The Next Wave of Process Strategy

When it comes to operational improvement, organizations today are light years ahead of where they were two decades ago, but there's no time to celebrate yesterday's wins. They won't immunize your organization against this decade's march of ongoing progress. That's because information technology — not just the Internet, but also mobile devices, "big data" for intensive data-crunching, and other computer hardware and software — will render even some of today's most proficient business processes obsolete by the end of the decade.

The question for top management is no longer whether your organization's processes need to be improved, but rather which ones, how much, and when.

I see three big opportunities:

1. Work across organizational and global boundaries. The Internet has changed our lives dramatically over the last decade. But organizations continue to use information technology to redesign work across organizational and global boundaries. For example, as I described in a post on collaboration across organizational boundaries, nine healthcare providers worked together to improve the experience of patients getting hip or knee replacements. Ford reengineered its global product development process to keep all parties, including suppliers, up to date on the status of new products in its pipeline. Apple uses Foxconn to make iPads, iPhones, and iPads.

Organizations are redesigning processes that cross organizational boundaries with now-primitive technologies like e-mail and teleconferencing. And they are using long-established approaches such as sharing data, online standards and templates, and using teams that map processes. In the example of hip and knee replacement work redesign, coordinating this improvement effort across the nine organizations wouldn't have been nearly as easy without simple tools like a document accessible to all: the standard path for patients. The traditional improvement approach of engaging all players to map the process from beginning to end was critical in forming a team from different organizations.

2. Knowledge work redesign. Highly structured work that requires lower skills and education — transactional work — is going away in many Western companies, supplanted by automation, outsourcing, and offshoring. Simple customer calls, such as checking an account balance or confirming a flight, are increasingly handled by automated voice response systems or self-service on the Internet. The jobs that remain demand more initiative, insight, and problem solving as well as emotional intelligence, relationship skills, and teamwork — like diagnosing a patient's condition. Other jobs are becoming more analytical as "big data" provides workers with more information to make decisions. Brand managers at P&G, for instance, get a constant feed of consumer sentiment from social media. They sort through it and respond as well as they can in real time.

But redesigning knowledge work (like diagnosing a patient's condition) is much more difficult than improving transactional work (like handling a simple account status call). In transactional work, workers must comply with a standard set of steps, often defined by outside process experts. But in knowledge work, where the worker must use judgment to make decisions, workers must get involved in redesigning their work. They then must help define the support they need and ways to develop their skills. Employees whose jobs are going away need help too, if they are going to tell you how to improve those jobs.

3. Speed. With accelerating changes in technology, competition, regulation, and globalization, so too has the half-life of any business process.

Managers must speed the flow of information so that decisions can be made faster at all levels, from top to bottom. For example, the executive team of Think Finance, a developer of financial products and one of the nation's fastest-growing private companies, gets together every day to review performance. CEO Ken Rees wrote to me that, "in an environment that's changing as quickly as ours, there are so many things to be worried about. The daily huddles and daily executive team review of the dashboards help us make sure we are raising and resolving any issues quickly while giving me comfort that everything is going smoothly and that I don't need to intervene. There are a host of other things that we do with the goal of breaking down hierarchy and improving communication (both up and down) to start to get people used to constant change as a standard practice rather than an upsetting occurrence."

The days of the static annual plan and budgets are numbered. Healthcare provider ThedaCare has thrown out its budgeting processes and replaced it with quarterly meetings in which cross-functional teams review performance and process improvement projects. Continuous improvement is how they address the slings and arrows the market throws at them.

Companies today must be able to make process changes in days or weeks, not months or years. In another post, I shared the stories of ING, a leading bank based in the Netherlands, and Nationwide Insurance, the $20 billion financial services provider. Both are using methods ("agile scrum") that enable quick, small changes to systems.

Over the last decade the opportunities for improving work have multiplied. We should celebrate the achievements of the process improvement approaches that emerged in the 1990s, what I call "Process Strategy 1.0". Now we need to look to the new frontiers of work in the 2010s. In my next post I will dig further into "Process Strategy 2.0" and how it can improve work that is more global, faster-paced, and dependent on knowledge workers.

Where are today's biggest opportunities for improving work? How should organizations take advantage of them?

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