AMN Perspectives by Thomas Group: Experience at Work
Posted: March 23, 2004, 9 a.m., EST
by John Steidl, Thomas Group consultant and Mike Manor, president, Automotive Aftermarket, Thomas Group
IRVING, TX — In our last article we identified seven critical attributes of the process enterprise. Starting today, we’ll spend several weeks exploring some of the practical issues involved in bringing these key attributes to your own organization.
This week’s article attempts to answer several commonly asked questions:
* How many processes should we be trying to manage and what should they be?
* What’s the role of the process owner?
* Who should be a process owner, and from what level within the organization?
How Many Processes?
If you dissect a business, you can find hundreds of processes. We’re familiar with an information technology (IT) process model that defines nearly 40 processes within IT alone. This is not useful. A key goal of the process enterprise is to eliminate white space (defined as a gap between accountability areas) by providing a higher-level framework than the existing functional organization. A process model with hundreds of processes will create more white space, not less.
We know of several multi-billion dollar companies that are moving toward a process enterprise. All of them started with dozens of processes in their process model, and over time moved to smaller and smaller numbers. Ultimately, these companies arrived (independently) at process models with fewer than 10 processes. Our view is that, for most companies, three to four processes is the right place to start.
At this level it’s pretty easy to define what a company does. It has to generate new sales, fulfill existing orders and ultimately, create new products and services to address a changing environment. The relative importance of these three processes may vary between industry segments and companies, but this model represents the most fundamental concerns of any business over time.
The Role of Process Owner
One common question is: How do these processes differ from apparently similar functions? For example, in a manufacturing company, “generate new sales” seems equivalent to the sales and marketing department; “fulfill orders” might be mistaken for manufacturing; and “create new products” sounds a lot like engineering. This is a dangerous illusion. Fulfilling orders quickly and effectively, with a high level of customer satisfaction, requires the coordinated action of nearly every department in the company. And as we saw last time, the sales force can create tremendous problems if the selling activity is too disconnected from design development, manufacturing and order fulfillment.
The job of the process owner is to ensure that all the pieces fit together seamlessly and work together effectively. More specifically, some of the key tasks of the process owner include:
a) Defining the scope and boundaries of the process, including the connection points with the other key business processes. For example, order entry could be treated as the end point of new business acquisition, or the beginning of order fulfillment. In either case, it represents an important link between those two processes.
b) Identifying the most important dimensions of performance for the process, and establishing appropriate measures to track that performance.
c) Evaluating the current operational capabilities of the process against company strategy and the competitive environment, and then setting appropriate performance goals linked to the metrics.
d) Leading or sponsoring a cross-functional team to establish and drive the performance improvement plan to achieve those goals.
e) Actively monitoring the execution of that plan, and ensuring that escalated issues are quickly resolved.
f) Working with the other process owners to drive process education and cross-functional behavior throughout the organization.
From these responsibilities, and the fact that there are a small number of high-level processes to be managed, it’s clear that the process owners must be fairly senior executives. They certainly need to be people in a position to mediate and resolve disagreements between functions, as well as people who can set aside their functional hats and take a broader view.
The initial commitment from a process owner is significant, but this tends to decrease over time as the process management infrastructure is put in place, and process management techniques become internalized in the organization. In general, we do not recommend that the process owner role be a full time one. In large organizations, however, it can be valuable to have one or more full-time personnel dedicated to supporting the process owners to ensure effective management of the key processes.
In a later installment, we plan to talk more about the important relationship between process owners and functional managers. Next time we’ll talk specifically about performance metrics in the process enterprise.
For additional information, visit www.thomasgroup.com or call Mike Manor at 972-401-4444.
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“AMN Perspectives by Thomas Group: Experience at Work” is written and sponsored by Thomas Group. The opinions expressed in “AMN Perspectives by Thomas Group: Experience at Work” articles appearing on aftermarketNews.com do not necessarily reflect the opinions of AMN or Babcox Publications.