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Process Improvement

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Process Improvement

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Process Improvement

About this Topic: Process Improvement

Topic Mentor

Mark McDonald, Ph.D.

Mark McDonald, Ph.D., is a leading researcher and practitioner of business process design and business
architecture. Currently Head of Research for Gartner Executive Programs, he was formerly a partner at
Accenture, where he was responsible for directing the firm's Center for Process Excellence. He has
worked on several global process transformation initiatives, and is the author of business process
reengineering methodology, tools and proven practices. Mark has written numerous articles on process
design and development and is the co-author with Peter Keen of The eProcess Edge, published by
McGraw-Hill in 2000.

Topic Source Notes

Learn

Susan H. Gebelein, Kristie J. Nelson-Neuhaus, Carol J. Skube, David G. Lee, Lisa A. Stevens, Lowell
W. Hellervik, and Brian L. Davis. Successful Manager's Handbook, 7th edition. Personnel Decisions
International, 2004.

Paul Harmon. Business Process Change: A Manager's Guide to Improving, Redesigning, and
Automating Processes. San Francisco: Morgan Kaufmann, 2003.

http://searchcio.techtarget.com/sDefinition/0,,sid19_gci536451,00.html

http://www.induction.to/six-sigma/tsld005.htm

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Dan Madison. Process Mapping, Process Improvement, and Process Management. Chico, CA: Paton
Press, 2005.

Paul W. Marshall. "A Note on Process Analysis." Harvard Business School Note 9-675-038, rev. July 1,
1979.

Steps

Dan Madison. Process Mapping, Process Improvement, and Process Management. Chico, CA: Paton
Press, 2005.

Tips

Dan Madison. Process Mapping, Process Improvement, and Process Management. Chico, CA: Paton
Press, 2005.

Tools

Dan Madison. Process Mapping, Process Improvement, and Process Management. Chico, CA: Paton
Press, 2005.

What Would You Do?

What would you do?

Paul recently became manager of an online bicycle tour guide service. Nine months earlier, the
company had established a new service: Sending emails to customers to notify them of new updates,
and to invite them to download the latest tours and travel information.

Customers initially expressed delight with the service. But in the past month, many customers have
complained that the latest travel information was actually out of date. Paul realizes that something is
wrong with his content-updating and distribution process. But he's unsure how to address the
problem.

What would you do?

Although Paul's process is virtual, he can envision it much like a traditional manufacturing process.
This will help him begin implementation of a business process improvement (BPI) initiative. His
next step is to assemble a BPI team to analyze the existing order process. The team will then
redesign the process to eliminate problems. Next, the team will have to acquire the resources needed
to implement the new process (such as personnel or equipment). Paul's team might then pilot the
new process to address any remaining problems before putting it to full use. Even after the new

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process has become standard operating procedure, the BPI team will continue to monitor its
performance and make further improvements as needed.

Can you identify and fix a broken process?

Topic Objectives

This topic helps you:

Understand the importance and benefits of business process improvement (BPI)

Plan a BPI initiative
Analyze and redesign a current process that needs improvement
Obtain the resources needed to change a process
Implement a redesigned process
Continually improve your business processes

Key Idea: What are business processes?

Key Idea

Managers hear extensive discussion of "business process improvement," "process redesign," and
"business process reengineering." But what are business processes, exactly?

Technically, a business process is the set of steps a business performs to create value for customers.
A process consists of three basic components:

Inputs: They start the process. For example, if you're building a bicycle, the inputs are the
tires, wheels, nuts, bolts, chains, and gears.
Activities: These transform inputs into outputs. In the bicycle example, activities would
include building a frame, attaching the wheels, and tuning the gears.
Output: Sometimes also called the outcome, the output is the result of the activities—in this
example, the finished bicycle.

Processes are easier to understand when you consider physical goods like bicycles. But processes
exist in every company—not just those that make physical goods.

Every company has many different business processes. But what are they, exactly?

Another way to understand processes

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Here's a way to identify processes in the context of your job. Consider business processes as the series
of events that bring together people, technology, and information in ways that create valuable
outcomes.

To see how people, technology, and information interact in processes, take a moment to glance around
your office. Notice that:

The people around you are carrying out process activities based on the inputs they
receive—such as customer requests. Their skills and knowledge constitute additional inputs.
These people are often working with technology—for example, computer programs, the Internet,
and copy machines. These technologies facilitate process activities—such as e-mailing a
customer or retrieving customer data.
Information is also all around you—stored in databases, provided by customers, or held in
people's minds. As such, information can be a process input (such as the number of parts in a
warehouse) or an output (for instance, a consultant's report).

In short, business processes constitute all the activities your company engages in—using people,
technology, and information—to carry out its mission, set goals, measure performance, serve
customers, and address the inevitable challenges that arise while doing so. Processes determine the
effectiveness and efficiency of your company's operations, the quality of your customers'
experience—and ultimately, your organization's financial success.

A closer look at processes

Every organization contains a large number of business processes. Some are simple processes carried
out in a single department—such as entering a customer's order into a computer. Others are complex
processes implemented throughout your company—for instance, developing successful products.

Processes can also vary in their degree of formality. For example:

Informal: A customer asks you for a discount if they purchase double the normal amount of your
product. There is no rule saying you can't provide such a discount, nor is there an established way
to give the discount. So you give the discount. You have just created an informal process. The
company hasn't documented this process as a set of steps that must be performed under certain
conditions. For now at least, the discount program exists only in your head.
Formal: You manage a call center that resolves customer concerns over the phone and through
the Internet. You and your team have established a rigorous set of procedures for answering

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customers' questions and solving their problems. Your team has documented these procedures,
and all new employees are required to study them and receive training before staffing the call
center's phones. Thus, the processes for handling customer concerns are highly formalized.

Some processes start out as informal, and then the organization decides to formalize them.

For instance, suppose you created an informal process by asking current employees to suggest job
candidates for an open position. The process proves highly successful, enabling you to identify and
recruit a new hire, who then excels on the job.

As a result of this success, your company decides to make this practice a formal part of its recruitment
efforts. It even sets up a bonus program to reward employees who recommend candidates who are
hired.

