In format ive gu ides on indust ry best pract ice
Inspiring Business Performance
Process OwnershipThe key to change management success
R&D
MARKETING
FINANCE
PRODUCT
SALES
PROCUREMENT
SUPPLY CHAIN
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The benefits of being agile, flexible and responsive in business today need little
explanation. Continual change is vital to adapt to market needs and meet customer
demand efficiently and profitably.
Change management programmes can bring huge gains for an organisation. But their failure is a common story. All too often, once change has been implemented and the project team has been reabsorbed back into the business, these benefits gradually slip away. Why?
The reason can often be found in the conventional structure of a business. Most organisations are functionally run, yet many of the issues fundamental to business performance - new product development and order-to-cash, for example - are linear, running end-to-end across the business, and they pay no regard to departmental boundaries. In this case, functional heads find themselves with no jurisdiction over neighbouring departments to drive improvement and the sole recourse is the CEO’s office, where the only cross-functional
authority lies. The problem being, as important as these day-to-day processes are, the CEO is just too busy to manage them. Consequently, the advances gained from the change management programme soon begin to wither.
Transforming an organisation takes tremendous effort and resource, and seeing achievements disintegrate can be hugely frustrating not only for the executive suite, but the management and staff who have dedicated their time and energy to implementing change.
How can you ensure improvements are sustained? Moreover, how can you ensure they are continually progressed? The answer lies in assigning accountability for these cross-functional processes to dedicated Business Process Owners (BPOs).
Excellence is only the beginning
Once a business has reached excellent levels of performance, the champagne corks have popped and everybody’s patted each other on the back, it is easy to sit back and expect the results to continue to roll in. Not only is this unlikely to happen - as staff leave and new people join, it is easy for processes and behaviours to slide. What’s more, with a rapidly evolving business environment (and competition) what was once excellent may soon become standard. As Winston Churchill once said, ‘success is not final’.
To make the benefits stick, the ethos of continuous improvement has to remain. The business should be optimised and re-optimised, then optimised again. In doing so, it is vital to measure your progress. The Class A checklist (a globally recognized standard for
Business Excellence) provides a set of metrics against which to determine your business performance.
Even then, once a business has achieved a Class A accreditation, it is not the end. Class A provides the framework from which initial improvements can be identified and delivered and from this base a springboard for more improvements that are vital if excellent levels of performance are to be sustained.
Empowering the BPOs and their cross-functional teams to proactively design and implement improvements will give the CEO confidence to focus more personal time on the business strategy that will take your company to the next level, leaving the competition in your wake.
Dawn Dent
Oliver Wight Associate
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Making a single person accountable for nourishing the benefits brought about by a change programme can have a massive impact on the performance of a process for the business and, more importantly, its customers. This responsibility does not necessarily need to fall to the head of the apparently most relevant function (Head of Finance for order-to-cash, for example). In fact, most processes could, and should, bridge multiple functions - they can be a lot more effectively integrated horizontally.
What is a BPO?
A BPO is someone who is responsible for continuously managing a single process, end-to-end in an organisation. Every organisation has linear processes such as:
• Order-to-cash• New product development• Global product support• Strategy development• Employment lifecycle management
Each of these processes should have a BPO, an ambassador for the process in its entirety, who is accountable for it running smoothly across the different functions.
The Business Process Owner
New Product Development, for example, involves R&D, marketing, procurement, supply chain and finance. The BPO is responsible for ensuring the process is performed well across these different departments, and meets the needs of the business, the customer, and the strategy.
If it is not fit-for-purpose, i.e. supporting the strategic business goals and tactical requirements, it is the BPO’s job to do something about it. This is far more efficient and effective than relying on the CEO to gather together all of the heads of department every time an issue arises.
The BPO should not facilitate the process, however, that is the role of the Process Facilitator, nor should they carry out the process that is the job of the front-line staff. Instead, BPOs should provide strategic guidance, set targets, commission change projects and offer coaching to those operating the process.
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Who should be a BPO?
Close association with the overall business strategy means the Business Process Owner should be a senior level leader. They are the people who understand the strategy the best and the earliest.
Being a good functional leader, however, does not necessarily mean an individual will make a good BPO. The BPO does not usually line manage everyone working in the process and so the ability to ‘see the bigger picture’ and to influence and coordinate across functions and through functional leaders is important. In taking on a Business Process Owner role, a functional leader will develop a much broader view of the business. Forward planning to prevent problems, rather than simply firefighting, is vital. Having a real passion for the process is a key differentiator too. These characteristics are especially important for leaders in a business maturing from a traditional functional organisation to a process based or team based organisation.
