Lean Six Sigma, May I Introduce IT?

In case you missed it – I did, and just caught up with the webinar recording – Bruce Williams gave a cracking presentation earlier this week: The Great Lean Six Sigma Reboot.

His description of the mutual scepticism between IT and the Lean Six Sigma (LSS) community (summarised in his slide below) is spot on.

He may be a Pega VP but he should have been a marriage counsellor.  He has home truths for both sides. He’s persuasive in showing how they are in fact natural partners. And he makes a great case that BPM is emerging as the natural bridge between them.

It’s unbelievably visionary for most organizations of course but if IT can work at the speed of Kaizen, then the LSS community can deliver enterprise-scale sustainable improvements.

He also neatly positions the iBPMS where I think it fits best: as the real-time, dynamic enterprise platform for collaboration and orchestration, sprinkling pixie dust over the core systems of record and systems of execution.

[I have no connection with Pega Systems. It’s just a standout contribution]

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24 Sep   The Business Management System App

19 Sep   What Process Excellence Looks Like in 2020

Process Excellence: Is The Party Over?

You could quite easily get gloomy reading the PEX Network survey Process Excellence: State of the Industry 2013.  Here we go again. Take down the certificate, put the books on eBay and re-write the resume. But wait. Here’s why that would be a mistake, a misreading of the underlying reality.

OK, at first sight, it is not good news. The proportion of process excellence programmes which are successful continues its decline (ongoing since 2009). Now barely half of all process excellence programmes succeed, according to the 800+ process excellence professionals surveyed.

Which is worrying, because you’d expect process excellence professionals to know what’s really going on, and to be biased in favour of reporting success.

Even more worrying, they report that 4% of programmes are ‘highly unsuccessful’, and report that 8% of organizations have ‘dismantled their process excellence programme’.

Other findings confirm a wider malaise: a decline in interest in process improvement; reported declining returns in process excellence; and reducing budgets.

You might reasonably conclude that it’s beginning to look like game over for process excellence. That it’s now downhill all the way into the history books (following in the footsteps of Six Sigma, which the survey reports is now used in just 33% of organizations – down from 71% in 2005).

The reality though is, I think, more subtle – and more hopeful. Continue reading

The Business Management System App

Lunch with an exasperated friend working in risk management and compliance – in despair at the limited ambitions of most of his global corporate clients.

“They understand that they need to break out of their silos. But they have a tick box approach when it comes to end-to-end processes.  Even when they are visual, it’s Visio pasted into a Word document, with zero ownership by the business.  So the most common response from the business is: ‘And you want me to maintain this as well?‘.”

The bottom line, as my friend pointed out, is that, in the jargon of risk management, the first line of defence in these organizations – the business managers in the line – is feeble.

And as Ernst & Young’s Thomas Huertas, a former Citibank MD and FSA Director, warned a GRC conference earlier this year: “If the first line assumes that compliance and risk management is someone else’s job, that’s a sure sign that the organization is headed for trouble.”

My friend pulled out his iPhone. “Look”, he said, “In the past hour, I have answered emails, checked how my team did yesterday, sent a text, bought train tickets, cancelled a flight, commented on a Chatter post and sent my aunt some flowers. And all within what you might call the Apple governance framework, which allows me to do all this but also determines much of what I can do and how. That’s what line managers need. A risk management and compliance framework that is embedded within support for real-time process operations. ”

It’s a rich metaphor. Each person in the organization has a corporate smartphone with easy access to the apps they need to do their work. It’s underpinned by systems but orchestrated by the process management platform, within which is embedded governance, risk management and compliance.

It fits too with recent advice from McKinsey that the integration of end-to-end process perspectives with real-time risk and actionable recommendations is critical to managing vendor and supplier risk effectively.

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16 Sep 2013   Why Process Excellence Is Headed For The Board Room

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What Process Excellence Looks Like In 2020

There are good reasons for believing that process excellence is moving increasingly centre stage, and that this will continue. What does this mean for the enterprise? What does process excellence look like in 2020?

As the old saw has it, it’s difficult to make predictions, and especially about the future. But here’s my take on what will be mainstream when Tokyo next hosts the Olympics.

