Why Business Process Management Is Key for Success
Why Business Process Management Is Key for Success
Issue #15 🧩 The need to justify Business Process Management 🧩 Toyota and the 1997 Aisin fire 🧩 Dr. Deming's 14 key management principles 🧩 The benefits of Business Process Management
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Business Process Managers are frequently hired because of a top-down decision for the company to obtain a specific ISO or other certification, which actually comes as a requirement from outside (e.g. customers, industry, regulators).
This means the organization itself hasn’t matured to the idea that its processes, systems, and structures need to improve and doesn’t understand WHY.
How can then a Business Process Manager persuade the organization to embrace the long-term transformation journey necessary to unlock the full benefits of BPM?
Read on 👇
📑 NOTE: Treat my posts like mini-guides: choose what’s relevant or interesting.
🤔 The Need to Justify BPM
One day I had to deliver a presentation to the IT Vice President (VP). We’d just had a process audit and he wanted to know the results, compared to the previous audit. I collected both audit results on a few slides, did the analysis, and highlighted the major areas for improvement with proposals for the next steps. And then, being me, I asked myself, “Why will any of this matter to him?” Which led me to the next question, “Why does what I do (i.e. Business Process Management [BPM]) matter at all?”
What is Business Process Management to begin with? Read here:
If you’ve read my other posts, and especially if you’ve stumbled upon my favorite five-monkeys-and-a-ladder experiment, you already know I always try to answer the question WHY. Even if I’m not being asked because sometimes people simply forget to ask. Therefore, I added three more slides at the beginning of my presentation to explain the benefits of BPM.
This post is an extended version of what I put on those slides and said to the VP. He listened to me carefully and then, when I finished with my introduction, said, “You’re preaching to the choir, you know. I’m already sold on the idea.” And that was music to my ears 🙂
🔥 Toyota and the Aisin Fire
On 1 February 1997, a massive fire at Aisin Seiki’s plant threatened to shut down Toyota’s operations. Aisin was the sole supplier of a critical brake component, called the P-valve, used in all Toyota vehicles. With Toyota’s Just-In-Time (JIT) production system, which kept only two to three days’ worth of inventory, the disruption posed a significant risk. A halt in the P-valve supply would have forced Toyota to stop production across 20 plants, costing the company an estimated $15 million per day. The situation was further exacerbated by the timing, as it occurred during a high-demand period ahead of a sales tax increase, making the potential losses even more severe.
However, the disaster was averted when over 200 firms, both within and outside Toyota’s network, rapidly mobilized to establish alternative production for the P-valves. Despite many of these firms having no prior experience in P-valve production, they collaborated by sharing detailed blueprints, technical specifications, and production methodologies to ensure consistent quality across the newly established production lines. Coordination was maintained through frequent communication within Toyota’s supplier networks, allowing the rapid scaling of production. Each firm took responsibility for different aspects of the process, including machining, assembly, and inspection, all while effectively self-organizing with minimal direct oversight from Toyota.
The Toyota Production System (TPS) was instrumental in enabling this swift and coordinated response. TPS’s emphasis on standardized work allowed these firms to quickly adapt Aisin’s production methods, while its focus on continuous improvement and problem-solving empowered suppliers to manage the crisis efficiently. Moreover, the system fostered a strong culture of trust and collaboration within Toyota’s supplier network, ensuring that all parties were motivated to work together seamlessly. Concerns over compensation or intellectual property rights were set aside during the crisis, with such matters addressed only after operations were restored.
The incident underscored the importance of Toyota's robust processes and highlighted the crucial role of TPS in managing unforeseen challenges. The disaster was mitigated not only through technical expertise but also because of the deep relationships and problem-solving capabilities that TPS cultivated across Toyota's supply chain. This event demonstrated how well-prepared the company was to handle major disruptions, reinforcing the significance of building capabilities that equip firms to manage both routine challenges and extraordinary crises effectively.
🔖 Management Principles
In his book Out of the Crisis, Dr. W. Edwards Deming outlined 14 key management principles to improve business effectiveness significantly. These principles are part of his broader System of Profound Knowledge, aimed at transforming traditional management into a more optimized approach.
Here’s a summary of the 14 points, as listed by The Deming Institute:
1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive, stay in business, and provide jobs.
2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.
3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.
4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.
5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.
6. Institute training on the job.
7. Institute leadership. The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.
8. Drive out fear, so that everyone may work effectively for the company.
9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.
10. Eliminate slogans, exhortations, and targets for the workforce asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the workforce.
11a. Eliminate work standards (quotas) on the factory floor. Substitute leadership.
