process-based business development · product owner product owner owner flow owner. the underlying...
TRANSCRIPT
Process-based Business
Development
Lecture 5
Autumn 2011
Lecture 4
Process-based business
development
Business idea & strategy
organizational
structure
competence
& resources
supporting
systems
culture &
values
work &
leadership
Business environment
Core processes
Cu
stom
er n
ee
d
Cu
stom
er satisfa
ctio
n
Road Road Road
Resources Resources Resources
Journey Journey Journey
Line
management Line
management
Line
management
Function-oriented way of
splitting responsibility
Process management
Team
Team
Resource
owner
Team
The principle structure and roles
of a process organisation
Business
owner
Resource
owner
Process
owner
Process
owner
Product
owner
Team
Business
owner
Resource
owner
Team Flow owner
Process
owner
Product
owner
Product
owner
Business
owner
Flow owner
The underlying ideas of the
process organisation (1)
• Harmony between controlling and
controlled unit
• Balance between vertical and horizontal
perspective
• Balanced between the future and the
operative present
– Process
– Competence
• Team-based work
The underlying ideas of the
process organisation (2)
• Focus on competence
• Handles interfaces to the environment
efficient
• Creates commitment
• Good cooperation and coordination
(through team work and process focus)
Lecture 4, continued
Alternative process organisation in totality
CEO
Z
Y
Supply products
Develop products
Purchas
e
Desig
n
Mark.
HR Finance Qualit
y
X
Process vs Work
Management
The process is the road Work Management is
the travel organiser
Process Management vs
Work Management
Process management is
about buildning,
evaluating and improving
the roads
Work Management is
about planning and
monitoring the traffic
Why introduce resource
ownership?
• In more and more organisations competence is
the key to competitiveness
• A good structure for competence development
gives more satisfied employees and better results
• To service organisations is resource utilisation
the key to productivity
• Competence takes significant time to develop.
Seeing competence as a strategic issue may be
critical for long term success
What is a competence centre?
• A group of people with similar knowledge and skills
• The centre ensures that the knowledge and skills of
the individuals are maintained and developed.
• The centre is the base from which resources are
allocated to the projects
• Two driving perspectives: competence need of the
business (now and future) and individual
development
• The group can be virtual, the individuals
geographically spread.
Development and management
of process-oriented
organisations
Key features for a level 5
organisation
Develop processes
• Established processes
• Clear customer focus
• Structured process development
• Suitable structural capital
• Effective and efficient processes
Key features for a level 5
organisation
Process oriented organisational structure • Active process ownership in all relevant
processes
• Balance between process management, competence management and work management
• Harmony between processes and organisational structure
• Balance in focus between future (strategic) and present (operative) tasks
• Reduced hierarchy
• Balance between vertical and horizontal organisational perspective
Key features for a level 5
organisation
Process oriented work and work
management
• Team-based way of working
• Organisational structure for horizontal work
management
• Delegation of work
• Leadership with focus on enabling and
supporting
• Continuous feedback on achievements
• Efficient and flexible work
Key features for a level 5
organisation
Resource and competence management
• Focus on prioritised competence areas
• Strategy driven development of competence
• Active competence ownership for all relevant
competences
• Structured development of competence
• Competence based resource allocation
• Efficient resource usage
• Competent employees
• High employee satisfaction
Key features for a level 5
organisation
Process oriented supporting systems
and structures
• Reward system in harmony with the goal's
and value's of the organisation
• Measurements of the business targeting
multi-dimension control and management
• Quality- and environmental systems are a
valuable support in the daily operation
• IT-systems in harmony with the processes
Key features for a level 5
organisation
Creating an organisational and cultural
harmony
• Process thinking permeates the organisation
• Management actions and communications
are consistent and in harmony with the
process thinking
Cooperation between roles
BO
FLOW
OWNER
CO-WORKER
RO PO
Co-operation needed for the
development of the process
