Measuring sales performance: Are you measuring results or drivers?

Let me start by asking you a quick question: what is the purpose of measuring sales performance?

Think this through for a moment and jot your answer down before continuing…

I asked this very question in a keynote I was delivering recently to over 1,000 sales leaders. There were 5 answers to choose from.

75% of them answered with “To see how well we are doing”

Now, whilst this is true, in my opinion it’s not THE purpose of measuring sales performance.

For me, the purpose of measuring sales performance is to improve it.

We work with hundreds of different organisations each year. Most of them have CRM dashboards lit up so colourful that they looks like a firework display! Some have enough data and information on them to rival Google.Many organisations use performance management as a way to reward or punish sales people, others use it to impose strict guidelines as to what the sales person should and should not be going. Others use the system as a catalyst for beating their sales teams over the head with a stick for not making quota and others use them for just keeping score.

But data and information is one thing. After all, keeping score is the easy part.

It’s how you use that data to improve your sales team’s performance that should be the real reason of why you are bothering to do all of this in the first place.

Let’s take a quick look at some common performance KPI’s and what they should mean and what they don’t tell you.

Pipeline measurements

“My pipeline is full”

Good for you!

But how effective are you in converting leads to opportunities?

Is your pipeline full of “deadwood”?

How are you qualifying?

Are you qualifying hard enough or are you massaging the figures.  

Do you keep deals in your pipeline for too long?

Meeting measurements

“I’ve been out and about all week with lots of client meetings”

The dashboard shows lots and lots of meetings.

So you’re very busy but were those meetings effective?

Were your meetings at the start of the week better than those at the end?

Did you follow your sales process?

How many qualified buyers did you really meet?

Did you qualify any out?

All of these factors will not show on a report.

Sales velocity

“It takes me 83 days to close a deal”

The time it takes you to close a deal is called your “sales velocity”

But so what, it’s just another number if you don’t put it into context because based on your skills and experience is this in line with what it should be?

Are all of your deals lumped into this metric?

What if you sell a whole range of different products and solutions all with different lag times?

This will distort the figures.

It’s important to measure the velocity of each deal against what the expectation should be against that particular product or service and bearing in mind the experience and skill of the sales person.

Only then will a figure of “83 days” make any sense at all.

Sales target vs actual

“I’ve achieved my target five months straight”

On the face of it everything looks great and it is because this sales person has made their quota 5 months running.

What the figures won’t tell you at this level is that this persons closing ratio is one of the lowest in the company at 21%.

To make quota they have to hustle like crazy to create a pipeline so large that they can sustain a 21% closing average to make their number.

So the questions we have around this are now:

• Is this sales person shooting fish in a barrel and is quickly running through presentations hoping that 21% will stick?
• What are they doing differently in a sales meeting to the sales person with the best closing ratio of 44%?
• Are they creating a lot of meetings with non-qualified buyers and hence their ratio is artificially low?

On the face of it I know many sales leaders who would leave this sales person alone. After all, they are making target right?

If your mindset towards sales measurements is one of keeping score and policing then a lot of money will be left on the table if no action is taken and the figures are not analysed further.

On the other hand if your approach towards sales measurements are all about improving sales then there is a great deal of upside leverage that can be made with the sales person that we have used in this example.

What is your current attitude and philosophy towards measuring performance?

A simple shift in focus from measuring results to driving better results can have massive impacts on the morale, approach and above all else the sales performance of your people.

SOURCE: MYcustomer

Benefits of Integrating Business Process Management with Lean Six Sigma

Business Process Management and Lean Six Sigma can work very well together. Each system has something great to contribute to an organization, which results in a higher level of power when combined. However, today not all organizations throughout the world either recognize the benefits or have failed to implement the combined initiatives through a system such as Integrated Enterprise Excellence.

