Roger Burlton, President of Process Renewal Group, gives a broad perspective on BPM as he discusses where BPM’s roots lie, how BPM has evolved, what BPM as a management discipline is really all about, the sweeping changes BPM will introduce and what companies must do to position themselves for success as the BPM movement continues to gain momentum.
This article is a 2015 update to the one first published in opening chapter of the book Business Process Excellence in 2005.
Business Process Management as an organizational regimen is very tricky to get your head around due to its multi-disciplined nature. Depending on who you talk to, it can be positioned as many things for many purposes and that is the heart of its misunderstanding and frequent sub-optimization. I intend to treat BPM’s diversity and breadth as its strength when viewed from a standpoint other than that of a functional perspective or a single point of view. I also intend to convey the essence of BPM as being merely a natural way of both looking at enterprises and getting things done within an organizational context. In this chapter, I have deliberately de-emphasized the enabling technical aspects of BPM; that will be covered in other chapters. Handled well, BPM should be no more that the application of common sense to logical business problems and opportunities. My challenge will be to convey this in a way that ensures that such common sense will become common understanding and common practice.
In my book; “Business Process Management: Profiting from Process”, I emphasized the critical nature of assessing everything we do with a performance lens firmly in place. I also outlined a number of pressures and challenges affecting organizational performance. These still hold true today. All of the following are front and center when it comes to corporate challenges that BPM must acknowledge and deal with:
- Shrinking business cycles,
- Commoditization of products and services,
- Cost pressures,
- Knowledge-based services,
- Extended value chains,
- External stakeholder power growth
A Simple Profit / Performance Model
Figure 1 shows a simple chart to illustrate the options we face in dealing with these pressures. The purpose for all organizations is to be effective and efficient as well as increasingly adaptable. Ultimately, they must strive to make the most of their resources given their strategic intent and the multiple demands on these resources. I will refer to this objective as to optimize profit for want of a more universal term. Management’s job is to defend attacks upon and increase the area between the curves.
Figure 1: A Simple Process Performance Model
How is that possible? The first option is simple to identify, the reduction of the cost of running the business, which is easy to say and do until you take into account other factors and consider the requirement to sustain the organization beyond the short term. Shortening the time to market is on everyone’s radar screen since the life of products and services in market is still shrinking in many industries. Elevating the return line requires the identification of the right offerings at the right time and great coordination in being ready to go to market on time on many fronts. Lastly, by anticipating and designing for impending changes in product and service characteristics and components you can lengthen the time in market through planned adaptability despite the fact that specific changes are indeterminate.
Everything you do organizationally or within a process needs to be assessed in these key performance terms. No organization is exempt. The question is how can this best be done? This chapter proposes a way of thinking and a way of managing that has been show to work based upon business processes as the synchronizer of ‘what’ work gets done and then ‘how’ work gets done. First, you have to change the way that organizations and managers collectively think about business processes.
Before the Industrial Revolution
Cleary, work with an intended result has been performed since the beginning of mankind. You can call this a process so what’s really new?
Prior to the industrial revolution there were individuals and companies that delivered products and services to customers and consumers. Handcrafting of whole products was more the norm with a strong pride in workmanship and complete personal responsibility for results across instances of processes. The provision of whole and complete services from request or initiation to result was more the case than in the recent past. Scale-ability was not the big issue it can be today and resources became capable through apprenticeship towards a lifetime commitment to such a craft. There were many centuries of stability and changes occurred in an evolutionary manner. Today’s definition of a Business Process, as set out in Figure 2, was not far off the mark.
Figure 2: Business Process Definition
Consequences of the Industrial Revolution
With the advent of the Industrial Revolution, scale-ability requirements and the optimization of the scarce resources such as equipment and factories became a must to offset the high capital investments required for competitive advantage. Consequently, segmentation of work and the commoditization of the worker served to achieve the new reality. Work was still performed to produce outputs but workers were separated from overall results visibility; they just did their small job day-in and day-out. They were responsibility for compliance in repetitive work steps and lived in a command and control workplace. Given that products and services had long life cycles and most workers had low education levels, this model was suitable for the times.
