simple processes

I recently wrote an article entitled Social Shared Services published exclusively in the Shared Services & Outsourcing Network (SSON) website. The article deals about how shared services organizations can harness Social Media. It  examines the possibilities of adopting social media practices and new collaboration toolsets as part of the shared services offering and communication channel.

Click here to>> view a full PDF version of the article.  

The article also mentions the four key adoption points covered by Social Shared Services: Engagement, Knowledge Management, Support, and Internal Customer Relationship. It describes the six components of the “Social” Shared Service Model – 1. Collaborative Shared Services Portfolio, 2. Enabling Technology, 3. Adoption Strategy, 4. Governance, 5.Performance, and 6. External Collaborative Research.  To read the entire article, go to Social Shared Services. 

About the Shared Services & Outsourcing Network (SSON) 

The Shared Services & Outsourcing Network (SSON) is the largest and most established community for shared services and outsourcing professionals. They provide the roof under which key industry experts and organizations share their experience, knowledge and tools; and practitioner peers from all over the world connect with each other. SSON focuses on developing its members through providing training, tools, and networking opportunities.

The group’s culture provides structure and meaning to its members—in many ways it controls members’ interactions with one another and with external parties.  In this post, this concept is applied in the Information Technology (IT) group setting. The IT group culture can influence the success of the IT organization. Culture is socially constructed through leaders that embed their beliefs, values and assumptions upon the group that it leads. The culture of any IT organization is formulated and impacted by several variables. The strongest and the most obvious is the influence of its leader. According to E. H. Schein, leader’s primary embedding mechanism is seen in how they pay attention to, measure and control aspects of organization’s operations and decision making. They initiate great conversations that tie cultural norms to the organization’s goals. If the current culture is not aligned with the new realities, leaders need to be the catalyst to create new understanding and help individuals select new behaviors and, eventually, beliefs. Leaders must also define, clarify and reinforce understanding of the actions and beliefs that build the desired culture. 

To examine how IT leaders influence the IT organizational culture and IT branding let’s use some of E. H. Schein primary embedding mechanisms and apply it in the IT perspective. Each one comes with a set of questions you can use to assess the impact of such embedding mechanism in your IT organization right now: 

What Leaders Pay Attention To, Measure, and Control on a Regular Basis  

Although performance measures presented in the leader’s reporting dashboard change from time to time, most of the leaders that I know only pay attention to a small set of key performance indicators. IT leaders rely on a subset of key measures that they believe is the best indicator of the overall performance of the organization. As an IT manager, you know what your CIO is looking at and controlling most of time. Your CIO gets your attention and tracks certain aspects of operations based on these key performance indicators. In some instances, the CIO will try to drill down and find more information about a perceived problem and base his request for action on this. The performance measures that IT leaders pay attention to, measure, and control on a regular basis dictate the importance given by the organization to a service, a problem or a project. 

It is but a natural tendency for managers, staff and different groups within IT to keep track of the performance measures that IT leaders are more attentive to. More likely, these people discuss these controls in daily IT operations meetings. Some will even set alarms so as to act swiftly on incidents before they become major problems. Performance measures and controls are powerful mechanisms that IT leaders use to forge a working culture based on what they think is important. How current are your departmental metrics? Do they measure against your current organizational objectives? Do they reflect the coming changes and help prepare your team for new ways of working? 

How Leaders React to Critical Incidents and Organizational Crises  

Companies in this day and age rely on an integrated set of digitized platforms and infrastructure to run and manage its business operations. When a critical IT incident occurs, it often impacts mission-critical systems and processes that affect business operations. These days, it is not hard to imagine how something like this can directly impair the ability of the company to serve its customers. These kinds of problems could unfavorably hurt the company’s profits and reputation in the short term. When a major IT incident disrupts most critical processes of the company, the credibility and reputation of the IT organization is heavily dependent on their perceived preparedness and responses during the situation. The CIO is at the forefront of disaster recovery measures and business continuity management and continues to work hand-in-hand with business managers. For mature IT groups, the planning, work and infrastructure that that is used to run disaster and business continuity situations are completed way before major incidents occur. 