In Lean Six Sigma, members and leaders are typically taught that technology is not a vital component in terms of solving process problems. Although BPM involves technology, Lean Six sigma can be enhanced through BPM’s methodologies and capabilities. Similarly, BPM users tend not to have appreciation of Lean Six Sigma strategies and how the techniques of Lean Six Sigma could lead to more effective BPM deployments. BPM and Lean Six Sigma complement each other in many ways possible, but not many are aware about these. Five benefits of integrating these two initiatives are:

1. Process Enforcement and Business Ownership

The integration of BPM and Lean Six Sigma can speed up the real-time execution of processes even when a team is geographically dispersed. With the tools combined, organizations or businesses can offer an orchestration of the essential elements of the techniques, such as the processes, inputs, outputs, failure analysis, documentation, evaluation, statistical analysis and feedback, among others. An effective collaboration of BPM and Lean Six Sigma can result in processes that can be automatically executed through BPM?s automation.

Through this integration, practitioners or business owners can have more control, which is intensified by monitoring and the reporting of predictive process performance metrics. The BPM portion and associated software can provide vital data for implementation and process design. This simply means that all processes can be executed according to their intent with harmony. This minimizes the risks of problems occurring.

2. Agility and Speed

Organizations will experience benefits when the two initiatives (i.e., agility and speed) operate together. For instance, a supplier can improve its competitiveness by reducing the delivery time. Through the use of Lean Six Sigma methods, this organization can determine the value stream map, which highlights the metrics and focus points necessary to reduce total lead time.

In this, the value stream map is broken down from the lower processes up to the point that key areas of waste and failure are addressed. Once improved, it results in delivery time enhancements. A BPM automation initiative can act at this time to deploy the controls and processes throughout the initial key areas, such as waiting order approvals and signatures. Through BPM, there can be automated controls, where all the data for process performance are collected in real time.

3. Better Approach to Problem Solving

Usually, Lean Six Sigma strategies focus on resolving narrow and highly specific issues. With this technique, all the data necessary to eradicate all wasted work can be determined in an efficient manner. Hence, there can be a well-defined set of steps or activities, which will aid in eliminating all the non-value-added work.

However, a traditional Lean Six Sigma deployment by itself often misses the big picture. This is where Business Process Management can be beneficial in the picture. In general, organizations benefit the most when there is a framework that will support the integration of the two techniques so that all angles of the problem solving process will be looked in a more precise manner; e.g., the Integrated Enterprise Excellence business management system described above.

4. Patches the Weaknesses

Lean Six Sigma alone in terms of a deployment involves two major weak points:

• The enhancements obtained from Lean Six Sigma have the tendency to become isolated and less focused, which can lead to problems with the flow of services or products in terms of the bigger context, like in an enterprise.
• A Lean Six Sigma deployment depends upon the collection of resources from competitors and views priorities the same way cooperatives do. Since various business units have their unique priority ratings, reviewing the right priorities normally leads to slow enterprise-wide improvements.

Now, what about BPM? Essentially, BPM is not into statistics — creation of hypothesis test when it comes to identifying areas for improvements like a Lean Six Sigma process improvement roadmap suggests. Yet, BPM within an IEE structure lays the framework required for modification in workflows and processes to allow the implementation of enhanced outputs derived from Lean Six Sigma.

5. Higher Returns

Average companies, which either employ Lean Six Sigma or BPM, are known to generate increased profit when compared to those who do not utilize any initiative. However, those organizations that manage to effectively integrate BPM and Lean Six Sigma successfully achieve the most long-lasting benefits.

Many organizations are deploying both Lean Six Sigma and BPM. Most of these companies are large companies, but smaller ones can also reap the benefits of BPM and Lean Six Sigma, together. Those companies that either utilizes Six Sigma, BPM or both experienced significant improvements on essential performance indicators. Yet, those who performed the integration of the two initiatives gained higher levels of success, particularly in terms of revenues.

Without doubt, the two initiatives have a lot to give to one another since they only have one goal — help organizations optimize and manage their processes more efficiently. While the focus and approach may be different, the combined efforts really help in elimination of waste, improving quality and developing better control.

BPM and Lean Six Sigma integration is promising, but organizations should be clever and alert to achieve continuous improvement throughout the years to come. An Integrated Enterprise Excellence system provides a roadmap for this effective integration.