Every enterprise will have what we might call a ‘cortex’. However it’s known – as the Business Management System or the Business Operating System or the Enterprise QMS, whatever – it will be universal in its scope. It will be how the organization understands itself, how it senses and responds, how it learns.

This cortex will describe every aspect of the enterprise at every level, whether it’s in-house or outsourced, and in a way that everyone can understand. It will be visual and intuitive, leveraging the language of process.

This won’t be just a basic lingua franca.  Right now, most transformation and improvement work relies upon the equivalent of semaphore. We’re moving towards a simplified pidgin. By 2020, we will have developed a rich universal language, still rooted in processes but capable of describing every aspect of the real-time organization in an accessible way that ensures appropriate participation in every aspect of organizational change.

The cortex will be underpinned by a process management platform, which will provide a collaborative framework for managing change and continuous improvement, as well as all the governance required for risk management and compliance.  The process management platform connects it all up; it’s the organization’s central nervous system.

Many of the operations of the enterprise will be automated, some delivered by robots or other autonomic systems within a ubiquitous internet of things. But even when automation becomes this extensive, there’s still a useful distinction between process management and automation. The process management platform will continue to sit above the automated world, providing the holistic perspectives that enable all the stakeholders involved to collaborate on designing and delivering change.

The cortex and its central nervous system, the process management platform, will be corporate consciousness. And process excellence will be the business of developing this consciousness and, in particular, developing organizational intelligence.

Mainstream process management platforms of 2020 will be distinguished in two ways:

(1) Engagement.  Since it all hinges on the enterprise embracing process, everything about process has to be so natural – personalised, intuitive, reliable, easy – that it’s always the lingua franca for training, collaboration and continuous improvement across the entire enterprise [even when the chips are down].

For the platform vendors, this is a huge challenge. It’s set to become a great deal harder as every activity of the enterprise becomes more social, more mobile, more fast-paced, more global, more multi-sourced, more automated and appy, more driven by real-time analytics and risk management.  Their quest for engagement will draw heavily on gamification [its serious side; not mash-ups of SOX and GTA5…].

(2) Governance. Mainstream process management platforms in 2020 won’t just crack complexity to ensure engagement. They will enable success in fast-moving operating environments which will typically be far more regulated, where compliance demands will be more extensive. It won’t be just regulatory pressure or product quality or the demands of rapid innovation either. Expectations in corporate social responsibility and sustainability are going to be far higher, and more extensive, and the costs of failure potentially catastrophic. The compliance overhead could be colossal so governance will need to be as light as possible, especially for the key stakeholders, without ever compromising compliance.

The process management platforms that are thriving in 2020 will have pulled off the trick of enabling agility while also ensuring compliance.

It’s a huge change, of course.  While platforms are essential, they are just enablers. Success in 2020 will require new levels of organizational maturity, above all, the capability to learn and adapt rapidly and intelligently. Many organizations won’t make it. We’re going to need new methodologies that draw upon the best of Lean, Six Sigma and other quality and process improvement approaches – and add in the insights of nudge theory and choice architectures.

It’s exciting. As I’ve said before, I think we’re in a pupa stage. We’re living in a rapidly transforming world, with huge changes to come. But we’re building a butterfly and it has a moral purpose. Here’s just three examples of how process excellence matters to humankind:

It’s key to avoiding our enormous waste of resources on failed transformation projects with near-zero benefits (highlighted most recently in this article in yesterday’s FT)

It’s the key to delivering what the West takes for granted to the majority of humanity who currently don’t have access to it – affordable heart surgery, for instance (the case for standardization and efficiency is superbly set out by cardiac surgeon Dr Devi Prasad Shetty here)

NGOs and Governments need efficiency and effectiveness just as much as, probably more than, global corporations (a great example, via PEX Network, is this World Vision case study).

Looking for one last time into my 2020 crystal ball, I think I can see…wait for it.. the closing ceremony of the Tokyo Olympics!  Goodness me! Great Britain has topped the medal table again.

Why Process Excellence Is Headed For The Board Room

Business process management (BPM) may have experienced a lost decade. But there are still powerful reasons for thinking that process excellence is headed for the CXO agenda.

Five factors are driving convergence towards a realisation of the strategic benefits of a joined-up and intelligent approach to process management.

