Specific Problems with Organization and Management Methods

Business Process Management that prevents Value-quality Chains

Business processes hide results, quality, and value that are managed in result value-quality chains.

By: Harry Greene

I always saw basic problems with Business Process Re-engineering (BPR). Before BPR, I tried to understand the actual business. I used to think of the business in terms of business inputs and outputs, and the people and other capital that transform inputs and produce outputs. The objective of solution development or implementation was to improve business outputs, or what I now call results. I always designed in quality as an attribute of the result.

Ten years or so ago, BPR became the method for business change and contradicted my personal approach, Result-performance Management (R-pM). I worked as a consultant on several BPR projects. BPR created another business process structure that was laid over the business instead of organizing and managing the business as with R-pM. The experience with BPR proved, beyond a doubt, the superiority of R-pM.

BPR has since evolved to Business Process Management, which continues the problems of monolithic business processes laid over the business.

But now, we can use R-pM to overcome the problems and limitations of business processes. Review the R-pM community download "How to build Result Value-quality Chains" to find out how.

Business Process Re-engineering created processes to produce an output

Business process reengineering (BPR) came along supposedly to organize and manage the way business really worked. BPR said that the important thing was the business process leading to one output at the end of the process. Results and performance within the process were mixed together, under the flawed definition of "performance". One objective of the process was to manage performance quality, which was contrary to my thinking. BPR simply rearranged the contrived structures and entities that we were already managing, into another contrived structure with different entity names, and did not actually organize and manage the business.

Business change management consultants changed to business transformation methodologies

BPR became a fad and business change consultants had to adjust to BPR. Implementing BPR became a matter of following methodologies, rather than thinking and using the good parts of BPR to make beneficial business change. To me the benefit of business change always came from improving the business outputs or results. But, this suggestion was always criticized as contrary to the BPR methodology.

Business, human, facility, and management capital were mixed into a monolithic process that often excluded enterprise information systems

Another problem was that the process mixed business capital, the capital that produced a result in the process, together with other capital like people, equipment, management policies, etc. In my experience, those implementing BPR either did not understand information technology (IT) or needed to produce quick improvements. So enterprise information systems were excluded from BPR, creating another set of problems.

BPR manages performance in the organization units to produce an output across the process

One particular problem was the capital management in the process. The capital was under administrators, who did not see their role as managing capital. The process team saw their role as producing the process output. So the capital in the process was mixed together and not managed and IT, which I saw as a fundamental part of the process, was kept outside. The organization units were expected to manage performance and performance quality and the process team was managing a result. From my own point of view, things were backwards; we should have been managing the results in the organization units to produce results leading to the final result and we should have been managing performance across the process.

Re-evaluate business process management

The re-engineered business process produces a monolithic process that is governed by the process flow across organization units. The idea was to break down the walls between the organizations involved in producing the process output. But, BPR propagated the problem of mixing results and performance together under the label performance. Managing performance quality in the process was confusing to me, was the performance quality being managed performance or results. To me, it had to be results labeled as performance. With the business process, it was hard to determine value, since value was now hidden in the results somewhere in the process.

Over the years, the problems with Business Process Re-engineering became known, so now we have a discipline called Business Process Management (BPM), which continues the problems fundamental to process management.

Abolish overlaid processes by organizing and managing the business

We need to go back to organize and manage the business. The business produces a wide range of outputs or results. The business employs capital to produce results. The results must be specifically defined and managed to manage business outputs. Capital must be broken down into performance solutions that are utilized in reality to produce results. The enterprise consumes capital in performance incurring performance costs and creates capital in results producing result value. The enterprise needs to be organized and managed based on only two entities: results and performance solutions. In this way, management can plan and control the results desired and the capital utilized.

Instead of business processes, manage result value-quality chains

Instead of thinking of business processes, we should be thinking of result chains, which define the results produced across the process. Only essential high-value results, for which a customer is willing to pay, should be in the chain. The flow should be determined by the relationship between the results. The process is the performance across the results for separately managed business, human, facility, and management capital. The business process solution is restricted to the business capital that directly produces the result. This business capital includes information system processing, which can no longer be separated as information technology.

Manage result quality instead of performance quality

Result quality replaces performance quality, but depends on performance effectiveness. A low-quality result is identified quickly in the chain. If the problem was a defective input result, this can be quickly determined. If the problem is ineffective performance producing the result, the problem can be addressed and solved.

Determine customer willingness to pay for results

Input results to the chain, results in the chain, and the final output result, have customers who are willing to pay to determine the value of each result. The total result value cannot exceed the value of the final output result. Performance consumes capital and incurs costs. The capital development and support cost plus the current operating cost of performance solutions utilized totals up to the cost of the result. Performance costs can be isolated by result, so each result has a value-added (result value - total performance cost). If the value-added is negative, we must deactivate the result, reduce the performance costs, or increase the result value and decrease the value of another result in the chain.

Manage the chain as a result, as well as results at each link

Each result in the chain is managed. The complete chain also is managed as one higher-level result. Each performance solution utilized in the chain is separately managed, providing complete responsibility for both performance and results in the chain.

Clarify costs and value, effectiveness and quality, and capacity and volumes

So instead of confusing our value, quality, costs, responsibilities, etc. in a monolithic business process, we need to clarify everything through R-pM in a result value-quality chain. Result value-quality chains enable us to manage the performance capacity against the volume of results produced, performance costs creating a result value, performance effectiveness producing result quality, performance expectation to reach result goals, and performance improvements to increase result value-added.

The R-pM Toolkit, your 21st Century Management Manual, contains the guidance and procedures needed to organize your business to replace monolithic processes with result value-quality chains.