BPM.com

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/

It is obvious that in today’s marketplace, every organization must become more efficient. In a Lean and Six Sigma world this means eliminating waste, which will assume one of these forms:

Overproduction and Inventory: Both old and new organizations easily fall into the trap of overproduction, some producing goods before there are buyers while others are producing more goods than there is demand for. Both situations are bad for the organization, especially from an internal perspective. From a customer perspective, overproduction might lead to shorter delivery times and lowered market price. The customer-oriented perspective might indicate that customers get the products in the time and that the price is balanced with the value it delivers to customers. Overproduction is something to be avoided, but at the same we need to make sure that we have right amount of goods in inventory to be delivered within the timeframe that customers expect to receive them.
Are you measuring the expected and realized delivery times to your customers and the deviation between them?

Waiting: As we all know, waiting for something or someone in a process is costly. While waiting, people may not have anything to do and partly manufactured goods need to be stored somewhere. It also wastes time for employees to switch from one process instance to another. From the customer’s perspective it is undervaluing customer’s time, since the organization is not able to design their processes and inventories in such a way that there is no useless waiting times delaying the process. In some cases, business rules can cause situations where there is useless waiting.
Have you evaluated all your business rules to check if they are still valid?

Processing: This is one of the most customer facing phases in manufacturing, even though many organizations do not seem to think so. This is where time is taken, quality is put into products, customer value is created and pretty much all the work in an organization is done. It is not enough to measure all the bits and parts of the process from an internal perspective, but we need to also evaluate the processes from a customer-oriented perspective. That means seeking the answers to questions such as: “Is this something customers really need?” or “Does this process contribute to successful customer outcomes?”. With the customer-oriented perspective it is possible to extend traditional Lean and Six Sigma thinking to question the overall reasons for certain processes to exist in an organization. That will lead to increased revenue, lowered costs and improved customer service simultaneously. From a mere internal perspective, that is hard to come by.

Correction: When everything goes right everyone is happy, but usually that is not the time an organization is really evaluated. The true measure is taken in those moments, when something fails. And as we know, correcting costs a lot. Thus, organizations should thrive for making as little mistakes as possible. But since perfection is hard to achieve, organizations should prepare for proper correction. From a customer-oriented perspective, always seek the cause, not the effect of an error. And make sure that it is you who notices the error (first), not the customer. It sounds very obvious, so you probably must have clear measures and plans for reacting to reclamations and other customer feedback?
Are you measuring those with the same enthusiasm as manufacturing mistakes detected internally? And foremost, have you linked that information all together?

If you have inefficiencies in your processes, you might be making more goods than you need, having people waiting for turns in the process or you are not fixing mistakes efficiently. In many cases, you may be doing all the previously mentioned things right, but you are missing the customer perspective from your process optimization efforts; and that will prevent you from creating even better business.

 

Here are some tips for reducing waste in your processes:

Sifting – The internal (Six Sigma/Lean) perspective recommends removing things from the work area that are not required to do the job. The customer-oriented perspective adds to get rid of all the work that does not directly contribute to producing successful customer outcomes.

Sorting – Organize tools and materials. Also evaluate how those that are left contribute to creating value for customers.

Standardizing – Eliminate random elements that slow down production. But, at the same time create an environment that enables people to present their ideas on how to improve processes. Standardize your processes for manufacturing successful customer outcomes (products are just a medium for that). And while doing that, keep in mind where the process starts and ends for your customers, not just for your organization.

Self-discipline – Insist on consistent performance. Make the customer everyone’s business in your organization.

 

Summarized: first evaluate what your customers really need from your organization, and then plan to improve a process and do it. Check to see if it worked with both internal and customer-oriented measures. Then, based on the results, act to improve the process further. And do not do this all only from an internal perspective. Have the best experts to evaluate what you are doing: Your Customers.

 

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

Managing customer expectations and providing great customer service are very important nowadays. To be able to do that, you should build customer satisfaction into your business processes. Traditionally, organizations measure customer satisfaction once per year, long after service has been provided. Some organizations may measure customer satisfaction after a service, project or product has been delivered and then take corrective actions.
The problem with this kind of approach is that they are reactive, not proactive ways to respond to customer satisfaction.

If you build customer satisfaction into your business processes, you do not have to read those negative feedbacks of your actions after it is too late. Here are some ideas, how to build customer satisfaction into your business processes:

“KYSS – keep your systems simple.” Do not track everything, just what you need. Focus on major attributes that contribute to successful customer outcomes. To keep on top of the details about your customers, develop a tracking system listing their traits and main preferences. Update it after each interaction to keep it fresh. Customers will be happier, if your employees do not need to take a long time to browse through complex systems to serve them.

“If it is important to your customer, it belongs in your tracking system.” Record service preferences and personal data, which help you to serve them better. Include pertinent information on any previous missteps on your organization’s part concerning this customer and make sure that those problems will not rise again.  Customers will remember the mistakes that you have done and so should you. Do not record the mistakes to punish your employees, but to learn and improve.

“The information you gather needs to be available in real-time.” Make sure all front-line employees have immediate access to the tracking system. You should not make the customers to tell you something that you should already know. If the customer contact comes through email, connect that with your CRM. If you receive a phone call, identify the customer with their phone number. If they walk into your store, remember them if you can and if you can’t, then have customer loyalty system, which identifies the customer.