When processes go wrong

Everyone in and related to your organization—you, your boss, peers, and direct reports, and your
customers and suppliers—carries out many different processes every day. But because business
processes are invisible, many people don't consciously think about them or realize the impact they have
on an organization's performance. Instead, when problems do crop up (for example, a customer's order
is filled incorrectly), people often look for someone to blame. Managers may spend time and money
replacing the person supposedly at fault. Or they might choose to invest in expensive new technology to
try to overcome the problem.

Yet many managers find that these "solutions" don't work. Ultimately, the same problems keep
surfacing. What's going on? As it turns out, most organizational difficulties stem from flawed
processes—not incompetent individuals or inadequate technology. By understanding the process
glitches that led to a problem, you and your team can correct the process to get the results your
company wants.

Adopt a process mindset

Because establishing the right business processes is so essential to an organization's survival, you and
your team can create enormous value for your company by adopting a process mindset.

When you have a process mindset, you regularly think about how to improve the way your group turns
inputs into desired outputs. You seek to understand the quality of your group's business processes by

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using measurements and process mapping to discover and correct weak points.

You can cultivate a process mindset in your team by helping team members understand and articulate
the many business processes they take part in, and by encouraging them to constantly look for ways to
improve those processes. Your reward? Greater efficiency, higher customer satisfaction, reduced errors,
lower costs, and enhanced company profitability.

Leadership Insight: Fixing potholes

In the mid 1990s, a Republican prosecutor, Steven Goldsmith, was elected the mayor of the city of
Indianapolis. He had campaigned under the Reagan philosophy that less government is better
government. And he said, "If you elect me, I am going to privatize many city services, because the
private sector can do it more efficiently than the public sector."

And he was elected. And unlike most politicians, he actually was going to deliver on his campaign
promises. And so, just before he was about to put up some contracts for bid, he thought he'd better
be able to demonstrate to the citizens and the labor unions that there is really going to be a
demonstrable savings.

So he asked his department heads: "Can you tell me what it costs us today to fix potholes, or to
repave a mile of road, or to pick up a ton of trash?" They said, "Well, we don't know, but we will
look and we will come back and tell you." And they came back in a few days and they said, "Mayor,
we have bad news. We have no idea."

Now, I wrote a case about this, and when I teach the case, I hand out the budget document for the
city of Indianapolis at that time period, and it is about the size of a phonebook — I mean, it has
hundreds of pages and hundreds of numbers on each page. And yet, despite that, there was nothing
in the budget document that told anybody what things cost or told them what they spent.

The mayor said, "Well, this is not a good basis for moving forward with privatization." He said, "We
have to find out what it is going to cost us, what it costs us today."

And so they did a study, used activity-based costing, and they started with filling potholes, and they
learned after about six weeks of the study that it costs about $435 per ton of asphalt to fix a pothole.

So he said, "All right. Now we are ready to bid it out." But the union had came up to the mayor and
said, "Sir, we would like to bid too." He said, "Well, I guess we got your bid. It is costing you $435 a
ton. And if the private sector does it cheaper, we are going to let them do it." But the union rep says,
"Well, give us a chance. We'd like to do it better."

The mayor said, "How long have you been filling potholes — 20 or 30 years? What is going to
happen in the next six weeks that is going to make a difference?"

And the rep said, "Well, there are two things that have changed. First, we have never seen this
information before, so we never saw all the elements that go into the costs of doing this road-repair
work. And second, it didn't matter before, because we had a job. Now it really matters, and we think
we can do better."

So the mayor said, "OK. Six weeks." And in six weeks, through a whole series of changes — in the

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way they filled the potholes, less staffing, getting rid of supervisors, a lot of process improvements
— the union drove the costs down 35 percent.

And in fact, when they subsequently did put it out to bid, the [union was] the lowest-cost supplier, so
it retained the contract. And Mayor Goldsmith told me, "I learned it is not about privatization. It is
about competition." That the workers in the public sector can be as efficient as or more efficient than
those in the private sector, but you need two critical components.

You need information. They had to know what it costs and all the elements that went in the costs.

And you needed to have some incentives. They had to have something at stake; some skin in the
game so they were motivated to improve. But once we provide them with valid cost information and
the incentives to do better, they did a terrific job.

And they didn't win every contract, but they actually won quite a few contracts by making these
process improvements. And the citizens were better off, and the workers were better off. They felt
much better about their jobs.

And sometimes they came in even with more savings, and he shared that with them. He gave them
$1,000 checks in very public TV appearances to say thank you for making process improvements
and doing your job better for the citizens of the city.

Three critical components – the facts, competition, and the right incentives – help people to do their
jobs better.

Robert S. Kaplan
Professor, Harvard Business School

Robert S. Kaplan is Baker Foundation Professor at the Harvard Business

School and Chairman, Professional Practice, at Palladium Group Inc.
Before joining the HBS faculty in 1984, Robert was the Dean of the
business school at Carnegie-Mellon University.

His research, executive education teaching, and consulting focus on linking

cost and performance management systems to strategy implementation and
operational excellence. Robert is a co-developer of both activity-based
costing and the Balanced Scorecard.

He has authored or coauthored 14 books and approximately 150 papers,

including 20 featured in Harvard Business Review. Recent books include
"The Execution Premium: Linking Strategy to Operations for Competitive
Advantage," the fifth Balanced Scorecard book coauthored with David
Norton, and "Time-Driven Activity-Based Costing" with Steve Anderson.

In 2006, Robert was elected to the Accounting Hall of Fame. He received

his Bachelor of Science and Master of Science in electrical engineering
from MIT, and a doctorate in operations research from Cornell University.

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A set of tools to enhance business performance

Business process improvement (BPI) is a set of disciplined approaches and tools that managers use to
enhance their company's performance. As the name suggests, BPI (also called business process
management, or BPM) focuses on changing business processes to improve their effectiveness.

In organizations that use BPI:

Managers and employees know their business processes and capture them in process maps,
procedure manuals, or agreed-upon "ways of doing things."
Managers track the performance of processes in the form of metrics that can assess the quality of
inputs and outputs or gauge the effectiveness of activities.
Top management systematically invests in its processes. In some cases, these investments are
intended to improve current operations—for example, enhancing the efficiency of order
processing. In other cases, these investments are meant to improve the company's competitive
position—for instance, strengthening the product-development or strategy-formulation process.
Organizations that do not use BPI may do these same things. However, their use of BPI is usually
sporadic, rather than a regular way of doing business.