A high degree of professional management was introduced after many decades and became the norm only after more than a century of transformation – not overnight, as it may seem from our distant backward perspective. Early in the 20th century, Frederick Taylor and others’ Industrial Engineering approaches led to improvements in work steps and functions performed and the maturing of efficiency-oriented time and resource measurement systems for physical resource optimization and cost control.
These approaches were later supplemented by the Quality Management movement made popular by the likes of Deming, Juran and Crosby in the mid to later half of the century when products and services were still relatively stable. The drive was on for better, faster and cheaper ways of production. Of great importance, a breakthrough in thinking around quality occurred when its definition was recast in customer terms by these pioneers. For the first time in a long time processes were discussed in terms of how they supported the customers of the enterprise and the consumers of their offerings. This led the way for the externally-focused process improvement phase that followed next.
Business Process Re-engineering
There was great promise and hope that came when Michael Hammer coined the term ‘Business Process Re-engineering’ in 1990 in recognition of what many companies had done as a natural evolution beyond Total Quality Management. That period saw a rash of new management theories emerge which together provided a foundation for BPM today. Balanced Scorecard from Kaplan and Norton, Learning Organizations from Senge, Enterprise Architecture from Zachman are but a few of the concepts that have come together to provide a baseline for today’s integrated thinking. However, BPR was the central tenet that exploded in popularity. It was also the reason for the near-demise of process thinking due to its common misunderstanding and poor application as well as some dogmatic ignorance of holistic organizational and cultural issues. Despite being cross-functional, BPR tended to emphasize transformation projects at the expense of sustainable structural multi-dimensional organizational change. Post projects, organizations often reverted to silo functional management structures with no ongoing nurturing of the resulting process asset. Due to the cost reduction orientation of its mandate, humans were typically ignored and jettisoned in many cases due to their high cost. Their knowledge was not seen as being central to ongoing sustainability and ultimately internal power struggles motivated by a legacy motivation model meant that benefits were often short lived, the solutions subverted and many companies put themselves at risk beyond the near term.
The Need for Integration
While many organizations were jumping on and off the BPR bandwagon, some were quietly applying a range of approaches that fused the best elements of many worlds and practices. They had learned that processes were the natural synchronizers or conductors of the business and that these processes were assets that had to be conceived, designed, developed and implemented as well as managed as is required for all assets. The management of holistic processes was almost like a trip back to the future wherein the best of the pre industrial revolution was being revived for today’s world but for scaleable solutions for flexible products and services that allowed mass customization/personalization and rapid change as well as a strong customer orientation. Responsibility for process results became embedded structurally and measurements became more aligned with process stewardship with the commensurate accountabilities. Overall, business performance was starting to be tied to the business activity monitoring in near-real time. Now, the best practice organizations are using BPM in concert with or to make sense of the Balanced Scorecard, Customer Relationship Management, Enterprise Resource Planning, Enterprise Architecture, Six Sigma, Lean Thinking and Reference Frameworks such as the Supply Chain Operations Model (SCOR) as well as a myriad of other programs, techniques, technologies and management methods, all of which require the synchronizing capability that process management brings. My integration oriented definition of Business Process Management capability is defined by the Burlton Hexagon in Figure 3.
Figure 3: Business Process Management Capability
Managing BPM Itself
As I have noted already, Business Processes are themselves organizers of capability and as such must be managed as enterprise assets despite the fact you will not find them on the balance sheet. From a management perspective, this means planning investments in them, developing and improving them and governing their performance. In the days of BPR when processes were handled in isolation from one another, this oversight was not crucial corporately. Now that organizations are looking at processes as the heart of enterprise capabilities, they must deal with the whole set of processes for an organization together. As such, processes require governance just as financial, human and capital assets do. In every case, there is a requirement to remain true to outside requirements such as regulatory and stakeholder reporting, to be in synch with the strategic intent of the organization, to use resources wisely, to ensure accountability, to maintain alignment, to monitor and gate initiatives, and to consider opportunity costs corporately. Processes are no different. This requires an integrating framework that does all of this and a governance mechanism based on sound yet fundamentally different management principles.
