The Process Concept

Put most simply, a business process is end-to-end work that produces something of value. More formally it is an organized group of related activities that together create customer value. The focus in a process is not on individual units of work, which by themselves accomplish nothing for a customer, but rather on an entire group of activities that, when effectively brought together, create a result that customers value. A customer does not care that we have allocated inventory or planned a delivery; the customer only cares that he receives the goods he has ordered. The difference between process and task is the difference between whole and part, between ends and means.

The two key words in the definition of process are together and organized. All people performing a process share a common purpose and work towards a common goal. They also have an organizing framework, a process design, that specifies exactly what work is to be done by whom, when, and where.

Some typical processes include order fulfillment, product development, and order acquisition. Processes are not merely new names for traditional departments; they are cross-functional sequences of activities rather than groups of people. Processes transcend organizational boundaries. Order fulfillment includes all work from receipt of an order until the customer is satisfied and pays the bill; it typically encompasses work performed by customer service, operations, logistics, and finance, among other departments. Similarly, the product development process encompasses far more than R & D. It entails work done by marketing, manufacturing, finance, and a host of other groups, all of whom are performing activities that contribute to realizing the ultimate goal: a new product. Processes are goal-directed and outcome-focused. Order acquisition is not merely a euphemism for sales. It is the name of a process whose mission it is to acquire an order. To be sure, sales is part of this process, but so are many other activities and organizations.

All companies fill orders, but not all perform an order fulfillment process. The difference is between process work and task work. People are doing process work when they work with an appreciation for the process of which they are a part, for the result they are helping to produce, and for the customer for whom they are producing it. People are doing process work when they follow a precise design rather than improvising and handling every situation on an ad hoc basis. Process work can best be appreciated by contrasting it with traditional task work. In task work, one person enters orders, another checks credit, a third allocates inventory, a fourth picks and packs, a fifth does traffic planning -with little or no concern (or even awareness) for what the others are doing, and with no overall framework that ties all the pieces together. One result is complexity and non-value-adding work, which in turn breed redundancy, miscommunication, conflict, rework, and all the other performance pathologies from which companies chronically suffer. Another is a lack of repeatability, consistency, and predictability, as work is done differently each time it is performed. The root causes of these problems are to be found in the narrow perspectives that task workers have, their virtually total ignorance of the larger context in which they are working; in parochial organizational identification and affiliation, through which allegiance is given not to customer or company but to function and unit; and in incongruent measurement and reward systems that reinforce limited concerns and perspectives.

Process work, in contrast, is customer-focused, holistic, and outcome-oriented. Processes represent a new perspective on an organization's work. They create an outward rather than an inward focus; they are directed towards customers and the results that customers require. People in process organizations still do tasks; however, they think process. They understand the effects of their own activities on others and on customers; they evidence ownership rather than compliance; they take responsibility for outcomes; they do what the situation requires rather than just what the boss has told them.

One common misperception is that process is somehow the enemy of creativity, that it implies routinization and automation, that it may be relevant for transactional work but not for such areas as developing and selling products. This is wrong. Process is not the opposite of creativity; it is the opposite of chaos. Process creates discipline and repeatability by putting individual activities into a precise framework. When they have a process perspective, people can focus their creativity where it belongs, on the content of their work, rather than on the structure of their work.

The Payoffs of Process

As one senior executive has put it, "Process is a revolution in thought, leading to changes in business." Because people performing process work have a broad perspective on their work and a sense of ownership of it, process work engenders far less non-value-adding activity than does task work. When each individual is narrowly focused on a specific task, managers and administrative personnel must perform a host of non-value-adding activities to "glue" together these isolated bits of work: checking, supervising, controlling, expediting, and the like. With process work, most of this non-value-adding activity is unnecessary. Front-line personnel have the knowledge and perspective needed to make their own decisions; checking and rework become unnecessary when everyone understands each other's work; disputes do not arise when everyone is aligned around a common goal. Less non-value-adding work means less overhead, reduced cycle times, fewer errors, and greater flexibility. Process work is also predictable and repeatable, since processes deliver results by design rather than by luck or through Herculean individual effort. These process designs also provide a handle for improving performance over time, through the application of process redesign techniques, six sigma quality improvement, new information technologies, and the like. Thus, process work not only delivers high performance, it delivers sustained high performance. The overall results of a process approach to work are lower costs and increased customer satisfaction, the twin underpinnings of growth and organizational success.

Process work has yielded spectacular benefits for companies in a wide variety of industries. A few contemporary illustrations:

• By managing service installation as a process, creating a precise and uniform design for it, and measuring its performance, Duke Power increased the percentage of situations in which it hooked up electrical service by the date promised to over 98%; in some company's service territories, that figure had been as low as 30%.
• IBM has reduced the time needed to bring new products to market by as much as 75%, by managing and measuring the entirety of product development as an integrated process.
• Allmerica Financial, a diversified insurance company, has applied process discipline to most of its operating processes. As a result, the company reduced operating costs by hundreds of millions of dollars as volume increased, and simultaneously vaulted from 37th place to 4th in an independent rating of customer satisfaction.
• Air Products and Chemicals has incorporated its customer interactions in a process called Customer Engagement. By systematically rethinking its design, the company has simultaneously increased the productivity of its delivery vehicles while achieving a major reduction in customer out-of-stock situations. In consequence, accounts receivable have declined while the percentage of business lost to competitors has fallen 80%.

Similar results have been reported in dozens of other leading corporations, including 3M, UPS, Conectiv, Merck, and Progressive Insurance, to name just a few.

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