Process re-engineering is on its way to becoming the latest pet rock of management techniques.
The reasons for its faddish popularity are clear: it is a way of tackling the enormous problem of flattening our overbloated, inefficient bureaucracies and streamlining the way work is done.
A 1988 General Electric Co. study of “best practices” in companies such as Ford Motor Co., Chaparral Steel Co., Xerox Corp. and Hewlett-Packard Co., as well as Japanese companies, showed that most improvements came by managing across horizontal processes (from order entry through shipping and invoicing), rather than down vertical functions (like marketing, production or accounting).
That’s because customer interactions and work activities flow across the organization, not up and down hierarchies.
Process re-engineering appeals to quick-fix managers because it aims for striking improvements by blowing up existing structures and procedures, and introducing radically redesigned technology or methods.
Why go through the pain and hard work of understanding customer needs, or developing improvement plans? Why train teams to analyze and improve processes, or to realign compensation, measurements and other key systems? With a few bold strokes, process re-engineering promises to fix decades-old customs and methods.
But, in fact, it becomes a powerful tool only as part of a larger improvement effort. This wider framework is called strategic process management, and it is built on these fundamentals:
- Improve processes from the outside in. Be very clear about who the process should really be serving – that is, customers, not bureaucrats or management. Determine the customers’ most important measures of the process – it may be turnaround time, accuracy rate, or some other yardstick.
Determine how well the organization is performing according to these measures. Then use this data to establish project goals and continuous improvement targets.
- Don’t let specialists, consultants, or executives re-engineer the processes in isolation. Managers, supervisors and frontline improvement teams must be involved. They can move it beyond being just a project, to a continuing management task.
The company’s core processes, such as the movement of materials, money, customer contacts or information, must be strategically managed for both radical breakthroughs and for long-term continuous improvement.
I know of one large Canadian retailer that hired high-priced consultants to revamp its logistics operations, including ordering, warehousing, shipping and invoicing. The new process made sense on paper, but the people who had to make it work felt cast aside. Since they didn’t “own” the new approach, it wasn’t too hard for them to demonstrate how the consultants’ ideas didn’t work.
- Make sure everyone involved in outlining, managing, diagnosing and improving the process is well trained. Managers and teams need to know how to collect, analyze and act on data, so that decision making is based on an accurate picture.
Also, ensure that team leaders and members have strong interpersonal skills. They should be able to conduct successful meetings, manage conflict, confront issues and perform as leaders or players.
- Put executives in charge and hold them accountable. Strategic process management starts at the top, with the executive team focusing on the most critical processes that need attention. It must be done within the context of the organization’s strategic plan.
Each core process must have an executive “owner” (sometimes the CEO) to put his or her weight behind the effort. The executive makes sure the process team gets the resources and attention needed to break down the “vertical chimneys” of departments.
The horizontal management of organizations is viewed as an urgent need these days. But companies need to avoid grabbing one tool, expecting it to do the whole job. The French cavalry’s motto was “When in doubt, gallop.” But managers should have a thoughtful battle plan before they send their troops into the fray.