Porter went on to postulate that activities make strategy operational; implying that the creation and successful management of a particular strategy is critically dependant on business managers understanding the firms activities in the form of its value chain. Only then can employees understand how their particular activities contribute to the whole.

With this in mind it follows that it is business managers of all levels that need to be given the tools to enable them to understand and manage their activities. Senior managers need to be able to visualise the value chain so they can formulate strategy. Middle managers need to understand their place within the value chain so they can successfully manage operational delivery.

None of this may seem particularly contentious. After all, since Competitive Advantage was published firms have used the value chain idea to radically re-engineer their operations and create entirely new business models. One only has to compare the current financial services industry to that of the eighties to see this in action.
But what I find odd is the ownership of the tools and the very particular way in which that ownership has skewed the way the tools have been used.

This all started when Porter mentioned the word ‘process’, in his context, as a sequence of related activities. Processes also relate to information technology where long before Porter came along, that section of industry was used to mapping out data flows as part of the design of IT systems. This in turn was a natural extension of the process engineering techniques used in the oil, gas and petrochemical sectors –‘the process industries.’ Since the process industries had already created specialist tools for the technical visualising of their processes, it followed naturally that IT would adopt something similar.

So when Competitive Advantage came along IT departments put the two together to visualise ways that IT systems could be used to create competitive advantage. Technical specialists used technical tools which employed technical language to map technical systems flows. Where there were obvious gaps or bottlenecks, so there were opportunities for the gaps to be plugged and the bottlenecks to be removed. But since this was all done by technical specialists with a great interest in IT systems, their obvious solution was for both to be achieved by process automation i.e. the application of more IT. The result was that service automation was born and with it the boom in new systems-led business models which has fuelled the last decade of growth.

But whilst the revolution which ensued has no doubt been profound and powerful, the nature of its birth has caused industry to tilt on its axis. It has meant that process improvement has been naturally associated with systems automation. The two have become synonymous. Along the way, the business manager – the very person that should be in control of competitive advantage and its delivery – has been cut out of the picture.

You may well take the view that it does not matter since regardless of who owns the ability to improve the business, the business has nonetheless been improved. But I would argue strongly that it does matter – and for one reason above all other, which goes right back to our dear friend Professor Porter.

If one takes the time and trouble to map out a corporate value chain and then to map up and down from supplier to customer, it becomes very evident that only a small portion is able to be automated. 20% appears to be the maximum quoted. So even when every department is able to access a multitude of workflow systems to aid human activity the bare fact is that 80% of industry involves activities that cannot be improved through automation. In our growing knowledge sector that figure is expected to be even higher. We still depend on human beings to innovate and 80% of information in industry is in their heads with a further 16% residing in the form of unstructured information. So even after the automation boom, the majority of activity knowledge is not being captured and used by business managers to create competitive advantage. In the race to adopt Porter’s ideas a great chunk of them have been hijacked by one sector of business – the IT community – and as a result business managers have been left out in the cold.

Surely now, with the enormous pressures on industry to become more agile, effective and efficient, it is time to return to the core of Professor Porter’s ideas. We have to put competitive advantage back in the hands of business managers.

In a recent Institute of Directors (IoD) publication, entitled ‘The Big Picture’, Microsoft’s UK General Manager of Marketing & Operations, Scott Dodds proposes a model for the business of tomorrow.

In it he states:

‘Successful organisations would be those that freed their people to work in the way they would be most productive, measured them by outputs not inputs, empowered them through innovative and flexible workplace design and supported them via a range of technologies and tools that helped them do their jobs more effectively. Forget business as usual….’

We would argue that the best organisations are already developing along these lines. For them, the concept of workplace is more fluid and both workplace operational management and interaction with people take on an entirely different form. It is this that we wish to explore in this blog.

The impact of cost on ‘the workplace’

Similarly, businesses are asking why and when their sales or purchasing staff need to spend hours on the road visiting customers or suppliers when again, a raft of good, new technology is available to avoid that. Sure, you can’t avoid some physical meetings but in many cases a web conference is easier, quicker, more efficient and often more effective. Employees arrive at the meeting less stressed and the technology is in place and integrated with the meeting organisation. There is no excuse now for a sales person to arrive at a client site and find they cannot log on to the client internet or that a data projector has failed. Online is not just cheaper but it can now also be better.

