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.