BPM and PI: Business Performance Partners (Part 1)

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1 BPM and PI: Business Performance Partners (Part 1) While many organisations have successfully introduced Process Improvement (PI) methodologies, a number of those very same organisations struggle to integrate enterprise-wide Business Process Management (BPM) as they continue to focus on initiatives for the current and coming financial years. These organisations often find that after some period of time they are having difficulty even sustaining their improvement programmes most of the low hanging fruit has been picked and the current ways of doing business have still not markedly changed. Alternatively, it can take significant time and effort to integrate BPM as the way we do business in an organisation. To maintain focus and momentum, it often requires the ability to implement some quick wins to maintain interest in the longer-term BPM investment. This series of three articles explores the relationship between BPM and Process Improvement Methods and suggests that successful and sustainable Business Performance relies on having a holistic and phased approach that consciously includes both. BPM and PI in contrast There are many definitions and descriptions of what constitutes process improvement and what constitutes process management. Without wishing to add to these, the following scenarios are included to reflect some of the aspects of process (improvement and management) initiatives that your organisation may be experiencing. Whatever your views and experiences, it is important to delineate between them as for every organisation investing in process there seems to be two more that are offering their services to help them through consulting services, tools, and methodologies. This can be confusing (and costly) for those about to embark on their journey so having a clear view of their relationship up-front can make the difference between success and failure. Process Improvement PI is often deployed into an organisation as a set of methodologies and tools focused on the improvement of processes through disciplined process improvement projects. The projects are usually initiated as the result of existing business lag indicators and therefore focus on the issues of the day. The improvement projects often involve the actual definition of the processes requiring improvement as there are few processes defined as part of the way the business operates. Some deployments have best intentions to change the more fundamental aspects of business performance that touch on the cultural and structural aspects of the business though often are brought back to the basics of delivering against the improvement projects for the current financial year. Such Process Improvement efforts will often compromise their strategic goals and ensure their survival by focusing on fulfilling operational and tactical goals for the company. This dilemma is sometimes accentuated when the central deployment Copyright 2006 Imre Hegedus 1

2 team is divested into the business; each business unit PI team, whose purpose is to bring the corporate knowledge and approach to the business, often finds itself doing the reverse and applies its skills toward optimising the business unit and potentially compromising the whole business. Business Process Management BPM is often introduced as a totally different way of managing the business through the definition, management, and ongoing improvement of it s processes. It is nearly always seen as requiring a cultural shift at all levels and while process is a primary focus, BPM recognises the complex inter-relationships between the various components of a business. The establishment of organisation-wide process models that describe the key aspects of the business (sometimes in terms of core, management, and support processes) often chracterises a BPM deployment. The introduction of the role of Process Owners and the need for corporate governance of the identified processes and how they relate to the now matrixed business also follows. The important link between the core business processes and the key customer requirements drives many of the strategic improvement projects that begin to emerge. All this good work tends to happen in parallel, and sometimes independently or even in competition with, the need to fix the operational issues of the day. An excellent strategic BPM deployment will fail if it does not deliver against some of the operational and tactical issues the business faces. Both these scenarios sound quite pessimistic but they need not. Interestingly, these scenarios are being played out in many organisations some give up and move onto something else some realize that to achieve long-term business performance they must add the one scenario to the other. Few organisations approach their performance management goals with an integrated PI and BPM strategy from the very start. Well, what if they did Business Process Management & Process Improvement BPM and PI are closely linked and need to be managed tightly if the focus on processes is to have significant and sustained positive impact on business performance. Put simply, BPM is the way in which an organisation manages its business through focusing on its processes and PI is the way in which an organisation improves its business through focusing on its processes. As no business environment is static, every business is required to continually improve the way it operates while being able to manage the current operations. Thus, for any organisation serious about process, the relationship between BPM and PI must be made clear and managed as part of business operations. Figure 1 summarises some of the characteristics often found in process improvement and process management deployments. Note that while BPM is considered to be more holistic, neither is superior enough to be entirely successful independent of the other BPM will struggle to deliver while PI will struggle to sustain improvements and transform the business. Copyright 2006 Imre Hegedus 2

