By Mathias Kirchmer, Peter Franz and Alexander Lotterer
Traditional process improvement techniques such as Lean, Six Sigma, Total Quality Management (TQM), etc. have delivered tangible improvements for many organizations by improving quality, eliminating process waste and reducing non-value-adding activities. While these initiatives typically start off well, generating excitement and great progress, they all too often fail to have a lasting impact as participants gradually lose motivation and fall back into old habits.
There are also many examples where these traditional improvement approaches did not lead to any tangible business outcomes while consuming significant resources. In other cases they created benefits in one area and issues in others – neutralizing the overall effect.
In order to succeed in today’s fast-paced environment with ever-changing business conditions, new technology trends and constant internal adjustments to cope with these changes, it has become increasingly clear that traditional improvement approaches alone cannot deliver the desired business outcomes in a repeatable and sustainable fashion. A broader and overarching management discipline is required to direct, align and govern process improvement initiatives across an organization to ensure the long-term success of such initiatives.
More and more organizations establish outcome-driven Business Process Management (BPM) capabilities to develop this new management discipline, which allows them to address today’s challenges more quickly and alleviate the shortcomings of traditional process improvement approaches. This new management discipline, which we call the “Discipline of Value-driven Business Process Management”, is built around outcome-orientation, customer-focus and a structured value-driven design of business processes realizing the business strategy of an organization.
Extensive research has proven that an organization competes through less than 20% of its business processes that have a high impact on strategic value drivers. Over 80% of the processes are more routine (commodity) processes. It is sufficient to achieve industry average performance in these areas. A value-driven process design and implementation considers this by focusing innovation and optimization initiatives, as well as company specific digitalization, on the 20% high impact processes. Commodity processes are designed based on industry reference models and implemented, as far as possible, through available standard solutions. Design and implementation of processes thus focuses systematically on creating business value.
The paper describes an approach to such a value-driven segmentation, design and implementation of businesses processes, transferring strategy into execution, at pace, with certainty in the digital world. The approach is explained using a number of case examples.
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