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Archive of posts tagged process-cascading

The Value Creation Machine

The book “Die Wertschöpfungsmaschine” (a suitable English title would be “The Value Creation Machine”) deals with the question of how value creation can be optimally organized. The authors see process and organizational structures that do not fit the strategy as the biggest obstacle for companies to give their best.

Andreas Suter, Stefan Vorbach and Doris Wild-Weitlaner (2019): Die Wertschöpfungsmaschine (available in German only)

Without grey theories the book introduces into a new, but already often used approach, how one tailors processes and organization to the business strategy. The focus is on the roles and responsibilities in the company from the perspective of value creation. The arguments are conclusive, comprehensible and very practical on the basis of numerous case studies from industry and service sectors.

The key idea is the focus on the internal and external interfaces to customers and suppliers. Processes and organizational units should be controlled consistently by means of simple client-supplier relationships. The simpler and clearer the interfaces are, the more value can be increased for the customer, operational complexity reduced, idle times and expensive overhead structures for planning, coordination and monitoring eliminated. In addition, the matrix organization can be avoided.

Originally, the “value creation machine” was developed at Graz University of Technology in the 1990s and first published as a book in 2004. If one compares the first publication with the one now available, it is easy to see how it has been further developed and extended to include important subject areas such as “innovation management”, “process cost management” and “digitisation”. The service character of many businesses has also been massively expanded.

How to Build a Process-Oriented Organization

The 10th Business Process Management Conference, organized by the University of Ljubljana, Faculty of Economics, took place in Ljubljana, October 14-15, 2015. The keynote speech “Process Management Practices, Organizational Excellence, and Firm Performance” by M. Kohlbacher was about organizational excellence, i.e. how the organization needs to be designed to gain rigoros performance improvements. Buiding on real world examples, it was shown which process management practices should be deployed in practice and how the organization’s business processes have to be designed in order to improve the firm’s key performance indicators. The key building blocks of a process-oriented organization are as follows:

On the top of all endeavors, there is the customer with her needs. Between the customers and the suppliers, there is the enterprise boundary:


Inside the enterprise boundary, the company’s value adding business processes are located:


The overall goal is it to build a customer-oriented organization. So, internal customer orientation is needed, too. In order to implement internal customer orientation, the organization is designed in a way that the business processes relate to each other like customers to suppliers. In its essence, customer-supplier-relationships are built between the organization’s business processes. Every business process has a defined customer and may also have one or more supplying processes. The customer process is ordering, the supplier process is fulfilling the order and supplies the result back to the ordering process:


So far, business processes were considered as black boxes. When the black box is opened, the activities of the business process can be seen (process design of a single business process):


IT-systems are supporting the business processes:


Another important element of process management is the role of the process owner. For every business process, a process owner is defined who is responsible for (i) the design of the process, and (ii) for the performance of the process:


Process performance measurement needs to be in place. This is done by developing key performance indicators (KPIs) for the business processes. Process performance indicators are metrics which numerically capture the performance of a business process. It is important that the KPIs are derived from business strategy and internal/external customer requirements:


Having KPIs in place, process performance can be measured and processes can be continuously improved (continuous process improvement):


In summary, the performance of the firm can be significantly improvement through building a process-oriented organization by using the following main concepts:

  • customer-supplier relationships between the business processes
  • process owners
  • process performance measurement, and
  • continuous process improvement initiatives

Developing an Enterprise Process Model Based on Cascading and Segmentation of Business Processes: A Case Study

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.

The Principle of Process-Cascading and its Performance Impact

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.

Cascading and Segmenting: Two techniques of Designing an Organization’s Business Process Model

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.

Cascading business processes

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 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

Business process segmentation examples