SOURCE: Quality Magazine

business model innovation

The digital age has become an impetus for business model innovation, as technology has dramatically changed how companies operate and deliver services to customers. This digital disruption has shortened business model lifecycles and made innovation key to financial success. The global marketplace has further driven the need for business model innovations, as companies must react to stiffer international competition and the increased potential for systemic risk. These factors are forcing companies to turn to business model innovation to stay competitive and foster growth in the competitive global marketplace.

One example of successful business model innovation is changes made by Apple beginning in the early 2000s. Apple's introduction of products and services such as the iPod, iPhone and iTunes expanded the company's offerings beyond the desktop computer market. For example, the iPod and iTunes created ways to profit from downloadable music, while theiPhone was a breakthrough in the smartphone market. Netflix is another example of this type of business innovation: After upending the traditional video rental market, in recent years the company has leveraged new digital technology to gain a competitive advantage in the streaming media business.

Successful business model innovation in the digital age requires an alignment of IT and business objectives, with the ultimate goal being to improve processes throughout the organization. As a result, CIOs other top IT executives play a big role in identifying ways to use new and existing technology to maximize business model innovation success.

SOURCE: SearchCIO

How to have Employees be more Creative for Continuous Improvement

Practical Process: The Primacy of Process

I believe that the primary focus of every organization should be the understanding, management, and continual improvement of the business processes by which customer value is created, accumulated, and delivered. Not the only focus, of course, but by far the most important. This is the essential message of process-based management and once that message is heard, the need for both process management and process improvement is obvious, urgent, and compelling. Let me explain what I mean by, and why I believe in, the ‘primacy of process`. This Column is deliberately short (if I had been in a hurry I would have written a longer one!) because I would like to find a way to succinctly define the key message of process-based management. Have I achieved that? Please let me know.

Process?

Why “process”? The simple view of a process is that it is a collection of cross-functional activities that transforms one or more inputs into one or more outputs. I also include all of the resources, people, systems, infrastructure, policies, regulations—everything that is required to execute and manage the process. Processes are important because this is how organizations get work done.

Primacy?

Why “prime”? Cross-functional business processes are the only way organizations can deliver value to customers and other stakeholders. By themselves, the separate functional areas of an organization cannot deliver value to external parties. An organization`s resources are managed ‘vertically` via the organization chart. Value is created, accumulated, and delivered ‘horizontally` across the organization chart.

It follows that an organization executes its strategic intent via its business processes. The sequence from strategy to execution is shown in the breakout box, From Strategy to Execution.

The only way an organization is able to exchange value with its customers and the way in which it executes its strategy—sounds prime to me!

Implications

If we accept that business processes are the value pathways, as well as the way organizational strategy is operationalized, where does that lead us? The inescapable conclusion must be that the starting point for effective organizational management is to understand, manage, and optimize those business processes. Without a proactive focus on business processes, organizational performance cannot be optimized and strategy cannot be effectively executed.

If value is created, accumulated, and delivered across the organization, what measurements of performance are made in that direction? Do we know if those cross-functional processes are working well? Do we know what “working well” would mean? Do we know where the performance gaps are and if anyone doing anything about them?

If value is created, accumulated, and delivered across the organization, who is in charge of that? The organization chart is silent on such cross-functional matters. Sure, we can say that the CEO is responsible for everything, but she knew that and it doesn`t help. Can it really be a good idea that the path through which we exchange value with our customers is not managed?

Relationship to Business/Enterprise Architecture

I`ve said that process performance should be the primary focus of an organization, but not the only focus. There are many other aspects and the positioning of the many other architectural elements naturally arises.

There are many “architecture” types. As well as business architectures and enterprise architectures, there are architectures that address IT, information, capabilities, services, systems, rules, applications, organizations, and people. This Column does not seek to either explain or reconcile the many views of business or enterprise architecture, but it does have a particular architectural stance—the primacy of process—and this requires that processes be the focal point of any architectural view. All of the common architectural perspectives are valid[1], but the process context is fundamental and each other perspective has a direct relationship to it. While other constructs are useful and often vital, particularly to guide information systems, the tendency to define ‘every` object and show the relationships to ‘every other` object via abstract diagrams, may be of limited benefit to managers.

