When embarking on a process excellence journey, look at business value across six different areas.
Part three of a series.
Many companies have process excellence, operational excellence, or business transformation programs. Some even have business process improvement or continuous process improvement departments – or other initiatives and teams focused on improving processes.
While these efforts have varying purposes across companies, they all have an underlying focus: to increase business value. Processes are – or should be – the focus since they are the key mechanism for businesses to deliver value.
But what is value? How do you define it? The most straightforward metric for measuring business value is hardcore dollars – also known as the bottom line. It’s important to consider other components that will significantly influence – either directly or indirectly – the bottom line.
We encourage companies to look at business value across six different areas: Financial Performance, Business Agility, Scalability, Reliability & Predictability, Customer Experience & Quality, Visibility & Transparency.
These areas may be tweaked for specific business needs (by combining two into one, splitting one into two, or re-naming one, for example), but generally capture the underlying value drivers in a business.
A Closer Look at Process Excellence Drivers
When discussing financial performance in the context of process improvement activities, almost everyone immediately jumps to cost-cutting measures. This is a key factor, but don’t forget to look at it from a revenue perspective. The ability to leverage processes to grow revenue and/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.
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 enabled using flexible technology platforms such as BPMS and rules engines are key differentiators that allow companies to quickly adapt pricing strategies, cash management, and other vital processes.
It’s also important to build support for continual process change – in a controlled manner – so the value of a flexible technology platform is not negated by cumbersome processes for implementing change.
After the latest recession, scalability became a primary focus for many businesses as they looked to efficiently expand and grow operations without adding resources or costs. Think of this as: growth without growing. Companies wanted to grow top-line revenue without growing expenses by making necessary strategic investments to increase overall efficiency.
In a company where revenues are not growing, this could lead to cost-cutting. However, companies with aggressive growth targets should proactively manage this growth to avoid having to make painful expense cuts later. Cuts that would impact customers and employees when a slow-down in growth occurs. Managing the growth could also better position a company for the next recession. Here’s an example of scalability: grow revenue by 40%, while only growing on-going expenses by 5%.
Reliability & Predictability
The ability to deliver predictable, repeatable and consistent operational performance is key to success in any industry, but especially in highly regulated industries such as healthcare, financial services and insurance.
Consistency is also the dream of every compliance resource, internal auditor, and Six Sigma Master Black Belt. Because this lack of variability demonstrates a process that is under control. Changing a consistent process is also much easier than reconciling a process that is performed in multiple ways.
Customer Experience & Quality
The customer is obviously essential to the success of any business. The goal always needs to be the following: to exceed customer expectations on quality, customer service and responsiveness. Regardless of how much you try to hide your processes, customers learn how you operate from the first time a salesperson reaches out to their final experience with you.
Focusing your efforts on what the customer actually sees and experiences versus what you think occurs internally is crucial. My two favorite real-world examples are the following:
- A company where each of three departments involved in a process was reporting 100% compliance with their 24-hour turnaround time. While, in reality, the customer was expecting an 8-hour turnaround for the end-to-end process.
- A company that spent considerable time focused on improving their rework process as opposed to focusing on the root causes leading to the rework in the first place.
Many of you who scanned through this list might also be asking where the employee experience is. I like to consider employees as customers of the process who should be expecting a similar positive experience. Involving employees in the improvement experiences (doing it with you as opposed to doing it to you) generally leads to the best cross-functional ideas for improvement. It also leads to reducing required change management efforts.
Visibility & Transparency
This is often the “softest” of all the benefits but can be argued that it’s the most important. Mostly because without data supporting the processes, it is difficult to make informed improvement decisions. Imagine a doctor preparing for surgery to remove a tumor without first performing a CT scan to determine the size, location, and other complexities. Enhancing the visibility of processes and performance through metrics, SLAs, and escalation allows for proactive correction and anticipation of future issues.
I have seen multiple examples of processes conducted via email that doesn’t provide insight into the true volume or impact of requests and the timeliness and quality at which these are being fulfilled. Although I generally don’t espouse automating a current state process (automating a bad process just gives you bad results faster), many improvement efforts require an upfront investment. This is how you can begin to capture the data necessary to develop an improvement roadmap.
How Do I Get Started?
When considering where to focus your efforts, it is important to do the following:
- Define how you will measure value in each of these areas within your business.
- Find the right balance between these areas.
The ability to measure 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 benefits are realized. A program or department might focus on all six areas holistically.
But it’s important to identify primary drivers, primarily focusing on Visibility and Agility for this fiscal year. And 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.