Because customer preferences change, assumptions are dangerous.” Just because a customer once ordered coffee after dinner does not mean that he or she will always want coffee after dinner.  Know your customer’s preferences, but do not get locked down because of them. You can ask them for example that would you like to have some coffee after your dinner. Do not be afraid to bring more value, for example by asking, if they would like to have some Costa Rican coffee that you imported yourself last week.

Customers’ moods change, so you need to track them.” Have your people track customers’ moods and make it their business to lift their spirit up. If people feel better after they left your business than before came in, then you have succeeded. That will make then come back and your employees will feel better of themselves, since they could make someone’s day better. It will also give positive kick to revenues. Be proactive, not reactive.

Do not dampen the customer experience with an impersonal delivery.” People like to be treated as individuals. Make every customer count and do not over look one for another. It is true that some customers are more valuable for the organization than the others, but you should never show that to your customers. For example, use the customer’s name on a liberal basis, always with a sincere, engaged manner.  And teach everyone in your organization good manners: to say hi and goodbye, thank you and other polite ways of working. Watch out for the caveat that your employees will look fake when being polite, because they do not want to be polite (you need to create a personal culture to serve customers in your organization).

Use technology to ask for customer’s information sparingly.” Ask only what you need to know to serve them better and they will happily share their information. Employ your database information discreetly. Do not sound like Uncle Sam watching them. You do not want customers to think you spy on them. And also, state clearly for what purpose that information is gathered for. After you have the information, use it! Too many organizations collect information just the sake of it and they do not use it intelligently to serve the customer.

 

To provide exceptional service, employees must think like your customers. Have your people eat in your restaurant or shop at your store. Let your employees use your services, so that they can see how they work. The old ways of measuring customer satisfaction do not serve you anymore and the reason is that you need to be proactive, not reactive. That requires you to build customer satisfaction as part of your business processes. Your employees need to know what may go wrong before it happens, so that they can prevent customers suffering from it. When you manage to do that, you do not have to send them annual customer satisfaction survey and take corrective actions long after customers have already dealt with the consequences.

 

 

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

The Blue Ocean Strategy is highly related to process innovation. The idea of this strategy is to build new businesses where none existed before. So-called Blue Ocean industries are more profitable than traditional business fields with head-to-head competitors. In the Blue Ocean strategy, you must offer your customers a value innovation (i.e. tangible product or service advancements) accompanied by demonstrable savings. To be able to do that, you have to look at your process innovation from a new perspective. Let’s revisit the six steps of the Blue Ocean strategy from a process point-of-view.

Reconstruct market boundaries – in a Blue Ocean strategy you must re-evaluate the premises that form your industry’s assumptions and shape your company’s business model. Easiest way to do that is to think: where does the process start for your customers and where does it really end. That does not only lead to expanded value chain, but also into completely new markets. Think about for example Ryanair, which is not only flying people, but also providing the whole holiday experience with accommodation and car rentals included. Holiday does not start and end for people when they fly (that is how traditional airlines used to think)…

Focus on the big picture – Keep your eye on the overall view and don’t get lost in the statistics. Many business strategists get lost in the data jungle, so they often miss where they – and their competition – are headed. You have to think what your customers really need from you and how your organization can provide them successful outcomes. Ask yourself every week: what do we have in our business processes that customers are not benefiting from.

Reach beyond existing demand – Businesses naturally focus on current customers, a process that invariably leads to greater market segmentation analysis. But, real growth lies beyond existing demand. To get to the open water, focus on potential future customers. Apple did not satisfy with just creating new versions of iPhone, they reinvented how people work with portable devices by introducing iPad. That for sure created them new reaches beyond traditional smartphone markets.

Get the strategic sequence right – Execute your strategy sequentially to achieve your value innovation. To be compelling, the technology must provide convenience, safety and entertainment. It has to make your customer’s life easier, simpler and more successful. Plan the experience you want buyers to have at all stages. Assess your service’s or product’s usefulness, ease, handiness, safety, entertainment value and environmental friendliness in light of how each factor affects the customer upon buying it, bringing it home, using it, adding to it, keeping it working and eventually, disposing of it. Remember that the customer experience is the process.

Overcome key organizational hurdles – Successful execution demands that your organization must resolve internal departmental differences. If you are still working in silos, try to create process bridges over them so that in the eyes of the customer you offer products and services as a one, solid company. Do not let your internal politics, bureaucracy, silos or other things get in the middle of you providing perfect customer experience every time.

Build execution into strategy – Reduce your management risk by incorporating Blue Ocean implementation into your organization’s ongoing processes. Make providing great customer experiences your main business. Teach people to think out of the box all the time and make sure that they are empowered to improve the processes. Make problem solving a team effort that everyone wants to participate in. If you do not build execution of great customer experiences part of your organization’s strategy, people will never do it. You can ask that for example from Zappo’s who are not just selling shoes, but are providing over the top customer experiences.

To succeed in Blue Ocean strategy, a value innovation must demonstrate actual savings and an appreciable benefit that a customer can use immediately. Your organization has to be able to fulfill the needs of your customers consistently all the time. The idea of Blue Ocean strategy is to build new businesses where none existed before and best way for you to do that is to start thinking about your processes from customer perspective.

Here are some reflective questions that you may ask:

  • Are your organization’s market boundaries clear to you?
  • Do you understand where your customer’s market boundaries are?
  • Are you playing with numbers or seeing the big picture?
  • Do you understand where demand for services and products in your target customer groups come from?
  • Are you able to work together as a team towards a common goal or does internal hurdles slow you down?
  • Is providing exceptional customer experiences built into your organization’s strategy?

 

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