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Table of Contents
- What Is Process Improvement?
- Observed Global Process Improvement Trends
- Australian Organisational Challenges
- Process Improvement Plan Implementation Challenges
- Executive Insights
- Common Failures In Large Scale Transformation Improvement Projects
- Is the operational time spent working linked with building the capability of process work?
- The Work Harder Vs Work Smarter Loop
- Why the Reinvest loop is a good process improvement model to understand your business
- Why Shortcuts Are Not A Good Option
- What Can An Executive Do to Support Process Improvement Projects
Currently, in the Australian marketplace, we are seeing that for most organisations’ their processes consume the most resources and deliver the most value, whether it be for a service or product. The trend towards automation, robotics, 3D design, and digitalisation is seeing companies renew their focus on those processes which are at the heart of sustaining their organisation. Process improvement projects have the potential to reduce or eliminate waste and often deliver better productivity. They also provide organisations with the ability to be agile, flexible and adapt to changing environments, new technologies and market disruptions quicker than those organisations that do not.
The ability to reuse processes could even lead to the smarter organisation’s ability to reproduce business services models for new client adoption and to drive competitive advantage. This concept was fuelled by the development of Service Orientated Architecture (SOA) approaches to IT development of which business process management is a key enabler. Davis, Rob. Processes in Practice a BP Trend Column, “Process Reuse – do we understand what it means?”, February 2010. The long-term business goal could be reusable business services that comprise people, process and systems although it is not always as easy to implement. Wouldn’t it be great to be in that position? Importantly, why is there then debate and criticism of adopting process improvement projects? The main Executive questions that I get asked are about the challenges of implementation and support. These questions include;
- Our operational managers are already at capacity, how do we build our process improvement capability internally without being reliant on consulting firms?
- Cost pressure requires us regularly to improve our EBIT and shareholder return, will process improvement projects achieve this and add value?
- Do we need to invest intensive operating resources in this activity and is it required?
- Will the outcome provide cost-cutting measures at the expense of our business as usual activities and quality of our products?
- Will process improvement projects fix our customer experience?
- The assumption is we have our existing processes mapped. What if we don’t, how long will it take, as we need to be at future state now?
- Do we need to buy a process tool if we want to capture the Enterprise processes?
This article aims to respond to these questions with evidence, models and suggested actions to have more success in process improvement projects. Process improvement is more than just “tweaking” to do things a ‘bit better’ it is about;
- Analyzing what you do
- Identifying and evaluating options and;
- Solving challenges
"Progress cannot be generated when we are satisfied with existing situations"
- Taiichi Ohno
What is Process Improvement?
Business process improvement is a systematic approach by process owners to identify, measure, analyze and improve existing business processes to help an organization optimize its underlying processes to achieve results that are more efficient.
As it is focussed on existing process improvements, you will quite often see concentrated work during transformation activities when a company needs to scale or improve operational performance quickly. The process improvement methodology was first documented by H. James Harrington’s 1991 book, “Business Process Improvement” (BPI) and is the methodology behind the basis of both process redesign and business process re-engineering. Whilst process improvements projects have a tactical response to a problem, they are often intertwined with Continuous Improvement (CI) projects or are part of a larger Strategic initiative that the whole workforce is involved with. The key process improvement frameworks, process improvement tools, and techniques, as well as process improvement methodologies we are seeing implemented today, include; Six Sigma, Lean, Kaizen, Zero defect, Muda, Mottainai, business process re-engineering, and total productive maintenance. The innovative “Blue Sky” techniques, or beginning with blank process design on existing processes in operations, work towards processes that are a utopia. Whilst these improvement projects are demonstrating an ability to fast-track better results initially implementation can be lengthy and remains a challenge.
Observed Global Process Improvement Trends
Whilst attending the PEX (Process Excellence) Conference in Singapore, in April 2017, I observed that the mature European, US, and Asian organisations are demonstrating process improvement for staff satisfaction, (e.g. DHL Innovation Singapore introducing follow-me robots and 3D packing slip glasses to support staff). Europe’s’ Thomas Cook Group focussed on customer satisfaction and created a detailed customer centricity model with a rating system of customer comments to adjust and resolve complaints in a focussed agile manner. This is in contrast to some Australian listed organisations that remain focused on quick wins for shareholder gain and are often quarterly and short-term cost driven.
Australian Organisational Challenges
The challenges of Australian large organisations today is that business process improvement projects need to consider more than just cost drivers. Therefore; just supporting cost-cutting initiatives like automation and robotics will not be sufficient to improve customer or staff satisfaction. Coupled with agile and rapid deployment, these techniques may not provide the long-term execution results anticipated. Organisations’ need to incorporate both performance and cost drivers, as well as value drivers because they link to the business transformation and innovation aspects that go hand in hand. Dutton & Thomas researched this in 1984 and produced a core principle that identified not only performance and cost but value drivers and attached them to the continuous feedback loop to reflect optimisation, improvement and innovation processes which provided not only efficiency but focuses on effectiveness.