A third aspect of workplace cost is that of employment itself. As the economic outlook becomes more uncertain for many businesses (49% according to an IoD poll last week), some will look to build an element of flexibility into their labour force by replacing employees with contractors. Whilst contractors still require a place to work, the nature of their workspace can often be more fluid than that for a permanent employee with a concomitant reduction in facilities costs.

So with these cost-drivers to consider – and they are by no means exhaustive – what should today’s business of tomorrow look like?

An alternative workplace model

Dodds proposes that a hybrid organisation is the model of the future. He defines this as an organisation characterised by fluidity of both structure and process and notes that with the introduction of flexible working policies, virtual teams and the dissolution of compartmentalised office space, this is already happening.

Cisco propose something similar and has created a number of office configuration scenarios that revolve around plug-in hardware, integrated furniture and clever document and data management software. The recent raft of on-line meeting technologies such as Webex and GoTo Meeting support all of this by providing communications channels which enable a large number of physical meetings to be replaced by practicable and effective on-line discussions.

At the centre of this models is an assumption that with the latest technology, employees should be able to work anywhere and would be much more productive if they were provided with that flexibility. It assumes that working at home, office or on the road are interchangeable and that employees choose the venue based on the task at hand.

The big question is how to manage that. As Dodds quite rightly states, whilst technology is the key enabler, the real challenges are not (just) technological, but cultural and social. How should that technology be best used as a force for empowerment, innovation, creativity and productivity as opposed to being seen as Big Brother breathing down people’s necks?

In the early days of home working, the focus was on control: ensuring that Jo, Fred or Johnny were working hard at their desk for the prescribed hours, instead of shirking off to play with their children. Unsurprisingly that approach failed. No none likes to be that closely monitored and the raft of time-management software that was rolled out to cater for this did very little to enhance productivity, let alone build employee/employer harmony.

Thankfully now the focus has switched to the enablement of desired outputs with the aim that empowerment, innovation, creativity and productivity are genuinely supported. But that too, comes with its own raft of challenges. Not least of these is a real confluence of the technological, cultural and social challenges that Dodds mentions, but also some which he does not: particularly those relating to approach and appropriate methodology. The result is that we need to redefine the system we use to manage this.

BPM redefined

At work people interact with each other. Some of that interaction is purely social; some is to gain information and exchange ideas. In fact, people obtain 50% to 75% of the information they need by talking to others and as the diagram below shows, the vast majority of that information is in people’s heads. Only 4% is structured.

So the challenge for any management team looking to create a hybrid organisation, is to replace that valuable face to face discourse with equally valuable structured knowledge: knowledge that is available on-tap to any employee, wherever and however they work. This is much more than creating the online operational manual, which is fine for rigid, compliance-driven organisations but fails where the aim is to promote best practice.

In order to manage responsibility and facilitate innovation, a much more flexible and adaptive system is required.

We would suggest the components of such a system are as follows.

• Visibility and accessibility. It should enable knowledge to be presented visually and made easily accessible to any employee via any device or platform.

• Clarity and comprehensibility. Information and best practice should be easily understandable by everyone, regardless of their technical or specialist skills. It needs to be presented clearly with levels of increasing detail being made available on request. In that way, each employee can drill down to that which is most relevant to them, without having to spend hours searching around.

• It should be socially derived and peer reviewed. No one has a monopoly on the best ideas and it is critical that any best practice management system must enable ideas to be submitted from any quarter and peer reviewed by all.

• It should foster and promote self sufficiency: a key trait for all employees of the future.

In short this is about adaptive best practice and the practical enablement of that for all. It is not about rigid process control.

The underlying technological platform needs to be able to provide value in an entirely different way to that provided by current systems and much more directly to the end user. Current BPM drives tasks. The requirement for the hybrid organisation is to drive knowledge dissemination so that the organisation as a whole can learn and be able to apply that learning easily and practically. Some of that learning may feed back into process but most – especially given the nature of the user – would be delivered in the form of best practice.

Business Process Management doesn’t do this: it provides rigid control. Knowledge Management Systems don’t do this: they fail to sufficiently capture the required intricacies of best practice though a commonly comprehensible visualisation mechanism.

A new type of system is required: a combination of methodology and a different form of knowledge capture/dissemination mechanism to that which exists today. It is related to knowledge management in a much stronger way than it is related to process management, but nonetheless needs to contain elements of both.

If we wish to give it a name and stay with a similar acronym, a Best Practice Management system would be much more applicable than a Business Process Management system.