1. The Drive For Agility

The pace of change, across all industries and regions, is now so intense and disruptive that every organization is constantly re-inventing itself. Agility is precious. Even banks are ‘approaching their Spotify moment’, according to the CEO of one of the largest, Standard Chartered.

2. The Enveloping Demands of Compliance

Increasingly, organizations have to provide immediate reassurance to regulators, customers, analysts and investors not just about financial controls (including new compliance requirements such as AML, KYC, FCPA and FATCA)  and product quality – that is the traditional concerns – but also about every other area of their business such as working conditions across their global supply chains, their environmental impact and their tax haven status. The penalties for non-compliance – and consequences in reputational damage – can be huge. And organizations are increasingly judged by their compliance to the spirit as much as the letter of the law. The Head of Enforcement at the UK’s Financial Conduct Authority warned a risk and compliance conference earlier this year that: “If your culture is constantly pushing up to the line, then when you cross the line, which you will inevitably do, we will come down on you like a ton of bricks”.

3. The Need for IT Alignment

There’s very little left that doesn’t involve IT (in its broadest sense).  Virtually every aspect of most organizations’ operations relies upon systems. Even departmental performance improvement projects usually have an IT component.  IT has never been more critical. Change and systems are inextricable. And yet, so often there is a dysfunctional gulf between IT and the business. A McKinsey study in association with the University of Oxford reported last year that “half of all large IT projects massively blow their budgets. On average, large IT projects run 45% over budget while delivering 56% less value than predicted. Software projects run the highest risk of cost and schedule overruns.”

4. The Value of Transparency

In an increasingly technological society, we are in danger of building more and more complex and tightly-coupled systems and organizations, naturally vulnerable to what Charles Perrow termed catastrophic Normal Accidents.  Most organizations already struggle with complexity; but it’s set to grow as organizations become more automated, more social and collaborative, and more virtualized (blending outsourced products and services from multiple suppliers). So transparency – through process visualization – is precious. It is the key to simplification and standardization and, for those on the frontline, better task support.  It also helps to identify and manage risks. One example is the shift under way in Life Sciences, from document-based Standard Operating Procedures (SOPs) to visual process-based perspectives which boost productivity – they enable everyone to see far more clearly what they need to do, and how it fits with what others do – and foster innovation by making it easier to get involved in process improvement..

5. The Lean Sigma Re-Boot

Both Six Sigma and Lean rose rapidly, peaked (remember when MBBs had the world at their feet?) – and have since waned. Other improvement methodologies had their day too. Hot this season is Operational Excellence.  Whatever we eventually call it, there’s a process of integration under way. We’re moving towards smarter approaches to performance improvement, reflecting the learning that any performance improvement initiative will be more successful and more sustainable in operating environments where processes are being managed effectively.

Which is why process excellence will be on every Board’s agenda. You can’t do all this – you can’t do any of these well – without paying proper attention to process. What Brad Power termed process attention deficit disorder may have been the norm for many organizations in the past.  It’s been hugely inefficient but went largely unremarked because it was business as usual.

Looking ahead, we can see that the organizations that will succeed in the future will be intelligent, capable of learning rapidly and responding effectively.  The risks are now so high, the pace so fast, the opportunities so big, but also so fleeting, and tension between agility and compliance so acute, that BPM in its widest sense – that is, process excellence – is set to become the strategic and enterprise-wide concern that it should have been all along.

Process is the language that enables that high quality collaboration; process management is the collaborative and governance framework that underpins it; and process excellence is the culture that defines it.

How to succeed in this emerging new world?  Where does it leave the software vendors? And what are the methodologies that will define how we do this? These are some of the questions I would like to explore in my third and final post.

Business Process Management’s Lost Decade

What did we achieve in Business Process Management (BPM) in the last decade? Frankly, not nearly enough. And there has been enormous waste.

Arguably the single most important root cause has been confusion. We’ve been lacking a common vision and vocabulary, which may sound ethereal but has had significant real-world impact. So let me start by nailing my colours to the mast with a definition of BPM in the simplest possible terms.

If all work is process (an assertion which was the startpoint for the APQC’s ground-breaking 2004 report on Business Process Management and remains essentially true), then business process management is about enabling the organization to deliver effectively and efficiently, and to continuously improve its performance. It’s about what we do, how we do it, who’s responsible and how we can do it better.

