by Craig Cochran
For most organizations, process
orientation offers one of the biggest improvement opportunities
available. It also represents a huge change in the way most
organizations view and manage themselves. With process orientation,
organizations think in terms of integrated processes rather
than a confederation of functional departments. Although
there's nothing inherently wrong with managing by departments,
problems arise when they're managed semi-autonomously. In
such cases, each department manager attempts to maximize
his or her results without considering how the results affect
the remaining portions of the process. In addition, departmental
divisions cause countless problems related to communication,
coordination and resources. As a result, the organization's
performance suffers because its operations aren't structured
Before we go further, let's clarify what the term "process"
means. Very simply, a process is an activity, or bundle
of activities, that takes inputs and transforms them into
products or output. Under this extremely broad definition,
just about any activity could qualify as a process. However,
we'll concern ourselves strictly with major business processes
--the handful of primary transformation activities within
an organization. Even the most complex organization probably
has fewer than 20 major business processes. These work together
in an integrated manner to carry out the organization's
strategy and achieve its mission.
Managing a business in terms of business processes makes
perfect sense, you might be thinking. Why would an organization
manage itself any other way? The answer is that most organizations
are structured according to functional activities rather
than processes. For example, people who perform similar
activities and report to the same manager are grouped together.
Once they finish their work, the product is handed off to
the next functional department and forgotten.
For example, consider the manufacture of widgets. The
three key activities in widget manufacturing are stamping,
grinding and polishing. A traditional widget manufacturer
divides these activities into individual departments, each
with its own manager, staff, equipment and supplies, as
From one perspective, organizing the company like this
makes a lot of sense. The work is cleanly divided into discreet
activities, with specialists doing their jobs and only their
jobs. Measuring the output of individual activities is easy.
At the beginning of the 20th century, Frederick Taylor and
Henry Ford used this approach to achieve new levels of productivity
from, and control over, employees. With cleanly divided
departments, employees are focused on their own work and
Ironically, this focus is also one of the drawbacks of
the approach. Everyone concentrates exclusively on his or
her job and really doesn't understand how the work contributes
to the organization's greater goal. Departments try to excel
individually without regard to the organization's overall
excellence. Each department measures its output and its
efficiency, doing whatever it can to improve this performance.
Such a structure works fairly well when an organization
makes a large quantity of a few products and it can sell
everything it makes. The structure causes problems, however,
when the product list expands and mass customization becomes
critical. Of course, a wide product list and mass customization
are virtually the norm now, for manufacturer and service
Another drawback to the departmental approach is that
resources aren't easily shared across departments. Personnel
are trained to do jobs in their departments only; they can't
be redirected to activities in other departments because
they don't know anything about those activities. Even if
they did, what would be the advantage to the department
manager, who's measured on the output of his or her department?
The departmentally structured organization lacks the flexibility
to apply people where they're needed on a moment's notice.
Personnel aren't the only resources that get snagged on
departmental boundaries. Supplies and materials don't flow
easily across these divisions either. When supplies and
materials are allocated to individual departments, there's
little motivation to share resources when other departments
need them. At the very least, delays occur as the details
are worked out and managers determine how they can benefit
from the situation. The question, "What do you have
that I can use?" is often heard in such situations.
Because most managers are compensated based on their department's
performance, they can't be blamed for behaving logically.
The last important resource that has trouble passing through
departmental boundaries is information. The departmental
structure sets up a filter between information and the people
who need to receive it. Feedback about the conformance of
work between departments is delayed or blocked altogether.
In many organizations, it's forbidden for personnel to leave
their departments and interact with people from other departments.
Even without such explicit prohibitions, though, departmental
divisions pose an obstacle to personnel receiving feedback
on their work further down the line. This block reinforces
the tendency for departments to think of themselves as little
islands, operating independently of other activities.
Consider how the illustration below differs from the one
we've been discussing.