Business continuity and disaster recovery is part of an organizational learning process. In the wake of a crisis, IT leaders adopt a learning orientation and use prior experience to develop new routines and behaviors that ultimately change the way the organization prepares and responds to crisis. The best leaders recognize this and are purposeful and skillful in finding the learning opportunities inherent in every crisis situation. Is your organization proactive about problem management, disaster recovery, and business continuity preparedness? What can you do to better build your team’s capabilities to manage critical incidents and crisis situations?   

How Leaders Allocate Resources

IT leaders have control on the allocation of resources in the organization. This applies to operational and projects resource assignments. The CIO controls the budget allocation to key projects, resource assignment to operations areas, and the time IT members spend on certain initiatives. On the other hand, the CIO also controls how and where to slash resources during budget optimization. How leaders allocate the resources of the organization creates a natural signal to its members about their priorities and what they think creates more value to the company. His or her interpretation of the business strategy and the expectations of the company’s shareholders impact the leader’s decision making process. Resources mean money and time. Therefore, when the CIO decides on the operating and capital budget portfolio allotment, this provides managers an indication of where in the organization best efforts and priorities are expected.

Another strong indication of the CIO’s priorities can be observed on how he spends time. To better understand the job of the CIO, Peter Weill, MIT profession and co-author of the book IT Savvy, examined how CIOs allocate their time. CIOs allocate time in four major areas: managing IT Services, working with non-IT colleagues, working with customers, and managing enterprise processes. Time allocation varies a lot because of individual management style but in most cases, where the CIO spends the most time sends a strong message. As an IT leader, examine how you spend your time. How do you think it impacts the desired cultural values of your organization? In what ways should you change your managerial regimens to better present, explain, and reinforce the desired culture?

Deliberate Role Modeling, Teaching, and Coaching

We all naturally know that leading by example is one of the most powerful ways of leadership, but ironically it’s often the most overlooked. As Mahatma Gandhi once said, “You must be the change you wish to see in the world.” The best way to create culture is to transmit culture. I think the most obvious ways to transmit culture is through teaching and coaching. IT managers and staff look up to their senior leaders for directions.  Leaders should be engaged with IT operations but their engagement in it should not be limited to supervising and running operations but also guiding, teaching and coaching managers.

Information Technology needs future-oriented leaders. Arguably, it is the most unpredictable and fast innovating area of the company. If the CIO is not forward looking, it can’t provide the business with a platform to continue to be competitive and at par with competitors who are relentlessly pursuing innovation. IT leaders are fascinated about the future. They are relentless about change and impatient for progress. CIOs are always looking forward to new technology and practices that are developing, looking for ways of plotting a course of new processes, tools and methodologies and experimenting how it will make sense in business in the future. How many types of developmental conversations occur in your organization? How can you create a culture of learning that goes beyond traditional classroom training? In what ways do your communication tools and practices help build your team’s skills for participating in conversations about goals, changes, and barriers they face? What can you do to better build your team’s capabilities for participating in transformative conversations? Is learning embraced at all levels?

The values and priorities of the IT leader- may it be the CIO, CTO, IT VP or IT Director— are reflected in the culture of the information technology (IT) organization. This is true also for other organizations, big or small, that has its members working together for some time. A positive organizational culture reinforces the core beliefs and behaviors that a leader desires while weakening the values and actions the leader rejects (Kaufman 2002). A negative culture becomes toxic, poisoning the life of the organization and hindering any future potential for growth. Obviously, there is an inevitable bridge joining organizational culture and the level of success it enjoys (Peters and Waterman 1982).

Photo courtesy of Ivy Remoreras Photography.

I have gained some extra pounds since the beginning of this year and this has hurt my right ankle a bit. For the past 3 months, I have been planning but failing to have a continuous physical regimen that will bring my body to a comfortable weight …until I found my new buddy – my Wii Fit Plus! It has been more than a week of Wii Fit training and I have not missed a day of fun workout. I definitely feel much better now. There is no hidden secret why Wii Fit has been so effective. What keep me coming back are the daily body tests that allows me to monitor my progress as compared to the goal that I set. The Wii Fit performance dashboards are amazing control measures! 

If performance measures are so effective in driving personal results, how does it relate to business? This is what this article is about — my reflections on the business of my Wii Fit Plus experience. 