11b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.
12a. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.
12b. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, among other things, abolishment of the annual or merit rating and of management by objective.
13. Institute a vigorous program of education and self-improvement.
14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job.
🌻 BPM Benefits
Business Process Management (BPM) is a tool for transforming operations and organizations. As such, it can be deployed to achieve whatever goal we set for ourselves and our business. We *only* have to ensure that:
We have a goal, a target, a purpose: Without it, it will be hard to aim our tool at the right thing.
We implement a complete system: Any partially implemented model, even if it’s the best one for our use case, won’t work.
And a special request from me: Do the right thing the right way! I’m happily providing the tool and explaining how to use it, but it’s up to you to create an environment where both your business AND your people thrive. Be mindful and intentional about this!
“We shape our tools and, thereafter, our tools shape us.” — Marshall McLuhan
Breaking down Deming’s 14 principles into more detail, here’s what BPM can achieve for us (specifically in the Information Technologies & Software Development industry) by implementing robust processes, systems, and structures in our organization:
💰 Reduced Costs & Higher Revenue
Finding problems earlier in the process lifecycle (e.g. bugs found in development, as opposed to in production; risks identified and mitigated before turning to issues; process noncompliances found and remedied before a certification/customer audit is at risk; etc.): The earlier the problems are identified, the cheaper they are - and vice versa.
Handling risks and identifying opportunities: Identifying and mitigating risks brings costs down, whereas identifying and acting on new business opportunities brings revenue up.
Properly identifying Change Requests: With no/poor processes in place, it’ll be hard to distinguish between requirements analysis and bugs on the one hand (part of the contract), and new requirements or changes to existing requirements on the other (outside of the contract - subject to negotiation, approval, and additional charges).
Increasing automation: A defined/described process can be analyzed for optimization and automation. We must always automate wherever manual work can be eliminated to make the process faster, cheaper, and more reliable.
🌊 Improved Business Agility
Increasing the ability to handle large throughput (e.g. 5-10K customer requirements): Just like in manufacturing, standardization increases the ability to manage big(ger) scope with the same amount of resources (time, capacity, budget).
Scaling the business (e.g. working in multiple programs, Scrum of Scrums, etc.): A scaled company Business Process Management System (BPMS) or Quality Management System (QMS) better supports the business and the organization in times of change. The BPMS/QMS and the organizational structure must be fully aligned because they depend greatly on each other (read more here).
Enabling overall continuous improvement: Since the world is not static, we must always change and adapt, but not all change is an improvement. To ensure changes are for the better, and that by improving something we’re not breaking something else, we need clarity on the bigger process picture and its intended outcomes.
Improving process interfaces (inputs and outputs): With process inputs and outputs properly identified, it’s easier to introduce changes without breaking the links and risking the whole BPMS/QMS becoming dysfunctional (read more here).
Incorporating Lessons Learned and Re-use into the next process cycle: A well-structured and maintained BPMS/QMS can improve itself too - just like a healthy organism can heal itself when needed. Having the reuse concept embedded into the BPMS/QMS has even greater importance for eliminating redundancy and waste of resources.
Seamlessly redefining tasks/responsibilities when changing the strategic direction and/or organization: It is a lot easier to change one or two pieces of the puzzle rather than all of them, especially if we’re not even sure what the overall picture looks like (read more here).
🏆 Enhanced Quality of Products
Setting internal business and product goals (e.g. Acceptance Criteria, KPIs, customer satisfaction levels): Especially helpful when those are not provided by the customers themselves (read more here).
Minimizing the number of bugs by e.g. performing Trend Analysis (i.e. pro-active Error Management): For that, we would need a well-working reactive Error Management process to collect the data.
Minimizing or completely eliminating customer escalations on production issues and/or breach of contract: One of the main goals of process optimization in the e.g. Product Development Lifecycle (PDLC) is to move bug identification and bug fixing as early as possible in the production cycle. The ultimate goal is to prevent bugs from leaking out to the customer.
🔎 Better Transparency
Having clear documentation and communication structures and procedures in place (incl. backup, archive, and restore procedures): Having clear definitions and communicated expectations of who has to do what how and (by) when minimizes the redundancy, frustration, resource wastage, employee turnover, etc.
Real-time monitoring and reporting: Defined and implemented processes are measured and monitored, controlled and reported on, and improved accordingly.
Increasing the confidence in reaching the set targets (internally and externally): When we see the set targets are at risk of not being met, we adjust our course or actions sooner, rather than later.
Knowledge-sharing: Processes and structures can break silos and enable a seamless resource (e.g. information) flow. HR support is crucial for this.
