Organizations are traditionally structured in a top-down manner. Through this structure, the CEO and C-suite leaders formulate strategic plans that are implemented through a cascade of instructions and resources, and then allocated down through the ranks.
Often missing in this traditional hierarchical approach is the connectivity between functions and departments; work flows across organization boundaries from department-to-department and function-to-function. What connects workflows are business processes – tasks combine to create a process; processes link to form business systems; and business systems connect to form the enterprise.
Without developed business processes in place, most problems lie hidden in between organization boundaries and functions. It is usually not obvious what the actual problem is, where it lies, who is responsible and who has authority to solve it. This is the underlying cause as to why organizations fail.
Business Enterprise Mapping has worked in performance improvement for over 20 years with a wide variety of organizations. In our experience, we see leadership teams primarily focus on direction, strategy, people and organization structure. While we often hear that leadership is happy with their firm’s vision and strategy, we also hear that leadership is frustrated with the organization’s inability to execute to desired outcomes.
The Primary Reason Why Organizations Fail
Through our client relationships, we have collected a large volume of data detailing the most pressing problems, frustrations, and opportunities in organizations. These performance issues span a wide variety of industries, size, and types. As a standard practice, we organize this data into five categories; business processes, organization boundaries, tools and equipment, people, and environment. We have compiled over 10,000 opportunities from a range of organizations and industries. Of course, these are grand averages, but the relative contribution of each category is summarized below.
Our clients have taught us that, on average, about 72% of all improvement opportunities are directly related to deficient business processes and organizational boundaries. Looking deeper into these causes, we find that processes and their boundaries are often undefined, not followed, too complex, full of non value-added work, lacking customer and supplier connections, not measured, and missing accountability. Many organizations miss the valuable insight that, without strong business processes, it is nearly impossible to manage and improve overall enterprise performance.
How Does This Happen?
Organizations typically make substantial investments in facilities, information technology, people, knowledge, and equipment to provide the infrastructure necessary for success. These assets all enable and support the production of products and services that deliver customer value. It is rare, however, to see an organization make a comparable investment in business processes. Because of process weaknesses, investments in other assets yield less productivity while enterprise performance suffers significantly. Strong business processes provide the engine that powers enterprise performance. By not investing in building, managing and continually improving processes, an organization substantially underperforms relative to its full potential.
What’s the Solution?
Systematically building reliable and capable processes makes the execution of leadership’s intention possible. By defining, improving and aligning business processes and systems, organizations gain the ability to create customer value, improve profitability and the substantially mitigate risk.