There is no single formula for determining who will make the best BPO, it depends on your own organisation and personnel. Returning to the example of New Product Development, the BPO doesn’t have to be the Head of R&D, but should be someone senior involved in the process who displays the following characteristics:
The Business Process Owner - a CV
• Senior Executive• Process coach• Influential• Enables problem resolution• Fosters cross-functional co-operation
For one organisation this may be the Head of Marketing, for another, it will be the Finance Director, or Head of Procurement.
The type and size of your organisation will also have an impact, as well as your business maturity. For example, in large organisations it is common to have two levels of process ownership: the Global Process Owner, a member of the executive team, supported by Regional or Local Process Owners. In smaller organisations, the executive team members will have the dual roles: functional leader and BPO.
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The role of the BPO
The role of a BPO has four facets: designing, measuring, coaching and acting as an ambassador for the process within the business.
Design & executionIt is important to remember the Business Process Owner’s role is one of senior level management. Thus, they are responsible for determining process performance requirements aligned to the business vision and mission, driving change, and providing an end-to-end authority, across all relevant departments. When it comes to design and execution, their role is to manage, or at least sponsor, implementation, automation and change efforts. They should design and implement training systems, and take ongoing accountability for the key business assets.
MeasurementWith the business strategy in mind, the BPO has to continually monitor performance and interpret that performance, so setting targets and communicating this information, come high on the agenda. As well as benchmarking against competitor processes, performance needs to be understood in terms of efficiency, cost-effectiveness, agility, and, most importantly, customer needs. These have to be translated into an appropriate set of performance requirements and KPIs. The BPO should ensure the mechanisms used to measure these are deployed in the correct order and regularly reviewed to ensure optimum performance. Where gaps in performance are recognised, it is the BPO’s responsibility to
oversee the change effort (as described above). This aligns to the need for a Measures hierarchy which links the business’ strategic goals to day to day process measures.
CoachingThe BPO should build process expertise within the people operating the process, instructing on technique, providing support and resolving conflicts. That said, they are a resource rather than a supervisor, enabling problem resolution, so helping rather than telling. The role of the BPO is to listen to feedback from the process performers to establish what works well and what does not. Thus, focus should lie on exceptional or unanticipated situations, troubleshooting through a relentless pursuit for the root cause, so permanent corrective action can be taken and resource redeployed as necessary, to improve process performance.
An AmbassadorNaturally the BPO is ambassador for the process within the business. They should represent the process at leadership meetings, lobby for process goals, obtain required resources and agree performance requirements. They should make changes when needed, the BPO should manage interfaces with other processes, negotiate with stakeholders, and remove any obstacles.
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Following a Proven Path
The Oliver Wight Proven Path is an implementation methodology for sustained cultural change, with three key phases: leadership, development and ownership (Fig. 1). At the end of the Proven Path, once the change initiative has been implemented and the executive team are satisfied with how it is working, the project team will be reabsorbed into the business and the processes embedded. The challenge becomes sustaining
and maturing the benefits that have been brought about - it is then that the role of the Business Process Owner comes in to its own.
Typically, however, the BPO will have been a key member of the original change management team. That means they will already have a thorough understanding of the process, will feel a sense of ownership of the new design, and will want to sustain it moving forwards. Furthermore, it is easier to implement a culture of process management when introduced from the beginning of a change programme.
The diagnostic, the first step in the Proven Path, which comes before the change management initiative will assess, amongst other things, the organisational structure and culture to see what change is required to implement formal BPO positions. The concept then has to be incorporated in to the executive team education, to get them excited and committed to it. It is at this point that BPOs are usually assigned.
As strong ambassadors, each BPO will be an important ‘agent of change’, throughout the development phase. As their title suggests, they will also be fundamental in the ownership phase, leveraging capability, delivering change and eventually taking full ownership of the process. They must also ensure during the ownership phase that the old processes, behaviours and measures are fully removed from the business.
Fig 1: How Process Ownership is integrated into the Oliver Wight Proven Path
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A permanent part-time fixture
Assigning Business Process Owners doesn’t mean creating another set of parallel senior leaders, but using those leaders that already exist in the organisation. In addition to having a functional responsibility, the executive will take on an end-to-end process responsibility.
Understandably you may be wondering how senior leaders, who are already incredibly busy people, are possibly going to find time for this extra responsibility? But being a BPO is not an all-day, everyday activity; it’s a part-time role. Unless there is an ongoing change programme, in many instances the BPO has just a few key process meetings a month.
It is imperative, however, that organisations recognise the role of the BPO not as an interim one, but a permanent fixture. The BPO has a role to play long after the improvement project is complete. That means no matter how many staff changes occur, documentation should exist and a formal handover process take place, so there is always an assigned and properly trained BPO to look after the process, sustain any benefits, and continue to improve it.