It’s true that variants on this definition have been endorsed, to varying degrees, by analysts, commentators and standards bodies. The confusion that has cost us so dearly is in the detail.

A decade ago, BPM was hot. There was huge excitement. The Global Business Process Forum event in London in the summer of 2004 had a triumphant tone.  Howard Smith and Peter Fingar had just published BPM: The Third Wave (with a strap line “Don’t bridge the business-IT divide. Obliterate it!”) and set a course to a new way of doing business.

Smith and Fingar had made the right noises:

“While automation can be readily achieved with a raft of existing technologies, BPM has a wider meaning… Processes are the main intellectual property and competitive differentiator manifest in all business activity, and companies must treat them with a great degree of skill and care.”

“..there is only one solution, an agreed-upon universal language that unambiguously describes ‘what we do and how we do it’, and to which all can subscribe.”

The trouble was that all hopes were pinned on the success of the BPMN process notation (V1.0 of which was published by the OMG in 2004) as the enabler of a world of enterprise collaboration where modelling and execution were one (in the jargon of that time ‘the model is the process’).

It was a wrong turn.  You don’t need to read much of its 516-page spec to realize that BPMN could never have been a universal language. Business people, at least for a couple of generations, are not going to easily surrender to the complexity of BPMN’s swimlanes and pools, events and gateways.

BPMN has not delivered in practice because it can’t enable business engagement. Despite substantial spending,  ‘BPM projects’ have often delivered lacklustre returns re-igniting debates about whether ‘BPM is dead’. BPM veterans talk of the failure of the ‘model-driven panacea’.

But BPMN was flawed too in a more subtle way. Its perspective is that virtually all work can be automated; that it is simply a question of understanding the process and the rules. Which may be essentially true in the very long run but it’s a long way from where we are now. It was a perspective though that suited software vendors perfectly, enabling them to co-opt – others might say hi-jack – BPM as a cover to market smarter automation products.

Analysts and commentators struggled to coalesce these disparate threads into a common vision and understanding. Gartner tried from time to time to re-assert the idea that BPM is far more than simply automation. But progress in aligning perspectives has been limited and painfully slow.  Even Gartner’s iBPM (Intelligent BPM) concept launched last year is widely seen as just the expansion of automation to include analytics.

In short, we lost the idea that BPM provides an holistic framework for performance management. It became an IT thing, an automation initiative.

Does that matter? Yes, and in ways that count.

Let’s start with the humdrum waste. What today is considered ‘normal’ is in fact a hidden overhead of huge proportions.

Most process mapping is low value and oftentimes a completely wasted effort. And what we’re talking about here is a global industry. In London alone, I can show you floors of sharp-suited consultants busy creating process diagrams for clients who have no idea what they really need.  Even where those process models stop this side of fantasy, they are, in a fast-moving world, more perishable than sushi on a summer’s day. Sometimes barely a year passes before the next team of consultants is back in, re-doing essentially the same exercise. It’s an ATM for the Big 4.

It’s not fair simply to cast consultants as villains. Even organizations that eschew consultants struggle.  Typically they have a myriad departmental snapshots of some part of their processes, often overlapping or with barely concealed gaps, and rarely synchronized. Teams define ‘their’ processes in a variety of formats and tools. Governance is an afterthought but that doesn’t matter because no-one reads them anyway. And even where there is an enterprise-wide integrated and governed process architecture in place, it’s almost invariably in a technical language that meets the needs of only an Enterprise Architecture cognoscenti within IT.

It’s not just the waste. This dysfunctional mash up has other, far more serious, consequences for the bottom-line. Look into the root causes of IT failures, of compliance failures, of failed cost saving programmes, of outsourcing debacles, of unsustainable Lean Sigma initiatives – and you’ll find a process failure.

Even worse though, this confusion encouraged other groups to dissociate themselves from BPM almost entirely:

It allowed Six Sigma and Lean practitioners, for instance, to feel justified in remaining aloof, in denial that their initiatives are always going to be more successful and more sustainable in operating environments where processes are being managed effectively.

Operational Risk and Compliance teams might bow the knee before the idea of a universal approach to business process management, but have invested instead in GRC platform solutions which only tenuously connect risks and controls with live end-to-end operational processes.