Set Your Goals and Charting Progress 

When I first played Wii Fit Plus, I was asked to set a goal for myself concerning my Body Mass Index (BMI). So I set where I’d like to end up — including the timeframe. Goals and graphs appear on the calendar so it’s easy to visually see my progress towards my goal. Another fun thing was receiving feedback from my personal Wii trainer – giving me pointers and encouraging me towards meeting my goals. 

In business, this can be likened to the combination of your strategic objectives setting and performance management system. Normally, you start the year off with a planning session. This is the time when you lay out your strategic plans and goals. Once you have those strategic plans, they are translated to tactical objectives and then into operational goals. Most organizations have multiple business units, divisions and departments, each with their own responsibilities, processes and applications. Those tactical and operational goals trickle downward to individual employees. As you can imagine, in such a complex organization, the question is: How can you monitor and measure your progress towards the organization’s business goals? How do you encourage each department to continue working towards meeting those goals? 

Business Intelligence and Performance Dashboards 

Wii Fit Plus provided simple graphs detailing my progress with my BMI, weight, Wii Fit Age and Fit Credits, as well as a calendar to monitor my training and goals. I was able to compare the calendar and graphs with my wife’s on the same Wii Fit Plus game, so both of us got involved. 

In my opinion, the graphs represent the Business Intelligence (BI) and Performance Dashboard. The BI and Performance Dashboards are part of the company’s performance management system and is also the organization’s magnifying glass. It is composed of anything from daily operational reports to weekly tactical analysis and a single-screen cockpit that provides Key Performance Indicators (KPIs) of the business. Business Intelligence and Performance Dashboards allow the business to: 

• Monitor – supervise key processes using key performance indicators that prompt alerts when potential deviation and problems arises.
• Evaluate – analyze the possible causes of the problem by exploring relevant and timely information from different levels and multiple perspectives.
• Manage – direct organization and processes to improve decision, optimize performance, refine strategy and steer the business in the right direction. 

The best way that executives can drive their business today is through an interactive dashboard that contains both historic and forward looking measures. Using performance dashboards, executives can view and analyze information about business results and the activities they manage. For middle managers, it will help them view departmental business metrics at a glance and drill down quickly to smaller segments of actionable information. 

Business Intelligence and Performance Dashboards are powerful agents of change. They help business reach their goals. This is much like how my Wii Plus charts has helped me achieve my personal targets!

Photo courtesy of Wii Fit Plus and SAP Business Suite.

The project that I am currently involved in has been very successful. Unfortunately, I can’t give you many details about it, except that the team is tasked to implement a new business model. It involves blueprinting the new model, construction, organizational transformation and implementation in a multinational company. We are not even finished with the project yet but the business return on investments has been unprecedented. In projects as big as this, you can talk about many success factors. The common clichés are senior management support, adequate change management, good business model design and construction, excellent resources, etc. However, I would like to single out one success factor that has inspired me to write this article—project management discipline.

Project management has been practiced since early civilization.  It began with engineering projects and it was in the early 1950s that companies started systematically applying project management principles and tools in complex business projects. It could be the oldest trick in the book.  But it is still a key element to any business integration initiative. 

Steve Small is a colleague of mine. He manages Project Management processes. I would like to quote him about his views on project management.

“I look at Project Management as the force that provides the structure, framework, and guidance for all the participants, activities and deliverables; however, the ultimate success factor for any project is the strength of the team you have in place. I know it is a cliché but it is really all about the people!”  

 Let’s analyze Steve’s quote and from it, derive key points of project management concepts. 

Structure, Framework and Guidance 

Let’s start with structure and framework. There are many project management frameworks and methodologies out there but there is a common theme in all of them. They all contain the traditional sequence of steps. They are typically comprised of the following stages: Initiation, Planning, Execution, Monitoring and Completion. These steps tell you what you have to do – how to manage your projects from start to finish. It describes every step in the project life cycle, so you know exactly which tasks to complete, when and how. Whether you’re an experienced project manager or a novice, it guides you in administering the project.  

Activities and Deliverables 

When it comes to explaining activities and deliverables, the PRINCE2 diagram and approach is my favorite. Why? It is because the framework provides the life cycle based on the project processes with clearly defined inputs and outputs. 

