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Breaking Down the Walls
By Craig Cochran

Although it saves money and promotes flexibility, process orientation means losing those cherished, autonomous departments.

For most organizations, process orientation offers one of the biggest improvement opportunities available. It also represents a huge change in the way most organizations view and manage themselves. With process orientation, organizations think in terms of integrated processes rather than a confederation of functional departments. Although there's nothing inherently wrong with managing by departments, problems arise when they're managed semi-autonomously. In such cases, each department manager attempts to maximize his or her results without considering how the results affect the remaining portions of the process. In addition, departmental divisions cause countless problems related to communication, coordination and resources. As a result, the organization's performance suffers because its operations aren't structured optimally.

What's in a process?
Before we go further, let's clarify what the term "process" means. Very simply, a process is an activity, or bundle of activities, that takes inputs and transforms them into products or output. Under this extremely broad definition, just about any activity could qualify as a process. However, we'll concern ourselves strictly with major business processes -- the handful of primary transformation activities within an organization. Even the most complex organization probably has fewer than 20 major business processes. These work together in an integrated manner to carry out the organization's strategy and achieve its mission.

Managing a business in terms of business processes makes perfect sense, you might be thinking. Why would an organization manage itself any other way? The answer is that most organizations are structured according to functional activities rather than processes. For example, people who perform similar activities and report to the same manager are grouped together. Once they finish their work, the product is handed off to the next functional department and forgotten.

For example, consider the manufacture of widgets. The three key activities in widget manufacturing are stamping, grinding and polishing. A traditional widget manufacturer divides these activities into individual departments, each with its own manager, staff, equipment and supplies, as illustrated below.

An Individualized Process

From one perspective, organizing the company like this makes a lot of sense. The work is cleanly divided into discreet activities, with specialists doing their jobs and only their jobs. Measuring the output of individual activities is easy. At the beginning of the 20th century, Frederick Taylor and Henry Ford used this approach to achieve new levels of productivity from, and control over, employees. With cleanly divided departments, employees are focused on their own work and little else.

Ironically, this focus is also one of the drawbacks of the approach. Everyone concentrates exclusively on his or her job and really doesn't understand how the work contributes to the organization's greater goal. Departments try to excel individually without regard to the organization's overall excellence. Each department measures its output and its efficiency, doing whatever it can to improve this performance. Such a structure works fairly well when an organization makes a large quantity of a few products and it can sell everything it makes. The structure causes problems, however, when the product list expands and mass customization becomes critical. Of course, a wide product list and mass customization are virtually the norm now, for manufacturer and service providers alike.

Another drawback to the departmental approach is that resources aren't easily shared across departments. Personnel are trained to do jobs in their departments only; they can't be redirected to activities in other departments because they don't know anything about those activities. Even if they did, what would be the advantage to the department manager, who's measured on the output of his or her department? The departmentally structured organization lacks the flexibility to apply people where they're needed on a moment's notice.

Personnel aren't the only resources that get snagged on departmental boundaries. Supplies and materials don't flow easily across these divisions either. When supplies and materials are allocated to individual departments, there's little motivation to share resources when other departments need them. At the very least, delays occur as the details are worked out and managers determine how they can benefit from the situation. The question, "What do you have that I can use?" is often heard in such situations. Because most managers are compensated based on their department's performance, they can't be blamed for behaving logically.

The last important resource that has trouble passing through departmental boundaries is information. The departmental structure sets up a filter between information and the people who need to receive it. Feedback about the conformance of work between departments is delayed or blocked altogether. In many organizations, it's forbidden for personnel to leave their departments and interact with people from other departments. Even without such explicit prohibitions, though, departmental divisions pose an obstacle to personnel receiving feedback on their work further down the line. This block reinforces the tendency for departments to think of themselves as little islands, operating independently of other activities.

Orienting to the big picture
Consider how the illustration below differs from the one we've been discussing.

An Integrated Process

The functional activities of stamping, grinding and polishing are recognized as part of an overall process. No departmental boundaries exist between these activities. Personnel are cross-trained on different jobs so they can move from one activity to the next, based on the workload. Flexibility is built right into the structure. Because departmental boundaries don't exist, resources also flow smoothly from activity to activity. Information, supplies and materials all go where they're needed, when they're needed. One person manages the entire process and is compensated based on the process's overall performance, rather than just one aspect of it.

An organizational structure based on major processes makes perfect sense, but it's a radical departure for many enterprises. Most managers have come of age in a world where companies consisted of functional departments, not integrated processes. Understanding how processes function requires a different mindset than understanding how departments function.

The missing element here is the link between one activity and the next. In functional departments, links are taken for granted. If each department does its part, then the entire organization will succeed. Little consideration is given to the links between the departments, even though most problems occur there.