Summary

The business of tomorrow is for many, the required model to succeed today. The inherent flexibility, efficiency and nimbleness of the model described by Microsoft and Cisco is equally valid at equipping a business to weather a recessionary storm as it is the demographic and work trends around the corner. Whilst clearly it cannot apply to all business functions, it can apply to those which are heavily office based or peripatetic such as sales and purchasing.

Just as Lean has been successfully applied to manufacturing operations a move towards a more flexible workplace must make sense as part of a larger plan for an organisation looking to improve its productivity whilst keeping an eye on costs. In these recessionary times, there cannot be many businesses to which that does not apply.

The missing ingredient is a new type of system that can adapt to the social and cultural requirements of the hybrid organisation. Only when that is in place will managers be able to make such an organisation work effectively.

Not only can this cause corporate indifference to the sheer hard work it takes to succeed, but it can also mean waste actually grows as clever people enthusiastically create their own solutions to the issues they face.

Profound changes to the structure of business standards based on ISO9001:2000 e.g. ISO9000, 9001, 9004 and sector-specific derivatives such as AS9100, now facilitate better entrepreneurial management: improving innovation and operational effectiveness in the process. They do this by enabling companies to:

• uncover cost and mitigate the hidden risks caused by enrepreneurialism;

• optimise the 80% of their operations that are incapable of being automated;

• create protocols to capture, foster and disseminate best practice, drive continuous improvement and reduce the incidence of sub-optimal practices;

• extend improvement across the value chain;

• reduce time to market;

• create an operational framework and an underlying culture which will guide, drive, support and maintain agility;

• move way beyond the benefits and limitations of Lean, Kaizen and Kanban.

A new white paper looks at these issues in detail and shows how companies can harness changes inherent in new standards regulations to their benefit. It can be downloaded here

Whilst early compliance was largely about codification: stating what the organisation did and how it did it; modern compliance has moved very firmly to improving the ‘how’, through a move which has transformed compliance from box-ticking bureaucracy to a valuable tool for continuous improvement.

It can be argued that ISO 9001 and its derivatives apply to any company but it is the sectors that involve highly skilled people to which they really apply: particularly the high-tech industries of mechanical, civil, electrical, electronic, chemical and biochemical engineering; pharmaceuticals, aerospace and others based on cutting edge science or technology.

The organisations in these industries are the opposite of the white collar factories: the service and entertainment organisations that rely on process automation rather than people skills to run their operations. High tech industries need standards to capture, foster and disseminate best practice, not to replace human intelligence with an automated workflow.

Codifying the ‘how’ – once a tortuous process – has been made much much easier and quicker to accomplish through the predominance of visual process mapping tools. It is difficult to know which came first but certainly as procedures have been replaced by visual representations of best practice and their publication has become digital and interactive, the focus of compliance has shifted from codification to continuous improvement.

Whilst this is positive evolution and for the best companies represents a path that they would follow anyway, it implies and requires a cultural shift which many organisations appear to have missed.

Specifically:

• it requires a focus on outputs rather than inputs;

• it necessitates the move from a 1-way street where instructions are pushed out to the workforce, to a multi-way street where every employee is interactively involved in improving the organisation;

• it requires the organisation as a whole to change and for that change to be led from the top.

These changes have the potential to transform the nature of Quality and the implications of this cultural shift are explored in depth in a new white paper which can be downloaded here The Quiet Evolution in Best Practice and its impact on Business Improvement.

At long last, though a detailed understanding and application of these changes Quality departments can now take centre stage in business improvement.

The root of the ‘should we engage them at all’ question is the changing nature of BPM systems.

BPM as we know it, came into being when the US military created the first standard for process mapping: IDEF0. IDEF was quickly adopted by the Quality world as a means to speed and simplify standards accreditation (e.g. ISO) and was and still is used to create effective quality management systems. But effectiveness is relative and whilst such systems are much more effective than paper-based procedures, beyond that narrow definition they do little to improve the overall effectiveness of the organisation. The reason is the role of the end user. In quality management systems, the end user takes a passive role: at best viewing processes as and when needed for reference, just like accessing a library. To all intents and purposes in such a system end users are disenfranchised, so that on a day to day basis processes have little impact on their job effectiveness.

