By Joel Oosthuizen, Sept. 27th, 2016. Business process re-engineering is a hot topic nowadays and for good reason. With disruption on the tails of many large enterprises, radical redesign of core business processes is required due to the rapid advancement of technology and therefore the consumer’s ever changing hierarchy of needs.
Companies and process that aren’t staying abreast of our needs as consumers are paying huge opportunity cost on a large portion of non-traditional revenue generation channels like mobile apps, social media and innovation. Tech Startups are also giving stale blue chips a run for their money in the continuous race to most innovative products and services, something large companies struggle with dearly. They struggle because their bureaucratic red tape, old-fashioned thinking and tired blood is keeping them from becoming great. A common thread of these symptoms reside among these companies.
Those that choose to enable their consumers as opposed to disabling them through the use of modern tools and technologies available is causing mass consumer migration to companies that do realize our needs are constantly evolving, and that we’d rather be associate with companies that enable us.
Dated paper processes, no three-dimensional view of the consumer, multiple unjustified touch-points with the client in order to enable a product or service all contribute to the increasing number of migrations.
To achieve dramatic improvement in productivity, cycle times and quality, companies need to utilize the type of mindset found in business process re-engineering. In Business Process re-engineering companies start on a naked canvas to rethink existing processes by following the value chain of their product or service to produce more value to the consumer. Usually a new value system is placed at the core of the re-engineering initiative that places new emphasis on the customer, enabling the consumer rather than the process.
A great place to start with a process re-engineering initiative is with an aggressive reduction in costly and unnecessary organizational layers. Usually these are the result of sub optimized micro environments in the organization, where the more effective answer would be to optimize the whole by eliminating waste.
The elimination of functional competencies, i.e. teams that specialize in one specific pigeon-hole of the bigger picture in favor of cross functional teams where a team can execute a customer requirement from inception to delivery will propel your efficiency ratio light-years ahead.
The incorporation of end-to-end measurements in a specific value stream provides key metric points for continuous inspection and adaption to take place, ensuring a self-correcting system going forward. Secondly, data analytics and use of technology through Information Management and Business Intelligence enables improved decision making
How does business process re-engineering work?
Business process re-engineering is a dramatic change initiative that contain five fundamental steps at its core:
- Refocus company values on the needs of the customer
Traditionally companies had designed their processes to enable the system, the culture and the bureaucracy. Looking at companies that are extremely successful today, or future state processes of companies finding themselves in the legacy spaghetti entanglement at present, you notice that the process is focused around the consumer and not the organization.
- Redesign core processes, often utilizing information technology to enable improvements
Core processes are critical to sustainability, like customer on-boarding, is critical in the eyes of the consumer, and if you fail here you are going to lose many potential customers, and chase existing ones away. An example here is where one organization is still sticking to an over-engineered paper based internal process, frustrating the consumer in the process, while the opportunity to go digital has been around for years.
- Reorganize a business into cross-functional teams empowered though end-to-end responsibility for a process
Traditionally organizations were designed to function in specialized pods of expertise, with many hand-off points with huge cost of delay. Huge lead and cycle times existed as there is no transparency. A light restructure where teams are grouped into small pods that has complementary skill-sets from each competence area results in productivity, accountability, speed of execution and customer satisfaction to shoot through the roof.
- Take stock of basic organizational and people issues and put measures in place to deal with these
If you have a zombie workforce, just going with the ebb and flow of the motions of the organization then this is symptomatic of a stale culture. Injecting fresh blood into the organization’s top layer is a quick way to disrupt the status quo and by doing so naturally inviting fresh thinking into the organization. Employee happiness and satisfaction surveys are good ways to test morale in order to find route causes.
- Improve business process across the organization by optimizing bottlenecks on areas with large non value adding times expended on activities
A round of Value Stream Mapping across the organization will quickly illuminate the areas that need help as a priority. They are plagued with huge amounts of non-value added time in the value chain and inefficiencies are surfaced for rectification.
Companies use Business Process re-engineering to
Reduce cost and cycle time:
- Reducing cost
- Enables the company to increase net profit and efficiency percentage by eliminating unproductive and wasteful activities and the employees who perform them
- Reorganization of teams reduces the need for management layers for the sake of having hierarchy
- Accelerates information flow by reducing the number of collaborative touch-points in the micro and macro environment and eliminates the amount of errors (defects) due to minimal hand-off points
- Improve Quality
- Business Process re-engineering improves quality by reducing the fragmentation of work and establishing clear ownership of processes. Workers gain greater responsibility for their output and performance can be measured based on near real-time feedback received.