17 July 2010, 2:53 pm
In a process-oriented firm, people who execute the processes need to have appropriate skills and knowledge. Furthermore, knowledge of certain process improvement, process redesign and change management techniques have to be present.
- Do process workers have detailed knowledge of how their process is executed? Process performers must have appropriate knowledge of how to execute the process, otherwise they won’t be able to implement the process design. The organization’s employees must be able to describe their business process’ overall flow. Furthermore the employees have to know how their work affects subsequent work, customers and process performance.
- Are process workers skilled in decision-making, process improvement and problem solving techniques? Hammer (2007) states that process performers need to have appropriate skills in order to be able to deliver high process performance. The organization’s employees should be skilled in problem solving, process improvement and decision-making techniques.
- Existence of a process redesign, project management and change management experts cadre. According to Hammer (2007), a process organization must have some people skilled in, and with knowledge of, process redesign. In a process-oriented organization, an expert cadre is available including change management, process redesign and project management experts.
- Use of process improvement methodologies. Improving the performance of business processes requires knowledge about, and usage of, process improvement methodologies (such as KAIZEN, Six Sigma, etc.)
19 June 2010, 6:06 pm
Process orientation is also a matter of enterprise culture. The real problems when implementing the process orientation approach are of a cultural nature (Hinterhuber, 1995). The cultural fit is an important issue since people and processes must combine to produce output (Armistead and Machin, 1997). Only a culture based on teamwork, willingness to change, customer orientation, personal accountability, and a cooperative leadership style goes hand in hand with the process approach (Hammer, 2007).
- Existence of inter-departmental teamwork. Process-oriented organization needs a culture which values teamwork, since business processes which cut across functions must be operated by people in a team (Hammer, 2007). Teams play an important role in process management, since e.g. a large process such as order fulfillment still requires working together across functional and/or geographical boundaries (Armistead and Rowland, 1996). Also, Hinterhuber (1995) states that a precondition for successful process management is employing empowered teams.
- Customer-focused attitude of employees. Companies have to increasingly act and think in a customer-oriented way. It is often argued that organizations that emphasize functions and hierarchy fail to focus on the customer (Hinterhuber, 1995; Schmelzer and Sesselmann, 2006; Gulati, 2007). In contrast, in a process-oriented organization, each business process has a clearly defined customer who receives the result of the process (Schantin, 2004).
- Employees’ accountability for enterprise results. Only organizations whose culture values personal accountability will find it possible to move forward with their degree of process orientation (Hammer, 2007). “Commitment to business success” is a cultural artifact exhibited by a process-centered organization (Hammer, 1996).
- Employees’ attitude towards change. The lack of a change supportive culture is often named when process improvement actions fail (Tenner and DeToro, 2000). As business conditions change, process designs need to evolve, and it is the task of process owners to guide that evolution (Hammer and Stanton, 1999). A remarkable part of a company’s change-capability is based on its employees (Nyhuis et al., 2008).
- Use of process language. Process orientation is a construct which becomes “real” through communication and interaction, i.e. the construct becomes real if it is communicated by means of language. By communicating about business processes and their design, process orientation becomes a reality (Gaitanides, 2007).
8 May 2010, 7:09 pm
Human resources systems have to support the process approach (Hammer, 2007). In a process-oriented enterprise, the process design should drive job descriptions. Also, incentive systems should be implemented which emphasize the process’ needs.
- Job descriptions based on process design: The process’ design should drive role definitions, job descriptions and competency profiles.
- Reward systems (incentive systems) that emphasize the needs of the organization’s business processes: Old reward systems based on the functional model are no longer viable in a process-based organization (Armistead and Rowland, 1996). Traditional vertical management systems pull people in one direction, whereas they should work for the interest of interfunctional processes. Therefore, management systems also need to emphasize the process’ needs, otherwise conflict and confusion ensue, lowering performance (Hammer and Stanton, 1999).
19 April 2010, 11:15 pm
This article is a brief summary of the paper “The Effects of Process Orientation on Customer Satisfaction, Product Quality and Time-Based Performance” by Kohlbacher M., presented at the 29th Annual International Conference of the Strategic Management Society in Washington D.C., October 2009 (http://dc.strategicmanagement.net). The work focuses on the question whether there is a positive relationship between process orientation and customer satisfaction, product quality, time to market, delivery time and delivery reliability. The paper also investigates whether these relationships depend on firm size or on manufacturing process type (batch/line vs. project/jobbing producers). The study uses a sample of more than 120 Austrian manufacturing companies. The findings indicate that process orientation has a significant positive effect on customer satisfaction, product quality, time to market, delivery time and delivery reliability. Another finding is that firm size does not moderate these relationships. Therefore, process orientation should not be branded as an organizational approach only for large firms as the positive relationship between process orientation and firm performance also holds for medium-sized firms. Neither does the manufacturing process type moderate these relationships, i.e. process orientation leads to better performance not only for batch/line producers, but also for project/jobbing manufacturers.
13 March 2010, 8:13 pm
“Structure follows process”: In the process approach, it is the process which comes to the fore, and not the existing organizational structure (Becker et al., 2004). A process-oriented organization has adapted its structure to the process view. Several authors stress that the organizational structure should be aligned with the organization’s business processes (Schantin, 2004; Suter, 2004; Gaitanides, 2007; Osterloh and Frost, 2006; Kiraka and Manning, 2005).