The functional activities of stamping, grinding and polishing
are recognized as part of an overall process. No departmental
boundaries exist between these activities. Personnel are
cross-trained on different jobs so they can move from one
activity to the next, based on the workload. Flexibility
is built right into the structure. Because departmental
boundaries don't exist, resources also flow smoothly from
activity to activity. Information, supplies and materials
all go where they're needed, when they're needed. One person
manages the entire process and is compensated based on the
process's overall performance, rather than just one aspect
An organizational structure based on major processes makes
perfect sense, but it's a radical departure for many enterprises.
Most managers have come of age in a world where companies
consisted of functional departments, not integrated processes.
Understanding how processes function requires a different
mindset than understanding how departments function.
The missing element here is the link between one activity
and the next. In functional departments, links are taken
for granted. If each department does its part, then the
entire organization will succeed. Little consideration is
given to the links between the departments, even though
most problems occur there.
Process orientation highlights the links between activities
because the links have become a visible part of the process.
They aren't disguised by departmental boundaries. With true
process orientation, if the links aren't effective, it becomes
immediately apparent. The connections between activities
become smoother because the process's dynamic nature demands
that they continually improve.
Clear processes also encourage organizations to use teams
in the workplace. Supervision is important when people must
be pushed and directed, which happens when nobody really
understands how the overall process works. In an organization
that has adopted process orientation, everybody can clearly
see how the various activities fit together and support
one another. The relationships are obvious. People can see
and understand the results of their efforts, and supervision
becomes less necessary. Process orientation therefore promotes
self-directed work teams and team problem-solving.
In almost every way, process orientation is superior to
traditional departmental structure. Consider the following
comparison between a functional department and an integrated
With a functional department, you'll find:
Improvement efforts focused on the activity level
Each activity fully staffed
All personnel and equipment utilized
Little understanding of interdependencies between activities
Slow feedback from downstream activities
Metrics focused on the activity
Little flexibility in the event of changes
Competition for resources
An inward-looking view
Clean divisions between management and staff
An integrated process, however, promotes:
Improvement efforts focused on the process level
Activities only staffed as necessary
Personnel and equipment used when demand requires them
Heightened understanding of interdependencies between activities
Less need for supervision
Free-flowing companywide communications
Fast feedback from downstream activities
Metrics focused on the overall process
Flexibility when change occurs
An outward-looking view
Blurred divisions between management and staff
Many subprocesses support one major business process,
but they all have the same ultimate objective: enabling
the business process to fulfill its organizational objective.
Major business processes sometimes coincide with traditional
departmental boundaries but more often cut across them.
People often become confused about where to draw the lines
between major processes. It's worth vigorous discussion
but not worth getting too hung up on. The exact definition
of each business process could easily be argued from a number
of different angles. It's important to remember that, with
process orientation, the organization is broadening its
focus and attempting to embrace a new structure. This alone
is a huge breakthrough.
Let's look at some examples of major business processes
and the subprocesses that support them.
- Determining a mission
- Developing a strategy
- Selecting key measures
- Communicating the mission, strategy and key measures
- Ensuring that all processes stay focused on the customer
- Analyzing data
- Making rational decisions
- Recognizing personnel for their contributions
- Representing the organization to the outside environment
- Acting ethically
Customer satisfaction process:
- Conducting research into market needs and desires
- Communicating market needs and desires to other processes
- Developing the marketing strategy
- Locating potential customers
- Providing product information
- Performing sales follow-up
- Gauging customer perceptions
- Analyzing data on customer perceptions
- Communicating to the organization about customer perceptions
- Understanding market needs and desires
- Converting needs and desires into design input
- Planning design activities
- Coordinating activities with all process leaders
- Developing product output that meets design input
- Reviewing the design progress
- Verifying and validating design output
- Communicating design information to other processes
- Controlling design documents
- Communicating needs to suppliers
- Evaluating and selecting suppliers
- Purchasing supplies, services and equipment (i.e.,
- Verifying the conformity of inbound products
- Ensuring the payment of suppliers
- Providing feedback to suppliers on performance
- Moving inbound products to the appropriate location
- Storing inbound products as necessary