BPI is a tool that can be used at every level of an organization—by a manager who sets out to change a
relatively simple process within her department, or by top management who introduce a companywide
initiative designed to improve performance throughout the organization.

Formal process improvement

Don't find fault, find a remedy.

–Henry Ford

This topic focuses on BPI efforts that you can initiate and carry out in your own team or department.
However, your organization may also have mandated a large-scale process-improvement program in
which all managers are required to participate. If that's the case, you may want to briefly familiarize
yourself with some of the more formal improvement methodologies and standards, listed below.

Formal Process Improvement Methodologies and

Standards

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Name Description

Six Sigma Disciplined data-driven approach

for eliminating defects in any
process, designed to deliver high
performance, reliability, and
customer value. Motorola
developed Six Sigma in the 1980s
after recognizing that products with
the fewest defects failed least often
during use. The Greek letter sigma
denotes variation from a standard.

Total Quality Management strategy aimed at

Management embedding awareness of quality in
(TQM) all organizational processes and
encouraging employees to steadily
increase customer satisfaction at
continually lower costs. TQM was
popularized in Japan after World
War II by American statistician and
college professor W. Edwards
Deming. Later, Joseph Juran
broadened the concept of quality
management from its statistical
origins to focus on the human
dimension.

ISO 9000 Family of standards for quality

management systems from the
International Organization for
Standardization (ISO). These
standards do not guarantee the
quality of end products and
services; rather, they certify that a
company is applying consistent
business processes. ISO 9000
standards are administered by
accreditation and certification
bodies.

Business Management approach that

Process promoted radical redesign of
Reengineering workflow within and between
(BPR) enterprises in order to achieve

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dramatic performance
improvement. BPR reached its
heyday in the early 1990s when
Michael Hammer and James
Champy published their
best-selling book Reengineering
the Corporation.

Triggers for a BPI effort

A BPI effort can be triggered by several types of events—including inefficiencies or problematic

performance as well as major changes in the business landscape:

Inefficiencies and problematic performance. Managers who notice inefficiencies or

problematic performance may decide to launch a BPI initiative. For instance, Kara, a manager at
a regional sales office for a large consumer-goods company, realizes that the office's sales figures
are 5% lower than those of other regional offices. Her staff work hard, but they're not achieving
their goals. Kara decides to examine key processes—such as the way her staff qualifies sales
leads and sets up customer accounts—to see whether any of these processes could be changed in
order to increase the sales figures.
Major changes in the business landscape. Business change can take many forms—including
new technologies, shifts in customer preferences, and the emergence of new competitors. Each of
these changes can prompt managers to embark on a BPI effort. For example, Marcus, a manager
in his company's human resources department, is intrigued by the possibilities the Internet
presents. He realizes that providing the means for employees to make their yearly benefits
changes online would help the company save time and money. Previously, employees who
wanted to change their benefits choices had to meet with HR personnel—a time-consuming, and
therefore costly, process. Marcus sets out to review the way the HR department currently carries
out its work and to develop ideas for using the Internet to introduce new efficiency to as many
processes as possible.

Benefits of BPI

A well-run BPI initiative enables you to generate many important results for your organization. For
instance, BPI could help you:

Understand how effectively your team is meeting the needs of customers and other departments
in your company.
Revise your hiring strategies to improve skill levels and expertise in your team.
Save time and money by simplifying overly complex and expensive processes.
Identify entirely new processes that enable your firm to provide top-notch customer service while
reducing costs.

Key Idea: The six phases of BPI

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Key Idea

BPI offers crucial benefits to any team or organization. But to generate those benefits, you need to
take a structured approach to your BPI efforts. Experts recommend the following six phases:

1. Plan: Select an existing business process you want to improve, define its scope, and assemble
your team.
2. Analyze: Closely examine the process you've identified as a candidate for improvement.
3. Redesign: Determine what changes you want to make to the target process.
4. Acquire resources: Obtain the personnel, equipment, and other resources needed to make the
process changes called for in your redesign.
5. Implement: Carry out the process changes.
6. Continually improve: Constantly evaluate the target process's effectiveness and make further
changes as necessary.

How would you initiate and manage a process improvement effort?

When your process change is simple

When you make simple process improvements in your department, you won't necessarily take the time
to carry out each of the six phases explicitly. Rather, you'll likely think through the phases quickly.

For example, suppose you want to make your team's decision-making process more efficient. Currently,
you gather input from each team member personally during the week before making a key decision. But
with the addition of several new hires, this process has become unwieldy and time-consuming.

You envision and suggest a change: Instead of the current process, employees will start meeting once a
week to discuss key issues. The team makes the shift—freeing up more of your time, which you then
invest in other responsibilities.

For such straightforward process improvements, an informal redesign and implementation are all that's
necessary.

Key Idea: Detect signs of trouble

Key Idea

To plan a business process improvement, first decide whether process improvement is needed. The
answer is "yes" if you notice certain telltale symptoms—including the following:

Customers are increasingly commenting that the product has deteriorated.

Certain procedures seem overly complicated.
Tasks take longer to complete than they did previously, or there is noticeable variation in the
amount of time different people take to perform the same task.
Things don't get done right the first time.
Team performance is declining or is consistently missing goals.
Employees are expressing frustration over confusing processes or bottlenecks that prevent
them from fulfilling their job responsibilities.

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Can you spot trouble in your business process?

Select a process to improve

If you're like most managers, you may see several symptoms of problematic processes occurring
simultaneously—suggesting that more than one process may benefit from improvement.

For example, Joe, who manages a regional office for a financial services company, has noticed that
customers are complaining about having to provide the same personal information several times while
applying for a loan. In addition, the office's growth—in terms of the number of new accounts signed per
quarter—is lower than that of other regions, despite the considerable expertise of Joe's staff.

When it seems that several processes may need improvement, how do you decide which one to tackle
first? Create a process selection matrix in which you rate each process according to criteria such as
how easily it might be changed and how problematic it may be for customers. Rate each possibly
problematic process on a scale of 1 to 5, with 5 being the highest score and 1 the lowest. The table
below shows an example of what Joe's matrix might look like.

