Why Business Process Improvement projects fail to deliver value?

Business Process Improvement projects generally use Lean/Six-Sigma techniques and some common sense to improve business processes. Project teams document current state of business processes (As-Is mapping). Then they analyse Business problems and document future state of processes (To-be mapping). Generally, it goes well up to documentation completion. Rubber hits road when project team starts planning for changes in business. They face challenges in every step of change (starting from agreement on new processes to providing training to business).

Irony is that after all of this hard work, business receives limited benefit!

But why? Business processes are now been improved. Business should have measurable improvement.

So, what is wrong here?

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I think there are two main reasons:

1. Ironically, project teams that take pride to break silos works within silo: Business Process Improvement projects takes pride of breaking business process silos. They look at end-to-end business processes (Value chains). Then, they try to make improvements in value chains.

However, teams do not realize that they are operating within ‘process’ silo. Just improvement in process silo will not make a big difference in bottom-line.

Why? I will try to explain with the help of example:

Let’s assume, we want to improve capability of business to generate weekly invoices rather than monthly. To improve this capability, we have to consider factors like:

  • Current organizational structure of invoice generation teams (Centralized, Distributed etc.)
  • Skill-set of team
  • Sources of invoice information received by the team(s)
  • Reporting requirements
  • Capability of software system to handle weekly invoicing
  • End-to-end business process (Invoice generation value chain)

Note that to improve business capability, improvement in business process is just one of the action points.

Now, let us zoom out a little bit and consider following questions:

  • How project team would know which value chains should be improved?
  • Who should decide if it is more beneficial for business to outsource business process rather than trying to improve it?
  • How project team will ensure that there is alignment between Business Process Improvement initiative and Business Strategy?

I suggest business should look at a big picture (via Singh’s Business Reference Model). To make real difference, business must follow top-down approach by aligning all tiers outlined in Reference model.

2. Root cause of problem is not addressed: Process improvement projects generally have a narrow scope. They look for inconsistencies in process (defects – 6 Sigma term). They identify and try to eliminate different types of Waste. However, root cause of inconsistencies and waste is often not fixed. Merely, proposing new processes do not resolve underlying problems. For example, root cause of different types of waste can be:

  • Indecisiveness of management
  • Lack of communication at management level
  • Lack of reusability
  • Micro-management

Often root cause of problems (like above) stay outside scope of process improvement projects.

So, what should business do?

I suggest, business should take 3-prong approach:

  • Develop a clear understanding of Business strategy and map initiatives that support delivery of strategy (Top-down approach)
  • Develop strong leadership to drive change
  • Develop culture of continuous improvement within business

What are your thoughts and experience in process improvement projects? I am sure you have some new insights that you would like to share. I will look forward to your comments!

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