Accepting the ‘primacy of process` principle, and starting with the process architecture, allows an organization to focus on the purpose and performance of the value pathways. Other architectural elements can be added when they are be shown to add value, when they are an aid to management and not a further complication.

Conclusions

Management needs its own disruption. A practical and pragmatic approach to understanding the organization as a system for value creation, accumulation, and delivery is required. Clear links between strategy and process execution must be defined. Mechanisms for identifying, managing, and improving process performance must be realized.

Organizations must reimagine their operations as value creation and delivery flows.

In Practice…

There are many things you might do in response to the issues discussed in this Column. Here are three practical steps you might consider doing now to get started on the creation of sustainable process-based management and process improvement.

Discover the value pathways

Document the process architecture for your organization. Find the strategy statements and determine who are the customers and other stakeholders and your organization`s value proposition for them. These are likely your core highest level processes. Decompose those processes down a level or two.

Agree on performance targets

If those processes were working as well as the key stakeholders would like them to, what would they be doing? How would you know? Define and document the critical few performance measures.

Mind the gaps

Capture the performance data and make evidence-based decisions about what to do for any performance gaps.

[1] Although I still struggle to see how ‘capabilities` add value that is not already provided by ‘processes`, but we`ll leave that for another day

SOURCE: BP Trends

What is Kanban and How Did It Change Management?

If you’ve shopped for project management or enterprise resource planning (ERP) software recently, you’ve likely come across the term ‘Kanban.’ If you’re like most software buyers, you might not be familiar with what that means. Below, we explain the history and business uses of this system.

What is Kanban and Where Did It Come From?

Kanban is a Japanese word that literally means “card” or “billboard.” In terms of project management, Kanban is a way of visually organizing production using cards, each of which represents a task or step in the production process. The system was born in the late 1940’s by Toyota engineers who drew inspiration from the “just-in-time” delivery model of supermarkets. Instead of ordering product to restock shelves based upon vendor availability, supermarket clerks ordered based upon the current store inventory. The engineers used this idea as a model to develop a manufacturing process that relied on matching inventory with demand in order to increase both quality and throughput. The result? Kanban.

On the manufacturing floor, workers would use a Kanban, or card, to represent steps in the manufacturing process. Adjacent up-and-downstream workstations communicated with one another via the Kanban cards. A container at each station would contain a Kanban that, when received, authorized the station to produce parts or ship the full container to the next workstation. The visual nature of using a card or billboard allowed teams to better communicate with one another, which maximized productivity. The result? Toyota became the largest, most profitable auto manufacturer in the world.

Kanban Goes Mainstream

Kanban was only used for manufacturing until the early 2000s, when David J. Anderson, Corey Ladas, and others developed the Kanban method for software development. It was centered around the idea of making incremental changes to processes and systems, and could be used by corporations in any industry, not just manufacturing. It is a “pull” system, where work in progress is limited in order to reveal bottlenecks that prevent supply from matching demand.

Of course, the introduction of the Kanban manufacturing process to software development resulted in the development of e-Kanban, or electronic Kanban systems. Instead of physical representations of work, e-Kanban systems, like those found in Kanban-based project management and ERP software, use electronic cards that may or may not contain barcodes, attachments, or other electronic messages.

Whether used for development or manufacturing, Kanban has six rules, developed by Toyota, that help ensure a successful implementation.

1. Downstream processes use items only in amounts specified by the Kanban card.
2. Upstream processes produce items only in amounts specified by the Kanban card.
3. Nothing is made, moved, or altered without a corresponding Kanban card.
4. If an item is produced or shipped, it must have a corresponding Kanban card.
5. Errors, defects, or shortages are never sent downstream
6. The total number of Kanban cards are limited to reduce inventory or work-in-progress and reveal bottlenecks or other problems.