Joe's Process Selection Matrix

Process Cost-Saving Source of Opportunity Easy to Source of Total

Potential Customer for Change Staff Score
Complaints Improvement Frustration

Setting up 5 5 2 2 4 18
new
accounts

Evaluating 4 2 4 3 4 17
applicants'
credit
histories

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Once you've rated each process, total up your scores. The highest score suggests the process you might
want to improve first. In Joe's case, he decides to focus on the process of setting up new accounts.

Activity: Which process should you improve?

Hone your process improvement skills by analyzing the processes below.

Your BPI team have reviewed the following three processes using a Process Selection Matrix.

In this matrix, the process of receiving a product returned for repair earns a rating of three for
cost-saving potential, a rating of two as a source of customer complaints, a rating of three as an
opportunity for improvement, a rating of five for being easy to change, and a rating of three as a
source of staff frustration, for a total score of sixteen.

The process of repairing a product earns a rating of four for cost-saving potential, a rating of two as
a source of customer complaints, a rating of four as an opportunity for improvement, a rating of two
for being easy to change, and a rating of three as a source of staff frustration, for a total score of
fifteen.

The process of shipping a product back to a customer earns a rating of three for cost-saving
potential, a rating of four as a source of customer complaints, a rating of three as an opportunity for
improvement, a rating of four for being easy to change, and a rating of two as a source of staff
frustration, for a total score of sixteen.

According to your Process Selection Matrix, which process should your BPI team focus on
improving?

Receiving product returned for repair

Not the best choice. Both this process and "shipping the product back to the customer" have
a total score of 16. However, "shipping the product back to the customer" is a bigger source
of customer complaints, which should give it the top priority.
Repairing product
Not the best choice. In a Process Selection Matrix, the highest total score identifies the
process you should focus on improving. 15 is not the highest total score in the matrix.
Shipping product back to customer
Correct choice. Both this process and "receiving the product returned for repair" have a total
score of 16. However, this process is a bigger source of customer complaints, which should
give it the top priority.

As you and your BPI team are discussing the ratings in the matrix further, your company announces
a new emphasis on improving customer loyalty as part of its competitive strategy. What might you
do next—if anything?

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You interview employees to get a more accurate sense of their frustration with the processes.
Based on these interviews, you change the rating for "Source of Staff Frustration" from 3 to 5 for
"Repairing product."
Correct choice. Employee frustration leads to poor performance, which creates dissatisfied
and disloyal customers. Changing the rating for "Source of Staff Frustration" to a 5 reflects
the importance of this link between employee satisfaction and customer loyalty. It also
changes the total score for "Repairing product" to 17, the highest total score. This suggests
that the BPI team should now focus on improving this process.
You take no action.
Not the best choice. With the new emphasis on customer loyalty, you might want to gather
more information on the five criteria for each of the three processes. The additional
information may cause you to reconsider some of the ratings to reflect the importance of
your company's new emphasis on customer loyalty.
You increase the "Source of Customer Complaints" ratings by one point for each of the three
processes to reflect your company's new emphasis on customer loyalty.
Not the best choice. Simply changing the ratings in the matrix is meaningless unless you
first gather information suggesting that the ratings are inaccurate.

Define the BPI's scope, goals, and schedule

Define the scope, goals, and schedule for the selected process improvement project.

Scope. Scope defines what will and won't be included in the effort. For example, to improve the
way his office sets up new accounts, Joe decides to focus on changing the way people and
technology interact to establish accounts. He prefers not to change people's jobs or adopt new
technologies if he can help it.
Goals. Specify how the BPI effort supports your organization's goals. Clarify how it relates to
other existing processes, as well as to important stakeholders, such as your company's customers
or suppliers. And express the desired improvement in numerical terms.

Joe, for instance, determines that improving the way his office sets up new accounts will help his
company achieve its strategic goal of serving customers more efficiently and quickly. The process
of setting up accounts directly affects customers' satisfaction levels and has links to the other
processes involved in approving loan applications, such as evaluating applicants' credit histories.
Joe expresses the desired improvement as: "Customers have to provide financial information only
once in order to establish an account with us."

Schedule. Specify which milestones you'll need to achieve in order to change the problematic
process and approximately when you expect to reach each milestone. For example, Joe's BPI
milestones include mapping the current new-account process within two months and conducting a
trial run of a revised process by the end of the third quarter.

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Assemble your BPI team

Decide who will carry out the BPI project. Your team should include the following:

Project manager: Select someone to serve as project manager—whether it's yourself or another
individual. The project manager should have experience working with others on focused tasks.
He or she will be responsible for ensuring that the work gets done on time, all issues are resolved,
and the project achieves its goals.
Process owner: The process owner will take responsibility for continually improving the process
once the BPI team redesigns it. Again, this may be you. He or she should be thoroughly familiar
with the redesigned process, open to making further changes to it as needed, and able to influence
others to accept changes. The process owner also needs to understand the principles of effective
process design, be able to track the new process's performance using metrics, and maintain
documents related to the process (such as flow charts, standard operating procedures, and
checklists).
Process users: Include individuals who work directly with the process. Select a representative
sample, not just the people who perform the process the best.
Skeptics: BPI teams also benefit from one or more skeptics—people who will challenge the
design process and stimulate productive debate over ideas.
Facilitator: If your BPI project is extensive, consider including a facilitation specialist
—someone with expertise in leading team meetings. Often, the project manager can fill this role.
Technology expert: Technology plays a role in most processes. Thus, having access to a
technology expert—for example, your company's Web-site administrator or technical support
analyst—can be valuable.

Get everyone on board

Establish ground rules for how the BPI team members will work together.

For instance, how often will you meet to discuss progress and address challenges? Who will be
responsible for which aspects of the work? How will team members share information and resolve
conflicts?

If necessary, gain your own manager's commitment to the BPI initiative by making a compelling
business case for the value of the project. Finally, decide with your manager when and how the BPI
team will provide updates on its progress.

Steps to analyzing your process

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Now that you've planned your BPI project, it's time to move to phase two—analyzing the process
you've identified as needing change. This phase consists of the following steps:

Mapping the existing process (documenting the way work flows through the process)
Examining the process map to identify problems
Interviewing stakeholders (including customers) to gain their insights on the process
Benchmarking how other organizations handle this process

After following these steps, you should have a set of documents that precisely describe the existing
process and include ideas for improving the process.

Map the existing process

In life, as in chess, forethought wins.

–Charles Buxton

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Activity: Identify that process map symbol

Can you match these process symbols to their meanings?

