other problems can solve themselves because of that. And if you handle communications poorly, you will get problems that did not exist before.

7. Create a system for identifying and prioritizing projects. You need to identify what process improvement projects are needed and then prioritize them. Here also the Pareto rule applies; you will get 80% of process improvement benefits from 20% of your business processes. Best way to optimize processes is to get rid of processes that do not contribute to successful customer outcomes and improve the rest.

8. Have a system for monitoring the progress of BPM projects and for auditing. You have to monitor not only processes, but also developing them. Make sure that your BPM projects stay on the right track. You can also organize internal and external auditions for BPM projects to maintain the quality.

9. Plan for rewards, incentives and recognition. Only pay for doing the right things. Reward useful innovations, give incentives on jobs well-done and give recognition on improving business processes. People do what they are paid for, so make sure that you pay them for the things that help your organization provide better customer experiences. Even little details matter, so do not overlook them, if they matter to the customer. Create a culture of positive change into your organization.

 

After the successful launch phase, it is time to move on to the management phase. It is important not to stay in one place, but to develop business processes all the time as customer expectations evolve. BPM is not a one-shot project; it needs to be an iterative, on-going process all the time. When you come up with really good ways to do things, your competitors will mimic it soon and therefore you need to be ready to take the next step forward when needed.

 

Get Janne Ohtonen's latest BPM book for free at http://addvalueto.me/download-a-free-process-leadership-book/

Do you have an employee reward model in your organization? Have you ever thought, who has designed it and for what purpose? Sometimes HR people design the reward model to keep people committed to the organization. In some organizations, management designs the reward model to keep people motivated to work. Financial departments may reward people based on financial numbers like growth in turnover and profit. And in some cases, it may not even be a bad idea to share the wealth that organization receives!

The problem with this, however, is that people may not know what exactly they are supposed to do to grow those numbers. How many times employees have been told to earn 20% more revenue this year while they are working on an assembly line? It is really hard to see the connection between the two, even though it does exist.

Business Process Management (BPM) is about managing everything that is done in an organization to provide successful customer outcomes. Also, people do what they are paid or rewarded for. Alas, organizations should combine the two things together and get the benefits of one serving the other. According to BPM research, it is very important that reward models adjust to business needs and to the processes fulfilling them. One research has shown that about 80% of the organizations in Finland have some kind of reward model. The question is, how many of those organizations have designed the reward system to support proper business process management?

If you have a reward model in your organization, take a few minutes and evaluate how many of the items that it has for evaluation actually help your customer to succeed? How many of them support you in improving business processes so that they will produce better results? I bet not many…
What should those reward models be based on then? Here are few ideas on that:

 

Reward model should adjust based on process changes

If you do not change the reward model when you change your business processes, people are going to keep on doing what they were used to. An answer to this is not to have high-level economic measurements for rewarding, because as I mentioned earlier, people may not know what to do. The reward model should reflect those things that will motivate people to do the things that will result to successful customer outcomes.
The model will have to reflect the business that you are in. For consultants, you can have more outcome-oriented measurement while for people working in manufacturing lines you need more accurate ones. But the difference to traditional thinking is in the ideology that each reward model is based on and also in its flexibility.

 

Reward model should be based on providing successful customer outcomes

As we all know, customers pay for those rewards to be given. Is it then not only fair to reward on results that come to them? Rewarding employees for growth in turnover will not help these employees to think about your customers. You get what you reward for, and that is a two-sided sword. Providing successful customer outcomes through well-designed business processes is a good reason to reward people. This requires changing the old mind-set of setting economical goals and controlling people with them. You will receive the economic outcomes if your people are doing the right things.

 

As a summary, my recommendation is to abandon the old ways of thinking about reward models from an organization’s internal perspective. Successful companies in 21st century design their reward models to support the successful customer outcomes produced through well thought out business processes.

 

Get Janne Ohtonen's latest BPM book for free at http://addvalueto.me/download-a-free-process-leadership-book/