• Starting up a project – Inputs: Project Mandate; Outputs: Project manager and project management team appointment, business case and project brief
• Initiating a project – Inputs: Project brief, business case and approach; Outputs: Project plan, refined business case, project controls, project initiation documents
• Directing a project – Inputs: Project plan, project controls; Outputs: Authorized initiation and stages, day to day project management and controlling.
• Controlling – Inputs: Status reports, alarms, issues and risks; Outputs: Issue resolution, reviewed project stage output, issue escalation.
• Managing stage boundaries – Inputs: Project stage progress; Outputs: Planned next stage, updated project plan (if necessary), updated business case (if necessary) and Stage end reporting.
• Closing a project – Inputs: Overall project results / output; Outputs: Project decommissioned and project evaluation reviews.

People and Other Resources 

Resources are essential to carry out the project task set forth by the project mandate. They can be people, equipment, facilities and financial. When you lack a project resource, it becomes a constraint that might affect the completion of the tasks. Resources need to be managed and balanced through project management so these are adequate in any given time to complete project activities. Normally, resource assignment considers how each task is prioritized. Resource scheduling, availability and optimization are considered key to successful project management. 

I spent a good portion of my work experience in projects. I had the privilege to work with people from different nationalities, cultures, backgrounds and process areas. I like participating in projects because it gives me an ever changing set of opportunities and challenges. As they say, no two projects are the same. It is mainly because of the temporary nature of a project — having a defined start and end date. It is a complete contrast to business-as-usual operations, where individuals and groups have predefined, usually repetitive tasks and goals to achieve value. 

To be continued…

In my succeeding post, we will discuss program management. Viewing program management as just administration of a collection of projects is a mistake. Program management is more than that. It is more involved with the firm’s over-all Process Culture. Vaughan Merlyn has written extensively about this topic in his blog IT Organization Circa 2017. Let’s see what we can draw up from his ideas and discuss it in the next article.

Peter Drucker (November 19, 1909–November 11, 2005) was a writer, management consultant, and self-described “social ecologist.” The Harvard Business Review honors Drucker’s contributions with a spread in its current November edition. The issue has a lot of interesting and insightful articles about the continuing relevance of his perspectives and wisdom in today’s turbulent times. 

Drucker’s Influence in Asia 

I remember my professor in the Asian Institute of Management who talked passionately about Peter Drucker’s perspective in business and management. Managers in Asia have described Drucker influence as essential in making their business successful and helping countries develop. Drucker frequently travelled to Asia, particularly Japan, throughout his life. He has profound influence there, not only as a management consultant to companies such as Toyota and retail giant Masatoshi Ito but also as a consultant to governments such as Japan, South Korea and China. 

Many influential and revolutionary ideas have run through Drucker’s career and writings. He preached about decentralization, simplification, impact of knowledge workers, management by objectives, customer service, corporate compensation, need for community, organizational business processes among others. I have chosen two out of Drucker’s many ideas to discuss: 

1. The Purpose of a Company Is to Create a Customer 

A company’s primary responsibility is to serve its customers. Profit is not the primary goal, but rather an essential condition for the company’s continued existence. There is only one valid definition of business purpose: to create a customer.”  – Peter Drucker

Profits come when customers continue to buy your products and services. That is the reason why Drucker’s perspective always pointed out the importance of putting customers first. A.G. Lafley, chairman of P&G board of directors, always sought out Drucker’s advice during his tenure as CEO of the company. He attributes their corporate principle to Drucker’s customer service principle that the consumer – not the CEO – is boss. P&G have made it their purpose to touch more consumers and improve more of each consumer’s life. By putting customers first, according to Lafley, they have nearly doubled the number served, from 2 billion to 3.8 billion; doubled sales and tripled P&G profits. 