The process owner (and his/her organisation)
• Has a continuous dialogue about the process with its users
• Co-ordinates and evaluates the improvement needs and acts as the
decision-maker
• Has a dialogue with customers regarding future needs and expectations
• Plans the process development on the basis of the company's objectives
and strategy
The line manager (and his/her organisation)
• Pays attention to improvement needs
• Suggests process improvements
• When needed, participates in the decision-making regarding process
development
• Carries out the improvements needed
• Strives for competence development that enhances the understanding for
work in the process
• Aims at variation of the co-workers tasks
Co-operation needed for
process establishment
The process owner (and his/her organisation) • Supplies the needed documentation (structural capital)
• Strives for purposive and available structural capital
• Motivates when needed the process design
• Keeps track of the degree of establishment (compliance)
The line manager (and his/her organisation) • Responsible for that that the process is actually used
• Manages the actual work (the single “journey”)
• Secures that the employees have the right process specific
competence
Co-operation needed for the
development of the employees’
competence and process view
The process owner (and his/her organisation)
• Strives for a structural capital that promotes understanding of the
activities of the process
• Strives for a structural capital that supports new as well as more
experienced employees
• Advocates process thinking
The line manager (and his/her organisation)
• Advocates the importance of using the process
• Utilizes the competence of the individual in an appropriate way
• Gives relevant feedback
• Encourages feedback between colleagues
• Varies the compositions of teams
• Allocates the individual to partly new contexts
Lecture 5
The four areas of the course
3. Process
management
1. Process
thinking
2. Process
development
4. Process
orientation
Understand and
apply the process
view
Enable the right
performance level
Secure the
performance level
Adapting the
enterprise to a
process paradigm
The challenge of BPM –
improve and maintain
Maintain baseline process
management (mandatory)
Part of daily business
Time
Performance
Process
improvement
(optional)
Projects
Establish
baseline process
management
(mandatory)
process product /
service
1. Define
7. Establish
3. Design & Document
5. Measure
2. Stakeholders & needs
4. Process requirements
Baseline Process Management
Process requirements
Business stakeholders
Society
Authorities
Suppliers
Creditors Employees
Owners Management
Customers
Healthy assumption:
The knowledge of the
customers to the process (and
its stakeholders) is insufficient
Identifying stakeholders and
their needs
• Identify all relevant stakeholders
• Go to the source
• Strive for understanding the actual
need
Security level
NN/MMYY
Customer
need
Functional
requirement
Product
requirement
Process
requirement
Process
measures
Process
goals
Stakeholder
requirement
- external
Stakeholder
requirement
- internal
Secondary
customer
need
Conflicting requirements - a
challenge
• There will be conflicting stakeholder
requirements.
• These must sometimes be judged against
each other and decisions must be made
regarding prioritization.
• Examples of conflicting goals
– Short-term gains – Long-term market share
– Control – Flexibility
– Innovation – Risk reduction
Formulating stakeholder
requirements (1)
• Write in a clear and easily understandable
way
• Formulate requirements in complete
sentences
• If possible link the requirement to a
specific activity or output
• Describe it in a quantifiable way
Security level
NN/MMYY
Formulating stakeholder
requirements (2)
Don’t write Write like this
Good documentation Documentation should be easy for customers to
understand
Right time Completed according to timings in project plan
Fast Invoicing Short period between completion of the project
and the last invoice
Cost efficient Few employees per amount of orders
High quality Deliveries made on time and in full, packages no
damaged
Proactive measurement - measure
the drill rather than every hole
Requirements analysis – from
stakeholder requirements to
process requirements
Purpose:
Find out what the requirements are and how these
will or should affect the process,
Customers and other stakeholders mainly place
requirements on the process deliverables. To be able
to control and develop the process one has to
understand what these requirements mean to the
process.
• “Do you know how value is created in
your organization? Could you map out the
value creation process? Can you measure
it?”
