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INNOVATION AND BUSINESS PROCESS IMPROVEMENT

Do the best ideas come from visionary policy or from process improvement?

I remember a very wise change management specialist telling me that if you wanted to introduce process improvement and an innovation program into an organization with a dominant leader don’t tell him his policies are wrong. He advised me not to say anything until I had figured out how to recommend that the change should be a change in process not policy. He was a very wise man because I have seen many submissions to make much needed changes to policy rejected because they had not been disguised as a process improvement.

Many ideas for improvement come from people working in the field on a day to day basis and are very familiar with the work on an operational basis. However, there are substantial arguments that business process improvement should radically change the way an organization operates. It is sensible that business process improvement should align with corporate goals or even industry goals.

Business Process Improvement

This is what the writers at Wikipedia wrote on the subject:

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Overview

The organization may be a for-profit business, a non-profit organization, a government agency, or any other ongoing concern. Most BPI techniques were developed and refined in the manufacturing era, though many of the methodologies (like Six Sigma) have been successfully adapted to work in the predominantly service-based economy of today. While there are differences in the challenges that each type of industry poses, the fact remains that the core principles of BPI and how they apply to business improvement remain portable across industries and functions.
It should be noted that BPI focuses on “doing things right” more than it does on “doing the right thing”. In essence, BPI attempts to reduce variation and/or wastage in processes, so that the desired outcome can be achieved with better utilisation of resources.
BPI works by:
• Defining the organization’s strategic goals and purposes (Who are we, what do we do, and why do we do it?)
• Determining the organization’s customers (or stakeholders) (Who do we serve?)
• Aligning the business processes to realize the organization’s goals (How do we do it better?)
The goal of BPI is a radical change in the performance of an organization, rather than a series of incremental changes (compare TQM). Michael Hammer and James Champy popularized this radical model in their book ‘’Reengineering the Corporation: A Manifesto for Business Revolution’’ (1993). Hammer and Champy stated that the process was not meant to impose trivial changes, such as 10 percent improvements or 20 percent cost reductions, but was meant to be revolutionary (see breakthrough solution).
Unfortunately, many businesses in the 1990s used the phrase “reengineering” as a euphemism for layoffs. Other organizations did not make radical changes in their business processes and did not make significant gains, and, therefore, wrote the process off as a failure. Yet, others have found that BPI is a valuable tool in a process of gradual change to a business.
[edit] BPI: Key Considerations
Processes need to align to Business Goals An organization’s strategic goals should provide the key direction for any Business Process Improvement exercise. This alignment can be brought about by integrating programs like Balanced Scorecard to the BPI initiative. e.g. When deploying Six Sigma, identification of projects can be done on the basis of how they fit into the Balanced Scorecard agenda of the organization.
Customer Focus Fast-changing customer needs underscore the importance of aligning business processes to achieve higher customer satisfication. It is imperative in any BPI exercise that the “Voice of Customer” be known, and factored in, when reviewing or redesigning any process.
Importance of Benchmarks BPI tools place a lot of emphasis on “measurable results”. Accordingly, benchmarks assume an important role in any BPI initiative. Depending on the lifecycle of the process in question, benchmarks may be internal (within the organization), external (from other competing / noncompeting organizations) or dictated by the senior management of the organization as an aspirational target.
Establish Process Owners For any process to be controllable, it is essential that there be clarity on who is the process owners, and what constitutes success/failure of the process. These success/failure levels also help establish “control limits” for the process, and provide a healthy check on whether or not a process is meeting the desired customer objectives.
[edit] Methodology of BPI• Carrying out BPI is a project, so all principles of project management apply.
• The first step in BPI is to define the existing structure and process at play (AS-IS).
• Then, the BPI process owners should determine what outcomes would add value to the organization’s objectives and how best to align its processes to achieve those outcomes (TO-BE).
• Once the outcomes are determined, the organization’s work force needs to be re-organized to meet the new objectives, using the variety of tools available within the BPI methodology.
Rummler-Brache Methodology
Geary Rummler and Alan Brache defined a comprehensive approach to organizing companies around processes, managing and measuring processes and redefining processes in their 1990 book, Improving Processes. This is probably the best known, systematic approach to business process change and ideas first introduced in this book have been very influential on other, less comprehensive approaches. This book draws heavily from the basic approach laid out in Improving Processes.
[edit] Implementing BPI
Most resistance to BPI comes from within an organization. Managers often do not wish to change existing structures. The labor force may resist BPI because of fears of layoffs; however, an organization using BPI on a regular basis, argue many proponents, will already have the proper work force to meet existing business challenges.
Some organizations have implemented BPI on a smaller scale and reported success, by doing the following:
• Start with a small process that can be completed in a short time frame.
• Set clear timelines.
• Do not spread resources thinly and focus on the short term payoff.
• Management and primary stakeholders must be involved, or else even a limited implem [edit] See
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Business Process Improvement and Customer Focus

It would at first glance that it would not be easy to focus on process and the customer at the same time. This is because business process improvement is often focused on the tight control of how process is managed so that the result can be measured. This is not to say that customer dissatisfaction can not be defined as a process fault, measured and the cause of the dissatisfaction addressed. This is in line with the Six Sigma approach

Many large companies have adopted Six Sigma approaches to improving quality control and cost reduction. There is an extensive methodology and implementation roles for Six Sigma. There is further information on Six Sigma at http://en.wikipedia.org/wiki/Six_Sigma.

Process improvement should be an essential part of any businesses strategic plan along with an innovation program It is hard to believe that businesses can operate today without some clear structure for process improvement and innovation program, but this does happen not only with some companies, but also the industries themselves. This can defy logic, but it is often the cause can be found in the culture of the company or industry.

Managing in tough times that arrive with a recession often requires a refocusing on process improvement and innovation. Many businesses that do not do this will not survive.

Does Six Sigma methods stifle creativity?

If you were to complete a search on Google regarding this issue you would find many articles. One of the most interesting articles is the one where Business Week reported that Jack McNerney introduced Six Sigma methods into 3M when he transferred from General Electric and increased the share price and bottom line performance, but when he left four and a half years later he also left a legacy of people wondering whether the corporate culture of innovation had remained strong. The 3M company had a proud history and culture of innovation. The full article in Business Week can be read at Business Week article June 11, 2007 “At 3M, A struggle between efficiency and creativity”

I believe that creativity and innovation can be fostered in an organization that had embraced Six Sigma or other similar approaches to becoming more efficient. I have worked in an operational environment in the banking industry where reducing costs was a key issue as well as the need to be creative in finding solutions to problems. We used the Kepner-Tregoe approach to many situations where the use of problem analysis and situation appraisal encouraged creative solutions to problems.

For many people, businesses and countries the arrival of a significant global recession will see innovation and productivity come to the fore as people struggle to manage in tough times.

Jack Taggerty

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