(Read more here.)
📈 Higher Efficiency & Accurate Planning
Minimizing or eliminating delays (and consequent penalties): Clear processes enable earlier and more accurate prediction, as well as a change of course in due time.
Handling resource, capacity, or prioritization issues, which prevent adequate execution: Transparent process interfaces make it easier to identify prioritization issues, as well as who, when, and based on what data has to make the prioritization call. Typically, prioritization issues are hidden behind problems like lack of capacity.
Avoiding customer interference or micromanaging: If, for example, the customer becomes uncertain that their targets will be met, we can expect them to request a customer audit/assessment or to directly come onsite and sit next to the Subject-Matter Experts (SMEs) during the whole time they perform their tasks. Needless to say, this is not a good working environment and totally not the relationship we want to have with our customers.
Minimizing or eliminating the “fire-fighting” mode (e.g. spikes in the trends for resolution of bugs, customer reports, root-cause analyses, delays, etc.): Fire-fighting occurs when risks or issues were not detected early enough, when we still had the chance to either prevent them or minimize the damage. With strong processes in place, such events are the exception to the rule, rather than the normal way of working.
Avoiding bottlenecks, single points of failure, working in silos, etc.: Such issues are identified and respective solutions are successfully implemented when there are defined processes in place, as they are constantly analyzed for improvement opportunities.
❤️ Increased Employee Morale
Creating a sense of purpose: Knowing why something exists is just as important as what that something is. The opposite behavior and its consequences are described in the five-monkeys-and-a-ladder experiment and the zen fable about the ritual cat (read more here and here).
Driving out fear: When people are guided to improve the system, and not to follow a broken one for fear of being punished, this embeds quality into their daily work life and decreases the dependency on inspection to achieve quality.
Enabling autonomy and providing leadership (as opposed to supervision) in the direction of continuous improvement: With full transparency in place, we immediately know if a process is underperforming. However, the emphasis is always on the process (as part of the bigger system), not on the person. Therefore, the main goal of leadership is enabling the system and all of its parts to perform in their most optimal way - and stop there (read here on the value of autonomy).
Instilling a sense of belonging and restoring pride in workmanship: Having common goals, clear roles and responsibilities, and transparency in terms of execution are some of the crucial elements for maintaining employee motivation. It is also a mandatory prerequisite for enabling autonomy (read more here).
Establishing a clear professional path/growth: Clarity in the rules around providing acknowledgment for a job well done removes double standards, unhealthy competition, and obstacles towards achieving the goal.
Increasing loyalty: Naturally reap the benefits of having everyone working to establish and maintain the best image of the company.
🛡️ Compliance, Safety & Security
Fulfilling demands from the business and the customers: Embedding an external standard, a customer, or an internal quality requirement inside the BPMS/QMS makes the company compliant with it, without disrupting the business.
Enabling process compliance and commitment to quality as part of everyday life (e.g. no panic mode and no impact on product delivery when external audits/assessments are due): The BPMS/QMS we all want is the one that is alive, not put on a shelf and only dusted off when an external audit is due. This is also the reason why auditors are not as strict with what’s written down as they are with what’s understood and performed by all.
🎯 Improved Customer Relationship & Satisfaction
Establishing a standard Product/Service Catalog (with Demos, as applicable): Having a well-defined list of what we offer and what the customers can benefit from is where the relationship with our customers starts.
Providing an overall Solution Design (based on the Architectural & Detailed Designs): Having a product structure in place means having a well-structured architecture too. Therefore, it becomes a relatively easy task to put all products/features together and present the customer with an overall Architectural Design for their specific solution.
Ensuring full traceability is in place (e.g. tracing back to an issue introduced in a given release, test coverage for all customer requirements, rolling back to a previous release, etc.): On the one hand, full traceability enables us to identify and implement improvements, from which the customers are benefiting directly. And on the other hand, full traceability (sometimes in combination with baselining) protects us from abusive customers.
Not being impacted by a faulty or missing BPMS/QMS on the customer’s, partner’s, or supplier’s side (e.g. when the external party is missing processes, product concepts, Definition of Done [DoD], etc.): When process interfaces are defined, criteria for input and output work products are also defined.
Incorporating customer feedback into the next process cycle: Same as with lessons learned, customer feedback provides material for identifying Opportunities for Improvement (OFIs).
And that’s how Business Process Management puts our organization on the right path. And, by doing so, it ensures that our products and services continuously improve, our business flourishes, and our people thrive.
Next, see here how to start implementing BPM:
Thank you for reading 💝
Till next time,
Irina
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