What is a Process?

• A logically related set of tasks performed to achieve a defined business outcome.

• A structured, measured set of activities designed to produce a specified output for a particular customer or market.

• A specified ordering of work activities across time and place, with a beginning and an end, and clearly identified inputs and outputs.

• Processes normally occur across or between organizational subunits. Sometimes they even cross inter-organizational boundaries.

• They have customers (either internal or external) — that is, they have defined business outcomes and there are recipients of those outcomes.Process Innovation is all about

Reducing the Costs of Coordination Across Organizational Boundaries• Process innovation is more than rationalization

or simplification, and more than common sense. It questions conventional wisdom about what is easy and economical and thus may lead to more complex, rather than simpler, processes.

ProcessesImprovement versus Innovation

Source: Adapted from Davenport (1993: 23-25)

Improvement Innovation

Level of Change Incremental Radical

Starting Point Existing process Clean slate

Frequency of Change One-time or continuous One-time

Time Required Short Medium (very focused)

Participation Bottom-up Top-down

Typical Scope Narrow, within functions Broad, cross-functional

Risk Moderate High

Primary Enabler Statistical control Information technology

Type of Change Cultural Cultural & structural

Ultimately, a major challenge in process innovation is making a successful transition to a continuous improvement environment.

An organization that does not institute continuous improvement after implementing process innovation is likely to revert to old ways of doing business.

High-Level Approach toProcess Innovation

Source: Adapted from Davenport (1993: 23-25)

Identify Processes for InnovationExhaustive vs. High-impact Approaches

Identify Processes for InnovationExhaustive vs. High-impact Approaches

Identify Potential Change LeversEspecially IT

Identify Potential Change LeversEspecially IT

Develop Process VisionDevelop Process Vision

Understand Existing Processes Measurement and benchmarking

Understand Existing Processes Measurement and benchmarking

Design & Prototype New ProcessDesign & Prototype New Process

Selecting Processes for InnovationKey Activities

Source: Adapted from Davenport (1993: 27)

Enumerate Major ProcessesEnumerate Major Processes

Determine Process BoundariesDetermine Process Boundaries

Assess Strategic Relevanceof Each Process

Assess Strategic Relevanceof Each Process

Render High Level Judgments of the“Health of Each Process

Render High Level Judgments of the“Health of Each Process

Qualify the Culture and Politicsof Each Process

Qualify the Culture and Politicsof Each Process

During Enumeration Provide BothWritten Description (Definition) and

Context Specification for Each Process

• The Order-to-Remittance Process encompasses all organizational activities which take place from the time a customer order is received through the receipt of payment. This includes the management of the order and inventory, manufacturing, distribution planning, shipping, traffic management, delivery, invoicing, and payment processing.

Loosely Identify: Process Context, Inputs, and Outputs

OTR

CustomersOrders,Requests,

Requirements,Payments Products

Boundary DefinitionQuestions to Keep in Mind

• When should the process owner’s concern with the process begin and end?

• When should the process customers’ involvement begin and end?

• Where do subprocesses begin and end?

• Is the process fully embedded in another process?

• Are performance benefits likely to result from combining the process with other processes or subprocesses?

Criticality to OrganizationMission and Strategy

High Medium Low

High

Medium

Low

Strategic Relevance and Health

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• Ratio of value-added time to cycle time.

• Does current process cross many functions (or organizations)?

• Does current process involve many narrowly defined jobs?

• Does current process have clearly defined owner and customers? (Does anyone get upset when the process product is late or over budget? Do we know who is responsible? Who ya gonna’ call?)

Health Indicators

Identifying Change EnablersKey Activities

Source: Adapted from Davenport (1993: 248)

Identify potentialtechnological and human

opportunities for process change

Identify potentialtechnological and human

opportunities for process change

Identify potentialtechnological, human, and fiscalconstraints on process change

Identify potentialtechnological, human, and fiscalconstraints on process change

Research opportunities in terms ofapplication to specific processes

Research opportunities in terms ofapplication to specific processes

Determine which constraintswill be accepted

Determine which constraintswill be accepted

IT Enablers:Capabilities and Benefits

Source: Adapted from Davenport (1990: 17)

Capability Benefit

Transactional Transform unstructured processes into routinizedtransctions.

Geographical Transfer information with rapidity and ease acrossdistances; make processes independent of geography

Automational Replace or reduce human labor in a process.

Analytical Bring complex analytical methods to bear; improveanalysis of information and decision making

Informational Bring vast amounts of detailed information into theprocess; capture process information for lateranalysis

Sequential Enable changes in the sequence tasks must beperformed; allow multiple tasks to be worked onsimultaneously

Knowledge Management(Intellectual)

Capture and disseminate expertise to improve theprocess

Tracking Monitor task status, inputs, and outputs

Disintermediating Connect two parties within a process that wouldotherwise communicate through an intermediary

Organizational EnablersStructure, Culture, and Human

Resources

• Too many systems fail to yield any real benefit because of human problems in implementation. Such issues must be addressed in the early stages, not as an afterthought.

• Work teams (simultaneously bringing cross-functional skills to bear) are the most common structural enablers of process reengineering. In many cases, IT also must be used to allow the team to work together effectively.

• In many cases, the organizational cultural will have to shift in order to empower the teams. But this need not always be the solution. IT can support either culture — empowerment or control.

• Human relations policies — how individual workers are trained, motivated, compensated, evaluated — must be aligned with the human requirements of the process.

• In some cases, current employees do not possess necessary skills and can not easily be retrained. This constraint may preclude process innovation.

Create a Process Vision:Aligning the Organization’s

Strategy and Processes

• Process innovation is meaningful only if it improves an organization in ways that are consistent with its strategy. Embody the organization’s strategy in a vision of the future process state.

(Hint: it is this “moral” vision that provides justification for the innovation effort. The justification is not “saving money,” but “making it easier to do business with the State” or “helping local government.”)

• Process visions, like strategies, should be easy to communicate to the organization, nonthreatening to those who will be affected, and as inspirational as measurable targets can be.

• Congruence or alignment between strategies and processes is essential to radical change in business processes. Without a linkage to strategy and vision, process change seldom goes beyond simple streamlining — good, but not innovation. (Even process streamlining is most valuable when done in areas crucial to organizational success.)

• But remember, nonfinancial strategies make sense only to the extent that they lead to better (often, but not always, financial) performance.

Developing the Process VisionKey Activities

Source: Adapted from Davenport (1993: 248)

Assess existing business strategyfor process direction

Assess existing business strategyfor process direction

Benchmark for process performancetargets and examples of innovation

Benchmark for process performancetargets and examples of innovation

Formulate processperformance objectives

Formulate processperformance objectives

Develop specific process attributesDevelop specific process attributes