In the pursuit of business excellence, an organisation will progress up the business maturity model (see Figure 2), evolving from a traditional vertical management structure, with a functional focus, in phase one, to a flatter, horizontal structure, which is process focused, in phase two.
Once staff have become used to working in a process focused organisation, the business can then look to mature to a matrix structure (phase three), which combines the best characteristics of the process structure, with that of a functional organisation. In parallel, functional leaders will grow the functional skills and competencies of staff, whilst BPO’s focus on optimising end-to-end process performance.
Thinking in processes has some serious advantages in the modern business environment, where to be truly successful a company has to put the customer at the centre of everything it does. In the recent economic downturn many businesses rushed to make cuts, without thinking end-to-end, and are now suffering the consequences.
An end-to-end perspective also helps prevent the misdirection of improvement activity. When problems in a business occur, often responsibility for resolving the issue falls to the department where symptoms appear.
Thinking in Processes
Fig 2: As a business evolves it will move up the maturity model, from a functional organisation in phase one, to a process organisation in phase two, to a matrix organisation in phase three, and finally a virtual organisation in phase four.
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For example, if the issue is with invoicing, responsibility automatically falls to the accounts department. In many cases, however, these are merely manifestations of the problem, whilst the cause is occurring upstream in the process; it could be an error with product price, for instance. Once you begin to think in processes, rather than squandering time and resource on fixing the symptoms, it becomes far easier to get to the root cause of the problem, and fix it.
For one organisation, this approach helped overcome invoice grief in the indirect procurement process. Accounts payable were failing to pay invoices on time, either because the procurement order was incorrect, or the user manager wasn’t signing off the orders on time. Before, there had been a blame culture with each department finger-pointing at one another. But once a BPO (in this instance a senior leader in finance) had been assigned
and met regularly with the sub-Business Process Owners (Head of Procurement, Sub-contractor manager and Accounts Payable leader), communication was improved across the process and the root causes of the problem quickly addressed.
Figure 3 is a simple breakdown (by its processes) of a manufacturing organisation with an aftermarket business. The core processes, in the centre, are those which directly impact the customer and deliver value to them; the enabling processes allow the company to perform the core processes; and the governing processes are those used to manage the business. Focus here is end-to-end, so in the case of order-to-cash, it starts with the forecast, through managing orders, to the master schedule, the material plan, receiving the material, manufacturing, dispatch, invoicing and then finally collecting the cash. This single process involves individuals from a variety of functions: sales, customer service, supply chain, operations and finance.
Rather than having multiple senior executives sub-managing this, one senior executive, the Business Process Owner, will oversee the process in its entirety, working through the functional leaders and with the process performers to ensure the required process performance is being achieved. The BPO ensures that everyone understands the role they are expected to play in the process, and sets them annual performance targets and metrics. By documenting the knowledge of process performers, job rotation becomes easier, and the knowledge and ideas of staff can then be harnessed to improve the process (and business) performance. Since many of these people will not work in the BPO’s functional department, a process of cascade education is required to ensure the heads of functions, line managers and process performers are all aware, and supportive of the role of the BPO.
Fig 3: An example process model - a manufacturing organisation with an aftermarket business
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Integrated Business Planning (IBP) is a tried and tested process which will drive an organisation to higher levels of maturity, because it removes traditional functional barriers and silo thinking, replacing them instead with a structure based on integrated processes and teams. The role of IBP is to align all the individual functions of the business (marketing, operations, finance, R&D etc.) to the direction in which the company is heading and the plans it has to get there.
Process Ownership and IBP go hand-in-hand, as many of the end-to-end business processes are considered in the monthly IBP process. The BPO will chair the relevant monthly review meeting (e.g. for the demand management process owner, this will be the demand review), supported by the meeting (and process) facilitator. The BPO will also attend the Management Business Review (chaired by the business leader) along with the rest of the Executive team, to represent their process.
The classic challenge for any organisation is to make its business cost-effective, and produce margin all the way through the economic cycle, through big growth to the depths of recession. This means having the flexibility to shrink or grow capacity strategically, depending on the economic environment, and this relies on having good visibility over the business and market.
It’s no mean feat for any business, but becomes an easier task when approached horizontally. The aim of the BPO is to develop a process roadmap and build flexibility in to the process, so if business takes off, rather than simply hiring more people and not improving
Process Ownership within the IBP process
Bringing the future in to today
business margin, growth can be facilitated strategically, with some systems automated and resource released. The process then becomes less sensitive to both major growth and economic downturn. As an aside, this can also add value to people’s jobs, as typically it is the repetitive work which is automated, leaving staff with the more enjoyable, creative roles.