Figure 4 shows a lifecycle process for process management itself as defined by the BPTrends Associates methodology for all levels of BPM. Its phases and activities navigate the progression from the production of a company’s business strategy through to the daily monitoring of results from its implemented strategic processes and re-connection to the front for renewal.
Figure 4: Process Management Framework
The Process Revolution and Evolution
As an Industrial Engineer with a keen interest in how people, organizations and societies change, I was somewhat surprised to discover that the Industrial Revolution was only so in comparison to historical timescales but not to human lifespan. Analysis of the move to industrialism that stared in the late 17th century in fact took more than a hundred and fifty years to accomplish. It was not an overnight phenomenon, as we may have believed. Changing businesses, companies, countries, society, culture and behavior is a multi-generational proposition. And it is clear that the end-to-end Process Revolution that started in earnest sometime in the last half of the 20th century is indeed radical in nature but like its predecessor will likely evolve through more generations of managers and some corporate casualties along the way to become truly universal. The journey is, and will continue to be, painful. As in the Industrial Revolution, there will be incredible opportunities for those who embrace it whole heartedly to create new business models and to supplant the laggards who insist on hanging on to the past ways of working and managing. The evidence is apparent already for the early adopters.
The New Common Sense
So if true business process management is logical but so unconventional for many organizations today what would the new common sense logic look like? To answer this question, first let’s examine how an ideal enterprise would appear to those on the outside with no visibility of its inner workings. There is no better place to start because outsiders only care about this perspective and they determine our success.
The External Perspective
The new enterprise is process-managed in order to stay in tune with its external business environment whether it likes the reality of it or not. It, first and foremost, recognizes that it must perform exceptionally well in all of its relationships and adjusts internally to do so rapidly and effectively. It knows what’s happening or might happen in the outside world and does everything to anticipate and respond. That does not mean that it is not proactive and takes no risks. If appropriate, it does. It manages at the stakeholder relationship level and organizes all its assets in alignment to this quest.
It continuously dispassionately asks:
- What is our business?
- What is the outside world like and what could it be like?
- Who are our stakeholders?
- What do they, and will they, care about?
- What are their needs and expectations of us?
- What experience is appropriate and valued by them?
- What products and services do we, and should we, offer?
- What else do we exchange with outsiders?
- What triggers our exchanges?
- How can we evaluate and measure our performance?
- How well are we doing as far as stakeholders are concerned?
- How well are we doing as far as we are concerned?
- Are we positioned to continue to perform effectively?
- What has to change and by when?
All of these questions are about the external marketplace and those in it. The answers will become our criteria for managing internally. The new common sense demands an outside-in approach or as Steven Covey of the ‘Seven Habits of Highly Effective People’ may say “start with the end in mind”. If you cannot answer these questions consistently across the management team of your corporation, then you are in for an uncomfortable ride.
The Internal Perspective
The challenge of the process-managed enterprise is to remain focused and capable to achieve the expectations of and the intentions towards the external environment that it has selected for itself. This is the second tier of the new common sense. Now we have to identify, design, develop, implement and continuously manage new internal capabilities that are in synch with our ever-changing external criteria.
Attributes of such enterprises include:
- Clear responsibility for external relationship management and performance (Relationship Leaders)
- Common definition of what are our end-to-end processes (Overall Business Process Map)
- Clear identification of which external stakeholders are involved with or affected by each process (Who cares?)
- Common understanding of what stakeholders need and expect from the process and what we intend for them for each process (What do we want them to care about?)
- Understanding of what we exchange with them in this process and what triggers such exchanges?