Process Improvement Implementation Challenges
Even though organisations have process improvement tools and techniques such as Lean, TQM, computer-aided design, stage gate product development processes and improved customer service systems. The inability of most organisations to reap the full benefit of these innovations has little to do with the specific techniques. Instead, the problem has its roots in how the introduction of a new improvement effort interacts with the physical, economic, social and psychological structures in which implementation takes place. The organisation today needs to understand how these failures arise and create a strategy to overcome pathological behaviours through case studies on successful process improvements. While the ability to identify and learn about new improvement methodologies and methods no longer presents a significant barrier to most managers. Instead of implementing these innovations presents the biggest challenge. Put more simply, you can’t buy a turnkey six-sigma quality program. It must be developed from within.
Where do process improvement projects go wrong?
The Caraustar Professor of Operations Management at Kennesaw State University, USA, showed in his five-year studies that nearly 60% of all Sigma initiatives failed to yield desired results due to the “stress-strain curve”. When confronted with increasing stress over time these projects had different results through the three phases; stretch, yield and failing. (The insights below identify at which stage process projects fail.)
- In the initial stretch phases, people involved find themselves stretched and were willing to tackle necessary tasks. Top executives paid close attention and rewards were provided.
- In the yield or middle phase of the project, six sigma experts moved on, executives turned their focus elsewhere and teams struggled to maintain the gains earlier achieved. Teams spent too much time on the projects and failed to meet production quotas. Executives only reported up those projects that were successful as their salary and bonus depended on it.
- In the next failing phase Teams became discouraged by their failure to build on previous success, and stopped caring as it wasn’t tied to their performance reviews. As morale sagged, no one stepped in to assume leadership of the project. When newly formed teams poached people and resources from older teams, members regressed to their old ways and reported achievements incorrectly, giving a false sense of success.
These lessons learnt below, provide some insights into what might lead to greater success in process improvement projects;
- Extended involvement of Six Sigma or other experts is required if teams are to remain motivated, continue to learn and maintain gains. If the cost is prohibitive, one expert could be assigned to multiple projects part-time for an extended one or two-year period, only after that, managers should take over.
- Performance appraisals need to be tied to successful implementations of improvement projects to motivate team members to embrace new, better work practices. Without this incentive employees are rigid and initial enthusiasm dies.
- Improvement teams should be no more than six to nine members and the timeline for a launch no longer than six to eight weeks. The bigger the team the greater the chance members will have competing interests and the harder it is to agree on goals.
- Executives need to directly participate in improvement projects and not just support them. Reporting on process improvements tends to only highlight projects yielding excellent results. By Executives observing the successes and failures firsthand, they can make a more accurate assessment as to which ones are worth continuing.
Common Failures In Large Scale Transformation Improvement Projects
What Contributes To People Not Following Process Improvements?
Debashis Sarkar; highlights the reason that process improvement projects fail (summarised below);
- Lack of process belief and deviations in the process improvement plan (see here for a template for your strategic planning process) - People don’t believe in the new process or why they are doing it so it introduces inner conflict and cognitive dissonance.
- Ignorant of Customer Impact - Employees behind the scenes cannot see the impact of their work on customers and don’t want to change.
- No process ownership or buy-in - Employees have no sense of ownership over the design of the processes.
- Not encouraged to innovate - Process non-compliance happens when employees want to innovate the existing way of working and entrepreneurial mindsets are not encouraged.
- Lack of training - People are often not trained in the process, how to follow it, what their works instructions are and what it means at a higher level or the vision.
- Complicated Processes – People take the path of least resistance and violate the processes that are too complicated.
- Cannot visualise the Big Picture – Employees can feel meaningless without understanding what they mean to the company. This can result in frivolous process compliance.
- Employee disengagement – The Gallup survey identifies that 24% of employees worldwide are disengaged now and employees that are not engaged cannot adhere to processes.
Is The Operational Time Spent Working Linked With Building The Capability Of Process Work?
Repenning and Stermans’ model provides insights into those questions I am often asked by Executives and provides a useful framework for thinking about the challenges associated with implementing improvement programs and practical suggestions to increase the chances that your next effort succeeds. It begins with the basic “physics” underlying process improvement where the performance depends on two factors the amount of time spent working and the capability of the process used to do that work. The performance of any process can be increased by the dedicative additional effort to either work or improvement but the two activities do not produce equivalent results. Time spent on improving the capability of a process yields the more enduring change but does not mean it immediately improves performance. It takes time to uncover the root cause of process problems and then to discover, test and implement solutions. There is also a delay between improvement activities and the resulting change in capability. No improvement in capability lasts forever as procedures become outdated.
The Work Harder Versus The Work Smarter Loop
The desired performance set by management is compared to actual performance and the gap is determined. It most organisations it was rare to find a process performing above expectations but the improvements aimed at closing this gap by pressure to increase the actual time people work, aggressive targets, over time, penalties for missing targets (the work harder loop)
The second option is the work smarter loop, where management increases the pressure on people to improve capability. However, working smarter can have limitations as there is a substantial delay between investing and improvement activities and reaping the benefits. Furthermore, the greater the complexity of the process the longer it takes to improve. Investments in capability can also be risky as improvement efforts don’t always find the root cause of defects, new process improvement tools don’t always produce desired gains and experiments can fail. Whilst investments in capability might eventually yield large and enduring improvements in productivity they do little to solve the problems managers face right now.
