Balancing Objectives and Measurements

The traditional theorem of the maximization of profit has to be discarded.

To manage a business is to balance a variety of needs and goals.  To emphasize only profit, misdirects managers to the point where they may endanger the survival of the business.  To obtain profit today, they tend to undermine the future.  They may push the most easily sale able product lines and slight those that are the market of tomorrow.  They tend to shortchange research, promotion, and other postponable investments.  Above all, they shy away from any capital expenditure that may increase the investment capital base against which profits are measured; and the result is dangerous obsolescing of equipment.  In other words, they are directed into the worst practices of management.

Objectives are needed in every area where performance and results directly and vitally affect the survival and prosperity of the business.  There are eight areas in which performance and objectives have to be set:  market standing, innovation, productivity, physical and financial resources, profitability, manager performance and development, worker performance and attitude, and public responsibility.  Different key areas require different emphasis in different businesses-and different emphasis at different stages of the development of each business.  But the areas are the same, whatever the business, whatever the economic conditions, whatever the business’s size or stage of growth.

ACTION POINT: In addition to setting profit objectives, set objectives for your business in the following areas: market standing, innovation, productivity, physical and financial resources, profitability, manager performance and development, worker performance, and public responsibility.

Define BPI's Scope, Goals, and Schedule

Clarify how it relates to other existing processes, as well as to important stakeholders, such as your company's customers or suppliers. 

Define the scope, goals, and schedule for the selected process improvement project.  Scope defines what will and won't be included in the effort.   For example, to improve the way his office sets up new accounts, Joe decides to focus on changing the way people and technology interact to establish accounts.  He prefers not to change people's jobs or adopt new technologies if he can help it.

Also specify how the BPI effort supports your organization's goals.  Clarify how it relates to other existing processes, as well as to important stakeholders, such as your company's customers or suppliers.  And express the desired improvement in numerical terms.  Joe, for instance, determines that improving how his office sets up new accounts will help his company achieve its strategic goal of serving customers more efficiently and quickly.  The process of setting up accounts directly affects customer's satisfaction levels and has links to the other processes involved in approving loan applications, such as evaluating applicants' credit histories.  Joe expresses the desired improvement as: "Customers have to provide financial information only once in order to establish an account with us."

To define schedule, specify which milestones you'll need to achieve in order to change the problematic process and approximately when you expect to reach each milestone.  For example, Joe's BPI milestones include mapping the current new-account process within two months and conducting a trail run of a revised process by the end of the third quarter.

ACTION POINT: Define process improvement efforts with scope, goals, and schedule.

Tips for Prioritizing Business Process Improvement Efforts

Prioritize processes that have the greatest impact on customers.

The following tips can help prioritize your efforts in process improvement.

• Determine which process in your team is most critical to your team's ability to contribute to the organization.  Ask team members, as well as external stakeholders such as vendors and customers for their point of view.
• Prioritize processes that have the greatest impact on customers.
• Select processes for improvement that will generate the most benefit for the least amount of investment
• Look for processes that result in costly problems--such as failure to meet customer needs, high costs, or long cycle times.
• Identify processes needing improvement based on internal considerations.  For example, a problematic process is causing unnecessary conflict among team members, preventing them from concentrating on meeting customers' needs.

ACTION POINT:  Consider the tips above when reviewing processes that need improving.

Select a Process to Improve

This suggests that more than one process may benefit from improvement.

If you're like most managers, you may see several symptoms of problematic processes occurring simultaneously.  This suggests that more than one process may benefit from improvement.  For example, Jo, who manages a regional office for a financial services company, has noticed that customers are complaining about having to provide the same personal information several times while applying for a loan.  In addition, the office's growth--in terms of the number of new accounts signed per quarter--is lower than that of other regions, despite the considerable expertise of Joe's staff.

When it seems that several processes may need improvement, how do you decide which one to tackle first?  Create a process selection matrix in which you rate each process according to criteria such as how easily it might be changed and how problematic it may be for customers.  Rate each possibly problematic process on a scale of 1 to 5, with 5 being the highest score and 1 the lowest.  The table below shows an example of "Joe's process selection matrix".

Once you've rated each process total up your scores.  The highest score suggests the process you might want to improve first.  In Joe's case, he decides to focus on the process of setting up new accounts.

ACTION POINT: Prioritize the processes you seek to improve.

Planning a Business Process Improvement

The answer is yes if you notice certain telltale symptoms...

To plan a business process improvement, first decide whether process improvement is needed.  The answer is yes if you notice certain telltale symptoms--including the following:

• Customers are increasingly commenting that your company's product has deteriorated.
• Certain procedures seem overly complicated.
• Tasks take longer to complete than they did previously, or there is noticeable variation in the amount of time different people take to perform the same task.
• Things don't get done right the first time.
• Your team's performance is declining, or the team is consistently failing to reach agreed-upon goals.
• Employees are expressing frustration over confusing processes or bottlenecks that prevent them from fulfilling their job responsibilities.

ACTION POINT: In what areas is your organization experiencing the symptoms above?