Do You Need Kanban?

While the benefits of Kanban/Lean processes to manufacturing and development are relatively well-known, a Kanban system can be used with great effect in a myriad of industries. Any team that generates a product can use Kanban. We even use Kanban software on several teams here at TechnologyAdvice. While Kanban takes some getting used to when transferring from a traditional waterfall system, once your team becomes more comfortable with the process it will help reduce lead times, and increase team communication and output. 

To find out more about Kanban-based project management and enterprise resource planning systems, call, click, or email one of our Technology Advisors for a no-cost, no-obligation consultation on how Kanban can benefit your business.

SOURCE: TechnologyAdvice

Business performance measurement builds a performance culture

As 2014 came to a close, the American Productivity & Quality Center (APQC) conducted a short survey to better understand the pressing priorities and challenges of business excellence practitioners for 2015. We found that process and performance management were the top two areas that business excellence staff planned to focus on in 2015 (see Figure 1).

Although process and performance management are separate focus areas, process management is often a starting point for organizational performance improvements. For an organization to improve its performance, it first must understand how to get work done effectively. This can include using business performance measurement to assess how the organization performs work and identify the performance and value of each process, as well as pinpointing which areas are underperforming, valueless, redundant or inconsistent with definitions and execution. Hence, all these process concerns link back to performance improvement opportunities.

Practitioners are prioritizing a wide array of challenges tied to performance management, from overcoming governance hurdles (e.g., identifying ownership) to including lagging, in-process and leading measures. These challenges have two main concepts in common: engagement and measurement.

If done correctly, business performance measurement can be the lynchpin of effective engagement. Organizations often will start measurement by assessing the performance and value of its processes, engaging employees in process activities and providing clarity on who does what.

In other words, assessing an organization's current state helps provide a baseline for determining and prioritizing process improvement opportunities, identifying measures for performance management, and engaging employees to think in process terms. An organization can baseline its current state in several ways: benchmarking, surveys, workgroups and value stream assessments. The method applied depends on the amount of performance data available, business process maturity and the amount of employee engagement that is necessary.

Overall, when organizations ignore the effect of change initiatives on people, roadblocks arise and intended results fall short of expectations. Many organizations conduct limited workforce engagement for process and performance management. Limited engagement results in employees who do not understand, care about or even agree with the process. Employee engagement creates buy-in with employees and overcomes organizational resistance. Outlining the value of process management in terms meaningful to leadership results in the sponsorship and resources necessary to make process efforts effective.

The greatest challenge for business process management is making it part of the culture and getting employees passionate about it as well. Many organizations face resistance during process rollouts because they don't involve employees in the process. If organizations involve their employees in the current state assessment, they increase engagement because employees feel a sense of ownership in identifying what the key issues are and what measures matter. Including these measures as the value drivers in process and performance improvement business cases establishes the measurement efforts in terms that leadership can get behind.

For example, Elevations Credit Union established a strategic initiative to improve its organizational performance. Its first objective was to address its ad hoc, patchwork processes. Elevations' approach combined current state assessments, employee workshops, process management and tool training, and mapping contests to engage employees in process management and establish a performance culture.

However, Elevations' real breakthrough with leadership came when it started using a performance dashboard to track and monitor its process performance. As the organization's processes and measures grew in complexity and the leadership's need for data to support its decision making expanded, Elevations implemented an enterprise dashboard system that provided access to the organization's key performance indicators (KPIs -- actual, target and variance). A corresponding "drill down" dashboard for each category of the enterprise process map allows leadership to root cause any variations in performance.

According to Elevations, the ability to get real in-process metrics was a fundamental change in how it operated. From that moment on, Elevations' senior leaders bought in on process management and began managing via enterprise dashboards. All of its metrics link back to processes, so it can now figure out what's broken and why by tracing back to the source of the problem.

