Signs of a Broken Business Process
Top 10 Reasons for Broken Business Processes
We have learned many lessons over the past 20 years, but our primary lesson is this: about 70% of all enterprise opportunities are directly related to business process deficiencies. When leadership doesn’t build robust processes and systems, it is very difficult to improve overall enterprise performance.
Process not defined.
Good business process management begins by first defining a process, its customer, supplier, inputs, outputs and conversion activities. Because processes spring up out of a need to solve a business problem, and then evolve toward a state of acceptance, most organizations do not have processes that are well designed and defined. We believe this definition is best accomplished using the Perigon Playbook. A Perigon Playbook is a robust, three-dimensional process map that provides a repository of all of the knowledge necessary to own, manage, and continuously improve a process. Those closest to the process and the subject matter experts most knowledgeable of the process should form the team that leads the map’s development. An undefined process is a broken business process.
Process not owned.
Organizations are commonly managed vertically, where the organization chart lays out a hierarchical structure of cascading management responsibilities and accountabilities. The problem with this paradigm, of course, is that work gets done horizontally, through processes flowing across somewhat arbitrarily defined vertical boundaries. The effective management of work must include the individual ownership of business processes that cross these boundaries. A process not owned is a broken business process.
Process not understood.
A business process can be complex or simple, long or short, and produce one or many products or services. Regardless, a business process must have a worthy purpose to justify its existence. Without a worthy purpose, there exists a broken business process that is non-value added and should be eliminated. Even for the simplest process with a single output, the process must provide something that the customer values.
Process not followed.
One of the things we often see in organizations is what we call the “superhero” solution. Organizations mistakenly think they will overcome a lack of well-defined and standardized processes by hiring very talented, superhero employees who make up their own business process and overcome the many obstacles to solving problems. While this can work in very small organizations and for a short while, it leads to chaos, burnout, high costs and potentially dangerous and unnecessary risk to the enterprise. A superheroes will not overpower a broken business process in the long run.
Customer not understood.
Every business process serves a customer and should create something of value. While the customer receives the output of the process, process owners (if they even exist) rarely know the customers of their process, what those customers want from the process, what customers think of the value provided by the process, and to what extent the process meets customers’ needs.
Supplier not understood.
Every business process is also served by a supplier. Just like the customer, most process owners do not know the supplier to their process, what the process needs from their supplier, what the supplier is capable of providing to the process, and to what extent the process needs are being served by their supplier.
Process is cumbersome to execute.
Because business processes frequently grow into existence without intentional purpose or design, they tend to meander across organizations through the development of “good ideas” that add extra steps, poorly designed tasks and additional work-around activities to accomplish what started out as a simple process requirement.
Loaded with non-value added work.
Value added tasks are tasks the customer would be willing to pay for. Limited value tasks are those that are questionable for the customer. All others are non-value added. We study the value added, limited-value added, and non-value added task ratio for every process we build. When processes have not been previously developed and analyzed, we typically find that the value added ratio is in the 5 to 20% range.
Performance not measured.
When organizations have front line measurements in place (and many don’t), we find that they are oriented vertically toward the organization chart’s definition of responsibility and accountability. They also tend to be reactive (and too late to adjust) versus predictive. Good process measurement captures both business process effectiveness (the extent to which the process satisfies the customer’s need or want) and process efficiency (the extent to which the process uses the minimum possible resources to do so.) Best-in-class enterprise performance measurement is built from the ground up, beginning with process measures that align with system measures, which feed enterprise key performance indicators (KPI’s).
Not linked to strategy.
We frequently hear the following from senior leadership, “We are committed to our strategy, but we can’t get the organization to execute.” We believe that strategy without strong business process is like a head without a body. Without having operational control of processes, it is nearly impossible to move the organization toward a vision of the future.