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.