2. Essential Condition for the Company’s Continued Existence 

“The need for planned abandonment – businesses have a natural human tendency to cling to “yesterday’s successes” rather than seeing when they are no longer useful.”  – Peter Drucker

Many companies focus on placing as many products and services as possible in the market and reap as much profits as possible. Their center of attention lies in what they have achieved in the past and what they are maximizing in the present. According Zhang Ruimin, CEO of the Haier Group based in China, sole focus on generating profits today could not ensure his company’s survival tomorrow. Early on, Haier’s profits were dwarfed by its competitors in China while Haier focused on quality. They could not compete with companies offering the same products in the market. But when supply-demand balance changed in China, according to Ruimin, lots of companies lost customers and went bankrupt overnight while Haier strengthened its position in the market. This is one of Drucker’s key principles – the assumptions on which the organization has been built and is being run no longer fits reality. Zhang Ruimin takes this to heart as a constant warning.  He wrote, “All decisions I make must be consistent with the ever-changing external environment. If they aren’t, the consequences may not emerge right away, but once the danger show up, it will be too late.” 

To read more about Peter Drucker’s perspectives and find out how his wisdom can help your company navigate these turbulent times, take a hold of the current November edition of Harvard Business Review with the headline: The Drucker Centennial – What Would Peter Do?

Photo courtesy of Harvard Business Review.

I had a colleague in Germany who once told me, “If I didn’t have to go to a lot of these meetings, I’d enjoy my work more.” We probably had a lot of meetings – maybe too much – with them.

Internal discussion, status meetings, presentations, weekly update, checkpoints —you name it; they are all types of internal collaboration, otherwise called meetings. Internal collaboration is almost generally viewed as good for a company. Leaders regularly challenge us to collaborate, to talk to different departments, and chat with counterparts in different business units and work together in cross-unit teams. Where do we end up? Typically, swamped by information overload, spending more than 50% of our time in meetings and spending 20% preparing for it. Contrary to popular opinion, you indeed can have too much of a good thing. 

I am not saying meetings are bad.  Not at all.  It is a time-tested tool for communication and assistance for employees in aligning activities to desired goals. It is vital for projects and operations. In leading a team or department, I hold meetings periodically (and sometimes more than necessary). It is essential to functioning teams. There is simply no substitute for a good meeting. Meetings, working with teams and collaborating across organizational boundaries can create tremendous value. 

However, conventional wisdom rests on the false assumption that the more employees meet and collaborate, the better off the organization will be. The fact is, too many meetings can easily undermine productivity and performance. 

Knowing when (and when not) to meet 

There is an existing rule of thumb for this; I certainly don’t want to reinvent the wheel. Let me cite what effectivemeetings.com has to say on this subject. I got this from the article, Six Tips for more Effective Meetings. You will be surprised with tip number one: Don’t meet!.  

Avoid a meeting if the same information could be covered in a memo, e-mail or brief report. One of the keys to having more effective meetings is differentiating between the need for one-way information dissemination and two-way information sharing. To disseminate information you can use a variety of other communication media, such as sending an e-mail or posting the information on your company’s intranet. If you want to be certain you have delivered the right message, you can schedule a meeting to simply answer questions about the information you have sent. By remembering to ask yourself, “Is a meeting the best way to handle this?” you’ll cut down on wasted meeting time and restore your group’s belief that the meetings they attend are necessary. ”

What’s a good meeting? 

You know when you’re attending one. There is a good reason to meet in the first place. The purpose, agenda and timeframe are clear. The participants are prepared and there is some degree of skilled facilitation. It is important to have someone who can keep participants focused on the goal in mind and can navigate issues so that the meeting can be effective. In good meetings you always leave with clear action items. 

Managers who emphasize the benefits of meeting are right. But they should temper those that do it excessively. It is a mistake to underestimate the equivalent time and cost the company spends in meetings. We should approach holding meetings as a group value-creating endeavor. Although getting together to collaborate is imperative to a working environment, the challenge is not to cultivate more and more meetings. Rather, it’s to develop the right meetings so we can achieve objectives and goals otherwise not possible when we work alone.

Photo courtesy of Ivy Remoreras Photography.

Innovation is bringing creative ideas to life. It occurs in the organizational context when individuals and teams work to spark new product development, to implement new technology and even to transform the organization. Innovation is always linked to performance and growth through incremental improvements in efficiency, productivity, quality and services. On the other hand, it is also associated with radical improvement like inventions, new products and radical changes in the business model. It is a balance of incremental improvements and radical innovations that keep the company competitive in a changing world.

