What makes a company successful?
Successful companies are easily identified, right? They are the ones that stand out from the crowd, others aspire to be like them, and individuals aspire to work for them. Internally, they have defined goals and a strategy that is clearly communicated; their business processes are defined; KPIs are set and tracked; resources are managed.
But what is it that causes one organisation to rise above its competition and even excel beyond expectations?
The difference is how much the organisation understands about what their customers really need. Particularly in hard economic times, those companies that are focused on internal issues and find that their business is changing more slowly inside than out, are those same companies that find themselves struggling with maintaining market share and revenue.
However, if you think this struggle is going to remain limited to purely economic influences, than you would be wrong. As consumers we are now more informed than ever and much less tolerant of suppliers who do not meet our demands, let alone our needs. We are the ones raising the bar even higher and directly influencing the successes and failures of the (product and service) suppliers we deal with.
The truly successful and enduring organisation today is one that has returned to its core purpose in business - to serve its customers. More than this though, they are adding value to their customers and putting the customer at the centre of everything that they do. In the 21st century, this is the primary strategy we need to succeed in business.
The challenge today is to move your company from the navel-gazing habits it has cultivated over many years and to refocus on the business from your customer's perspective, i.e. from an outside-in perspective. Only then does the organisation have a real chance of moving to the next level of maturity.
BPM in the Economic Climate of 2009
Given all the doom and gloom about the economy that is appearing in recent media stories, can companies maintain, let alone implement new systems for Business Process Management in 2009? How do organisations need to change their decision making and business strategy to ensure future success? What changes are needed in business fundamentals or business focus?
Increased external stresses to an organisation will increase pressure on management teams to implement changes within the organisation. These same external stresses can translate to increased performance expectations of individual employees. The challenge then is for the management team to manage the required organisational changes. The way in which an organisation manages change, and its capacity to maintain or expand its business processes will be a reflection of its level of maturity. There are a number of Capability Maturity Models that have been published. The Carnegie Mellon Software Engineering Institute (SEI)[1. Carnegie Mellon Software Engineering Institute website - http://www.sei.cmu.edu/cmmi/] defines 5 levels of levels of maturity within their Capability Maturity Model (CMM).
The SEI Capability Maturity Model (CMM) level definitions:
Level 1 - Initial (ad-hoc processes)
Level 2 - Repeatable (basic processes conceptualised and demonstrated)
Level 3 - Defined (processes are documented, standardised and linked to goals)
Level 4 - Managed (processes are quantified, measured and controlled)
Level 5 - Optimising (continuous process improvement)
Although developed by the Software Engineering Institute, these levels of process maturity are broad enough to apply equally across all types of organisations within any industry. As Harmon (2007, p. xxxv)[2. Harmon, P. 2007, Business Process Change, Second edn, Morgan Kaufmann Publishers] notes, this model is in the same spirit of Total Quality Management (TQM) and leading companies today are focused on moving from from level 4 to level 5.
It's important to realise the distinction between those companies that have established, documented and linked procedures in place (Level 3, 'Defined' processes, or better), and those companies that have identified and completed the initial mapping of their procedures but are yet to refine them, master them and train their staff on the use of the procedures (Level 2, 'Repeatable' processes). This distinction sets apart companies that are capable of continuing their Business Process Management (BPM) procedures in times of stress. In times of stress (such as increased economic pressures), companies that are yet to reach a level of established procedures within their BPM system will typically drop their procedures, reverting back to the "old way" of doing things. This is because procedures that are still embryonic rely on individuals to constantly push them into day-to-day operations - they are not "endemic" to the organisation and are readily abandoned when performance expectations of individual employees increase.
Organisations that struggle to maintain their procedures and business systems in times of stress are typically characterised by situations within their organisation such as:
- having only one or two individuals defining procedures and pushing for them to be defined
- those individuals responsible for defining procedures do not have this defined as their primary role
- the organisation does not truly "own" the procedures
- the business systems are not visibly implemented in a top-down management methodology
Organisations whose procedures and business systems continue to be used in times of stress are characterised where the organisation:
- has standardised their procedures
- provides staff training on using the procedures
- conducts regular reviews of their procedures
- is not relying on only one or two individuals to define and implement procedures
It could be argued that much of the current economic climate can be attributed to poor decisions made (particularly) by large organisations. Poor decision making may be a reflection of a lack of quality business data and failing to apply good risk analysis to the business data that is available. Putting risk analysis aside for a future post, often business data exists, but it is not collated, presented or communicated to decision makers. To effectively evaluate risk, reliable business data needs to be well presented and communicated effectively to the management team to give them the best opportunity of eliminating poor strategic decisions.
Business data is typically collected through the IT systems in an organisation. At a minimum, IT systems will be used to collate and present business data. Even in tough times, IT still has a role to play. However, I believe it is less likely to involve the implementation of new enterprise-wide (eg. ERP) systems, particularly where they have not been committed to in company budgets to date. Typically there will be a greater focus on analysis of the root cause of process failures leading to more targeted and potentially independent solutions to those failures.
An organisation with established processes that are quantified and have Key Performance Indicators (KPIs) established that are tied to strategic goals will find themselves in a much better position to weather the stresses applied to them from external sources. The requirement remains for people, processes and technology to work together and be aligned with overall business strategy. At what level of maturity an organisation sits, will greatly determine their success in hard economic times.
SEI Capability Maturity Model
Portfolio, Programme & Project Management Maturity Model
UK Office of Government Commerce article
Key Performance Indicators (KPIs)
The old adage of "you can't manage what you can't measure" is never more true than when establishing or refining any management system.
When establishing or refining business intelligence or monthly reports, most organisations turn to key performance indicators (KPIs) that are applicable to their business. At the same time, defining and establishing the "right" KPIs for an organisation can be a significant challenge. But what if most of the hard work has already been done for us? What if there was a pool of industry accepted, best practice measures that we could identify and apply to our own organisations?
Well, like most good sources of information, it is just a matter of identifying that they exist and where to find them.
Take a look at the KPI Library. It is a free source (registration required) of business measures that are categorised by industry to help identify those KPIs that are most important to your organisation. Along with each KPI there is a description to help identify its use and assist in searching through the many (1000+) different KPIs that are listed on this site.
I highly recommend this to anyone who is going through the process of refining or establishing their business reports and measures.