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How Process Orientation Impacts Innovation Performance

1 May 2012, 12:55 pm

This article briefly summarizes the study “The Effects of Process Orientation on Exploitative and Explorative Innovation”, by D. Weitlaner and M. Kohlbacher, which will be presented at the 32nd Annual International Conference of the Strategic Management Society, which will take place in Prague, October 7-9, 2012.

The study investigates how individual components of process orientation (i.e. continuous process improvement, corporate culture in line with the process approach, management commitment towards the process program, the process owner role, process performance measurement as well as process knowledge and documentation) affect explorative and exploitative innovation. Exploitative innovations (or incremental innovations) refer to small-scale improvements and adjustments of existing goods/services of a company. In contrast, explorative innovations represent entirely new goods/services which are not inferred from the existing supply of a company.

The empirical study involves 840 Austrian enterprises operating in the manufacturing or service industry. The empirical findings reveal that continuous process improvement and a culture that is in line with the process approach are significantly and positively associated with both types of innovation. The empirical evidence also shows that a narrow focus on detailed process documentation may actually be cumbersome to explorative innovation.

Detailed time and location of the paper’s presentation will be announced via this post as soon as the final conference program is published.

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Cascading and Segmentation of Business Processes: A case study

31 March 2012, 3:35 pm

This article introduces the study “Process Cascade- and Segmentation-Based Organizational Design: A Case Study” by Kohlbacher M. and Weitlaner D., which was presented at the IEEE International Conference on Industrial Engineering and Engineering Management in Singapore in December 2011.

The paper discusses the approach of process cascading and segmentation, a design principle which helps organizations to build its structure around its customer-oriented business processes. Cascading of processes is an approach where the organization’s business process design is based on internal customer-supplier relationships which ensure that every business process of the organization has a clearly defined (internal) customer which places an order and also receives the results. Segmentation of business processes refers to the idea of creating process variants of business processes which face heterogeneous market and/or customer requirements. Both principles – cascading and segmentation of business processes – complement each other. The paper shows how these design principles are applied in practice by using an Austrian manufacturing firm as a case study.

The poster of the presentation can be found here; the paper is available via IEEE Xplore.

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Modeling Business Processes with the Event-Driven Process Chain (EPC)

27 February 2012, 9:26 am

This article gives a brief introduction into modeling business processes by using the Event-Driven Process Chain.
The Event-driven Process Chain (EPC) is a type of flowchart and was developed by Prof. Wilhelm-August Scheer at the Universität des Saarlandes in the early 1990s. There are four basic elements of the EPC:

  • Events: The event describes the incidence of a state. This state activates a function or is the result of a function. Events are passive elements in EPC. Every process begins and ends with one or more events.
  • Functions: Functions represent tasks or activities within the company. Functions describe transformations from an initial state to a resulting state. They are active elements in EPC. Functions consume resources and time. A verb should be used for the name of a function.
  • Logical Connectors: By using the three different logical operations (AND, OR, and XOR), branchings can be inserted between events and functions.
  • Control Flow: The control flow describes the chronological-logical dependency of events and functions and can be split up by using the logical connectors.
EPC elements

The basic EPC elements. Source: Course "Process Management", Graz University of Technology.

 

 

A simple EPC model is depicted in the following picture:

Simple EPC diagram

A simple EPC diagram. Source: Course "Process Management", Graz University of Technology

 

 

Events and functions can be connected by logical connectors in the following ways:

Events, functions and logical operators in the EPC

Events, functions and logical operators in the EPC. Source: Course "Process Management", Graz University of Technology

 

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Process Owners: How to Help Them Succeed

17 January 2012, 11:36 am

This is a brief summary of the article “How to help process owners succeed”, posted on Harvard Business Review Blog Network by Brad Power.

According to Brad, six things militate against success in the role of the process owner:

  • The management team’s attention shifts to other priorities.
  • Process owners misunderstand their role.
  • Process owners are not held accountable for improvements.
  • Process owners are not senior enough to have the necessary influence.
  • The organizational structure to accommodate the role is too complex.
  • Employees are uncomfortable belonging to business processes rather than functions.

Brad lists 6 specific bullet points how to address these issues:

  1. Make the process owner role permanent and incorporate it into overall performance management.
  2. Select process owners with strong leadership skills and develop those skills even further.
  3. Make the process owner accountable for how well the process performs.
  4. Give the process owner organizational power.
  5. Minimize disturbance to the organizational structure. Create process owners outside the formal organization with a very small staff, leave most people in their functional organizations, and clarify the process owner’s role with respect to the functions and business units they will work with.
  6. Help employees get comfortable thinking in terms of end-to-end activities that together generate value to customers. Encourage cross-departmental activities that solve customer problems, and reward cross-departmental teamwork.
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The Principle of Process-Cascading and its Performance Impact

22 December 2011, 11:32 am

This article summarizes the study “The Performance Effects of Process Cascade-Based Organizational Design” by Kohlbacher M. and Weitlaner D., which was presented at the IEEE 2011 7th International Conference on Next Generation Web Services Practices in Salamanca, Spain, in October 2011.