Business Architecture and Enterprise Architecture groups have happily invested enormous sums in mapping and modelling processes in ways that were only loosely linked – if at all – to live end-to-end operational processes.

Business Transformation teams have defined Target Operating Models that are strangely disconnected from operational realities.

In the recent words of a client, whose experience is typical: “In our organization, responsibility for process excellence has no home. It bounces around between the SAP team, the Shared Services organization, the Automation team and Compliance.”

In short, we have progressed. There is mainstream recognition that process ‘matters’ in some vague  way. Process thinking is slowly becoming part of our everyday reality. But we absolutely haven’t covered ourselves in glory. We may talk about process as enterprise DNA but we treat it in an amazingly casual way.

iStock_000000552191SmallI’m optimistic though that we’re in a pupa stage (when the caterpillar turns to goo). Many cells die but the few remaining cells – the imaginal cells – build a completely new and totally different body.

I think we can embed process perspectives in organizational cultures in ways that will transform enterprise capabilities.  There’s a BPM butterfly going to emerge out of this chrysalis.

But if we want to accelerate its progress, then a clearer vision and a common vocabulary must be a sine qua non. After a decade of debilitating confusion, we need a fresh start, linguistically speaking.

I can see that there’s a strong case for writing off the term ‘BPM’ as beyond redemption, leaving it behind as our caterpillar phase.

My preference though is that we should retain ‘BPM’, confined to the spirit of its original holistic definition. In this sense…

BPM uses the language of process to enable the organization to deliver effectively and efficiently, and to continuously improve its performance.

BPM leverages process visualization to create a space where everyone across the enterprise – operations, compliance, IT, sourcing, risk management, finance – collaborates to deliver for customers and to continuously improve.

BPM makes crystal clear what we do, how we do it and who’s responsible.

BPM’s goal is to build a platform that enables effective collaboration across the enterprise.

Done well, the BPM platform is personalized, intuitive and engaging – and branded, perhaps as the ‘Business Operating System’ or the ‘Business Management System’.

It’s like the BPM platform is the double helix, upon which is written the precise genetic code of the entire enterprise, its Business Management System.

All of which is a long way from automation.

It’s true that there are some relatively simple and highly-automated businesses – some boutique outsourcers or monoline insurers, for example – where a BPMS (a workflow automation platform) can put its arms around virtually every task undertaken in the enterprise.  In these cases, perhaps, the model is the process.  Whatever – these cases do illustrate the convergence of BPM and automation.

The point is that these are rare exceptions. An IBM survey in 2010 reported that 75% of all activities in the enterprise are manual tasks. For most organizations, and for a long time to come, BPM and automation can usefully mean different things.

However we define things (and it really doesn’t matter as long as it’s clear and gains widespread acceptance), clarity matters now more than ever. As we’ll see, there is a confluence of forces that are set to drive process excellence up the strategic agenda for the next decade.

New Horizons: Process 2020

The last time I started a business, we found ourselves, twelve months later and after repaying every cent due, homeless and penniless – and with two children under two years old.

I bounced back immediately with a new knock-out business idea.  Not. But with the support of family and friends, we slowly rebuilt. We were older, wiser and rather more risk averse.

So it’s a huge tribute to my wife’s courage that here I am doing it again.  And this time, I’m happy to add, with the enthusiastic support of our sons, now in their mid-20s.

My new venture, Process Operandi, is intended to be a home for world-class and independent expertise on process and operational excellence. It’s early days of course but promising. [I’m hoping we can keep the house this time round 😉 ].

I’ve worked for most of this century in business process management – at Savvion, Nimbus and TIBCO.  And I’ve been fortunate to work with some awesome clients, partners and colleagues, from whose creativity and generosity I have benefited enormously.

What did I learn?  A decade in, and at a transition point like this, seems like a natural time for reflection. And especially as, in some ways, I’ve been an eyewitness. There’s been a sea change in ‘business process management’ in the last decade and, in many ways, Nimbus has been at the eye of the storm.

So I’m going to share some personal reflections – on what I’ve learned, and what I think it means for the future – in a series of three Process 2020 posts. They start this Thursday 12 September with some 20:20 hindsight: Business Process Management’s Lost Decade.

I hope they’ll be of interest – and look forward as ever to your comments.