Elevations' success using performance dashboards comes as no surprise. When discussing performance measurement, most practitioners refer to the type of measurement that helps companies monitor its current and past states. Thresholds, both low and high, for KPIs are set and managed by exception. When data begins to move outside the threshold limits, the performance measurement system can alert management, who then attempt to diagnose the problem and address its causes. Practitioners refer to this type of measurement as diagnostic control systems. Although this type of measurement provides management with "auto-pilot" capability that can keep the organization on target with its goals, it is frequently insufficient for success.

The performance management challenge -- designing and using process measures in the business -- is one reason this approach is not always successful. Most dashboards look at in-process and lagging indicators while overlooking leading indicators that help organizations proactively react to changes in the business environment.

Figure 1. 2015 business excellence priorities and challenges.

Several methods are available for including leading indicators in an organization's performance management. The most widely known is the balanced score card. Normally (although not required), the balanced scorecard is broken down into four sections called perspectives:

1. Financial -- strategy for growth, profitability and risk (typically the shareholders perspective). The scorecard considers financial measures lagging indicators and includes looking at growth, profitability and shareholder value.
2. Customer -- strategy for creating value and differentiation (customers' perspective). The customer measures are often leading indicators and include customer satisfaction, net promoter score, brand awareness and market share.
3. Internal business (operations) -- is the strategic priorities for business processes. Operations measures are usually in-progress, performance-based measures used to indicate how well the business is running (e.g., cycle time, quality, employee skills and productivity).
4. Learning and growth (people) -- the priorities to create a climate for change, innovation and growth within the organizations. This includes, but is not limited to, employee training, corporate culture, as well as individual and organizational improvement. The measures are typically in-progress or lagging measures that vary but can include employee behaviors and adoption rates.

The important takeaways here are that measurement plays an important part in how organizations can engage employees -- both leadership and frontline -- in process and performance management. By including the right blend of measures an organization can improve its decision making capabilities for improvement opportunities, provide transparency and ultimately establish a performance culture.

SOURCE: TechTarget

Kaizen - Continual Improvement

Are Your Operations Doing the Right Things, at the Right Time, in the Right Way?

Companies have focused on efficiency for over 15 years now.  But are they making the processes effective?

For this column, let’s consider efficiency to be doing work as quickly as possible with a low error rate.  Then let’s consider effectiveness as eliminating all work that is not really necessary – doing the right things, at the right time, and in the right way.

Too many BPM efforts however, are so narrowly focused on cost takeout that they miss the fundamental question of need – “do we need to do this in the first place?”  Of course, the answer to this question must be backed by the answer to the question “why?”  Anything that falls outside of this need is extra and is a candidate for elimination.  

Not surprisingly, doing this before the team considers efficiency will save a lot of time and cost.  Why improve things you don’t need to do?  But it will also leave holes that will need to be removed.

Effectiveness

Efficiency lives in process – no real news there.  But where does effectiveness live?

I submit that effectiveness lives in fundamental “need”.  What do you really need to do?  The framework for identifying this “need” and thus effectiveness is set by the company’s strategy and given context in the company operating model.  Anything beyond this fundamental or basic need in producing the service or product is extra.   What is left will require specialized support activities to knit together – but that can be managed through careful action and task justification.

So we can find what we need to do to be effective, and we can then make that efficient.  But before we make anything efficient we need to first look at how we can guide work so that the right answers, components, business operations, and assemblies come together to deliver the service or product component.  We need to find a way that guarantees the right logic is considered and the right questions are asked to comply with legislative and operational requirements while constantly being guided to the next step in the work.  

This requirement for guidance is the realm of business, manufacturing, technical, and other rules.  The fact is that rules define the “what” of the business - while process defines the “how”.  If we consider process to be the life blood of the company, carrying the components that are needed to produce something and thus keep the company operating, we can consider rules to be the “brains of the outfit”.  They direct everything and tell us how things need to be done.  Rules thus set the operating framework and are both interpreted and supported by standards to set performance measurement limits on the work.  Taken together, rules and their supporting standards, define how operational effectiveness will be viewed – within the context of company strategy.