Regular review of the 5-10 year strategic plan and business objectives is an essential prerequisite for the development of an appropriate process roadmap. The priority of the BPO is to look to the future to ensure the process is continually ‘fit for purpose’. An Integrated Business Planning process, with its
Fig 4: The Integrated Business Planning Review meetings will be chaired by the BPO and attended by a cross-functional selection of managers
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24-36 month rolling horizon, provides the BPO with the tools to look ahead, as well as a clear overview of the business and the strategic direction it is looking to take.
If significant change occurs or is anticipated, be it internal or external, process improvement programmes can then be commissioned to bring the future in to today, and guarantee the process remains strategically sound not just now, but for years to come.
Take one international company, whose strategic plan included growth in the Chinese market. Significant change to its process
designs, capacity and performance were all required to deliver this objective. Because the business already had an established Integrated Business Planning process and an infrastructure of Business Process Owners, the business was able to set up the processes and secure a system in China, which allowed local sales and customer service to be established at an early stage, and for the market forecast for China to be easily integrated in to the Integrated Business Planning process. Working closely with IT, the BPOs delivered a set of processes which not only supported the strategic objective, but were also globally integrated.
Fig 5: Strategic continuous process management - bringing the future into today.
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Bringing the future in to today becomes easier when the business strategy is considered from the perspective of a multitude of processes. Setting aside time for the various Business Process Owners to convene at a Process Leadership Meeting to discuss their individual processes and provide support to one another has real merit, especially if they are working on developing the business strategy - a strategy can then be executed through the Integrated Business Planning process.
The Process Leadership Meeting helps to ensure all processes suitably support the business strategy, and are integrated with one another at every level. Moreover, approaching issues with their process hats on allows business leaders to ask the right questions and make high-level decisions, such as the implementation of an ERP system, with not just one department, but the entire company in mind.
Traditionally when an Executive helps to put together the strategy they approach it from a functional viewpoint. The Head of Finance,
The Process Leadership Meeting
Summary
for example, would financialise the different ideas put forward, the sales person would be thinking about growth, the supply chain person would consider the cost profile of the business, and so on. But once these executives approach each problem from two angles (functional and process), the company strategy immediately becomes richer.
This does not mean changing the governance structure of the business entirely; it just requires some tweaking, to allow time for the BPOs to make decisions and focus agendas on process management.
Once the strategic process plans have been developed by the BPOs at the Process Leadership Meeting, the Integrated Business Planning process then helps in the execution of these plans. Each month the five reviews - product, supply, demand, integrated reconciliation and management - produce one-page summaries, with relevant news succinctly detailed, making it easy for the BPOs to debate the important data from a process perspective.
A properly implemented system of Business Process Ownership can deliver real business benefits. Assigning senior individuals accountability for the ongoing success of a process sends a powerful message to the rest of the organisation and ensures the time, effort and resource invested in a change management programme doesn’t go to waste.
Not only that, Business Process Ownership can deliver benefits throughout a change programme, and can extend way beyond the process itself to positively influence the delivery of the overall business strategy, to ensure your organisation performs well now, and for many years to come.
About Oliver Wight
At Oliver Wight, we believe sustainable business improvement can only be delivered
by your own people; so, unlike other consultancy firms, we transfer our knowledge to
you. Pioneers of Sales and Operations Planning and originators of the fundamentals
behind supply chain planning, Oliver Wight professionals are the acknowledged industry
thought leaders for Integrated Business Planning (IBP).
Integrated Business Planning allows your senior executives to plan and manage the entire organization over a 24-month horizon, while Oliver Wight’s extended Supply Chain Planning and Optimization ensures your supply chain is designed and structured to deliver best-in-class customer service with minimal costs. Using the Oliver Wight Maturity Model to pursue our globally recognized Class A standard for best
practice will determine a tailored improvement journey for you to develop your organization’s processes, and reach and sustain excellent business performance. With a track record of more than 40 years of helping some of the world’s best-known organizations, Oliver Wight will help you define your company’s vision for the future and deliver performance and financial results that last.
Inspiring Business Performance
Oliver Wight EAMEThe Willows, The Steadings Business CentreMaisemore, Gloucester, GL2 8EY, UKT: +44 (0)1452 397200
Oliver Wight Asia/Pacific131 Martin Street, BrightonVictoria 3186, AUT: +61 (0)3 9596-5830
Oliver Wight Americas, Inc.PO Box 368, 292 Main StreetNew London, NH 03257, USAT: +1 (603)-526-5800
www.oliverwight-eame.com
The information contained is proprietary to Oliver Wight International and may not be modified, reproduced, distributed or utilized in any manner in whole or in part, without the express prior written permission of Oliver Wight International.