- An organizational structure which supports cross functional process management as well as functional expertise
- Clear responsibility for all end-to-end business processes that support the stakeholder relationships (Process Stewards)
- Processes that establish and communicate business strategy effectively.
- An effective measurement and diagnostic system built for near real time evaluation and decision-making based on stakeholder and process performance.
- Information systems built to support full closed loop process execution from first trigger to last outcome of a stakeholder-initiated process(BPMS)
- Clarity on what processes have to change and what has to change in each one of them in each process and by when
- Capabilities (technological, human and physical asset) aligned with and managed by whole business processes.
- A set of business principles that support holistic thinking.
- Aligned incentives for all internal human resources and organizations to assure motivation to deliver against the outside requirements.
Once again, I would contend that, if you had just arrived on the planet from another galaxy, this is what you would expect to see if you thought that the human race cared enough and was capable about doing the right things right.
BPM as Common Practice
Continuing in the spirit of common sense, I will now address the issue of what we can do to realize the type of organization described so far. I will describe a logical structured method for working in a process oriented enterprise.
Principles. I am a great believer in principles to guide design, action and decision-making. No set of rules and procedures will ever be able to articulate every situation and nuance of possible action in a business process. You need something to fall back upon in reading a situation and doing what makes sense. The approach will follow some tried and true fundamentals that will guide you in circumstances whereby documented methods are insufficient and when you need to adjust from the exact documented steps. Some of the critical principles are as follows.
“Start with the end in mind”
When running an instance of a process or redesigning one the Stephen Covey advice is paramount. If it is not crystal clear to everyone as to what constitutes later success when the process is operational and everything is done to add value to that vision you are sunk. The process results will be inconsistent, the stakeholders will be disappointed and the process will come under attack– both for the process execution and for its transformation. The simple message is that a clear and shared vision is required when you start. Do not leave home without it.
Every process, in order to be manageable, must be measurable and driven towards the attainment of agreed performance objectives. Finding performance metrics and setting targets is not so hard. Finding the right ones is very hard. As Norton and Kaplan of Balanced Scorecard fame have reported ‘what you measure is what you get’ so you better be sure that it is aligned with your and your stakeholders’ process performance expectations. Performance attainment must become the basis for design, operational feedback, assessment and improvement of processes to cut through perceptions, resistance and internal politics. Without it behavior will not change and the right results will not accrue.
Consistent with the prior two principles is the requirement for the absolute passionate commitment to and unwavering focus on the stakeholders of the process and their requirements. They are the only reason the process exists. Some will be active participants and others will be keenly interested and ultimately affected by what happens. The criteria for process performance must start and end with both their and your needs and desired experience. Trying to design and conduct processes without this perspective which serve as design criteria as the paramount consideration is delusional and at best sub-optimal.
“Criteria before decisions”
The root cause of most poor decisions in any business scenario and within all processes is that there is a lack of consistent criteria to guide action. Often decisions are made based on personal biases that vary based on the individual’s experience, position or difference of opinion. Without shared and clear decision-making reference points that are carefully pre-considered, documented and communicated available to the decision makers, decisions will be inconsistent, easily challenged and not supported. Early process steps in every process must be built in to get acceptance of criteria to be applied to decisions in later ones.
“First things first”
Another Covey principle that must be strongly considered is the one that states that you have to start somewhere and that you may as well do what makes sense and sets the process off in the right direction. Failure to do this will undoubtedly result in errors, delays, rework, and downstream customer dissatisfaction. As mentioned before, the biggest cause of lack of process performance is what you did or did not do earlier in the process. So, after thoughtful design, trust the process and do all the steps and do not skip conducting good planning and preparation work or it will cost you later. When designing processes make sure your methodology has adequate consideration for whole process design not just the visible part at the end.