Finding rules

Rules are everywhere.  Most are, however, not written and those that are, are seldom up to date.  So where do you start?  The following is one approach – it is not the only one however.  But, it works.  Let’s start with effectiveness in any process, business unit’s work flow, or the applications that support the work.

The first step is the archeological dig through the company dustbins – existing documentation.  Procedure manuals, HR rules, financial rules, sales rules, and compliance rules should be collected and the rules vetted.  That is the foundation – you may very well find rule conflicts, out of date rules, and rules that no one knew existed.  Vetting them is tedious and will probably be resisted.  But it is critical and needs to be done to create a foundation for the operation
.  
These rule collections will first focus on the business operation.  IT should next add its technology related rules – the Do’s and Don’ts that must be considered in any business activity support design.  To make this collection useful, care will need to be taken in finding a rules “engine” or storage application, coding the rules for electronic storage, and defining an indexing structure that will make it easy to find and thus modify, version, or reuse any rule.

With this foundation in place, it will be time to look at the business operation itself.

Any look at what makes a company effective must really start with strategy outcome and work backward.  The outcome description is where you first know how goals will be delivered and where the business model must be changed to support the strategy.  All capabilities will be identified and defined as part of the outcome definition. The capabilities then tie to process and a walk back up the process is a look at what it takes to build the product or services.  

The activity in a business unit represents the work that actually creates the components and does the construction of a solution.  The rules in the company guide every action, every decision, and every step of the work.  But when many teams look at a BPM project, they focus on the activity, not the rules that help identify if the activity is even needed – if the activity is not important or complex enough to require guidance the team really must ask why it exists. Similarly, if the rules do not support the actual work, why do they exist?  The two are partners in a corporate dance that determines what should be done and how it should be done.
Of course, if the rules are overly complex, the team will need to see if they can be streamlined.

In addition to the “easy to find” rules, teams will find other rules (often the most important ones) in the heads of the staff.  They do the work and apply rules constantly – some they make up to control new work.  Many of these unwritten rules are not found anywhere in the “documented” and now vetted rules.  In some cases, these rules may be imbedded in applications that the staff has learned about over time through use.  In other cases, the rules are work-around rules that have had to be informally created to get past changes in the operation, in law, and in application systems.  I call these “white space” rules.  Only the people doing the work of getting around things know these rules. 

The fact is that these rules will tell the team how the activity really works.  Comparing these rules with the ones you have already documented will point out redundancy, differences, conflicts, and erroneous activity.  In some cases I have found old rules that no one knew were still in use had to be changed immediately to comply with current legal requirements.

Rules
As noted rules are everywhere and at many times are the hidden mandate for any activity.

But today we see that many from the BPM world do not pay enough attention to business rules and many from the BPMS world look at rules from a technical perspective – aligning them to the applications in the project or solution.  In both cases, these rules are generally poorly defined and unavailable for general use.  They are also not really adequately shared between the business and IT sides in creating a new business solution.

The need to address this is critical and cannot be underemphasized – you must get a handle on your company’s business, technical, production, customer, compliance, and financial rules.  In healthcare, there are even more rule categories on the clinical side of services.  Without a detailed understanding of applicable rules and immediate access to them, it is difficult to look at change and anticipate impact.  

However, what we should do with rules is a matter of opinion.  The same is true in determining what we need to do.  The fact is that both considerations are often debatable.  Today, I find that rules are often one of the orphans of the modern IT and business operation activities.  Both IT and the business seem to have divided business transformation and IT solution development and in many ways are recreating the divide of the past 50 years.

The problem is that many teams really don’t look closely into the rules in a business or IT operation and ask the probing fundamental questions.  These include:

1.    Is the procedure manual up to date?  How can we bring it up to date?
2.    Do we really know all the rules that guide the work or the creation of IT support?
3.    Are the company rules written down?  Have they been reviewed by business area managers?
4.    Has legal and finance reviewed the rules and vetted them?
5.    Are the rules stored in a rules library?  How are the rules organized?  Are they linked to business activity and are they easy to find in the rules library?
6.    Do we know every place in the business and every application that uses each rule?
7.    Are all compliance related rules defined and aligned to the business activity work? – Are we in compliance with all important state, federal, and international (for the countries we do business with) rules?
8.    Have we been fined for reporting violations in the past?  What did we do about that?