Process orientation highlights the links between activities because the links have become a visible part of the process. They aren't disguised by departmental boundaries. With true process orientation, if the links aren't effective, it becomes immediately apparent. The connections between activities become smoother because the process's dynamic nature demands that they continually improve.

Clear processes also encourage organizations to use teams in the workplace. Supervision is important when people must be pushed and directed, which happens when nobody really understands how the overall process works. In an organization that has adopted process orientation, everybody can clearly see how the various activities fit together and support one another. The relationships are obvious. People can see and understand the results of their efforts, and supervision becomes less necessary. Process orientation therefore promotes self-directed work teams and team problem-solving.

In almost every way, process orientation is superior to traditional departmental structure. Consider the following comparison between a functional department and an integrated process:

With a functional department, you'll find:

• Specialization

• Improvement efforts focused on the activity level

• Each activity fully staffed

• All personnel and equipment utilized

• Little understanding of interdependencies between activities and processes

• Close supervision

• Localized communication

• Slow feedback from downstream activities

• Metrics focused on the activity

• Narrow accountability

• Little flexibility in the event of changes

• Competition for resources

• An inward-looking view

• Clean divisions between management and staff

An integrated process, however, promotes:

• Broad competencies

• Improvement efforts focused on the process level

• Activities only staffed as necessary

• Personnel and equipment used when demand requires them

• Heightened understanding of interdependencies between activities and processes

• Less need for supervision

• Free-flowing companywide communications

• Fast feedback from downstream activities

• Metrics focused on the overall process

• Broad accountability

• Flexibility when change occurs

• Shared resources

• An outward-looking view

• Blurred divisions between management and staff

Typical business processes
Many sub processes support one major business process, but they all have the same ultimate objective: enabling the business process to fulfill its organizational objective. Major business processes sometimes coincide with traditional departmental boundaries but more often cut across them.

People often become confused about where to draw the lines between major processes. It's worth vigorous discussion but not worth getting too hung up on. The exact definition of each business process could easily be argued from a number of different angles. It's important to remember that, with process orientation, the organization is broadening its focus and attempting to embrace a new structure. This alone is a huge breakthrough.

Let's look at some examples of major business processes and the sub processes that support them.

Leadership process:
  Determining a mission
  Developing a strategy
  Selecting key measures
  Communicating the mission, strategy and key measures
  Ensuring that all processes stay focused on the customer
  Analyzing data
  Making rational decisions
  Recognizing personnel for their contributions
  Representing the organization to the outside environment
  Acting ethically

Customer satisfaction process:
  Conducting research into market needs and desires
  Communicating market needs and desires to other processes
  Developing the marketing strategy
  Locating potential customers
  Providing product information
  Performing sales follow-up
  Gauging customer perceptions
  Analyzing data on customer perceptions
  Communicating to the organization about customer perceptions

Design process:
  Understanding market needs and desires
  Converting needs and desires into design input
  Planning design activities
  Coordinating activities with all process leaders
  Developing product output that meets design input
  Reviewing the design progress
  Verifying and validating design output
  Communicating design information to other processes
  Controlling design documents

Inbound process:
  Communicating needs to suppliers
  Evaluating and selecting suppliers
  Purchasing supplies, services and equipment (i.e., inbound products)
  Verifying the conformity of inbound products
  Ensuring the payment of suppliers
  Providing feedback to suppliers on performance
  Moving inbound products to the appropriate location
  Storing inbound products as necessary
  Optimizing the time, cost and performance of inbound products

Product realization process:
  Communicating supply, service and equipment needs to inbound process
  Scheduling work
  Arranging resources
  Producing the product through appropriate transformation activities
  Verifying product conformity
  Providing feedback to all activities within the process
  Packaging the product as appropriate
  Applying identifiers to the product as appropriate
  Final product release

Outbound process:
  Handling of the final product
  Scheduling transportation
  Storing the product
  Ensuring preservation
  Order picking
  Truck loading
  Coordinating delivery with customers

Personnel management process:
  Determining personnel competency needs in cooperation with process leaders
  Recruiting appropriate personnel
  Assigning personnel to processes
  Determining appropriate compensation and benefits packages
  Developing policies that result in employee retention
  Facilitating organizational communications
  Mediating conflict
  Ensuring legal compliance
  Administering programs to build competencies (e.g., training, etc.)

