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.
Processes
Improvement versus Innovation
Improvement
Innovation
Incremental
Radical
Existing process
Clean slate
One-time or continuous
One-time
Short
Medium (very focused)
Participation
Bottom-up
Top-down
Typical Scope
Narrow, within functions
Broad, cross-functional
Moderate
High
Primary Enabler
Statistical control
Information technology
Type of Change
Cultural
Cultural & structural
Level of Change
Starting Point
Frequency of Change
Time Required
Risk
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.
Source: Adapted from Davenport (1993: 23-25)
High-Level Approach to
Process Innovation
Identify Processes for Innovation
Exhaustive vs. High-impact Approaches
Identify Potential Change Levers
Especially IT
Develop Process Vision
Understand Existing Processes
Measurement and benchmarking
Design & Prototype New Process
Source: Adapted from Davenport (1993: 23-25)
Selecting Processes for Innovation
Key Activities
Enumerate Major Processes
Determine Process Boundaries
Assess Strategic Relevance
of Each Process
Render High Level Judgments of the
“Health of Each Process
Qualify the Culture and Politics
of Each Process
Source: Adapted from Davenport (1993: 27)
During Enumeration Provide Both
Written 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
Orders, Customers
Requests,
Requirements,
Payments
Products
OTR
Boundary Definition
Questions 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?
Strategic Relevance and Health
Criticality to Organization
Mission and Strategy
Degree to Which
Current
Implementation
Meets the Challenge
(“Health”)
High
Medium
Low
High
Medium
Low
Health Indicators
• 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?)
Identifying Change Enablers
Key Activities
Identify potential
technological and human
opportunities for process change
Identify potential
technological, human, and fiscal
constraints on process change
Research opportunities in terms of
application to specific processes
Determine which constraints
will be accepted
Source: Adapted from Davenport (1993: 248)
IT Enablers:
Capabilities and Benefits
Capability
Benefit
Transactional
Transform unstructured processes into routinized
transctions.
Geographical
Transfer information with rapidity and ease across
distances; make processes independent of geography
Automational
Replace or reduce human labor in a process.
Analytical
Bring complex analytical methods to bear; improve
analysis of information and decision making
Informational
Bring vast amounts of detailed information into the
process; capture process information for later
analysis
Sequential
Enable changes in the sequence tasks must be
performed; allow multiple tasks to be worked on
simultaneously
Knowledge Management
(Intellectual)
Capture and disseminate expertise to improve the
process
Tracking
Monitor task status, inputs, and outputs
Disintermediating
Connect two parties within a process that would
otherwise communicate through an intermediary
Source: Adapted from Davenport (1990: 17)
Organizational Enablers
Structure, 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 Vision
Key Activities
Assess existing business strategy
for process direction
Benchmark for process performance
targets and examples of innovation
Formulate process
performance objectives
Develop specific process attributes
Source: Adapted from Davenport (1993: 248)