I recently able to speak with Mathias Kirchner, Managing Director and Co-CEO at BPM-D Inc., about how organizations can differentiate between which processes provide a competitive advantage and have a high impact on strategic value drivers and commodity processed which are more routine in nature.
Mathias will be speaking on our free webinar on June 17 at 11:00 a.m. CDT: Targeting Value in a Digital World.
APQC: How can a business identify which processes provide a competitive advantage and add value to the organization’s strategic goals?
Mathias: The identification of high impact processes is critical for any value-driven, process management approach. In order to identify those processes you first operationalize the strategic goals by identifying their value-drivers and relative importance. Then you determine the impact of each process on each value driver. The total impact of each process then allows you to identify the 15 to 20 percent of processes that really matter to the organization’s strategic goals.
APQC: What should businesses look to help them make right selection of available standard solutions to make improvements in their commodity processes?
Mathias: Commodity processes only need to perform at an industry average level. Sophisticated optimization and innovation initiatives typically don’t provide much value for these commodity processes. Hence, to design these processes and select the support or enablement solutions its best to go with the current industry standards: available process reference models and frameworks in conjunction with standard software packages.
APQC: What is the key to starting a successful value-driven segmentation?
Mathias: The "mechanics" are easy and include combining value-driver trees with process frameworks and a process impact assessment matrix. But the facilitation of the segmentation process, getting key stakeholders to agree on the impact of each process on each value-driver requires preparation and a well-organized approach. Experience has shown that a combination of one-on-one meetings with stakeholders and short, focused workshops creates the best results. It’s also important also to understand that this is not a one-time effort. The segmentation needs to be updated, at least once a year, whenever the business environment or strategy changes. That way you can adjust your focus and concentrate on what is important in the new business situation. Hence, the segmentation becomes part of the process of process management.
APQC: What is a common mistake people make in their design and implementation of business process?
Mathias: The most common mistake I see is that people don't differentiate between their design and implementation approaches. They treat every process as equal. This leads to a situation where they don't spend enough time and budget on what really matters and spending disproportionate efforts on commodity processes. Applying multi-dimensional segmentation with a differentiated approach for design brings more value for the same or less input. Hence this creates a significant increase in process management productivity and performance. For example, while Lean or Six Sigma are good tools in some situations, they fail in others and automation based on a weak point analysis could be more powerful option.
APQC: Everyone has a strategy but what’s the difference between those who turn strategy into good process execution and those who don’t?
Mathias: I recently saw a statistic on CEOs’ key interests that states over 80 percent of CEOs see strategy execution as one of the largest challenges. Organizations that don’t link strategy to execution systematically will end up with disconnected strategy and operations. The organization drifts along. Hence, the strategy is more or less worthless. The discipline of business process management is focused on value-driven strategy execution and successful organization use business process management like any other management discipline such as HR or Finance.
Join us for our June 17 webinar to hear Mathias discuss:
- an approach to value-driven segmentation,
- the designs and implementation of businesses processes, and
- how to turn strategy into execution with certainty.
For more process and performance management research and insights follow me on twitter at @hlykehogland or connect with me on LinkedIn.