Maintenance process:
  Providing maintainability requirements to inbound process owners
  Determining and implementing preventive maintenance
  Scheduling work in the most efficient manner possible
  Reacting to breakdown scenarios
  Performing predictive maintenance
  Optimizing infrastructure cost, timing and effectiveness

Improvement process:
  Guiding the development of procedures
  Managing internal audits
  Administering corrective and preventive action
  Reporting to leadership on the results of improvement efforts
  Facilitating problem-solving methods and tools
  Troubleshooting with customers
  Assisting in improving suppliers
  Guiding the use of statistical techniques
  Identifying and removing nonvalue-added activities
  Soliciting improvement ideas from personnel
  Ensuring personnel recognition
  Supervising the investigation into product and service failures

Drawing the lines between business processes is something of a balancing act. Generally, an organization benefits when the business process cuts as broadly as possible through the organization: however, a process that cuts too broadly will be difficult to control. Defining the end of one business process and the start of another is a matter of subjective judgment and what can only be called "process wisdom." Nevertheless, a couple of guidelines can assist in defining the processes.

First, business process includes activities that add value to a product in the same general manner (e.g., by acquiring and readying the product, transforming the product, etc.). The activities don't necessarily need to be similar to one another, but they must work toward a common destination.

Second, business process includes activities that have the same general objective (e.g., acquiring the best supplies and materials at a competitive cost, transforming the product in the most efficient manner possible, etc.).

Avoid the temptation to define processes along the same boundaries as functional departments. The whole point of process orientation is to combat the narrow, myopic perspectives that functional departments often encourage. Simply calling a functional department by a different name does nothing for the organization.

Beginning the journey
In a perfect world, restructuring an organization along business processes would be a simple action. Nobody resides in a perfect world, however. Organizational changes of this magnitude carry with them significant implications, and usually only the most senior managers can successfully carry them out. Even then, they sometimes fail.

Evolving toward process orientation is the best solution. Practical actions can be implemented that will gradually shift your organization toward process orientation. And these can be implemented by anyone with organizational respect and clout. The cumulative impact of the following actions is great, but taken slowly and incrementally, they're much easier to digest:

Determine the business processes that exist within the organization.
Compare the boundaries of the business processes with existing functional departments to determine where conflict exists.
Develop process flow diagrams that span departmental boundaries and depict business processes in their entirety.
Cross-train personnel who work within the same business process.
Assign cross-trained personnel to new activities in order to build flexibility and heighten awareness of the integrated process.
Examine incentives and objectives across functional departments. Do they encourage improved functional departments at the expense of business processes? Remove all incentive and objectives that suboptimize the organization's overall performance.
Establish opportunities for personnel to interact within and across business processes. Encourage frequent dialogue. Some of the best improvement ideas come serendipitously through informal discussion.
Encourage personnel to communicate their ideas for improvement. Focus personnel on improving business processes rather than narrow tasks and activities.
Eliminate activities that don't add value or contribute to the effective functioning of the business process.
As personnel and managers become accustomed to thinking in terms of business processes instead of functional activities, begin reshaping the formal structure of the organization toward process orientation.

Craig Cochran
Craig Cochran
About the Author:
Craig Cochran is a project manager with the Center for International Standards & Quality, part of Georgia Tech's Economic Development Institute. He's an RAB-certified QMS lead auditor and the author of Customer Satisfaction: Tools, Techniques and Formulas for Success and The Continual Improvement Process: From Strategy to the Bottom Line, both available from Paton Press. CISQ can be reached at (800) 859-0968 or on the Web at www.cisq.gatech.edu.
The Continual Improvement Process: From Strategy to the Bottom Line
Continual improvement is not optional. It is a condition of survival. Every organization must have systematic methods for making smart decisions, attacking problems, improving its products and services, and repelling competitors. Anything less than a systematic, disciplined approach is leaving your future in the hands of chance. This book presents a range of practical methods for driving continual improvement throughout the organization. The starting point is leadership, with a clear definition of mission, strategy, and key measures. These themes are then carried throughout the enterprise, informing everyone on the issues that matter most to survival and success. Strategic approaches for the deployment of metrics, review of organizational performance, effective problem solving, internal auditing, process orientation, and cultural development are also described in detail. Practical tools and examples are provided at every step of the way, enabling immediate implementation of the concepts. This book is more than a guide to continual improvement; it is a guide to leading and managing any organization.

Customer Satisfaction: Tools, Techniques and Formulas for Success
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Customer Satisfaction: Tools, Techniques and Formulas for Success
Customer satisfaction is the single most important issue affecting organizational survival. Despite this fact, most companies have no clue what their customers really think. They operate in a state of ignorant bliss, believing that if their customers were anything less than 100-percent satisfied they'd hear about it. Then they are shocked when their customer base erodes and their existence is threatened. The key to competitive advantage is proactively gauging customer perceptions and aggressively acting on the findings. The techniques for doing this don't have to be difficult, they just have to be timely and effective. This book explores a range of practical techniques for probing your customers' true level of satisfaction. Tools and specific instructions for use are described in detail, enabling the organization to get started immediately. The tools range from very basic to highly sophisticated, providing a path for organizations to follow as they progressively become more familiar with the unique drivers of customer satisfaction. This is the perfect reference for organizations that want to continually improve and outpace their competition.





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