An organizational design based on process cascades is an approach where the business process design of the organization is based on internal customer-supplier relationships. This design principle was originally developed by Schantin (2004) and Suter (2004; 2009). The principle is based on the idea that, in general, each business process is activated by an order which is placed by another business process. The receiving process executes the order and delivers the results back to the ordering process. The ordering process therefore acts as an internal customer for the receiving process, which acts as an internal supplier. The approach is recursive, i.e. the supplier process may act itself as a customer process which places an order to a third process, and so forth. The principle is illustrated by the following figure:

The principle of cascading business processes.

The principle of cascading business processes.

The study discusses the idea of process-cascade based organizational design and empirically investigates the impact of such a design on firm performance. The empirical findings of the study are that firms which implemented process-cascade-based organizational design achieve higher firm performance. The paper is available via IEEE Xplore.

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Survey on Process Management: Structure follows Process

8 November 2011, 10:10 am

In the process approach, it is the process which comes to the fore, and not the existing organizational structure (Becker et al., 2004).This article discusses the concept of structure follows process which was investigated by the process management survey. Survey details (research design, sample, etc.) can be found here.

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 (Suter, 2004; Gaitanides, 2007; Kiraka and Manning, 2005). 45% of the surveyed firms state that they derived their organizational structure from the organization’s business processes.

The item “The organizational structure is derived from the organization’s business processes” was rated by the firms in the sample as follows:

  • 22,96%: Disagree
  • 31,85%: Neither agree nor disagree
  • 45,19%: Agree
The organizational structure is derived from the organization's business processes.

The organizational structure is derived from the organization's business processes.

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Survey on Process Management: Process-Oriented HR-Systems

3 October 2011, 9:07 am

Human resources systems have to support the process approach (Hammer, 2007). Process-oriented HR-systems incorporate job descriptions based on business process design and incentive systems that emphasize the process’ needs. This article discusses empirical insights on process-oriented HR-systems using the results of the process management survey. Survey details (research design, sample, etc.) can be found here.

In most of the firms, the design of business processes moderately drive role definitions, job descriptions and competency profiles (see figure below). The item “Process’ design drive role definitions, job descriptions and competency profiles” was rated by the firms in the sample as follows:

  • 26,85%: Disagree
  • 40,27%: Neither agree nor disagree
  • 32,89%: Agree
Process’ design drive role definitions, job descriptions and competency profiles.

Process’ design drive role definitions, job descriptions and competency profiles.

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 inter-functional processes. Therefore, management systems also need to emphasize the process’ needs, otherwise conflict and confusion ensue, lowering performance (Hammer and Stanton, 1999). Interestingly, most of the surveyed organizations do not have reward systems in place that emphasize the needs of the organization’s business processes. The item “Our organization has implemented reward systems (incentive systems) that emphasize the needs of the organization’s business processes” was rated by the firms as follows:

  • 69,33%: Disagree
  • 16,67%: Neither agree nor disagree
  • 14,00%: Agree
The organization has implemented reward systems (incentive systems) that emphasize the needs of the organization’s business processes.

The organization has implemented reward systems (incentive systems) that emphasize the needs of the organization’s business processes.

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The Impact of Process Ownership and Process Performance Measurement on Firm Performance

12 September 2011, 6:11 pm

This article summarizes the study “Process Ownership, Process Performance Measurement and Firm Performance” by Kohlbacher M. and Gruenwald S., to be published in the International Journal of Productivity and Performance Management, Vol. 60, Issue 7, 2011.

Process performance measurement and the process owner role are two key components of business process orientation. The article investigates whether the implementation of process owners and process performance measurement can improve firm performance. The study was conducted with 132 randomly selected manufacturing companies in Austria. For every firm one executive (CEO, CIO or quality manager) was interviewed.

The following items were used to measure to which degree the role of the process owner is established in the organization:

  • Is a process owner assigned to each business process?
  • Are process owners experienced managers/leaders?
  • Are process owners responsible for continuous improvement of their processes and do they perform this task proactively?
  • etc.

The following items were used to measure to which degree measurement of process performance is carried out in the organization:

  • Are performance indicators defined for business processes?
  • Are process performance indicators derived from enterprise goals and/or from (internal) customer requirements?
  • Are improvement actions actually initiated if poor process performance is encountered?
  • etc.

