Organizational maturity is the measure of the quality of a company's operations. A company with a high maturity level can face challenges and seize upon opportunities. Improving organizational maturity is a gradual process that emphasizes internally driven improvement.
Benefits of Using a Maturity Model
Watts Humphrey’s original Process Maturity Framework and most additional maturity models focus on transforming the organization to a world-class level. Figure 1 shows the progression of the five maturity levels, including the characteristics of each level. This model provides a tool for organizations to understand their current level of maturity and progression to higher maturity levels. At what level of maturity is your organization?
Figure 1 Example of maturity levels of a process
Using a model helps companies develop an improvement plan based on their current level of maturity and desired future state:
- The maturity of the company’s business environment will impact its ability to implement process improvement efforts (incremental or radical) successfully.
- An effort to improve processes is probably futile if the very basic elements needed to support effective process management are not in place.
- Companies must implement effective quality management and process management systems before any serious improvement initiative is considered.
Organizational Maturity Levels
Just as process improvement approaches require different levels of knowledge about process, information, people, technology, and systems integration, so do the evolving levels of organizational maturity.
Process improvement models from simple PDCA and problem-solving through increasingly more complex models, such as Cost of Quality, lean, Six Sigma, and Balanced Scorecard, align with the levels of organizational maturity. Management must select appropriate process improvement models based on their company's maturity level.
It is senseless to jump from a low level of maturity to a very sophisticated approach. The text in Figure 1 describes the organizational characteristics management must achieve to create a stable platform for performance excellence. Each level builds on the previous level.
Level 0 describes an organization with no formal controls. This might be a start-up small business with a limited vision for growth. Level 1 is described as dysfunctional, with minimal or no processes in place. Here, the organization experiences poorly controlled, unstable processes. The organization is functioning reactively. Process improvement models for moving from Levels 0 or 1 to Level 2 are Plan-Do-Check-Act (PDCA), Problem-Solving, and Customer Satisfaction.
The PDCA cycle in Figure 2 below encourages observation and planning to identify the root cause of an error, plan a response (PLAN), pilot the solution (DO), measure the results (CHECK or STUDY), and then document changes and new processes to hold the gains (ACT). This tool is a good approach for process definition at Level 1. The documentation of processes and measurements is the beginning of a structured organization. Improvement is not only a result of corrective action; the PDCA cycle can be used for general process improvement and achieving planned business objectives.
Figure 2 The Plan-Do-Check (Study)-Act Cycle
Moving up the Ladder from Levels 1, 2, and 3
Establishing repeatable, reliable processes and measures is the entry to higher levels of organizational maturity. Level 1 is a fly-by-the-seat-of-your-pants approach without formalizing how activities are managed. When leaders learn from past problems and listen to their customers, they begin to see patterns in how they respond to disruptions and meet customer expectations.
Each level in the maturity model guides the implementer to higher organizational performance. Progress to higher maturity levels requires data-based and quantitative performance measures for effective improvement. Not many ad hoc or Level 1 companies are sustainable. A Mom-and-Pop stand at the Farmers' Market will work, but the moment they want to open stands at different Farmers' Markets, they need Level 2 financial and management techniques. Expanding beyond personal accountability requires trust and formal controls.
The awareness of the need for a structure brings an organization to Level 2. This level should be a fast pass-through to Level 3, where control measures are established, documented, communicated, and implemented repeatedly. Core processes are designed and documented. Some entrepreneurs cannot share company controls and delegate to others. As their company grows, they become overwhelmed by trying to do everything. They cannot let “their baby” go. A sharp growth curve in any business occurs when the owner brings on trusted employees and develops formal measures, processes, and controls.
Organizational stability and sustainable growth only begin at Level 3. Where is your organization on this ladder to maturity?
Be on the lookout for my next blog, in which I will delve deeper into Level 3 and share improvement tools for moving up the levels.