In a process map, which symbol represents a cross-reference to another process?

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Circle
Correct choice. A circle represents a cross-reference to another process.
Big D
Not the best choice. A big D represents a delay. A circle represents a cross-reference to
another process.
Triangle
Not the best choice. A triangle represents filling or storage of materials or information. A
circle represents a cross-reference to another process.

In a process map, what does a diamond shape symbolize?

A delay
Not the best choice. A delay is represented by the symbol of a big D. A diamond represents
a review or decision to be made.
A review or decision that must be made
Correct choice. A diamond represents a review or decision that must be made.
The start or the end of the process
Not the best choice. The start or the end of a process is represented by the symbol of an
oval. A diamond represents a review or decision to be made.

In a process map, which symbol represents an activity that a person or technology performs?

Box
Correct choice. A box represents an activity that a person or technology performs.
Arrow
Not the best choice. An arrow represents the direction of the workflow. A box represents an
activity that a person or technology performs.
Oval
Not the best choice. An oval represents the start or the end of a process. A box represents
an activity that a person or technology performs.

Key Idea: Examine your process map for problems

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Key Idea

Examine each component of your process map, asking yourself questions such as:

At which points does this process break down or experience delays?

At which points do people typically experience frustration with the process?
Which parts of the process seem to consume an inordinate amount of time?
Which parts of the process lead to low-quality outcomes?
Which parts of the process incur unacceptable costs?

For example, after examining his process map, Paul might conclude that: His team could save time
by automating parts of his process to increase efficiency and employee satisfaction.

You've mapped the process you want to improve. Can you spot the problems in that process?

Interview stakeholders

Meet with process stakeholders—such as your supervisor, peer managers, and employees. Ask them
how they view the process and what they think works well and not so well in the process. Invite them to
offer suggestions for improvement.

For instance, after examining his map of the new-account setup process, Joe had concluded that his
team could save time by gathering all customer documentation at the moment the application is
received, rather than going back to the customer to ask for it later. He also realized that the process
contains multiple decision points where a person must evaluate a loan's progress and possibly take
corrective action. This can introduce errors and delays in serving customers.

Joe sets out to interview stakeholders. Through talking with the loan officers, Joe finds that they spend
much of their time coordinating document flows between the customer and the Credit Department. He
learns that customers rarely bring all the information needed to complete a loan (such as proof of
income) to their initial visit. Thus loan officers must track down this information to process the loan.

In interviewing stakeholders, don't forget to ask customers what they want from the process. Then fill
out a report indicating how they would "grade" your team on each requirement and what "A" level
performance would look like—to them—for each.

For example, Joe's customers want to provide information only once while applying for a loan (their
idea of "A" level performance on this requirement). Perhaps they would give this requirement a "C"
grade because of their frustration with having to provide information several times.

Benchmark

In addition to interviewing stakeholders, find out how other organizations conduct the process you want
to redesign. These other organizations can include competitors, companies that are similar to yours but
that don't compete directly, and enterprises that are considered "world class" in your target process.
Your goal in benchmarking is to generate additional ideas for redesigning the problematic process.

To generate ideas for which organizations you might benchmark, use sources such as research

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companies, consultancies, industry studies, industry trade associations, and former employees of
competitors. You can also contact organizations yourself and conduct brief interviews with managers
and executives about how their company carries out the process in question.

Steps toward a new process

You've analyzed the existing process that you identified for improvement. Now it's time for your
business process initiative (BPI) team to redesign the process so that it produces the outcome you're
looking for. The redesign phase consists of these steps:

Envisioning a better process

Testing your team's ideas
Considering the implications of a potential redesign
Documenting your redesign
Gathering feedback from stakeholders and refining the redesigned process

At the end of your redesign phase, you should have a set of documents describing the proposed process
redesign that is approved by management and other key stakeholders.

Key Idea: Envision a better process

Key Idea

With the rest of the BPI team, visualize what an ideal process would look like. Be sure that the ideal
process directly addresses the business problem or opportunity identified in the project goals.
Drawing on your stakeholder interviews, benchmarking, and other activities from the analysis phase,
brainstorm ways to make the process better.

During this brainstorming, set aside the "as is" process flowchart, so new ideas won't be influenced
by the status quo. Then think about ways to improve the process's performance.

First, think about ways to exceed customers' expectations. Could the accuracy, speed, and
quality of the process be improved? How might the process be improved to make it easier for
customers to do business with the company?
Second, consider ways to cut costs. Could steps be eliminated from in the process to reduce
the number of resources required or reduce the cost of the resources used?
Third, brainstorm ideas for reducing cycle time—the total time it takes to complete the

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process. Could requests for clarification or information be eliminated to speed up the process?

In addition to brainstorming ways to improve the process, determine how to measure the new
process's performance. Define performance metrics related to:

Customer satisfaction—for example, "Number of times customer has to phone the company
before getting their problem solved" or "Amount of time on hold."
Quality—such as "Number of errors in assembly."
Cost—such as "Amount spent per quarter on parts."
Cycle time—for instance, "Number of hours to assemble one unit of a product."

Imagine a perfect process. How would it work?

Ideas from Joe's BPI team

Joe's BPI team came up with several ideas for a better process, including the following:

Ask for documentation up front. Currently, customer information is verified late in the process.

For example, the customer is asked to provide proof of income after the loan application is
accepted, creating a one- to three-day delay in the process and requiring the loan officer to
contact the applicant.

A review of the process's history revealed that this step was originally included to avoid having
the credit department work on an application only to find out that the applicant did not meet the
required income criteria. However, since less than 3% of loan applications are rejected, the new
process should ask borrowers to submit their proof of income at the time they make the
application. This would accelerate the process and eliminate the expense of the loan officer
following up to request documentation.

Add a new staff position. Loan officers are responsible for managing the loan-application cycle,
including ensuring that the right documentation is gathered and processed. Therefore, loan
officers have to follow up on any questions and outstanding issues. This step was intended to
ensure that customers received personal service from loan officers. However, it limits the number
of loans an officer can handle at any one time, reducing their ability to generate new sales.

Creating a loan production coordinator position to handle routine documentation requests would
free up loan officers' time and let them generate more new accounts. Loan officer time is
costly—not only because loan officers are paid salary and commission, but also because time
spent gathering information is time away from generating new business. Adding a loan
production coordinator position would save the company money, since the task of contacting
customers would now be performed by a person in an administrative position.