The model suggests that working harder and working smarter are connected. The most important interconnection arises because organisations rarely have excess resources. If performance gaps continue to rise, workers have no choice from working harder to reduce the time spent on improvement as they strive to meet their objectives.
Why The Reinvest Loop Is A Good Process Improvement Model To Understand Your Business
An organisation that successfully improves process capability will experience rising performance. As the performance gap falls, workers have even more time to devote to improvement, creating a virtuous cycle of improved capability and increasing attention to improvement. The reinvestment loop means a temporary emphasis on one option at the expense of the other option is likely to be reinforced and eventually become permanent.
Organisations that reinvest in improvement will experience increasing capability and find that they have more time to allocate to working smarter and less need for heroic efforts to solve problems by working harder. Successful initiatives work to strengthen the reinvestment process by allocating the resources freed up by productivity gains for further improvement. It will take time for process integrity to depreciate even if process improvement team meetings are skipped upon and boosts the time available to work done right now.
Why Shortcuts Are A Bad Option
Shortcut loops are tempting because there is often delay between cutting corners and the consequent decline in capability. (e.g. the software engineer that forgoes documentation in favour of completing a project on time later has to return to fix bugs in testing). The interaction between the balancing shortcut loops and the reinforcing reinvestment loop creates a “Capability trap” and explains why organisations find themselves stuck in a vicious cycle of declining capability.
What Can Executives Do To Support Process Improvement Projects?
From the research suggestions and based on my experiences, there are some distinct areas to support process improvement areas that have been grouped and summarised below;
Mobilising Commitment & Engagement
- Provide direct and active implementation support - make it part of everyone’s journey. Embed process improvement KPI’s into all staff performance. Show up, walk the walk, talk the talk, and keep your projects real. Find early process projects that are failing and redirect resources.
- Be clear on the value proposition – focussing the value proposition on process step compliance reinforces the check-the-box culture which won’t deliver the intended long-term results. Instead focus value on outcomes to drive sustainable results.
- Implement a change acceptance process model – by looking at a model that’s heart is to mobilise commitment you can adjust and assess at each stage. Key areas’ that can be considered to assess are integrating the change, focussed leadership, compelling business need, shared future state, mapping the transition and the engaged support and resistance. These can be mapped in a radar chart and managed throughout the project.
- Reinvest in culture and capabilities with process improvement projects – start with aligning leaders and employees around purposeful efforts to transform and grow. When these activities are kept behind Executive closed doors the extent of the leadership and employee gap is significant. People play a pivotal role in business success and change requires the hearts and mind of employees. 62% of employees consider culture as the number one hurdle to digital transformation, innovation and cross-functional collaboration.
- Leverage subject matter experts and use reinforcements - to drive the right behaviours to influence your outcomes. Reinforcements happen in communications, workplace norms, processes, systems and structures. Systematic reinforcement is the key to sustainable change.
- List success criteria – ranging from the most tangible (financial) to the least tangible (strategic) that indicate the organisation in on the right path and weight their success relative to each other.
Enabling Transformation and Innovation
- Integrate and realign with six other business models –
Value model – process performance changes need to be reflected in newly defined value drivers and indicators.
Revenue model – realign process driving forces with any value generated flows of the organisation.
Cost model – link any re-engineered operational processes to cost models and profiles, review cost drivers and processes to cost flows.
Service model – any change to processes will ultimately change the service delivered by the organisation. The service model needs to be updated to perform at maximum efficiency.
Operating model – the focus on standardisation and integration of processes across the organisation. There is a need to continually review processes for coordination, unification, diversification and replication.
Performance model – constant monitoring is required of performance gaps and issues to strategic objectives, success factors, and KPI’s.
- Introduce Process Innovation - Innovation creates value that was previously unavailable. Process innovation can open-up new markets and business opportunities and should be integrated with the six models above. The BPM process lifecycle should adhere to your organisational innovation principles. Prioritise improvement areas – define, document and select through collaborative efforts between business, IT and units of the organisation. Due to process interdependencies selects areas correlated and aligned with the overall process strategy and goals.
- Take stock of as many organisational processes as possible – as everything is connected to everything else in the value chain from concept to customer. Promote everyone to think about interdependencies between individuals, departments, vendors, and customers. Ideally, this is why a tool is needed to quickly click through the complexity and to see the relationships and value chains. If set up with a good business architecture and governed so your business understands, this will become your competitive advantage when going to market to win new business and you can recoup costs quickly.
- Visualise the process with everyone and provide feedback loops – organisation communication across business units and effective collaboration within project teams become much more efficient because everybody knows what’s going through regular reporting, evaluations, audits and measurements (in terms or process testing and simulations). The feedback loop encourages clear communications about improvements and optimisation of existing processes, and closes bottlenecks and encourages participation and involvement by all parties.
- Implement lessons learnt and divest if required – Conduct data through observation, extensive interviews of participants, archival records and quantitative metrics. Use system dynamics as the basis of understanding what implementation has yielded a number of insights into the improvement paradox.
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