There is growing concern about the success and sustainability of process improvement initiatives using only traditional approaches like Lean or Six Sigma. For example, a study conducted in Europe showed that 70% of companies that launched Lean initiatives have failed (Pedersen and Huniche (2011)).
Let’s take a look at some of the main reasons why traditional process improvement approaches often don’t deliver the expected results in today’s business environment:
Most process improvement initiatives are temporary by definition. This means that projects that have project managers, project sponsors and other resources assigned often struggle to realize the desired outcomes in the long run. With the end of an improvement project, resources get reassigned to other initiatives without having the necessary permanent process governance established. This leads to difficulties during the implementation of process improvements and to issues with sustaining the desired outcomes.
Process improvement initiatives are launched to address specific issues (as shown diagrammatically in Figure 1 below) such as long lead-times, high cost or poor quality. While these are often legitimate and valuable initiates to improve the performance of business processes once issues occur, there is much less emphasis on managing and innovating critical processes proactively. Research has shown that organizations only compete with approximately 5% of their processes with a further 15% being important core processes, supporting the competitive advantage (Franz, Kirchmer, 2012)(Kirchmer, Franz, 2014). For these highly critical business processes, a much more proactive approach to continuous improvement and process innovation is required.
Figure 1: Traditional Continuous Improvement (CI) fixes issues
A key characteristic of traditional process improvement approaches is the fact that projects are identified because of specific issues that are supported by data and evidence (metrics, customer complaints, issue logs, etc.). Unfortunately, this bottom-up approach can lead to issues like scoping projects too narrowly, not addressing the entire end-to-end process. Because of this, traditional process improvement initiatives risk to sub-optimize parts of a business processes to correct an identified issue while sacrificing the overall process performance or causing issues in other areas. This is especially common when a business process spans multiple departments with different leadership, competing priorities or objectives.
A secondary issue related with this bottom-up approach is timing and resource challenges. Because traditional improvement approaches are built on fact-based, data-driven evidence, lengthy data gathering and analysis activities tying up valuable resources often slow down initiatives. This is especially troublesome, if the improvement effort is focused on processes that are not considered high-impact processes that directly contribute to achieving a company’s strategic objectives. Resources “wasted” on those commodity processes are then lacking when it comes to innovation and optimization of high-impact business processes. Traditional improvement approaches don’t systematically “target value” (Franz, Kirchmer 2014).
Business and IT divide
Many companies keep process improvement initiatives separate from IT initiatives or don’t involve IT staff in process improvement projects. In today’s environment where technology is a critical enabler and sometimes the core foundation of a business processes, we view this separation between business and IT as an important threat. The first issue with this separation occurs when project portfolios between business and IT are not aligned or coordinated. This often leads to prioritization issues in identifying and selecting the right initiatives regardless of funding or budgetary constraints. Or process improvements implemented through a change initiative are reversed or made obsolete when IT completes a system upgrade and implements a new solution.
The business and IT divide leads to another significant issue that is related to analyzing and improving business processes. With the increased digitalization of business processes, the understanding technology capabilities, features and functions during the analysis and design of processes are absolutely critical. Business processes are no longer either manual or IT-enabled – they often consist of complex interactions between people and IT systems and even different on premise and “cloud” applications. They need to be understood and designed as a whole. Unfortunately, many tradition process improvement initiatives don’t involve IT staff early enough to analyze and design business processes that require knowledge about the enabling technology.
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