Test your ideas

Your team may envision several possible new processes that would improve on the current one. After
gathering as many ideas as possible, test those proposed processes to determine which of them seems
best. Consider these testing mechanisms:

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Role-playing: Have team members act out the proposed process to see how well it works. Assign
someone to take the role of customer, another to play an order taker, and so on. Create
artificial—but realistic—orders, contracts, or requests and ask each person to play his or her role
while carrying out the process. Observe how things go: look for bottlenecks, coordination
problems, and other difficulties that may disqualify the process as ideal.

For instance, Joe's BPI team role-plays by having one person play the customer and using an
actual loan application form to approach the bank. A "loan officer" manually checks the
application and writes down the information needed to verify and validate the application. The
completed application is then handed off to the credit department.

Practice: Start with real inputs—such as orders, contracts or requests—and have the people who
would actually be carrying out the real process try turning those inputs into outputs. Again, look
for difficulties or surprises that may indicate the proposed process would not work smoothly.
Computer simulation: Many software vendors offer applications that enable managers to test
proposed processes under various scenarios to find bottlenecks and other problems. If you have
access to such software, consider experimenting with it to evaluate the top processes proposed by
your BPI team.

Testing your ideas helps you make corrections during the design process, when they are easy and
inexpensive to make. It might also help you find previously unidentified glitches in the process. For
example, during Joe's role-play, the loan officer asks the "customer" for documentation. The customer
replies: "What documentation? I just gave you an application." Joe realizes that providing customers
with a checklist of the documentation they need to supply when applying for a loan would speed up the
application process—and would decrease customers' frustration.

Consider the implications of change

The general who wins the battle makes many calculations in his temple before the
battle is fought.
–Sun Tzu

To further gauge the feasibility of your redesigned process, discuss the organizational ramifications of
the redesign with your team. The table below shows examples of implications you'll want to consider.

Examining a Redesign's Organizational

Implications

Organizational Will the new process require . . .

Aspect

Structure The creation of new jobs,

departments, and reporting
relationships, or major
modifications of existing
structures?

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Depending on the nature of your redesign's organizational implications, you may decide that your
team's proposed process needs further changes.

For example, Joe realizes that creating a loan production coordinator position might tempt the loan
officers to care less about the quality of their work. So he decides to create metrics to track which loan
officer applications required the most work to complete. He then decides to use these new metrics
during loan officers' performance evaluations.

Document your design

Document the latest version of your redesign in an activity flowchart. Omit details about who will do
which tasks. That information will come later. For now, you want to present a relatively simple version
of the process to stakeholders to invite their feedback and ideas.

Gather feedback and refine your process

Present the new activity flowchart—along with information about how you generated ideas for the
proposed process—to key stakeholders. These stakeholders will likely include your manager as well as
others in the company who would be affected by the changed process. Ask:

"Does the process, as designed, address the performance issues identified in the project goal?
Does it enable us to take advantage of important opportunities?"
"Where do you see potential issues arising in this proposed process?"
"What suggestions would you offer to improve the process's effectiveness at achieving the project
goals?"
"In your opinion, have we missed something that's important? If so, what is it?"

By inviting input from stakeholders, you begin building support for the new process your team has
crafted. When people contribute ideas for changing a process, they often feel more committed to it.
Consider whether you want to further revise your proposed process to incorporate some of the
feedback.

Arriving at a final version of your redesigned process is a major milestone. But your team still has work
to do.

Activity: Fix that flawed process

Improving a flawed process isn't easy. But with practice, you can sharpen your skills.

The Pickle Pagoda is a small deli chain that was trying to launch a new sandwich-and-soup recipe
every three months. But the process was not going smoothly. In particular, the chain couldn't seem to
develop the new recipes in time to meet the three-month deadlines. Sally, the operations manager,
has assembled a BPI team to improve the recipe-development process. The team presents her with
three options.

In the first process, chefs develop a new recipe, which is then reviewed with a cost analysis. After
this point, the recipe could either return to development and the process would restart, or the recipe

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could advance to the stage of new recipe training. If the recipe advances, a period of delay will
begin, as the time is taken to procure ingredients. Finally, after the ingredients are procured, the new
recipe will launch. This process has a cycle time of twelve weeks.

In the second process, chefs develop three new recipes, which advance to new recipe training, and
then to a cost analysis review. After the cost analysis review, the recipes could either return to
development and the process would restart, or the recipes would launch. After launching, a period of
delay would begin, as the time is taken to procure ingredients. This process has a cycle time of ten
weeks.

In the third process, chefs develop three new recipes, which are then reviewed with a cost analysis.
After the cost analysis, the recipes could return to development and the process would restart, or the
recipes could advance to new recipe training while also beginning the period of delay as time is
taken to procure ingredients. After the new recipe training is complete and the ingredients have been
procured, the new recipe will launch. This process has a cycle time of seven weeks.

Which redesigned process should Sally choose?

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Redesigned process #1
Not the best choice. This redesigned process contains several problems. For one thing,
developing only one new recipe at a time is risky. If the company has trouble procuring the
ingredients for the recipe once it is approved, a delay will result. The company won't have a
backup recipe in place to launch within the three-month deadline. Also, by carrying out
procurement after training is complete, the company lengthens the recipe-development cycle
time unnecessarily. With several inefficiencies in this proposed process, the cycle time could
extend as long as 12 weeks—too long to develop and launch a new recipe every three
months.
Redesigned process #2
Not the best choice. This redesigned process contains a problem. True, it's a good idea to
develop several new recipes at a time. That way, the company can have a backup recipe in
place in case something goes wrong with the other proposed recipes. However, by carrying
out procurement after training is complete, the company lengthens the recipe-development
cycle time unnecessarily. With a major inefficiency in this proposed process, the cycle time
could extend as long as 10 weeks. That's cutting it a bit close to develop and launch a new
recipe every three months.
Redesigned process #3
Correct choice. This redesigned process seems the most promising. It's a good idea to
develop several new recipes at a time. That way, the company can have a backup recipe in
place in case something goes wrong with the other proposed recipes. For example, if there's a
shortage of ingredients needed for an approved recipe, the company could switch quickly to
another approved recipe for which ingredients are available. It could therefore avoid delays.
By carrying out procurement and training at the same time, the company further reduces the
recipe-development cycle time. With the important efficiencies contained in this proposed
process, cycle time could be reduced to six weeks—which should be a comfortable
timeframe for developing and launching a new recipe every three months.

