|
||
|
||
|
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
Dr. Rummler died suddenly on 29 October 2008. He brought his experience to the issue of organization effectiveness, and his keen insights are ones that will enable BPM practitioners to focus on the right work.
Interview conducted by Daryl Plummer and Elise Olding in May 2008.
Part 1: BPM and Value Creation Daryl Plummer: Dr. Rummler, you are well known to me through your writings and through conversations about you with other people. When you look at the arena that we're in, which is generally thought of as process improvement and process management, it's an interesting thing that's been going on for a while. One of the things that always interests me is what the outcome of all the noise and gnashing of teeth will be. In other words, what's been the impact, in your mind, of process management, process improvement, and process re-engineering that's made it all worth doing? Dr. Geary Rummler: Well, I'm "underwhelmed" by the impact that the field has had. The field – I think – is broader than process improvement. I believe "process" can have both strategic and tactical impact. Most of the work to date – going on for 15 to 20 years – has been about process improvement, which I think of as tactical. Twenty-plus years ago, based on our early work at Motorola, I had hoped that the field would move fairly quickly from just process improvement to process management to management by process – that management would see that improved/redesigned work processes needed to be managed to remain effective and that you can effectively manage the business by managing those processes as a system. Executives in the Motorola semiconductor sector were beginning to do that in the mid-1980s. Once those executives understood the network of processes that made them successful and the need to manage them, they began to put metrics in place and systematically manage processes to achieve significant organization results. The results we saw there were very powerful, very rewarding, but as it turned out, very misleading. As we worked to improve processes in other organizations, it was hard to get the management support that was required to go to the next level – from functional alignment to process management. What I missed about Motorola was the competitive pressure those executives were working under. Because of that pressure in the mid-80s, they made things happen. They selected the processes to be improved, they participated in analysis and design of the processes, and they managed redesigned processes to get the desired results. Over the years, as re-engineering became a fad and peaked, there was not the competitive pressure, top executives were not concerned and involved, process work dropped from strategic impact to the more tactical continuous process improvement. And now there are turf wars between competing process improvement philosophies, methodologies and technologies. Crazy, counterproductive stuff. The notion of impacting the way a company manages has been lost, as near as I can tell. Plummer: I was very interested to hear you say that you've been underwhelmed by the impact. It suggests that there's infighting and still a lack of understanding of how to apply the principles associated with all of this in any consistent way. Would you agree with that, or is there something else that plays a part? Dr. Geary Rummler: Well, I think that's definitely a piece of it, Daryl. But an even more important piece is that the process improvement and management activities have largely been performed at the wrong level of organizations. Let me explain, using the graphic in Figure 1, which I used in my keynote address at your conference. Figure 1 shows what we call the "value creation hierarchy" of a business. This is a generic top-to-bottom model of the structure of the value-adding work required for a business to produce products/services valued by customers. The work of the value creation system of any business (Level 1) can be further decomposed to three major subsystems (Levels 2 and 3) – product/services launched, sold and delivered. The subsystems consist of critical processes (Level 4), which in turn, consist of subprocesses and tasks (Level 5-plus). Level 5 is where subprocesses connect to the performers of the work; either human performers, technology system performers or a combination of the two. Level 2 of the value creation hierarchy (VCH) is critical, because that is the last level at which the processes of an organization are connected to customer expectations and business requirements. Implicit in this view is that each of these levels of process decomposition can/should be linked to the next higher level. In fact, starting at the top – starting at Level 2, where the value creation system is connected to customer expectations – each level of process provides the performance context and requirements for the next lower level. So, if you attempt to identify processes at Level 3 or lower (with no link to Level 2 and customer expectations), you are operating in what we call the "suboptimization zone." That is to say, you could well be improving (optimizing) processes in isolation, and thereby suboptimizing the larger system at the next level up. Now, in the context of the VCH, I submit that the majority of process