We are on the brink of important change in the world— and it is economic in nature. We have seen massive job cuts, company bankruptcies, budget reductions, etc. We are in a period of profit-focused cost cutting. Innovation may be a low priority for many companies in this period of recession but I think it is a big mistake. Innovation ought to be a crucial element in a firm’s recession strategy. It will allow them to do more with less and to generate profit by exploiting existing resources.

Two kinds of Innovation that are especially valuable in a recession:

Internal and External Collaboration

Greater internal collaboration– between departments and business units, as well as external collaboration– with customers and suppliers, are essential if companies are to stay healthy during the recession. For example, internal collaboration could result to a Cross Selling strategy that could increase sales to the existing captured market while lowering cost of selling.  Collaboration can be a channel for transfer of best practices between operating units. Internal Collaboration can also result to inter-business-unit product innovation by creating new products and services from existing knowledge, technologies, products and brands.  External collaboration, specifically with key entities of your supply chain network – from suppliers to customer, is vital to staying in business during a recession. The big challenge to firms is to reduce cost while maintaining service levels. Businesses need to have open communication with suppliers and customers alike and ensure a more effective and efficient supply chain.

It is also important for firms to use new technology and cheaper options for collaboration. Leveraging Web 2.0 in the enterprise can be one option. Let me give you a clearer example. It is critical for companies to understand how customers reassess priorities, reallocate funds, switch brands and redefine value of products and services. Web 2.0 platforms can be both a source of information and a channel to facilitate this kind of collaboration in a cost effective way.

Leveraging Shared Services

If it’s all about cost reduction and economies of scale, it’s probably the best time to implement Shared Services. In these demanding times, companies are challenging themselves to discover business processes and business models that will open undiscovered synergies. Shared Services could be the answer to companies keenly looking for convergence and streamlining of an organization’s functions.

Shared Services has to ensure that they deliver the services required of them as effectively and efficiently as possible. In a recession, this convergence enables the appreciation of economies of scale within the function and can enable multi-function collaboration where there is the potential to create more synergies. A word of caution though, a Shared Services implementation involves a large scale cultural and process transformation; it must come with a well-planned organizational transformation and change management strategy.

In a nutshell

Shared Services has been around for years and companies have always strived to collaborate — internally and externally. I think the emphasis this time should be precision, timing, and bringing the best ideas forward. Forward looking and innovation-focused companies are seeing the light at the end of the tunnel. I strongly believe that this is the best time for innovation, for breakthrough value and for paradigm shifts. This is the best time to position your company ahead of the pack when the economy regains momentum again.

Building an engine that generates a steady stream of innovations in processes, technology and product development is difficult, but companies that are able to do it, differentiate themselves from competitors. Innovation groups (other companies call it evolution committees or R&D groups) should focus their energy on: 

• Incremental Improvements (streamlining, optimization, reengineering, cost reduction, reliability) 
• Radical Periodic Improvement (New platform, new methods, new strategy, new philosophy, Enterprise 2.0, leap to Process Culture, etc)   

Examples of two companies who have mastered innovation are Toyota and Google. Both are leaders in their respective industries. Toyota’s success is tied up to its well-known business model– the Toyota Way that has been duplicated by other companies in different industries. The Toyota business model has been so successful that the company has relied on it for decades now to run its global business successfully. Toyota, for a long time, has a strong process culture and its continuous dominance is driven by its focus on incremental process improvement that is tied up to its quality operations and production management. 

Google, on the other hand, grew rapidly because of the radical rules they initiated that redefined the use of the Internet. Roberto Verganti in his book Design-Driven innovation compares this radical change to having a vision, and taking that vision to the heart of the customers.   In the case of Google, this means the Web users. Think about it.  This company has overturned our understanding of the use of information and networking. Jeff Jarvis in his book What Would Goggle Do?, talked about Google differentiating itself from the likes of Yahoo and AOL. Unlike the previous search giants, Google is not a portal; it is a network of platforms. Google, in a way, empowered the users of the internet, changed media and redefined the advertising rules. We as users have not asked for these new necessities, but when we experienced them, it was love at first sight. 