Think collaboratively

Now that your BPI team has created a new design for your problematic process, it's time to

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identify—and obtain—the resources you'll need to put the redesign into action.

Regardless of what business unit you work in, this phase may require you to collaborate with several
other units or departments within your organization. If the scope of your proposed process change is
large, you will likely work closely with one or more of the following groups:

Human Resources (HR)

IT
Finance

When you finish this phase of your BPI initiative, you should have all the required resources on hand.

Understand resource types

Depending on the complexity and scope of your new process, the resources you'll need can vary
dramatically. For example, a process change may require:

New or changed work roles. With many BPI efforts, you may decide to use consultants or
contractors to perform the redesigned process. Or you may change an existing employee's job
responsibilities so that he or she now performs part of the redesigned process, or hire entirely new
employees to carry out the process.

For example, a BPI team at SalesCo decides to create a more targeted selling process that requires
breaking down the existing sales force into smaller territories. This means that the company must
hire several new salespeople for each of the reconfigured territories.

New equipment or technology. Some process redesigns require new equipment or technology.

To illustrate, to make its product-design process more efficient, NewBrand has decided that
designers need to be able to share their electronic files more easily with marketers and product
developers. In addition, designers have to be able to reproduce hard copies of their designs more
quickly than before. To support these changes, the company decides to acquire new graphics
software and printing equipment.

New physical space where equipment and technology can reside or where people can carry
out the process.

For instance, the BPI team at NewBrand realizes that the company will need to designate space in
the design department for the new printing equipment.

Support from information technology experts.

For example, BigCo's new way of segmenting markets and conducting market research requires
the addition of customer-relationship management (CRM) software modules to the organization's
current customer databases. Several experts from BigCo's IT department will need to step in to
ensure that the new software modules work well with the existing databases and to resolve any
problems with functionality that may arise.

Training.

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To illustrate, once BigCo's new CRM modules are in place, the company will need to train
marketers and customer-service personnel to use the new technology.

New management responsibilities and metrics. A new process often creates new
responsibilities that need to be incorporated into management activities.

For instance, a manager in a department that has overhauled a process may want to start
evaluating his or her employees' performance according to new criteria related to the redesigned
process.

Of course, many process changes are more minor, and require less substantial resources. For example,
to implement his redesigned process for establishing new accounts, Joe may need people from HR to
draft the job description for the new position of loan production coordinator. He may also need
someone from IT to help ensure that the loan officers are using the right tools to enter customer
information.

Obtain resources

Once you've identified the resources you'll need to implement your new process, take steps to acquire
them. To build the infrastructure and gather the materials you'll need, you will likely need to work with
other departments or business units.

For example:

If your redesigned process requires extensive new equipment or technology, you will probably
have to order these materials through your company's purchasing or IT department.
If numerous people will need to receive training in using the new process, you may have to work
with the human resources department to provide the required workshops or courses.
However, if the redesigned process requires just one person to receive training in a relatively
straightforward task that does not call for a change in job responsibilities, you may not need
formal HR involvement. In this case, you may be able to simply ask another employee in your
department to meet with the employee and explain the new task to him or her.

Toward using your new process

With your resources in place and the process design completed and tested, you're ready to implement

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your redesigned process. That is, you'll actually start using the new process within your organization.

Many experts maintain that implementation is the most difficult step in any BPI effort. To boost your
chances of success, think of implementation as consisting of these parts:

Understanding and addressing implementation obstacles

Putting the new process into action

Understand implementation obstacles

Difficulties mastered are

opportunities won.
–Winston Churchill

Before implementing your new process, it's useful to understand common obstacles to implementing a
redesign and to ask yourself whether you've taken steps to avoid them. The table below shows some
common obstacles—with several strategies for preventing them.

Common Implementation Obstacles

Obstacle Explanation and Ways to Avoid

Examples

Resistance Any process change Acknowledge

from carries the implicit employee concerns
employees assumption that by pointing out
people were doing how the new
the wrong thing in process solves the
the old process. So, problems raised by
you can expect the old process.
some resistance to Help employees see
the new process how they will
from employees, benefit from
particularly if there adopting the new
is no easy way for process. And
them to see the clearly explain any
benefits of making changes in
the change. workloads and
compensation that
will come with the
new process.

Resistance If a redesigned This issue needs to

from process crosses be addressed before
managers several departments implementation

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or units, turf —during

disputes can crop development and
up when it comes testing if possible.
time for Managers need to
implementation. see that supporting
Specifically, the new process
managers in some will make their job
units may be easier or enable
unwilling to change them to deliver
the way they work better performance.
in order to put the
new process into To win their
action. support, highlight
the business
problems that the
current process is
causing, their
performance in the
old process, their
ability to improve
that performance
by using the new
process, and how
the new process
will benefit them.

No Every process If the project never

champion change requires a had a champion, it
to push the champion—the should not have
effort person who started in the first
provides executive place. If the
support to the champion has
project. In cases of changed or lost
a major process interest, however,
change, the CEO or remind him or her
a high-level leader of the business
may be the value that the BPI
champion. effort will generate.

The champion Make sure the

provides the champion visibly
executive authority demonstrates his or
to make changes to her support for the
the process and to project to other
reallocate managers and the
responsibilities. employees
involved. A memo

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or e-mail from the

champion is not
enough. People
need to see that the
champion will
make the tough
decisions required
to achieve the
goals.

You can avoid many implementation obstacles by laying the groundwork early in your BPI effort. For
example, help managers and employees see the importance of changing the process, and involve them
in the redesign. The more they participate, the more they will understand the value of the change and
support its implementation. For example, asking people to take part in testing the new process will help
them see that the change is feasible, and will get them on board for implementation.

Leadership Insight: Haste makes waste

I work in the pharmaceutical industry, and in the pharmaceutical industry we are bound by lots of
different regulations by the health authorities. One of the regulations has to do with how do you
conduct investigations. An investigation is usually an activity that gets documented when something
in your manufacturing process may have gone atypical.

And for investigations, the regulatory agencies have certain number of expectations: the quality of
the investigation, the parts that investigation should have, and also the timeliness of the
investigation.

