Process has dominated the consulting world, at least since Michael Hammer and James Champy published Reengineering the Corporation in 1994.
Keep the Joint Running and its InfoWorld predecessor, Survival Guide, have been contrarian about process for nearly as long.
The process perspective isn’t wrong. It is, however, subordinate to other, more important perspectives. As evidence:
- Jim Collins’ Good to Great (2001) isolated five factors common to the high-performance companies he and his team analyzed. Process improvement or reengineering initiatives weren’t among them. High-quality leadership, a culture of discipline, and strategic focus were.
- William Joyce, Nitin Nohria, and Bruce Roberson published the results of their “Evergreen Project” in What Really Works (2004). Their formulation is a bit more complicated than Collins’, but similar in most respects. Their evidence was, if anything, more compelling.
Over the ten years examined in the study, companies that followed the “formula” increased sales by 415 percent and operating income by 326 percent. Companies that didn’t increased sales by just 83 percent and operating income by 22 percent.
- Regular correspondent Noah Wollner pointed me to an older study by John Kotter and James Heskitt. Titled Corporate Culture and Performance (1992), it contrasted companies that fostered a “performance enhancing culture” with others that didn’t. Defined as promoting risk taking and innovation, being receptive to change, valuing entrepreneurship, and encouraging mutual support in identifying and solving problems, the impact was, to say the least, significant:
Over an eleven year span, organizations with performance-enhancing cultures experienced 682 percent revenue growth and 746 percent net income growth. Those that didn’t grew revenue by only 166 percent and net income by just 1 percent over the same period of time.
- And, as mentioned my last column, every time anyone looks at what drives customer satisfaction, employee attitude is the most important underlying factor.
So far as I can tell, there is no reliable published evidence, other than the anecdotal, that process change is a primary driver of business success.
Does this mean process has no value in a modern corporation? That would be a false inference. The question isn’t whether process matters. The question is how it matters.
Those who view companies as collections of processes end up looking at companies as mechanisms — collections of gears, cogs, buttons, and wheels. From this perspective, employees occupy some but not all roles in a process. Done right, everyone is replaceable, and when replaced, nothing changes.
Those who view companies as collections of people end up in a different place. For us, businesses are, first and foremost, societies. While not the lead story, process still has important roles to play.
First, process encourages consistency where consistency matters — usually when the company has to produce a large number of very similar items; sometimes when failing to undertake work in a very specific way can lead to dangerous situations or legal liability.
Second, having well-defined processes lets employees focus on getting work done instead of on figuring out how to do it. Just as important, well-defined processes (and procedures) make collaboration easier because everyone involved shares a common understanding of how we do things around here.
And finally, well-defined processes create a framework for constant, steady improvement (“continuous improvement” is the now-cliched, preferred buzz-phrase). Without a well-defined process to provide a baseline, the enterprise has to constantly start over — the getting-work-done equivalent of software that never progresses beyond the alpha-testing release.
In human-centered enterprises, process also has clear boundaries. The most important is this: Everyone understands that the business exists to take care of customers; that taking care of customers is something employees do; and that employees rely on trustworthy processes to help them do it, when the processes fit the situation.
When a company’s processes don’t fit the situation, the company has to make a choice. It can, with complete validity, decide that what the customer wants isn’t something the company does. If you run a travel agency and a customer wants you to replace a broken axle in the family minivan, “Sorry but we don’t do that,” is a reasonable response.
“We haven’t done that before, but we’ll figure out a way to do it for you,” is often an even more reasonable response: The company can decide that when its standard processes don’t fit a customer’s request, the customer has just revealed an opportunity, or something that should be fixed.
Companies that only do what they do eventually do too much of what customers don’t need any more. Those that figure out how to handle unexpected requests, on the other hand, sometimes find whole new profitable lines of business in the process.
As it were.