“Next things next”
Even if you get off on the right foot, either an irrational misdirected rush to get all changes implemented at once often takes over or the organizational power plays take off and blind all other logical considerations. The consequences can be devastating since the enterprise must live with them every day post transformation. The sequence is simple define who cares and what they care about, then products and service interactions, then define what gets done, then how it gets done, then the rules that govern the work, then the capabilities required in terms of technologies and human competencies, then where work will be done and then the organizational model required to do so. Throughout each of these, the human change communication and cultural transformation must be managed. The mixing-up of this sequence is a major factor in the design and implementation dysfunction seen in business processes and the inappropriate set of technologies and other capabilities that are not aligned to process requirements and stakeholder needs and ultimately business performance. In brief:
- Design stakeholder relationships before processes
- Design processes before technological capabilities
- Design processes before human competencies
- Design processes and human competencies before organizations
- Design and execute the stakeholder communication program continuously
BPM Methodology Fundamentals
In order to realize the intent of the principles of BPM that works, significant architecture, analysis and design work must occur consistent with the principles previously addressed. Every component must contribute towards the establishment of a process-organized capability to deliver business performance and its improvement. The following Table 1 will describe the requirements of a methodology in terms of what we need to know, in what order, what tools we need to capture it and the way it contributes to business performance.
|What Do We need to Know?
|What Management Tool will we use?
|How will it Contribute to Business Performance
|What Organization are we optimizing?
|“Organization-in-Focus” Scope Model
|What are the external pressures and drivers that the organization must deal with?
|Driver and Market Analysis
|What does the organization want to become and by when?
|Business Strategic Intent Documentation
|What are the external stakeholders for the organization?
|Stakeholder Map – Role Hierarchy
|Stakeholder Relationship KPIs & Performance Objectives
|What products and services do we exchange with our stakeholders?
|Stakeholder Exchange / Context Diagram
|Product and Service KPIs & Performance Objectives
|What other items do we exchange with them?
|Stakeholder Exchange / Context Diagram
|Product and Service & Stakeholder Relationship KPIs & Performance Objectives
|What must we do as an organization to meet our stakeholder intentions?
|Process Architecture Map – levels 1 and 2
|Aligned Process Goals, KPIs and Performance Objectives
|How should we organize best to meet our process requirements?
|Process Stewardship Map and Organization Chart
|Process Organization KPIs & Performance Objectives
|What technology resources must we have in place in order to perform what we must do?
|Enterprise Technology Architecture Models, SOA Models
|Technology Capability Goals and Performance Objectives
|What human skills and competencies do we need in order to perform what we must do?
|Human Competencies Map, Cultural Assessment
|HR Goals and Performance Objectives
|How should we allocate our investment resources to achieve maximum performance?
|Pain / Gain Prioritization, Transformation Program Plan
|Transformation Goals, KPIs & Program Priorities
|What is the actual performance of the ‘Organization-in Focus’
|Performance Monitoring Results
|Actual Measures against above Objectives
The table shows that there is a lot to know if you want to truly improve business performance through the organizing effect of business processes. It also shows that there are multiple models or maps that are required showing different aspects of the ‘Organization in Focus’ Like maps of a country that show political regions, precipitation, temperature or population, these performance-oriented maps are related and all are important. They answer the questions posed by different perspectives. They must be aligned by the process perspective in order to build a full performance management capability that is required for process managers to manage processes and outcomes. The Process Methodology for process management described earlier is designed to organize and integrate all of the requirements into a repeatable approach that can be trusted to deliver. The methodology described in my book as shown earlier in Figure 4 attempts to honor these principles and structure while dealing with the multiple perspectives required.
I have attempted to show that, despite the fact that processes have been with us for ever, we have a long way to go. The opportunity to exploit them, however, is still with us since many organizations are still largely dysfunctional when it comes to seamlessly doing the work required connecting to and from the outside stakeholder world. Their processes are not designed and managed holistically. Their methodologies are short sighted and partial. Many do not know what they do not know when embarking on a process venture. This chapter has provided the common sense for effective process management and the start for the establishment of some common practices to allow repeatable success in your enterprise.