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 optimally.

What's in a process?

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 illustrated below.

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 little else.

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 providers alike.

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.

Orienting to the big picture

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 of it.

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 process:

With a functional department, you'll find:

Specialization

Improvement efforts focused on the activity level

Each activity fully staffed

All personnel and equipment utilized

Little understanding of interdependencies between activities and processes

Close supervision

Localized communication

Slow feedback from downstream activities

Metrics focused on the activity

Narrow accountability

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:

Broad competencies

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 and processes

Less need for supervision

Free-flowing companywide communications

Fast feedback from downstream activities

Metrics focused on the overall process

Broad accountability

Flexibility when change occurs

Shared resources

An outward-looking view

Blurred divisions between management and staff

Typical business processes

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.

Leadership process:

• 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
• Selling
• Performing sales follow-up
• Gauging customer perceptions
• Analyzing data on customer perceptions
• Communicating to the organization about customer perceptions

Design process:

• 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

Inbound process:

• Communicating needs to suppliers
• Evaluating and selecting suppliers
• Purchasing supplies, services and equipment (i.e., inbound products)
• 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 products

Product realization process:

• Communicating supply, service and equipment needs to inbound process
• Scheduling work
• Arranging resources
• Producing the product through appropriate transformation activities
• 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

Outbound process:

• 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., training, etc.)

Maintenance process:

• Providing maintainability requirements to inbound process owners
• 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

Improvement process:

• Guiding the development of procedures
• Managing internal audits
• Administering corrective and preventive action
• Reporting to leadership on the results of improvement efforts
• 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 failures

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 the processes.

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.

Beginning the journey

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 process.

Assign cross-trained personnel to new activities in order to build flexibility and heighten awareness of the integrated process.

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.

About the author

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. Letters to the editor regarding this article can be sent to letters@qualitydigest.com.