• “One of the most important things you can
do is to get senior managers to agree on
the value creation process in the
organization”
Spitzer R. D: Transforming performance measurement: rethinking the way we
measure and drive organizational success
Process Object in Object out
Efficiency
Resources
Requirement Requirement Requirement Requirement
Requirement Requirement Requirement
Step 1 – Create an overview of the
requirements on the process
Order Food
Efficiency
Meny
Stakeholder
requirements
Fast service
Tasty
food
Warm
food
General process
requirements
Short
leadtime
Cost
efficiency
Step 1 – Create an overview of
the requirements on the
process
Process Object in Object out
Efficiency
Resources
Requirement Requirement Requirement Requirement
Requirement Requirement Requirement
Step 2 – Relate each requirement
to suitable components of the
process
Order Food
Efficiency
Meny
Fast service
Warm
food
Tasty
food Short
leadtime
Cost
efficiency
Step 2 – Relate each requirement
to suitable components of the
process
Requirement
Process Object in Object out
Efficiency
Resourses
Requirement Requirement
Requirement
Requirement Requirement
Requirement Requirement
? ? ? ? ?
?
?
?
Step 3 – Identify potential indirect
requirements that enable proactive
measurement
Order Food
Efficiency
Meny
Fast service
Warm
food
Tasty
food
Cost
efficiency
Food served directly
after cooking
Chef with high
competence
Step 3 – Identify potential indirect
requirements that enable proactive
measurement
Different requirements will suggest
different areas of development
• Process structure
• Competence
• Measurement
• IT
• Values/Culture
• Other
What is meant by indirect
requirements?
• Sometimes there are no practical possibilities to gather
necessary data. Then it is advisable to look for a correlating
characteristics to measure instead.
• A correlating characteristic is a characteristic that can be
expected to be linked to the characteristic that one initially
planned to measure.
• Indirect requirements can also be used to identify
possibilities to measure and control proactively.
• It is better to measureindirect requirements than not
measuring at all. A measurement with known flaws is better
than no measurement .
Checklist for stakeholder
requirements
• Are all relevant stakeholders known?
• Do they represent a balanced mix of
stakeholders?
• Has sufficient information been collected from
the relevant stakeholders?
• Have the stakeholders’ needs been formulated?
• Have the stakeholders’ needs been translated
into stakeholder requirements?
• Are the requirements formulated in an easy and
understandable way?
Process measurement
”What gets measured gets
done!”
• HORRIBLE THOUGHT! • Look at what is measured in any
organization!
• Which behaviors are encouraged?
• Which values are displayed?
What’s measured gets
done…(1)
What’s measured gets
done…(2)
Between 1970 and 1977, Alexeyev was registered for 80 world
records, gradually. He was rewarded financially for each
record.
”What gets measured gets done”
– only good when we have carefully
selected what to measure
What is important?
(What should be
measured?)
”What gets measured gets
done” – when is it valid?
Important?
Performance?
Take action?
The purpose of measurement is
not to create diagrams but to
provide knowledge
”The most powerful purpose of
measurement is to improve, not to
prove.”
”The essence of a corporate culture is
the firm’s measurement system. It is
the lens through which reality is
perceived and acted on.” Paul Strassman
A measurement system can
both preserve a situation
and contribute to changing it
To develop a measurement system is not only
about deciding what to measure, it can very well
be about deciding
what not to measure
”What gets measured gets
done!”
1 Cost
2 Flow
3 Cost
1 Flow
3 Income
2 Income NEW
FOCUS
”To manage a part of an organization as an isolated kingdom was
possible as long as focus was on costs, but it is impossible to continue
when we realize the matter of flow.”
Eli Goldrat
Watch out for the engineer…
• ”everything that should be measured
can be measured in a way that is
superior to not measuring them at
all.”
• ”an open mind can measure
anything. You may not be able to
quantify it, but you can measure it.” Spitzer R. D: Transforming performance measurement: rethinking the
way we measure and drive organizational success
”If we demand that measures be
immediately objective, quantifiable,
and statisticallv reliable, then we are
ruling out most emergent and
potentially transformational
measures.”
Spitzer R. D: Transforming performance measurement: rethinking the way we
measure and drive organizational success
Quality = ?
Flexibility = ?
Competence = ?
On time = ?
