When embarking on a process excellence journey, evaluate business value across six different areas.
Part of a series.
What is value? The most straightforward metric to measure business value is hardcore dollars – also known as the bottom line. But other components will significantly influence that bottom line, either directly or indirectly.
We encourage companies to look at business value across six different areas beyond hardcore dollars: Financial Performance, Business Agility, Scalability, Reliability and Predictability, Customer Experience and Quality, Visibility and Transparency. By evaluating these details at the start of your process excellence journey, you’ll be able to track precisely where your process efforts should focus. Along the way, you’ll have consistent metrics to show you where your efforts are driving results.
You can customize these areas for specific business needs (by combining two into one, splitting one into two or re-naming one, for example), but together they capture the underlying value drivers in a business.
In this blog, we’ll look at each area more closely, so you can determine the impact process excellence can have on your business.
A Closer Look at Process Excellence Drivers
Almost everyone wants to jump immediately to cost-cutting measures in their process when they consider financial performance. This is a key factor, but try looking at it from a revenue perspective. Leveraging processes to grow or recognize revenue faster can lead to strong financial results and a competitive advantage.
In recent years, we have seen an increase in customer onboarding and product development, process improvement activities across numerous industries lead to significant added value.
In today’s ever-changing marketplace, the ability to rapidly adapt to market opportunities and threats in a cost-effective and productive manner is key to short-term and long-term survival. Processes with flexible technology platforms, such as business process management systems (BPMS) and rules engines, allow companies to quickly adapt pricing strategies, cash management and other vital processes.
Part of business agility is building support in a controlled manner for continual process change, so the value you gain through a flexible technology platform is not negated by cumbersome processes for implementing change.
Think of scalability as growth without growing. Scalability can look like growing your revenue by 40 percent while only growing ongoing expenses by five percent.
After times of economic hardship or unpredictability, we often see scalability become a primary focus. As you look to efficiently grow operations and top-line revenue without adding expenses, you’ll need to make necessary strategic investments to increase overall efficiency.
If your company has aggressive growth targets, proactively managing this growth avoids painful expense cuts later. Painful cuts directly impact customers and employees when a slowdown in growth occurs. Managing growth can also better position a company for the next recession.
Reliability and Predictability
Consistent processes let change happen more efficiently. You can change a consistent process much easier than reconciling a process performed in multiple ways. You’ll know when your process is consistent when it’s reliable and predictable.
Delivering predictable, repeatable and consistent operational performance is key to success in any industry, but especially in highly regulated industries like healthcare, financial services and insurance. Every compliance resource, internal auditor and Six Sigma Master Black Belt dreams of predictability.
Customer Experience and Quality
The customer is essential to the success of any business. Your goal should always be exceeding customer expectations on quality, customer service and responsiveness. Focusing your efforts on what the customer actually sees and experiences versus what you think occurs internally is crucial.
Regardless of how much you try to hide or band-aid your processes, customers learn how you operate from the first time a salesperson reaches out to their final experience with you.
You may be wondering where the employee experience is on this list. I like to consider employees as customers of the process who expect a similar positive experience. Involving employees in the improvement experiences generally leads to the best cross-functional ideas for improvement. It also reduces required change-management efforts.
Visibility and Transparency
This is often the softest benefit, but we argue it’s the most important. You will struggle to make informed improvements without data supporting your process. Imagine a doctor preparing for surgery to remove a tumor without first performing a CT scan to determine its size, location and other complexities. You certainly wouldn’t want to be on the other end of that scalpel. Metrics, service-level agreements and escalation allow for proactive correction and anticipation of future issues.
You can enhance the visibility of processes and performance on a small or large scale. For example, I have seen companies conduct select processes via email. While that may seem convenient and cost-effective at first, it doesn’t provide insight into the true volume or impact of requests. You’ll also have a harder time tracking the timeliness and quality of responses. In this case, an improvement effort will take an upfront investment. This investment is how you can begin to capture the data necessary to develop an improvement roadmap.
How Do I Get Started with Process Excellence?
When considering where to focus your efforts, start with these two steps:
1: Define how you will measure value in each area of your business.
2: Find the right balance between these areas.
Measuring success is imperative in launching an improvement program or department. This will require a combination of “hard dollars” and “soft dollars” to set the upfront standards and provide reinforcement when you realize the benefits. A process excellence program or department might focus on all six areas holistically. You may find it benefits your company to have a business process improvement or continuous process improvement department that works single-mindedly to increase business value.
While your team gets to work, remember that individual projects need to have more specific goals – one primary impact area – to avoid attempting to boil the ocean and drive too much change into the organization at once.
Understanding these key business value drivers as part of any improvement effort will enable you to “Think Big, Start Small and Act Quickly” to clearly see the impact of your efforts.