It’s hard to imagine how already huge companies such as Toyota and Google can continue to improve and sustain growth well into the future. They have perfected the fuel that keep them competitive and well ahead of everyone else. They rely on the combination of continuous incremental changes and periodic radical innovations. I think it is mandatory for companies who aim for sustainable growth and continued primary industry position in the future to push for visionary innovation. There is no single scheme to follow. It is a transversal process that depends on combining industry experience and strong innovation methodologies that create new ideas, new technologies, new products and new processes. 

Design-Driven Innovation- Book Recommendation 

Last weekend, I came across a book entitled “Design Driven Innovation: Changing the Rules of Competition by Radically Innovating What Things Mean”.  This recently-published book is written by Roberto Verganti — a professor of Management of Innovation at Politecnico di Milano. He is the founder of PROject Science, a consulting institute that provides consulting services on management strategic innovation. 

The book caught my attention initially because of its title. I have a close affinity for design initiatives, having moved early last year across the Pacific from Asia to the company headquarters to join a Global Design Team. I have always believed that innovation from a well-thought out design initiative can radically improve a company and change the rules of competition in its industry — be it product innovation, organizational, technological, process and company philosophy. 

From the front flap of his book, Professor Verganti presented his vision of a bold new way of competing. He wrote, “Until now, innovation studies have focused either on radical innovation or incremental innovation pulled by the market.” He explains that “…design-driven innovations do not come from new markets; they create new markets. They don’t push new technologies; they push radically new meanings.” His book talked about innovative products like Swatch in the 80s and as well as Nintendo’s Wii and Apple’s iPod – both of which are currently dominating their respective markets.   In the fourth chapter of his book, Professor Verganti provided a comparison between the innovation strategies of Nintendo, Sony and Microsoft in the US$30 billion game console industry. Nintendo, after dominating the game market in the 80s, was experiencing a downturn, until they released their revolutionary Nintendo Wii. Meanwhile, Microsoft and Sony were focused on incremental improvements on their Xbox and Playstation products through better speed and graphics.  Nintendo, on the other hand, introduced the radical idea of using game consoles as an active physical entertaining medium. It generated new meaning to game consoles and appealed to different consumers worldwide. 

I think managers who are interested in innovation should get a hold of this book. This can be used as essential reference for all those interested in design and determined to make innovation the driving factor in their business and profession. In my case, the reason I bought this book is because I am interested in Processes and IT innovations. I believe this book will definitely provide me insights on methodologies that can drive process innovation initiatives. It is something that I want to write about and explore.

Book Cover Image Courtesy of Harvard Business Press.

Last August 13, I published an article entitled “Accelerating Process Culture” which talked about the four different levels of process culture maturity in a company. There are two underlying criteria used to qualify the different levels of process culture maturity– level executive management involvement and level of business process integration. 

When executives exhibit a strong commitment to the process and technology evolution of the company, they always bring everyone on board. Executive management has the authority to push company-wide change as well as fund processes and IT initiatives. They are responsible for aligning the company’s structure to the business integration strategy; therefore, they enable the organization to advance to a higher process culture maturity. Let’s revisit the four levels of process culture maturity:

• Level 1: Individual heroes - dependence on individuals or a few company experts
• Level 2: Diverse Approach – initiatives per department but lacking in integration
• Level 3: Model Integration – business and IT align and model integration is achieved
• Level 4: Process Culture – executive passionately participates in process initiatives

This time, let’s examine closely the highest level of process maturity—The Process Culture. The final step of process culture maturity is when the organization achieves a high level of model integration by leveraging the consistent involvement of executive management as sponsors and facilitators of change.

There are three factors that determine the right approach towards process culture maturity.  Let’s call it the “SIB factors”. S stands for senior management involvement, I for innovation and B for business model integration.

Senior managers and managers alike are the critical success factors in your organization’s process culture journey. They lead the way in building process culture and defining the operating model. Innovation in information technology is also a key component. Successful companies nowadays rely on an integrated set of electronic business processes, tools, information, and technologies. With proper support and funding, an IT organization should be able to provide the right platform and technology in which to build the foundation.

