The goal of process management is to improve process. Let’s say you are successful at putting in place a process improvement practice. Can there be too much of a good thing? Experts are saying that it can be.
The past twenty years has brought a focus on business as a process. We measure it as a process. What is the total effort needed to accomplish one unit of business? How can we reduce the cost? Can we increase the quality? Practices such as Six Sigma, Lean, TQM, and others give a clear method to measure and improved a process.
Sometimes, when you put your focus on the “process of business” you take the focus off of the business itself. When you measure finely detailed metrics of production — e.g. how many units per day, how many minutes of labor per unit of output — then those metrics drive decisions. It can be very satisfying/motivating to make incremental improvements in these measures. If you go too far, the excessive focus on this tends to exclude more expensive, yet equally vital, activities like innovation. This is best summed up with this quote from a PricewaterhouseCoopers study:
“Those in middle management… found innovation disruptive to their day-to-day activities and felt it got in the way of running an efficient operation–which is what they were paid to do.”
Doing things precisely the same say makes an organizations fragile (as I have mentioned in earlier posts) because it prevents anyone from experimenting to find a better way. Enforcing a best practice is a two edged sword: you prevent random variations, but you also prevent purposeful small scale improvement. This occurred to me:
Innovation is thinking outside the box;
Automation is the box
Innovation can be disruptive. This means for a short period of time, your efficiency metrics will go down! A company that wants to adopt a disruptive improvement will need to endure a period of reduced performance, in order to “retool” for the new way of working. Ask yourself this question: can a small team escalate the need for a retooling to upper management which is only following the numbers? How much effort will that be, and how much bandwidth does the executive team have to listen to all the explanations from lots of small teams. The metrics can cause the worst kind of centralized control where the numbers are not telling the complete story.
Lisa Bodell posted an excellent piece today: “5 Ways Process Is Killing Your Productivity“. She says:
Why do we love process so much? It offers a way to measure progress and productivity, which makes people feel more efficient and accountable. When used correctly, processes should standardize and simplify the necessary tasks that keep business running smoothly.
She points to a slightly different problem, that your task lists may be so efficient at presenting low grade work to employees, that they may not have the time to attend to higher grade, longer term activities:
[Process is] not a good thing when there are so many processes in place that they restrain the people they’re supposed to help. If your team spends its days asking for permission before executing, taking an hour to complete expense reports or time sheets, attending redundant meetings, or answering irrelevant emails, you’ve got a problem. Exactly when are employees supposed to find the time to innovate when every task or topic is labeled “urgent” and every deadline is ASAP?
She cites 5 ways that process can kill productivity, summarized here:
- Unreasonable number of sign-offs and approvals.
- Focus on process instead of people
- Over-dependence on meetings
- Lack of clear, long term vision beyond efficiency
- Antagonism to change that is not efficiency driven
Daniel Lock writes a post: “How too much process is killing innovation.” He says:
Examples abound where companies have taken on top down, methodology driven approaches to improving their company and come off second best.
Both of these articles cite a couple of well known cases:
- 3M started to use Six Sigma from 2001 to 2005 in order to cut costs and increase efficiency. It worked! They cut costs some 21%. However, at the same time they noticed that innovation in new products dropped as well. (See ZDNet: Six Sigma ‘killed’ innovation in 3M)
- Home Depot found that a focus on efficiency decreased moral and satisfaction. Another 2007 Business Week article put it bluntly: “Profitability soared, but worker morale dropped, and so did consumer sentiment. Home Depot fell from first to last among major retailers on the American Customer Satisfaction Index in 2005.”
- A 2011 Harvard Business Review article by Yves Morieux says “Today companies, on average, set themselves six times as many performance requirements as they did in 1955, the year the Fortune 500 list was created. Back then, CEOs committed to four to seven performance imperatives; today they commit to 25 to 40.”
- A Boston Consulting Group survey of more than 100 U.S. and European that found “the amount of procedures, vertical layers, interface structures, coordination bodies, and decision approvals needed in each of those firms has increased by anywhere from 50% to 350%.”
The ability to enforce process has had the effect of enforcing the process. Imagine that! Your process has become too good.
Ryan Huang (Six Sigma ‘killed’ innovation in 3M) quotes Geoff Nicholson of 3M saying that you should avoid the following things that tend to kill innovation:
- Asking for a 5-year plan
- Insisting people go through all levels with a new idea
- Being control-conscious
- Expressing criticism and withholding praise
- Being suspicious of every idea that originates below you
- Making a decision to reorganize in secret and maximize surprise
Most of those are fundamental to what is generally known as good process management, or at least traditional scientific management. Daniel Lock suggests three keys to avoid killing innovation completely:
- Understand that innovation and problem solving require discrete approaches and thinking.
- When considering problems to be solved, emphasize and look for opportunities to raise standards instead.
- Don’t wait for problems to arise to raise standards, continually seek opportunities to improve and innovate.
Theo Priestley made a related post recently (Is standardization still a valid strategy?) where points out that standardization destroys variance, and variance can be important. He argues that small incremental improvements will never get you to a disruptive, larger scale change, and advocates occasionally completely throwing out the current process and starting from scratch in order to get the most innovative changes.