3 Methods by which an organisation improves its business through focusing on its processes General Characteristics Projects Business Problems Processes Reactive Proactive Methods by which an organisation manages its business through focusing on its processes Short-term Long-term PI Operational Strategic BPM Process-specific Business-wide Relies on BPM to proactively identify opportunities and sustain improvements Facts & Data Single-loop Mechanistic Knowledge Double-loop Organic Relies on PI methods to improve processes and design new ones Figure 1. General Characteristics of typical PI and BPM deployments While it is true that many PI efforts include some of the BPM characteristics of Figure 1 and vice versa, it is useful to have a model of understanding where one starts and where the other finishes as they each require different approaches, skills, infrastructures, and stakeholder management strategies. Indeed, some process improvement initiatives purport to address many of the process management characteristics but are simply not equipped to fulfill on them and vice versa. While much of the Figure 1. is self-explanatory, it is worth spending some time on the aspects of single-loop and double-loop learning as well as mechanistic and organic views both of which we can introduce through the concept of systems thinking. Systems thinking has its foundation in the field of system dynamics, founded in 1956 by MIT professor Jay Forrester. Popularised by Peter Senge in the 1990 s the basic concept is to view organisations as complex systems. Doing this helps in all aspects of management and leadership. BPM owes much of its genesis to the concepts of systems thinking and system dynamics. Systems Thinking is about seeing interrelationships rather than linear causeeffect chains. (Senge : 1992, p.73). It also focuses on feedback loops which are at the heart of learning (organisations). Only by taking an organisation-wide (or wider!) perspective can you begin to see such relationships. Double Loop learning (Argyris & Schön : 1974) is attributed to BPM in Figure 1. as it questions an organisations objectives, policies, and underlying norms whereas PI projects often make improvements within the confines of a defined problem and in themselves may do little to change the things that contributed to the problem in Copyright 2006 Imre Hegedus 3

4 the first place (Single Loop learning). This can lead to PI encouraging us to view organisations quite mechanistically fixing parts of the machine that require it when they require it. BPM, in contrast, encourages a more organic view of organisations where things are evolving and inter-related. These organisational metaphors (Morgan : 1986) can be both the result of the approach taken or indeed determine the approach taken to process management or improvement. Continuous Improvement AND Management We have all seen some version of The Continuous Improvement Cycle that incorporates a PDCA/PDSA wheel making its way up the saw-tooth improvement curve and a standards wedge stopping it from falling back down. It is worth considering for a moment, what it is that makes the improvement cycle a continuous one. Process Improvements are projects that are started through the identification of some measure of poor performance. Implied in the undertaking of any process improvement endeavor are two key assumptions: 1. The organisation has the ability to continually measure, monitor, and report on process and business performance (Business Performance Monitoring capability) 2. The organisation has the ability to sustain the process and business improvements once the projects have completed (Business Performance Management capability) Both these capabilities are more than just process-related they are to do with the people (skills, training, development), the culture, (decision-making practices, accepted, expected, and actual behaviours), the technology (network & information technology, tools, systems) and the alignment of operational & tactical activities to strategic intent. The systemic inter-relationships between these organisational dimensions are complex but need to be appreciated and managed as best they can if any improvement efforts are to be sustained. There are a number of ways of analysing these dimensions and guide our systems thinking including business performance frameworks (ie. Australian Business Excellence Framework (ABEF), European Foundation for Quality Management (EFQM), and the Baldridge Award Framework). More recently, the application of maturity models has provided the means by which organisations can evaluate their capability to both manage and improve their processes (& the business). The key questions here relate to the current organisational capability to manage and improve it s processes. Some diagnostic prior to embarking on your process initiative is a good place to start. Your organisations process maturity should determine your deployment approach and foci. The continuity comes from the ability of your organisation to manage the integration of your chosen PI methods with your BPM strategy and implementation. Copyright 2006 Imre Hegedus 4

5 Performance Partnership The key premise of this article has been that the sustainability of any process improvement (project) is dependent on the capability of the business (strategy, people, process, tools) to manage its processes. It is no use improving something if we cannot manage to sustain the improvement. Conversely, the ongoing management of something must include the ability to improve it. The difference between process improvement and process management is often unclear but the difference is important and we must better integrate PI and BPM from the outset if either is to be successful. With respect to BPM, systems thinking helps us to understand the real causes of problems and how to address those causes looking at the end-to-end processes (not just the processes, behaviours and events directly attributed to specific problems) and considering the systems and structures that caused the issues in the first place. BPM engages a number of methods to help us not only improve our process performance but can guide us in re-evaluating fundamental business practices, systems and structures through a process/systems mindset. PI is a necessary complement (indeed a part of) any good BPM deployment and provides the tools and methods by which an organisation can improve its process performance. Deployed together, they can successfully address operational issues while working toward tactical goals and contributing toward the framework of an organisations strategic vision - continuously. In part 2 of this series, we will further explore this relationship and consider some practical questions to prompt how your organisation might go about sustaining their existing process management/improvement deployment. About the Author Imre Hegedus is currently Chair of the Australasian Chapter of the BPMG Group Imre has developed Process Models and deployed Process and Quality Methodologies for more than 10 years. Imre has chaired a number of process forums and adjudicated various Australian Quality Teams Awards. He can be contacted at imre.hegedus@bpmg.org. References Argyris, C. and Schön, D. (1974) Theory in practice: Increasing professional effectiveness. San Francisco, Jossey-Bass. Morgan, Gareth. (1986) Images of Organisation. California, Sage Publications Inc. Senge, P.M. (1992) The Fifth Discipline. Australia, Random House Copyright 2006 Imre Hegedus 5

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