The next thing that the company needs to do is to make sure that they select the right business process model from among the many tested disciplines and existing operating models. The underlying logic here is that a company’s business model is limited by the environment. In other words, it depends on several factors, such as the industry it operates, the products and services it sells, its size and geographical diversity. Using all these factors, you determine the level of business process standardization and the level of integration of the company’s different businesses — with profitability and competitiveness requirements in mind. Shared services, outsourcing, diversification, standardization, model replication are some of the most prevalent business models multinational companies have implemented. 

The real question is: how close are you and your company to getting to the highest level of process culture? This is a guide on how to assess the level of process culture maturity of an organization. Again, the examples are outlined using the “SIB factors”. Observe the following points and evaluate how your company is doing right now.

Senior management involvement

• Top executives participate in the IT and Processes evolution committee.
• Requires thoroughly analyzed business cases and encourages measurement of acquired benefits.
• Pushes for post-implementation audit to evaluate project output and acquire lessons learned.
• Encourages collaboration across business lines and functional teams.
• Funds IT and Process initiatives and actively support training in the use of IT.

Innovation:

• Exhibits a strong sense of innovation, feelings of shared interest to continue to improve and be ahead of competitors
• Holds regular management briefings on the impact of new technology developments and process innovations in the industry.
• Establishes a consolidated IT operation that manages a standard IT platform to sustain day-to-day support functions to business areas.
• Encourages use of IT in the business. Users possess a feeling of empowerment and confidence in the effectiveness and reliability of the processes and systems. 
• Strives to leverage new technology, platform and methodology with sufficient effort in research and development in the area of processes and IT. 

Business Integration:

• Defines a clear vision of model integration and process standardization.
• Uses a best-in-class enterprise resource planning software to run an integrated set of business processes
• Promotes implementation of end-to-end processes to ensure the efficient flow of activities and effective allocation of decision rights and accountabilities.
• Captures business information in one area and shares it to another business area. Possesses the willingness to share and use information to measure and improve key performance.
• Maximizes reuse of business processes and platform across different business lines.

Achieving a high level of process culture maturity presents a host of challenges to an organization. The SIB factors provide a structured framework where initiatives can be drawn and strategies derived. This will propel your company forward through its process culture maturity journey.  Achieving the highest level of process culture maturity requires strong executive sponsorship and IT leadership in order to support the company through a change process. When achieved, the company is in a good position to leverage IT for profitable growth and gain competitive advantage in a global market that knows no boundaries. This leap begins with you and your company’s senior managers.

It seems like distant past when big companies rely on individual heroes to facilitate process initiatives. They are long-service employees who became the experts of how things and processes work in the company. They are always consulted because of their inherent authority– business owners and managers listen to them. Think about them as company elders and gurus whom we seek advice from when things go wrong and consulted whenever changes are planned.  

When a company relies and is solely dependent on its individual heroes for change and process enhancement, it is on its 1st level of process culture maturity.

The second stage of process culture maturity is the Diverse Approach.  This is when the company starts to utilize standard methods and best practices to drive process design and innovation. Oftentimes at this stage, different areas in the organization implore varying approaches and therefore, less synergy is achieved. Standard operating procedures (SOP) start to shape in each department and documentation becomes an integral part of process implementation. In many cases, at this point, IT and business approaches tend to clash and technology becomes the focus of project implementation.

Companies move up to the Model Integration stage when it builds more synergies throughout the organization. Very successful multinational companies such as P&G, CEMEX, and ING DIRECT take advantage of Model Integration by consolidating functions and developing its shared services. P&G, for example, has established Global Business Services (GBS) — a shared service organization that provides the company a platform for continuous global growth while maintaining values of innovation, service, customer responsiveness and business efficiency. Companies at this level adapt a consolidated method to design and implement business models using standard processes and tools. The project team discipline ultimately improves as management breaks silos and approaches process and technology implementation equally.  The common tendency is for companies to establish global standards and to consolidate both IT infrastructure and human resources, thereby reducing cost of operations.

The final step to Process Culture Maturity occurs when innovation and change in business practices through process understanding are consistently promoted within the company. When executives passionately embrace process thinking, they are able to promote innovation more confidently when implementing new technologies.

Many organizations have gone a long way from the days when company individual heroes were the sole initiators of change and process innovation.  Yet it’s difficult to predict what comes next — as technology evolves, industries consolidate, and Web 2.0 quickly becoming the new platform.