- Optimizing the time, cost and performance of inbound
Product realization process:
- Communicating supply, service and equipment needs to
- Scheduling work
- Arranging resources
- Producing the product through appropriate transformation
- Verifying product conformity
- Providing feedback to all activities within the process
- Packaging the product as appropriate
- Applying identifiers to the product as appropriate
- Final product release
- Handling of the final product
- Scheduling transportation
- Storing the product
- Ensuring preservation
- Order picking
- Truck loading
- Coordinating delivery with customers
Personnel management process:
- Determining personnel competency needs in cooperation
with process leaders
- Recruiting appropriate personnel
- Assigning personnel to processes
- Determining appropriate compensation and benefits packages
- Developing policies that result in employee retention
- Facilitating organizational communications
- Mediating conflict
- Ensuring legal compliance
- Administering programs to build competencies (e.g.,
- Providing maintainability requirements to inbound process
- Determining and implementing preventive maintenance
- Scheduling work in the most efficient manner possible
- Reacting to breakdown scenarios
- Performing predictive maintenance
- Optimizing infrastructure cost, timing and effectiveness
- Guiding the development of procedures
- Managing internal audits
- Administering corrective and preventive action
- Reporting to leadership on the results of improvement
- Facilitating problem-solving methods and tools
- Troubleshooting with customers
- Assisting in improving suppliers
- Guiding the use of statistical techniques
- Identifying and removing nonvalue-added activities
- Soliciting improvement ideas from personnel
- Ensuring personnel recognition
- Supervising the investigation into product and service
Drawing the lines between business processes is something
of a balancing act. Generally, an organization benefits
when the business process cuts as broadly as possible through
the organization: however, a process that cuts too broadly
will be difficult to control. Defining the end of one business
process and the start of another is a matter of subjective
judgment and what can only be called "process wisdom."
Nevertheless, a couple of guidelines can assist in defining
First, business process includes activities that add value
to a product in the same general manner (e.g., by acquiring
and readying the product, transforming the product, etc.).
The activities don't necessarily need to be similar to one
another, but they must work toward a common destination.
Second, business process includes activities that have
the same general objective (e.g., acquiring the best supplies
and materials at a competitive cost, transforming the product
in the most efficient manner possible, etc.).
Avoid the temptation to define processes along the same
boundaries as functional departments. The whole point of
process orientation is to combat the narrow, myopic perspectives
that functional departments often encourage. Simply calling
a functional department by a different name does nothing
for the organization.
In a perfect world, restructuring an organization along
business processes would be a simple action. Nobody resides
in a perfect world, however. Organizational changes of this
magnitude carry with them significant implications, and
usually only the most senior managers can successfully carry
them out. Even then, they sometimes fail.
Evolving toward process orientation is the best solution.
Practical actions can be implemented that will gradually
shift your organization toward process orientation. And
these can be implemented by anyone with organizational respect
and clout. The cumulative impact of the following actions
is great, but taken slowly and incrementally, they're much
easier to digest:
Determine the business processes that exist within the organization.
Compare the boundaries of the business processes with existing
functional departments to determine where conflict exists.
Develop process flow diagrams that span departmental boundaries
and depict business processes in their entirety.
Cross-train personnel who work within the same business
Assign cross-trained personnel to new activities in order
to build flexibility and heighten awareness of the integrated
Examine incentives and objectives across functional departments.
Do they encourage improved functional departments at the
expense of business processes? Remove all incentive and
objectives that suboptimize the organization's overall performance.
Establish opportunities for personnel to interact within
and across business processes. Encourage frequent dialogue.
Some of the best improvement ideas come serendipitously
through informal discussion.
Encourage personnel to communicate their ideas for improvement.
Focus personnel on improving business processes rather than
narrow tasks and activities.
Eliminate activities that don't add value or contribute
to the effective functioning of the business process.
As personnel and managers become accustomed to thinking
in terms of business processes instead of functional activities,
begin reshaping the formal structure of the organization
toward process orientation.
Craig Cochran is a project manager with the Center
for International Standards & Quality, part of Georgia
Tech's Economic Development Institute. He has an MBA from
the University of Tennessee and is an RAB-certified QMS
lead auditor. He is the author of Customer Satisfaction:
Tools, Techniques and Formulas for Success, available
from Paton Press (www.patonpress.com).
Visit the CISQ Web site at www.cisq.gatech.edu.
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