Why is this important?
Compliance, HR, legal, and financial rules represent laws and require that you follow them or risk being fined and maybe go out of business.  Other rules determine how things will be done and provide order out of what would be operational chaos.  The fact is that rules are the logic of the company and project the beliefs and culture that executive management wants to infuse into the workforce.

In the context of this column, rules direct how all work is done and how all decisions are made.  They provide the framework for business activity and they guide workers and managers down a specific path in interacting with customers, building product, and running the business.

The simple fact is that without rules, even if they are not written, everyone in any business would be able to do their work in whatever way they thought right.  Chaos would reign and the company could not compete.  So why are rules important?  They simply guide all work and compliance with appropriate laws.  They keep you in business.

So who owns rules?

Who is responsible for finding them, defining them, and then both managing them and changes to them?  Not a small task.  There are thousands of rules in any mid-sized company and a lot more in a large company.  There are, however, no standards or norms for rule ownership that I am aware of.

There is also seldom anyone who has the authority to, or the responsibility to, collect, vet, index, and store rules.  This is one of the big problems that hampers effective and efficient business operation and slows any type of business improvement or transformation.

But the fact that there are rules everywhere and that there are business activity rules, decision rules, compliance rules, HR rules, finance rules, legal rules, social rules, policy rules, technology rules, data rules and on and on, makes finding, updating, and controlling their use a difficult task.  So who is responsible for rules?  This takes commitment from a person like the COO or the CIO and it must be considered to be a strategic necessity.  If not, it will not be funded.
The fact is that rules are a company asset!  

Rules allow the company to run with some consistency and efficiency – they help make certain work get done the right way.  They support strategy and compliance with laws.  They are the combined intelligent evolution of the company and how it works – gathered over all the years that the company has been in business.  They are one of the big things that provide any company with a competitive edge.

The fact is that whoever can change the fastest with the lowest risk will have a real advantage.  Those who can include access to all relevant information for these rapid changes will have an even greater advantage.  Arguably an advantage that combines rapid improvements to both effectiveness and efficiency offers a timing and cost of change advantage, and builds flexibility into the operation.

Because a company’s rules define and support this competitive differentiation, they should be considered to be undiscovered company assets.  Many will represent trade secrets and some may be based on patents and proprietary thought leadership.  All of which are company assets.

Formal rule definitions are also important in operations and business interruption – Disaster and Recovery.  If they are not known and if known but not formal, a remote hot site for Disaster Recovery is not really much use in many companies.  The computers will work in the hot site, but operations will be hurt.

Note:  A Disaster Recovery hot site is a remote location that has fully operational computers and work space running 365 days a year.

A looming catastrophe

Companies are about to lose many of their senior workers due to aging.  Without a clearly defined set of integrated rules that can be easily found we can expect the millennials who replace these workers to make procedure and execution errors – the infamous human errors that people are writing about. It is easy to predict serious competitive problems for companies that do not take the time or make the investment to create this foundation for understanding the business and how it functions.  This is not only a business problem.  It is also an IT problem, a manufacturing problem, and a problem in every corner of the business.

Tight budgets have caused cutbacks in the way BPM and BPMS groups look at creating solutions and in the move to integrating components into end to end processes for modernization.  But the market is opening and competition is heating up.  Given the changes in technology, business management, and the approaches to business streamlining, it is clear that some will leverage this emerging technology and some will not.  However, for those that do, change will have removed a major anchor that is slowing the company’s ability to adjust and evolve.  

The purpose of this column is to encourage BPM practitioners to increase their emphasis on identifying and defining business rules and in applying the understanding this discovery process will provide to looking at what rules and work are really necessary to start with.  From that point the traditional look at efficiency can provide even better results.

SOURCE: processexcellencenetwork