Business Management Styles
BPM or Management by Process
In one of my first courses about Business Process Management, the chairman, an expert in Total Quality Management, was making a major difference between Process Management and Management by Process. In fact, two really different Business Management Styles
For me it was just a question words. Some years after, making a return on experience from my first BPM initiative, I really understood this difference when I discovered the remedy had been worst than the disease. Let me explain why.
After this course, we decided, the Quality Director and myself as Information System Director, to instruct the managers of our company about Business Process Management.
A map of the processes was defined, and the process owners trained (more or less one in each functional department). After a first set of process attributes was established (mission, inputs, outputs and key performance indicators), objectives were defined and tracked through dashboards.
It seemed everything was perfect in the best of the worlds:
- The Quality Director could offer periodically to the top Management, a measurement of the performance on the company, not only in terms of Finances, but also on Customer Satisfaction and Internal Processes Improvement
- The IS Manager had official spokesmen from each Department to address and implement improvement initiatives through technological solutions.
So why, some years after this initiative, had the organization become more divided, with more difficulties to deliver in time, quality and cost ?
Wasn't Management of the Processes supposed to provide more effectiveness and efficiency to the business ?
After analyzing the situation, it appeared that only one dimension of the problem had been addressed, the vertical one. The functional organization had been reinforced.
In fact nobody was addressing the horizontal axis, neither looking for integration and coherence of the whole system.
The Processes was managed, yes; but the company was not managed by Process.
What is Process Management ?
– Focus is put on Effectiveness (Benefits optimization)
– Improvement initiatives are local or by job categories (vertical)
– Most of IS solutions are specific to perfectly match the functional needs
– Power is in the hand of the Process Owners, who define “best of breed” solutions
I name this way the vertical axis of the business processes improvement, as it use to match with the hierarchical organization
What is Management by Process ?
– Focus is put on Efficiency (ROI driven)
– Priority is put on results at company level
– Ad-hoc organization with leadership at top level
– Improvement axis is more horizontal, i.e. Supply Chain
– Processes are integrated with strategy (Balanced Scorecard)
– Off-the-shelf solutions are chosen (for less Total Cost of Ownership)
– Enterprise-wide view is required to communicate (Enterprise architecture)
As the initiatives are considered from an integrated point of view, I call it the global or horizontal axis.
If you have to assume some BPM responsibility, be sure you are balancing the two axies.
Most of the business process initiatives start coming from a Department which wants to solve a concrete problem first. It is a good starting point.
However, as a coordinator of the whole improvement process, you are facing a major risk: to make your organization more vertical with barriers between the Departments, which make the horizontal operations more difficult.
To mitigate this risk, I see three major actions you should lead at company level, if not implemented yet:
- "Plant your Balanced Scorecard tree" to link Business Process improvement with Strategy
- Define the value chain your organization brings to its stakeholders (customers...)
- Be the Enterprise Architect (also called city planner) of your Business
The Balanced Scorecard
Balanced Scorecard is one of the best Business Management Styles I know to introduce the strategy into concrete actions.
In a few words, it ensures that the changes you will implement at Process or People levels are the "roots" to reach some of the "fruits" the company is looking for, in terms of Financial results and Customer Satisfaction.
If you can demonstrate it, you have paved half the way to success, as you probably will get better sponsorship at top level.
The Value Chain
What is the value your process offers to the company? To answer this question you will have to put in relation your process with the others and to check the real value you deliver them.
This approach helps to define what is relevant with regards to this main mission of the organization. Discard what is not, and reallocate the resources to the initiatives more critical for the value chain optimization.
When working on the horizontal axis or from a global point of view, several Departments are involved and not only as owners of a specific process.
Usually Departments like Quality, Information Systems or Human Resources are the main stakeholders of the improvement process. Either for organization consolidation, standardization, or to meet regulatory or compliance requirements, they have to work together and, at the same time, with key users of each Department.
As complexity is increasing, a common language, like Enterprise Architecture, is required to communicate and share objectives.
Enterprise Architecture is all about the relation between the three worlds involved in Business Change Management:
- the Business world: Processes, Company Objectives, Improvement initiatives, Risk Assessment, Quality inputs...
- the Social world: People, Organization, Job positions, Competences, Individual objectives, Performance...
- the Technology world: IT Infrastructure, Applications, Master data, Indicators, IS Projects...
The Enterprise Architect has to make each world to understand the others. No need for that to build complex relational databases.
But to address any change initiative from the three points of view, involving the stakeholders required for its implementation.
As the society of the seventeenth century, today's enterprises need to balance the individual-centric power of their heroes with more "honnêtes hommes".
This type of honesty has to be taken in the sense given by Molière, as a code of behaviour that holds society together (or any organization).
I sincerely thinks that a Management by Process understood as an integration initiative, can help to achieve this goal.