improvement work has been done on subprocesses at Level 5, or best case, at the process level at Level 4. Assuming Level 4 is best case, that means the process improvement work is separated by two levels from business goals. So, a combination of working at the wrong level in the VCH and the fact that at Levels 4 and 5, the process work is usually taking place in functional silos, the chances the process improvement results consistently impact business results at Level 2 is somewhere between slim and none. No amount of good intentions and good technology can overcome this reality. Plummer: Consistency, I believe, is a big part of success. And if, in fact, we're looking to drive more consistency into process improvement, do you believe that business process management, as it is incarnated today, will make that much of a difference – that it will make a difference from what's been done in the past? Things like TQM, re-engineering, Six Sigma and so forth. I know Elise has a number of issues on this, as well. But what would you think about it? Dr. Geary Rummler: Daryl, I need to be sure I understand what you mean by BPM before I try to answer that question. Plummer: Very fair, very fair point. And I want Elise to chime in here as well. When I think of business process management, I think of a discipline and a methodological approach to how you manage the way you do things. And more specifically, in a business, the idea of how processes work to achieve goals is something that can be thought of as an implicit thing, you just do it – or it can be thought of as an explicit thing, where you have defined what the steps are, what the decision points are, and what the results are intended to be. When you start doing that explicitly, you're able to manage it as a logical act, as opposed to just doing it as a side effect of something else. So when I think of it, because I'm operationally focused, that's what I think of BPM as being. Rummler: That helps. I agree. That's a good definition. Elise Olding: Yes, and I think the one thing I see, too, Geary, is that process management differs from methodologies like Six Sigma, which – although very valuable – are more of a narrowly focused process improvement and don't enable an understanding of the bigger picture. BPM ties that bottom-up continuous-improvement aspect with a top-down strategic view, since you've got everything interconnected. Rummler: I agree with that as well. So, we're in agreement that what's necessary is a sound underlying methodology for looking at, understanding, and managing processes. And that there is a process improvement and management methodology that is distinct and separate from technology. And that the methodology might cause you to apply technology as part of what you're doing, but it's not all about technology – is that fair? Olding Yes. Plummer: Absolutely fair. It's not all about technology. In fact, I would say it's not that much about technology at all. Olding: And I think my personal view is that technology is an enabler and a tool, but it's not always the solution. Rummler: Okay, good; we're in agreement. But the confusion between process and technology is a real issue. In that regard, Elise, I was interested in your comments before Daryl came online, about your experience at European conferences. Because here in the States, when you go to various BPM conferences – to a degree, even your conference – BPM appears to mean the latest software thing. And if you walk down the vendor aisle at these conferences, by the time you reached the end you'd be convinced that BPM is all about technology. But that's an aside. So, back to your point, Daryl: You need to have consistency; you need to have a methodology – which incidentally, we have, as do several others. But the first piece of our methodology – at least in terms of an improvement methodology – is to be sure that you're working at an appropriate level in that value creation hierarchy of processes that I just mentioned. Because consistently working on a Level 5 subprocess, buried in a function, disconnected from the business goals at Level 2 might be interesting and get you a high score in your process-maturity rating, but it sure looks to me like a waste of time and money. And it is the kind of waste of resources that causes senior management to wonder if this process stuff is getting them the payoff they were led to expect. Olding: We are seeing that our clients are struggling with getting the big benefits and the value BPM promises. So, what would you say they need to do in order to really prove the value of BPM and so that the impact is overwhelming – to talk to your "underwhelming" remark? Rummler: I think the answer is in the hierarchy shown in Figure 1. It is a matter of where in this hierarchy you identify a process to improve. For example, if somebody is directed to improve the order entry subprocess (Level 5 in Figure 1), but for one reason or another they are not able to connect the requirements of that subprocess to the larger order-to-cash process requirements (Level 4), the product delivered processing subsystem requirements (Level 3) and the value creation system requirements (Level 2), there are going to be two serious problems. The first is, how would the erstwhile improver of the OE subprocess know what is important to