In my company, at a given point in time we were taking, I will say, too long to close an
investigation. The quality of the investigation may have been really good, but it was taking at times
five months, six months to close an investigation.

Usually the industry target is to do investigations within a timeframe of 30 days. When you don't
close an investigation within that timeframe, you can imagine a lot of the batches that you will need
to release to your next customer will have to take longer because you have to have an investigation
closed before you can release a batch.

Management was really concerned with how long it was taking us to release these batches. So we
went to a room to do process improvement: "We're going to fix this, we're going to figure out what
we are doing that is not allowing us to finish in time."

And we went through a brainstorming session. We were excited, very excited. We come out with at
least a hundred activities that we would do to make these investigations close in a timely manner.

Well, we went out, and for the next month, investigations were closing in a timely manner. We were
excited; we thought we had accomplished that task. The following month, everything went back to
square one.

We were puzzled. What was going wrong? We thought we were doing the right thing; everybody

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knew that we had this team that was going to save the world, if you will — and it didn't work.

And one thing we learned from this lesson is, first, we rushed it. And in process improvement, I
think one of the key lessons that I learned is that you cannot rush it. You really need to understand
where you are, which I'm going to call point A, and what is that point B you need to be at.

And point B could get defined by what your management needs. What are the timeframes that you
need? Who are the customers that need to be involved? What are the regulatory expectations or any
other agency that may have expectations?

And you need to apply a lot of the scientific concepts that are out there already — that are available
already — that allow you to do process improvement in a scientific manner that will increase your
chances for success. And that was the key lesson that we learned with this particular project.

Need to speed up process? Take the time to get it right.

Esther Alegria
Vice President of Manufacturing and General Manager, Biogen Idec.

Esther Alegria is the Vice President of Manufacturing and the General

Manager for Biogen Idec, a Pharmaceutical and Biotech industry leader.

She began her career in the pharmaceutical industry as a Quality Control

Technician at American Cyanamid and Warner Lambert.

For 11 years, Esther also worked for Wyeth Biotech in multiple capacities,
including the development of quality control testing and as the Associate
Director of Quality Assurance.

Prior to her current position as Vice President of Manufacturing for Biogen

Idec, she served the company as Associate Director of Product Quality
Management and Director of Quality Assurance/Quality Control.

Esther completed her doctorate in chemistry at the University of Hawaii.

Put the new process into action

When you're ready to put your new process into action, apply these steps:

1. Communicate. Get the message out about the upcoming implementation of the new process.
Give people—managers, employees, and other people involved in the process—time to
understand or reaffirm why the new process is needed, what it is, how things will be different and
better, who was involved in the project, and what will happen when the new process becomes
part of everyday operations. In most cases, you cannot overcommunicate this information.
2. Educate and familiarize. Build a more detailed understanding of how the new process works
through role-play, practice, and simulation. Just as you used these techniques during phase three
(redesigning the problematic process), you can use them now to test (or to demonstrate) how well
your new process works. For instance, if you decide to practice the new process, ask everyone
who will be working in that process to try it out exactly as it's meant to unfold. During the

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practice, watch for problems, and then decide how to eliminate them.
3. Pilot (if necessary). If you suspect that the new process may still have some difficulties that need
to be worked out, pilot it. During a pilot, you run the new process as you would under actual
business circumstances, but you limit the scope of the process. For example, you might try the
new process with just one group of customers, one sales region, or one product category. You can
also constrain the pilot by time; for instance, by running it for several months and then assessing
its effectiveness.

Pilots are riskier than role-play, practice, and simulation, because they involve actual customers,
products, or services. However, if you monitor pilots closely, you can fix problems as soon as
they occur—while gaining valuable feedback that will help improve the process. One other
advantage of using pilots is that the people participating in the pilot will be able help train others
when you roll the new process out to other regions, products, and customer groups. Pilots also
give skeptics the opportunity to observe the new process in action—and to reassure themselves
that it is effective.

4. Implement. Put the new process into production by declaring the start of new operations. Begin
to gather data on the new performance measures related to the process, and be available to answer
questions and support people as they change the way they work. Recognize that there will be a
learning curve and that people will need time to get the process right.
5. Break from the past. Remove the artifacts of the old process to reduce any temptation to shift
back into previous habits. These artifacts may include old forms, paper stock, equipment,
signage, and so forth. Removing these items sends a clear message that the new process is here to
stay.

Toward continual improvement

You've implemented your new process. Now you face another challenge: ensuring that the redesigned
process continues to deliver the results you want. You now need to establish a system for continually
monitoring—and improving—your process's performance. That means identifying problems as they
come up and making the changes needed to correct those problems.

To continually improve your process, you:

1. Measure process performance according to the metrics you've chosen.

2. Identify and take needed action.
3. Update your performance metrics and targets as necessary.

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Measure process performance

In your redesign phase (phase 3), you established metrics for measuring your new process's
performance. You'll use those metrics (along with their associated targets, or specific desired
performance) to monitor the new process and make changes as needed to continually improve it.

The table below highlights examples of the metric types you may be working with. It also provides
examples of metrics, targets, and types of performance data gathered.

Metrics, Targets, and Data

Metric Type Example Possible Data and

Target Source

Quality: Is For a No more Monthly

the new redesigned than two breakdown
process's process breakdowns reports from
outcome free intended to per month. manufacturing
of errors or make a personnel.
defects? piece of
equipment
more
reliable, a
metric may
be: number
of
breakdowns
per month.

Cycle time: For a new No more Information

Does the process than four on timeliness
process intended to weeks to from hiring
produce its speed up fill managers
intended hiring, one position. after each
outcome in a metric position is
timely might be: filled.
manner? number of
weeks to
fill open
position.

Customer For a new One phone Customer

satisfaction: process call needed satisfaction
Are intended to to resolve survey results;

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customers improve customer call center

satisfied with customers' problem. records.
the process's experience
outcome? with your
team, a
metric
might be:
number of
times
customer
calls
service
department
before their
problem is
resolved.

Cost: Does For a Between Monthly

the process redesigned $15,000 expense
produce its process and reports from
intended intended to $20,000 managers who
outcome in a improve the spent on use
cost-effective return on consultants consultants.
manner? investments per month.
in
consulting
services,
one metric
might be:
amount
spent per
quarter on
consultants.