The next phase of BPM sought to address this issue through process automation. Instead of engaging the end user, such systems replaced routine human activities with automated systems. Whilst this worked well for mundane tasks and enabled jobs that would otherwise require skilled labour to be replaced with unskilled labour, it did nothing for knowledge workers:they remained disenfranchised.

Thus in knowledge-intensive industries such as engineering and high-tech manufacturing: those industries which are the engine of the recovery, systems-led BPM has failed. Whilst related business improvement methodologies such as Lean and Lean Six Sigma sought and continue to seek to engage the knowledge worker, systems-led BPM has sought to avoid them. Hence the third and latest wave of BPM: Lean BPM. This answers the question of ‘should we engage them at all’ with an emphatic statement: ‘most definitely: they are critical to continuous improvement’.

The second dilemma is ‘if we do engage them, how best should we do that’? One school of thought states that this is dependent on the nature of the business. If, for example the business’s model is dependent on process automation to enable unskilled workers to undertake otherwise skilled tasks, this school might recommend that engagement is limited to strict process compliance: the blind following of tasks with little or no improvement input. The Lean school would state the opposite: that continuous improvement can only occur when end users are fully engaged in process improvement and the aim of that engagement is to build a culture of collaboration and dialogue across the entire workforce irrespective of the nature of the business. Our experience at E Squared very much supports the latter. Organisations are able to move from a state of process chaos to clarity through process improvement alone. But the creation of genuine continuous improvement requires the additional component of culture change. That can only happen when leadership creates a groundswell of desire across the entire organisation to improve, so that the vital well of knowledge which is deeply embedded in the activities, skills and experience of end users is tapped and brought to the surface. It is relatively straightforward to build a process management system. But building an effective business improvement system is more difficult and is critically dependant on the hearts and minds of end users being engaged.

So the answer to the question ‘what is the role of the end user in BPM’ depends on the desired state of organisational improvement. If that desire is limited to the creation of clearer or automated processes, then the end user role may be limited to the occasional updating of the process library. In this context the term ‘End User’ might best be described as ‘Process User’, ‘Process Follower’ or ‘Process Viewer’. But if the organisation desires to be one of the best or even the leader in its field, then it can only do so if it truly harnesses the process knowledge, skills and experience inherent within its end user workforce. In this case, the term ‘End User’ might best be described as ‘Process Developer’ or ‘Business Improver’. Given this, it is unsurprising that across the whole of the BPM industry, there is confusion around the role and term ‘End User’. End Users are suffering from an identity crisis driven by the differing business requirements placed on their shoulders. There must be a better, more encompassing term. Answers on a postcard please.

It is very easy to understand why. In hard times and in true James Bond fashion, many CEOs reach for the ‘passenger eject’ button as being the most rapid way of shedding overheads. But that’s like an ailing individual faced with starvation adopting a slimline diet: it, as history has told us many times, can only make matters worse.

Overstretch is pernicious and has serious short and long term effects. Short term the immediate impact is on staff. Longer hours, unmanageable task lists, pressurised middle management and a generally unsympathetic culture lead to a raft of human and business ailments occurring. Worn-out people not only take more days sick but they also make more mistakes. Both increase costs. Eventually the best staff leave and as word spreads the business finds it harder to replace them. Turnover increases with new staff moving on much quicker due to the over-pressured environment. The result is a dilution of skills and a dilution of quality. Operational excellence plummets, customers leave and profits fall. Unless quickly and firmly checked, a spiral of decay will set in.

The classic example of this erroneous approach happened back in the early nineties with one of our most prestigious engineering companies: Rolls-Royce. Faced with heavy competition and spiralling costs, especially in development, the company embarked on wave after wave of redundancies across their core manufacturing operations in Derby, Coventry and Barnoldswick. Retirement deals were struck and hundreds of staff with unique aerospace engineering skills and thousands of years of experience were let go. The company did of course recover and transformed itself in the process. It saw the results and acted quickly to prevent the downward spiral. A new management team were put in place and an entirely different business strategy followed. But that took many years and the intervening period was very difficult indeed. Core skills were irretrievably lost and it is no coincidence that Rolls-Royce is today one of the staunchest supporters of skills rebuilding in UK engineering. It has clearly learned a very painful lesson.