improve in that subprocess? And how do they know the improvements they make to the OE subprocess don't screw up a downstream subprocess and subsequently suboptimize the total order-to-cash process? The second problem the OE subprocess improver will have is they can never demonstrate that their improvements had any impact on business results at Levels 2 and 1 of the value creation hierarchy. Our experience is you cannot start by identifying and "improving" a process or subprocess in the vacuum of Levels 4 and 5 of the VCH. If you can't establish a connection to desired business results at Level 2, at the initiation of an improvement project, you sure as hell can't run around and find a connection after you have made supposed "improvements" in the process. In all our process improvement work since the Motorola days, if we can't make that connection to business requirements at the outset, then we don't have a deal. Plummer: We run into, quite frequently, people who are "modeling things for the sake of modeling." I think it's the way Elise put it. They don't seem to know why they're doing what they're doing. This seems to be potentially a devastating thing, because it leads to frustration, it leads to a lack of success overall. Rummler: I agree totally. That stuff is killing the field and I hate it. That's what leads to management thinking BPM is a fad – to fadlike behavior and a fadlike lack of results. This is what I mean when I say BPM has descended into the weeds – and I define "weeds" as Level 5 in my diagram in Figure 1. These subprocess efforts are not connected to Level 2 and business results. There is no business context for what these folks are doing. So, they model the "is" process (they can't get to a "should" because they don't know what the Level 2 requirements are) and they play with the latest modeling software tools. No wonder you are hearing grumbling about the poor return on BPM efforts. Part 2: Process Is Here to Stay Plummer: I go into businesses all the time and talk to them about how they bring IT and business together with BPM. I often find that the business doesn't want IT looking at their processes. They don't want, necessarily, to develop a discipline around it, because it exposes too many flaws in the way that they go about doing things, or in the fact that something they might do is no longer necessary. So, how do you get past that? Do you believe we have to get past that, or is that something that will just exist and we have to learn to live with it? Rummler: We definitely have to get past that resistance. A strategy we have used for years is simply to go where somebody has a level of pain that leads them to say, "OK, we'll give up our privacy, to have you take a look at our system, because we're so messed up, and we're going to be in deep trouble if we don't fix it." We will certainly not give up that strategy. But we are now pursuing another angle, which I mentioned in my Gartner Keynote. We are hoping, through two new books and other efforts, to convince business executives that, for years, they have been focused on just one of the two critical dimensions of a business. The two dimensions are, first, the value creation dimension, which creates and delivers valued products/services to customers. The second dimension is the resource dimension – those critical resources (money, people and technology) needed to fuel the value creation dimension. Our argument is that management has focused almost exclusively on the very visible resource dimension of business and virtually ignored the nearly invisible value creation dimension. The value creation dimension, the value-adding work required to create and deliver valued products and services, is really the backbone of the business – a business will be only as successful as the value creation dimension (or value creation system) is effective. Yet that value creation dimension is unarticulated, unmanaged and in chaos, in most businesses. Of course, we know this value creation dimension or system by another name in business today; we most often think of it as the work system or processes operating in a business, buried in functional silos. The trick is to not look at processes as tedious and costly work activities (a resource dimension view), but to realize that a business is a network of value-adding work processes that can and must be wired together into an effective value-creating system. We argue that "process" is the mechanism for articulating a top-to-bottom (Level 1 to 5 in my Figure 1) value creation architecture of a business. We plan to develop these architectures for businesses and use them to show executives that processes (Levels 4 and 5 in Figure 1) can and must be linked to Levels 2 and 1 in their businesses. The IT organization has been working on what it calls business process architectures for some years now. But the pictures are technology-centric and generally make sense only to other IT folks. Our version of this architecture is business-centric and causes executives to say, "That's the whole darned business. I can see that. And I can see where in this picture I can take an action, which leads to business results." We are encouraged by the early results of helping organizations map their value creation dimensions or systems. It puts process in a value context. Olding: Geary, I agree with what you just suggested. At Gartner, what we have been talking about is this idea of having a different representation of a model for IT, and a different kind of a modeling approach for the business. But still, how do you get that message to senior management? Why they should be interested in this? What the value is going to be, and what are the risks of them actually not doing this? Because I don't really think that message is being articulated very well. So, if you were in the elevator with a CEO, what would you tell him about this? Rummler: One of the most useful lessons I learned as a young businessman was the difference between product/service features and benefits. Always sell the benefits. Consultants and staff people spend too much time talking about the features of their particular brand of expertise and not enough time figuring out and communicating the benefits of their special sauce to their customer – the executive. Ideally, before I found myself on an elevator with a CEO, I would have learned everything I could about his/her challenges and be in a position to say, "I recently helped an organization successfully solve a problem very similar to the one you are facing. If you like, I can give you the name and number of an executive who can describe what we did and the results." If I had no insight into the CEO's challenges, I guess my elevator comment would be something like, "Who do you think will win the Super Bowl?" Olding: So, that implies that it's very necessary to consider the specific circumstance that a company's in, and not just do BPM for BPM's sake, which seems to perhaps be somewhat the trend. Gartner research points to CIOs saying improving business processes is their most important issue, which I interpret to mean establishing BPM could be their No. 1 initiative. Rummler: "BPM is our No. 1 initiative." Boy that sounds like a solution in search of a problem. Classic – features rather than benefits – and very common. We have begun working with an organization that had a strong internal element that was initially pushing to become a "process-centric" organization. But at the same time, we encountered a second element in the organization, more bottom-line oriented, who stated very clearly that for competitive reasons, they needed to improve the customer experience. Our response was, let's focus on the redesign of the customer experience system to meet customer expectations and business requirements. In the process of implementing the improved system, we will convert your organization into a process-centric organization. Our experience is that it is very difficult (and dangerous) to sell BPM on features alone. And I'm betting that the majority of those CIOs who say BPM is their No. 1 initiative are going about the task without understanding and communicating the benefits of BPM to their clients. More BPM disappointments in the making. Olding: What I'm taking away from what you say is that, even at Gartner, we need to be a bit bolder about being clear about the success criteria, and maybe even give guidance to our clients that they are not going to be successful. Rummler: Yes, I think so. You have the reputation as the premier BPM conference – you have a lot of influence. Gartner is in a position to provide some much-needed BPM leadership. But in that regard, I have a couple of impressions to share with you, based on my experience at the Las Vegas conference. First, Daryl's nice definition of BPM aside, technology had a heavy presence at the conference – it was hard to distinguish technology from underlying process methodology. It seemed to me there was sparse evidence of methodology, compared to technology. The second impression was that there were a lot of examples of process work at the tactical level – at Levels 4 and 5 of my Figure 1. I realize that some of that is necessary, since that is where a lot of the attendees are currently operating. But you/we need to show them some strategic (Levels 3 and 2) applications – process principles applied to designing/redesigning businesses and improving subsystems of processes. They need to see the potential they have to make significant changes. If they don't, I believe they will always be content to fiddle with pretty insignificant stuff. Plummer: So – fixing things. I'm just listening to you guys go through this, and I wonder about the future and whether or not people will come around to the appropriate way of approaching the methodologies of BPM, or whether they will just simply abandon it and move on to the next big thing, ultimately. Companies are notorious for trying things for a short period – especially in the U.S. We find differences in other parts of the world, but in the U.S., we have short attention spans. Is this something we'll learn to fix before we move onto the next big thing, or are we going to get it right? Rummler: Daryl, I am convinced "process" is here to stay. It has already survived the "re-engineering" fad, and I'm sure will survive the technology confusion. Why? Because businesses need valued products and services, leading to profits. And those two things come about only as the result of sound internal work processes. I think the next phase in the evolution of process is the recognition by business that process is the building block of the