Results of the study:

The contingency table of the process owner role and process performance measurement is illustrated below:

Process Performance Measurement
Low implementation High implementation Total
Process ownership Low implementation 46
(34.8%)		 5
(3.8%)		 51
(38.6%)
High implementation 34
(25.8%)		 47
(35.6%)		 81
(61.4%)
Total 80
(60.6%)		 52
(39.4%)		 132
(100%)

In approx. 35% of the firms, both process performance measurement and process owners are virtually absent. Approx. 26% of the interviewed firms implemented process owners in their organization, but do not or only sparely measure the performance of their business processes. Approx. 4% of the organizations implemented process performance measurement, but have no or only a rudimental implementation of the process owner role. Finally, approx. 36% of the firms have both process performance measurement and process owners in place.

The core finding of the study is that implementing process performance measurement or the process owner role only is insufficient to achieve high performance. Organizations must implement both concepts (process performance measurement and the process owner role) to reap the fruits of process management. This finding is illustrated in the following figure:

processowner_processperformancemeasurement_performance

The left illustration applies for firms with no or rudimentary implementation of process performance measurement. These firms apparently cannot profit from establishing process owners. The right illustration applies for firms which (comprehensively) implemented the concept of process performance measurement. It can be said that those firms benefit from establishing the process owner role in their organization.

In summary, the empirical evidence shows that both concepts – process ownership and process performance measurement – must be present in the organization in order to gain higher organizational
performance.

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Survey on Process Management: BPM Office

1 August 2011, 1:52 pm

How many firms do have a so-called BPM office in place which coordinates and integrates process projects? This article discusses this question which was investigated by the process management survey. Survey details (research design, sample, etc.) can be found here.

A business process management office, often also referred to as process office (Fischermanns, 2006) or business process management group (Harmon, 2007), coordinates and integrates process projects in the organization. 46% of the surveyed firms state that they have implemented a BPM office. However, 34% of the firms state that a BPM office doesn’t exist in their organization.

The organization has implemented an instance coordinating and integrating projects dealing with business process management.

The organization has implemented an instance coordinating and integrating projects dealing with business process management.

The item “The organization has implemented an instance coordinating and integrating projects dealing with business process management” was rated by the firms in the sample as follows:

  • 34,00%: Disagree
  • 20,00%: Neither agree nor disagree
  • 46,00%: Agree

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Survey on Process Management: People and Expertise

6 July 2011, 11:49 am

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. This article discusses the results related to people and expertise of the process management survey. Survey details (research design, sample, etc.) can be found here.

Process performers must have appropriate knowledge of how to execute the process, otherwise they won’t be able to implement the process design (Hammer, 2007). Most of the surveyed firms state that their employees only have moderate knowledge about the design of the business process they work for. The item “Employees can describe the design of the business process they work for. They know how their work affects subsequent work, customers and process performance” was rated by the firms in the sample as follows:

  • 13,33%: Disagree
  • 51,33%: Neither agree nor disagree
  • 35,33%: Agree
"Employees can describe the design of the business process they work for. They know how their work affects subsequent work, customers and process performance"

"Employees can describe the design of the business process they work for. They know how their work affects subsequent work, customers and process performance"

The item “Our organization’s employees are skilled in problem solving, process improvement and decision-making techniques” was rated by the firms in the sample as follows:

  • 20,67%: Disagree
  • 61,33%: Neither agree nor disagree
  • 18,00%: Agree
"Our organization's employees are skilled in problem solving, process improvement and decision-making techniques."

"Our organization's employees are skilled in problem solving, process improvement and decision-making techniques."

According to Hammer (2007), a process organization must have some people skilled in, and with knowledge of, process redesign. The item “An expert cadre is available in the organization including change management, process redesign and project management experts” was rated by the firms in the sample as follows:

  • 42,67%: Disagree
  • 33,33%: Neither agree nor disagree
  • 24,00%: Agree
"An expert cadre is available in the organization including change management, process redesign and project management experts."

"An expert cadre is available in the organization including change management, process redesign and project management experts."

Improving the performance of business processes requires knowledge about, and usage of, process improvement methodologies.The item “The organization makes use of methodologies for continuous process improvement, like KAIZEN, Six Sigma, etc.” was rated by the firms in the sample as follows:

  • 32,89%: Disagree
  • 29,53%: Neither agree nor disagree
  • 37,58%: Agree
The organization makes use of methodologies for continuous process improvement, like KAIZEN, Six Sigma, etc.

The organization makes use of methodologies for continuous process improvement, like KAIZEN, Six Sigma, etc.

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