So what is the answer? How can organisations today avoid the ‘slash and burn’ mistakes of the past? One very powerful answer lies in the Lean Six Sigma (LSS) approach adopted so successfully by the likes of GE, Caterpillar and Alcan. Lean Six Sigma narrows the gap between shareholders’ expectations and results and is the product of two very different but complimentary approaches. Lean creates value through the elimination of waste and non-value added activities. Six Sigma is a quality measure aimed at meeting customer’s needs. Together they enable processes to be brought under control to achieve quality targets, improve process speed, reduce waste and improve operational profits. LSS is the key to avoiding overstretch. It naturally aligns corporate vision and strategy with a practical method to enable its delivery. LSS organisations solve their own problems by empowering the whole organisation to be practically creative whilst never losing sight of the business, customer and employee needs.

Core to the management of LSS is the DMAIC cycle of Define, Measure, Analyse, Improve & Control. Whilst relatively straightforward to understand, the DMAIC cycle is more easily managed with Lean BPM tools such as Qmap. LSS states that to achieve excellence in one particular key performance area, excellence needs to be achieved in all related key performance areas. This implies a hierarchical process structure to make it work: i.e. the gain in the parent KPA is equal to the sum of the KPAs in the subsidiary (ie child) areas.

One particular organisation that has used Qmap to create a high performance lean structure and culture is Defence Estates, already previously featured in this blog. Optimising efficiencies whilst maintaining full operational effectiveness is difficult for any organisation to achieve. Doing so with 60% fewer staff in an environment where any fall in effectiveness can cost lives might therefore seem impossible. But this is what Defence Estates are achieving. Their case study is well worth a read.

David Key

‘Over-documentation is really counter productive and contrary to the intention of a QMS (Quality Management System). Management may not realize the issues that over-documentation causes or may not be able to match the causes to the root. This is a key area for QMS improvement.’

I couldn’t agree more. Over-documentation causes delays, confusion, inconsistency, lack of compliance, increased risks, increased error incidence, elongated and ineffective audits, project over runs and a range of costs associated with all of these.

Over-documentation is by and large, a culture issue. Organisations feel safe when they have reams of paper on which to fall back. They can claim that they know what they are doing because it’s written down in a manual. The reality is usually very different. Manuals are rarely read and by their very nature are usually out of date the moment they are printed. The procedures and processes within them are static, fossilised and have very little bearing on the reality of business operations. Those hardy souls that do venture in for guidance find the experience so dry that they rarely venture back. An organisation that over-documents, is usually reactive, static and struggling to compete.

But there is very good news for any organisation in this position: if ever there was a prime area for effectiveness quick wins this is it. It is very straightforward to breathe life into over-documented businesses.

It involves the operational equivalent of a Spring Clean. Cobwebs need to be dusted off and out of date procedures need to be replaced. Curtains need to be drawn and windows opened to let in a fresh, new light on the organisation.

In practical terms this means the following.

• Map out the underlying processes to which the documentation relates and identify the documentation and data which is critical to their completion. Use a common, unambiguous format that all employees can understand. This means avoiding symbols and conventions so often associated with process management (e.g. flowcharts and BPMN). The clarity generated by this action alone will create an immediate uplift in effectiveness.

• Bring documentation out of the dark by visualising and publishing those processes directly to users’ desktops. Manual’s are rarely read. Neither are QMS systems that become libraries. The system needs to be dynamic, interactive and directed to each user’s specific needs.

• Control and disseminate all relevant information at the point of need. In practice this means linking all documentation, data and media to the relevant process, activity or task. In this way users have a single point of access to all the tools and information they need to undertake their jobs. By linking the processes to documents and data within the QMS (even though the documents and data may be spread over several systems or servers) compliance and full version control is always maintained.

The very act of creating version-controlled, user-focused processes within a QMS can create an immediate improvement in itself. Linking such processes to a dynamic document management system so that documents are controlled and disseminated at the point of need, creates a further, significant improvement step.

So if your organisation is suffering the operational equivalent of Winter Blues, follow my simple 3-Step method and give it a Spring Clean. Everyone, from shareholders to stakeholders will feel the immediate benefit.

David Key

Here is the detailed case study.

See http://bit.ly/egWpbk

A range of companies from small consultancies to global enterprises have quickly sought to benefit from the advantages new Qmap creates in:

• Cost reduction
• Profit improvement
• Quality and Compliance improvement
• Lean and Six Sigma implementation.

If you are looking to reduce your operating costs, massively reduce your BPM training, hardware and maintenance requirements and engage end-users, process authors and process owners in rapid process improvement wherever they are based, then take a look at New Qmap. You will be in good company.