Innovation is messy. Experimentation is inefficient. But you have to do those things if you want to remain in the business in the long term. You have to take a balanced approach: some amount of time on efficiency of existing work, and some other amount of time on less efficient, adaptive work. Whether it is 90/10, 80/20, or 66/34 depends upon the kind of organization you want to have.
Process optimization approach such as Six Sigma, Lean, TQM are not dead. They work well. But like any tool, you need to be careful how you apply them. Too narrow a focus on efficiency will make an organization fragile. At the end of the day, satisfied sustainable customers is the only metric you should care about.
The 3M and Home Depot examples are interesting – but it wasn’t the “six sigma” that got them – it was the leadership (or lack thereof) and its style. The leaders (ex-GE folks) were convinced that the same six-sigma playbook was what 3M and HD needed. Maybe it wasn’t. HD lost experienced personnel out of their stores (among other issues). 3M lost sight of what makes them unique in American business. I don’t think either one was a result of Six Sigma – after all, that would excuse the people running the company from responsibility for their judgments and leadership. HD has been on the road back since Blake jumped in as CEO.
Were the processes too good? Not in my book. In my book, the efforts they took to cut costs optimized on the wrong metric.
Yes, that is right. They attempted to optimize the wrong things. The irony is that the metrics they chose seem reasonable on their own, and the Six Sigma method was actually successful in improving them! What they didn’t realize was that there was an unexpected confounding relationship with other metrics they also care about. Neither 3M nor Home Depot are a lost cause: the reason we are talking about them is because leadership in each organization realized their mistake. Lucky for us they allowed this mistake to be publicized so that we can learn from it.
This is a great article about how narrow minded processes can make an organization fragile and ruin creativity. In fact, let’s use the Claims Processing business process in a health plan organization as an example.
For many Health Plan organizations, the Claims processing business process should be a relatively simple process. However, organizations tend to overcomplicate the process with unnecessary steps and an unreasonable number of sign-offs and approvals. As you mentioned, customer service is a vital metric of an organization’s success and a health plan organization with unhappy internal and external customers can find themselves losing customers and profits. However, a Health Plan organization which embraces a culture of business process improvement can generate significant benefits – streamlined business process flows, reduced costs, and improved claims processing.
Improved Claims processing can help to reduce the amount of low-value work done and lead to higher customer satisfaction. Modest initiatives, however, can still encounter stumbling blocks and almost no one provides effective resources for business process improvement for free. These resources can include end-to-end business value stream map templates, KPIs, best practices and other improvement opportunities.
Most health plan employees who want end-to-end business process flows will have to convince a C-level executive to hire an expensive consulting firm to come in and make business process maps of their processes, with no guarantee that any real improvements will be made. Since the data contained in the maps is so valuable, no consulting firm will make that data available for even the client to use if they tried to replicate the work themselves. However, for employees who can’t make executive level decisions, there are some resources available. This free online source provides health plan business process flow map templates, KPIs, best practices and other improvement opportunities: http://opsdog.com/improvement/health-plans/processmaps
That’ll be PRIESTLEY Mr Swanson 😉
Have you considered changing your name so I don’t have to edit this post? 🙂 No, I guess not. Sorry, sorry, and thanks for the correction.
Lol believe it or not I saw my grandfather’s discharge papers from the Canadian forces during WWI a couple of weekends ago and your spelling matches those. Somewhere along the way it’s been changed.
L’ha ribloggato su Gestione Documentale, Archiviazione Sostitutiva, Gestione dei Processi Aziendali: Processidocumentali.come ha commentato:
Collaborative Planning & Social Business e’ amio avviso uno dei piu’ interessanti blog di oltr’alpe sulla gestione dei processi aziendali. In questo articolo di Keith Swenson si evince l’enorme divario esistente tra l’Italia e altri paesi del mondo; mentre da noi l’adozione di strumenti software per la gestione dei processi aziendali e’ ancora una faccenda riservata agli “early adopters” aldila’deinostri confini c’e’ gia’ chi si pone ilproblema degli effetti che potrebbero avere processi di business troppo performanti sull’Organizzazione aziendale. Ebbene si, PER QUANTO SI POSSA STENTARE A CREDERLO, anche avere dei business process troppo efficienti puo’ creare un serio rischio, ossia quello di fidarsi troppo della propria efficienza e spegnere il lume dell’innovazione. Insomma: facciamo le cose in una sequenza talmente ottimizzata che non ci accorgiamo che esiste un metodo completamente nuovo per eseguire tutto in un modo molto piu’ efficace o efficiente.
Questo vuol dire abbandonare l’idea di incrementare l’efficienza dei processi interni e lasciare tutto al caso (oal caos)? Ma assolutamente no: edilmotivo e’ molto semplice: anche l’innovazione e’ un processo (creativo), ma la sua ricerca puo’ essere sistematizzata ed aiutata propriograzie ad una strategia di BPM. Quindi, process management e innovation management possono coesistere in maniera sinergica, l’una senza l’altra possono esistere … ma solo per un tempo limitato.
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