Business process improvement
Total Quality Management. Six Sigma. Eight Omega. ISO 9000. CMMI. BPMM. SCOR. The number of process improvement frameworks out there is staggering. Where does one begin? What should we believe? Is there a right way and a wrong way? To be sure, we should make a distinction between a framework and a methodology. While a framework provides a foundation typically designed to promote a standard operational architecture, a competitive advantage may only be derived by applying an improvement methodology that aims to distinguish one company’s processes from another.
Why improve in the first place? There’s typically a contingent of folks who believe the old saw, “if it ain’t broke, don’t fix it.” But there are competitors out there, each a moving target, each determined to take customers away from you. Insurance companies face a particularly daunting problem: there is only so much room for price reduction. Unless you’re already a major player, growth strategies built entirely on price competition, especially in the personal lines markets, are largely opportunistic and ultimately difficult to sustain. Soft markets demand greater attention to the other side of the profit equation – cost cutting brought about by operational efficiencies is how the game must be played to ensure sustainable growth.
However, over time, the processes that drive excellent operations become written about and spoken about as examples of great ways to do business, and, as such, become codified as part of a larger body of “best practices” to which everyone has access As a result, the competitive advantage they once provided begins to erode as these “best practices” become relegated to the heap of industry standards – thus providing no advantage at all. To thwart this vicious cycle, it’s incumbent upon good competitors to continuously evaluate and improve their operations in order to preserve the competitive advantage that truly excellent operations provide.
WHERE DO WE BEGIN?
So I’ll assume that you accept the notion that there’s a place for continuous improvement, that by itself, it’s not simply a buzzword or a faddish management mandate and that, sure, I’ve got your attention. But where to begin? Organizations can be terribly complex; a typical insurance company manages dozens of operational processes, all important, and all designed to influence the efficiency and effectiveness with which work gets done. There may be hundreds of staff members impacted by a single operational change, and technology – often millions of Naira worth of investment – to consider as well.
To be sure, I’m not advocating an all-at-once assault on the way things are done in an organization; those initiatives often fall flat, take too long and cost far more than anyone anticipates. At the end of the day, the benefit derived is simply not worth the effort (just ask those involved in business process reengineering initiatives in the mid-90s). What I am advocating, however, is the proliferation of a culture of continuous improvement – a workforce committed to monitoring and improving the way they perform their work.
So we’ve set up the thesis: (a) there are many approaches to process improvement; (b) there is a viable argument for undertaking a program of continuous improvement; and (c) given the complexity of most organizations, most folks don’t know where to start. Fair enough? Given this, there are four important “big picture” items that must be in place in advance of an effective business process improvement effort. They are:
PROVIDING THE VISION. Widely communicating what the world will look like in the event process improvement efforts are successful is critical. Good leadership skills are needed to promote and reinforce the notion that the hard work of changing the way things get done will yield phenomenal results.
PROVIDING THE SKILLS. Absent the simple means to set about improving their own work, staff members will wallow in their own incompetence as they struggle to make things better. This should not be so much an exercise in futility and frustration as one of the disciplined
Business process improvement: Seven steps to operational excellence
What I am advocating is the proliferation of a culture of continuous improvement – a workforce committed to monitoring and improving the way they perform their work.
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application of proven methods. Provide new skills and employees will be better equipped and far more enthusiastic about the program. This paper attempts to provide an overview of such skills.
PROVIDING THE GOALS. Consistent with the vision, goals and milestones indicate that the program is working even before it has fully matured. Like the vision, goals, too, must be widely communicated and universally understood.
PROVIDING THE REWARDS. When those goals and milestones are met, reward the team! Build compensation plans that reserve a portion of annual bonuses for meeting or exceeding the process goals established. Take a process improvement team out to dinner when a major milestone has been met. Reinforce the good work that’s being done and you’ll get the repeatable behavior that marks a culture of continuous improvement.