Step 4 – Formulate
requirements in measurable
terms
Order Food
Efficiency
Meny
Fast
service
Tasty
food
Cost
efficiency
Food served directly
after cooking
Chef with high
competence
Leadtime from order to
food on the table
Questionnaire
to customer
Cost per customer
Step 4 – Formulate requirements
in measurable terms
Process Object in Object out
Resources
Efficiency
Measure
Measure
Measure
Measure
Measure Measure
Measure
Measure
Step 5 – Decide what and how
to measure
Efficiency
Meny
Order Food
Leadtime from order to
food on the table Percentage of food
Portions served directly after cooking
Customer
questionnaire
Competence level reached in accordance to education program
Cost per customer
Measure
specification
Step 5 – Decide what and how
to measure
Six steps from data
to information and action
1 data collection what data should be registered, when and how
2 compilation how to treat the data in order for it to turn into
information
3 presentation how to present the result
4 communication how and to whom should the information be spread
5 analysis what to be analyzed and by whom
6 action what decicions can be taken based on the
information
A measurement system is more
than a collection of measures
• A measurement system is a gathering of related
measures…
• – described by rules and procedures of how the data shall
be
– collected,
– compiled,
– presented and
– communicated
• – which in combination reflects important performances
and qualities for a certain process
• sufficiently effective to make it possible for intelligent
analysis with following actions if needed.
Why a measurement
specification?
• The measurement specification is a predefined document
containing detailed information of a specific measure.
– Data capture
– Compilation
– Presentation
– Communication
– Analysis
– Countermeasure
• It's purpose is to secure that measurement really takes
place and that it is done in the same way over time
• The measurement specification is the link between data and
knowledge
Ensure that the measurement
system has an active owner
The measurement system will deteriorate fast if nobody is responsible for it
Never develop a measurement system without having solved the ownership question in advance
The process owner is often the natural owner of the measurement system
The measurement system will
never be finished
Continuously update the system to reflect
the current value system
Stop measuring when a problem is solved
Look at development and maintenance of
the measurement system in its context
Make the measurement system
visible
• Always develop the measurement system
together with the people who use the
process
• Let the people who are responsible for
execution also be responsible for data
collection etc.
• Communicate the results
• Fast feedback between performance and
follow-up
Frameworks – not a complete
solution
• “Whatever you do, don’t fall for the easy
way out, which is to just use standard
industry frameworks or scorecards.”
• “Frameworks can consist of 70 to 80
percent standardized measures, but
should include 20 to 30 percent that are
company specific.”
Spitzer R. D: Transforming performance measurement: rethinking the way we
measure and drive organizational success
Gartner
Key success factors for
process measurement • Measurement is not considered the goal in itself –
improvement is!
• Development is seen in its context
• A systematic approach is used
• There is a clear owner of the measurement system
• The answer to “what is important” is the basis for “what to measure”
• The question “what should all not be measured” is also dealt with
• Inaccurate measures are accepted and considered better than no measures at all
• The measures are related and structured into a measurement system
• Focus on pro-active measures
• Rewards in line with measurement system
Management processes
Over the past decade, just about every company
on the planet has been hard at work reinventing
its business processes.
Yet few companies have devoted a similar degree
of energy and imagination to the challenge of
reinventing their management processes.
Gary Hamel, The Future of Management, p 215.
Management processes -
shortcomings
• Calender-driven
• Biased toward conservation rather than growth
• Takes the existing business model as the point of
departure
• Focused on existing customers and markets
• Controlled by the defenders of the past
• Implicitely risk averse
• Do not concider the process perspective
Gary Hamel, Leading the revolution, p 297.
Management processes –
different to core processes
• More difficult to define clearly
• Customer focus less relevant/guiding
• As-is may not be established
• Best practice depends on values
• Can be significant gap between official and
actual as-is
Management process…
“… is a process of planning and
controlling the performance or
execution of any type of activity”
A simple management process
Process
executed
Plan process • set goals and expectations
• establish plans and budget
• provide resources and staff
• implement process
Control process • monitor process
• reinforce success
• diagnose deviations
• take necessary corrective actions
Goals &
measures
Expectations, plans & resources
Process measures
Feedback
Changes in goals and plans
Object out Object in
Main types of management
processes
• Establish the way – to decide in which direction and in
which way the organization should develop
• Show the way – to make clear and motivate the choice of
direction through communication and breaking down
overall purposes into operational objectives
• Create conditions – to, in different aspects, create the
financial, structural and resource requirements for the
organization to follow in the designated manner
• Follow up and correct – to follow up the development of
the organization and correct deviations if necessary