value creation system required for their ultimate success. Olding: Back to what we were talking about – the necessary conditions for success of the process discipline in a company. Can you highlight what those necessary conditions are and what kinds of success you see for companies that do this well? Rummler: Elise, I think there is only one critical condition for success that must exist – and that is the existence of a critical business issue (CBI) in the client organization. If there is no CBI (hard to believe) or management is in deep denial as to the existence of one, then serious, transforming BPM is not going to happen. Period. There may be misleading "demonstrations" and "concept tests," but nothing of substance will happen. How can it? Serious BPM costs money, takes time, and can upset a lot of apple carts, and you can't do that without an equally serious business case. I guess you could argue that a second condition – or factor – is that the internal BPM practitioner is about 70% a smart business person and 30% a BPM expert. Because the key to their success is going to be finding the critical business issue, understanding how BPM can address it, and then convincing top management to make the investment. I guess those are the two conditions: an opportunity and somebody capable of exploiting that opportunity. Olding: Given that, we do see clients that – and I've also, in my personal career, done this – start out a little bit under the radar. But obviously, those of us in the industry that have been practicing this know that there is a bigger picture. So, do you think that someone starting out in a very small role, doing some process improvement work can engage an organization and help them see this larger value by applying some of these consistent practices and principles, and bringing this forward to the management? Rummler: Possibly. But I stand by earlier comments about the two critical conditions required to make a significant difference. The notion that we're working on, of there being an internal value chain or a value creation system, and that you can document that fairly quickly – that's where, I think, that would be the next step for an inside person. Like you say, the profile is that they believe in this, it makes sense, they've seen results, they start playing around with it on a small scale and try to leverage that. How do I go about getting a picture of the value creation system of my business, of my employer? Sort of from the bottom-up. Which I think can be done, but we haven't done a good job of teaching people how to do that. Because I think if you get that picture, then two things. One: When you've got an understanding of your organization's value creation system and who the players are, it will change that practitioner's perception in terms of how they pick and choose projects to work on in the future. It will show them where there are high leverage points, and so, those lower-level projects will bear more fruit, because they're more strategically positioned than they might have been if you didn't have the blueprint of the organization – the architecture there. And Two: I think that that can lead to some middle managers, upper-middle-management people, saying, "Wow! How did you do that?" And then you can roll out that picture and say, "Well, I can do that because I got this understanding of how this organization fits together." And I think that once you begin to get some of those documents in front of people – and I don't mean the BPAs – with a technology focus that IT comes up with, that would scare anybody – but something where a vice president can actually understand their business, and have a broader picture of it, and see that it's not going to bite them. Because they can't help but see opportunities with that picture. So, that's a piece I like to think about – how we upgrade the well-meaning practitioners that we've all been, and know, and love out there – to get them to see where they can have this higher impact. Olding: That sounds like great advice to wrap this up with, Geary. The concept of making sure that we take the big picture into account. I do see some of our clients somewhat resistant to doing that. And then, even to Daryl's point, a lot of these initiatives are starting in IT, and the business doesn't think that IT people can create that bigger picture. So, I think there's huge value in pushing that message out and making sure that all of our clients (and everybody engaged in this kind of work) do that as a real foundation for the work that follows on. Plummer: Well, yes, I think it's a very interesting conversation. I think there's some very surprising things in there, in that it's not a sure thing that we'll figure this out and that it's going to be successful, but there are ways of approaching it that would be much more effective than others. And that's always a good thing to get out there. I want to thank you for taking the time to join us here. Rummler: Great. If you could make sense out of that, you'll be real magicians. Subsequent to our interview, we learned of Dr. Rummler's death. We mourn his death and thank him once again for a wonderful opportunity to interact with him. In the world of BPM, he was truly one of the magicians. We will remember.  |
|
|
|||||||||||||||||||
|
|||||||||||||||||||||||||
|