10 February 2010, 2:21 pm
This article is a brief summary of the paper “The Perceived Effects of Business Process Management” by Kohlbacher M., presented at the IEEE International Conference in Toronto, September 26-27, 2009 (TIC-STH 2009).
The paper empirically explores the outcomes of business process management by conducting interviews with a total of 44 process-oriented firms. Organizations were asked about the perceived benefits of business process management (BPM).
The effects most often reported are:
- BPM leads to better transparency: 18 respondents (that is 40.91% of the total respondents) stated that by applying BPM, the organization and/or business processes became more transparent and understandable. This leads to better identification of organizational problems and their causes.
- Nine respondents (that is 20.45%) reported that process-oriented organizational approach leads to clear responsibilities because of the process owner role terminating many unclarities caused by fragmented and/or blurry accountability.
- Eight respondents (that is 18.18%) refer to the gained efficiency/productivity due to BPM. Non value-adding activities are better identified and can be called into question.
- Seven respondents (that is 15.91%) reported that BPM brings clear structure and organizational interfaces.
Other benefits reported include improvement of product quality, throughput time reduction, better customer orientation, etc.
27 January 2010, 7:33 pm
This article is a brief summary of the paper “The effects of process orientation. A literature review” by Kohlbacher M., to be published in the Business Process Management Journal, vol. 16, issue, 1, 2010. The paper examines the literature to review studies that report about the influence of process orientation on organizational performance. Studies were classified into statements without straight empirical support, quantitative studies, and case studies. A total of 26 studies were identified that report about effects of process orientation on organizational performance. Studies where positive effects are obtained are predominant.
According to the results of the paper, the effects most often reported are
- speed improvements (most often in terms of cycle time reductions), reported by 14 studies
- increase of customer satisfaction, reported by 11 studies
- improvement of quality (most often in terms of product quality), reported by 10 studies
- reduction of cost, reported by 10 studies
- improvement of financial performance (e.g. in terms of sales, profits or profitability), reported
by 8 studies
2 December 2009, 5:37 pm
The idea of process cascades (representing internal customer-supplier relationships between business processes of an organization) was originally developed by Tipotsch (1997), Schantin (2004), and Suter (2004). The idea is illustrated in the figure below. Process A, acting as an internal customer, places an order to Process B, acting as an internal supplier. After receiving the order, Process B deals with the order and delivers the result back to Process A. Cascading of business processes is an recursive approach, i.e. process B may itself place an order to another process, and so on.
The idea of cascading business processes
The idea of business process segmentation was also originally developed by Tipotsch (1997), Schantin (2004), and Suter (2004). Other authors refer to this idea as well. For instance, Osterloh and Wübker (1999) call it “Triage”, and Gaitanides (2007) calls it “process variant”. The idea is illustrated in the figure below.
Segmentation of business processes
Segmentation of a business process refers to the idea of creating process variants of a business process which faces heterogeneous market and/or customer requirements. The objective is that every process variant created can then handle homogeneous requirements. Some possible examples of business process segmentation are depicted in the figure below (segmentation by degree of business case complexity, customer type and customer location).
Business process segmentation examples
5 November 2009, 2:52 pm
Measurement and management are not separable (Lebas, 1995). By focusing measurement on processes rather than functions, alignment and common focus across separate organizational units can be achieved (Hammer, 2007). Implementing measures and taking corrective actions are operating precepts of process management (Melan, 1989), since a business process can only be mastered if it can be measured (Hinterhuber, 1995).
Process performance indicators are metrics which numerically capture the performance of a business process. The measures assigned to each process should be specified explicitly for each process (Braganza and Lambert, 2000). The process performance indicators have to be derived from the process objectives which themselves must be derived from business objectives and/or from the requirements of the process’ internal/external customers. This is crucial because business processes have to be linked with business strategy (Ndede-Amadi, 2004) and with the environment they intend to respond to (Kiraka and Manning, 2005). In his book, Davenport (1993) describes strategy as the backdrop against which process vision is created and driven.
Process performance measurement only makes sense if performance indicators are calculated from process performance data which is continuously collected. Not continuously collecting process performance data would impede timely reaction on poor process performance.
11 October 2009, 12:58 pm
A business process needs to have a process owner who has end to end responsibility for the process (Osterloh and Frost, 2006; Suter, 2009).
Process owner of a business process
The existence of process owners is the most visible difference between a process enterprise and a traditional organization. Moreover, process ownership needs to be a permanent role (Hammer and Stanton, 1999). A process owner does not only need to have process knowledge, but also leadership experience (Schmelzer and Sesselmann, 2006).
“The process owner must have the authority to take all measures necessary to coordinate and improve the business process.” (Hinterhuber, 1995)
Process owners should have enough power in the organization to act for the interests of the process. An interesting example of the power of process owners is given by Schmelzer and Sesselmann (2006). In their book, they describe the process owner role at Texas Instruments Europe, stating that process owners in this company are members of the European strategic leadership team. Thereby a tight connection between business processes and business strategy is ensured.
An important task of a process owner is the continuous and proactive improvement and optimization of the business process for which the owner is responsible for.