Written by Michael Wood, from Gantthead.com
October 1, 2007
According to a major 2007 survey, the top initiative for CIOs was Business Process Improvement. And according to the Ziff Davis/CIO Insight article “Companies Falter at Aligning IT to Business”, by Brian P. Watson (Sept. 10), “most companies find their IT to be ineffective and poorly aligned to their business.”
While it is good news the CIOs are recognizing the need for better alignment, it would appear that few know how to achieve it. Given the IT world is over 50 years old, the continued misalignment issues are troublesome at best.
Having dedicated my entire professional life to the art and science of Business Process Improvement since 1979, I have come to realize that improvement is the wrong word. Instead, the concept should be Business Process Alignment. I further submit that IT is not alone in the quest for alignment. Business goals are often misaligned with stakeholder expectations; policies rarely reflect alignment and business processes are in need of continuous recalibration.
Getting aligned is one thing. Staying aligned is something all together different. Like the human body--where alignment of the shoulders, spine, hips and so on is critical for good health--so it is in organizations, where the goals need to be aligned with stakeholder needs, the operations aligned to achieving those goals and IT aligned to properly leverage operations. The problem is that like the human body, organizations are in constant motion and subject to outside stimuli that make it change direction, get out of balance and even knocked off course.
Yet alignment is rarely a major focus of executives. It would only seem logical that CEOs and other “C” level executives would be on the constant lookout for misalignments that are coming their way. Everyone talks about being agile, responsive and nimble, yet few actually design their organizations with those capabilities in mind. Instead, they create rigidly structured, silo-ed organizations that fall prey to bureaucratic ways, political infighting and basically poor information circulation.
In addition, far too many companies are overly cost driven to the point of creating major vulnerabilities and losses of control (critical for staying agile and nimble) without sufficient counter measures. Take the disaster that befell Mattel this summer, having to recall more than 10 million toys due to quality issues (lead in the paint used on toys, magnets that fall out of toys, etc.) in their outsourced China supplier.
In the name of progress and improvement, more and more enterprises are diluting their ability to compete and prosper in a sustained manner. Is there any wonder that business processes would be misaligned, and thus the supporting IT systems and organizations?
The following model illustrates this point:
As can be seen in the model, there are many influences that can impact the alignment of an organization. To the extent a company has control over the stimuli that shape it, it has the ability to plan and systematically respond to change. However, as the source of those stimuli come from outside influences like government regulations, global events (economic and otherwise) and changes in the competitive landscape, companies can find themselves in a reactive, knee-jerk mode and often have no mechanism in place for attaining a new state of equilibrium.
No matter the policies or aspirations of an organization, a simple reality remains. If the company cannot quickly and painlessly modify its value delivery systems and supporting IT systems and infrastructure, it cannot sustain prosperous growth.
Unfortunately, chasing costs is often like pouring gasoline on a fire as they misdirect critical resources with across-the-board budget cuts, hiring freezes and project cancellations. What companies should be doing is taking a more strategic view of its place in the world (or at least its industries) and set in motion misalignment detection/early warning systems. Their performance metrics should focus on measuring alignment issues such as goals to stakeholder expectations, business process effectiveness in supporting stakeholder-driven goals and objectives, and IT effectiveness at leveraging and streamlining end-to-end business processes.
Companies should be continuously engaging its workforce to tackle the implications and responses to outside events like pending changes in regulations, another 9/11 or Katrina, etc. These scenarios need to reach down deep into the organization and not just become battle strategies created in the boardroom. All this takes investment, which is virtually impossible in a world where we cut costs because Wall Street fears the need to exceed stock price expectations quarter by quarter.
To achieve alignment, those needing to be aligned need to be in the loop. They need to be constantly aware of the outcomes that customers, employees, owners and the community need and expect. All focus should then be placed on monitoring how well these outcomes are delivered and on ways to improve the delivery process. From the boardroom to the data center and all points in between, alignment must be the focus.
While to some this might appear to be pie-in-the-sky type thinking, it isn’t. Consider some of amazingly successful companies like Starbucks, Costco, Amazon, Nordstrom and Google in contrast to American car manufacturers or the major airlines. With only minor inspection, it becomes intuitively obvious that the first group understands its customers, knows how to take care of its workforce and delivers superior returns to its owners, and how poorly the second group does across the board in delivering value to its stakeholders.
For example, while Starbucks is reinventing itself from a coffee house to a cultural icon where people can congregate to socialize, enjoy music, purchase food, coffee and other supporting paraphernalia, airlines are searching for ways to increase seating capacities, reduce services and lower traveler expectations. So who is thriving, and who is slowly going out of business? Who do you think has a more aligned business model: effective business processes, or IT environment? It is all related, and part of a finely tune gyroscopic mechanism that is continually seeking equilibrium, balance and alignment.
Business Process Alignment begins in the boardroom with the basic premise that sustained success can only be achieved through an aligned organization. Next, this premise must become the mantra of management and be driven down into the culture so that everyone, everywhere is living and breathing the alignment philosophy. Of course this implies that the goals of the organization are stated in simple and operational terms, and communicated frequently and often to the workforce. It requires that processes be put in place to continuously collect, review and discuss alignment-related information.
Has this been tried before? Sort of. Remember the TQM, quality circles and continuous improvement initiatives of the 1980s and ‘90s? While the hearts of those trying to implement these ideas were in the right place, their tools and perspectives were not. They just didn’t understand business processes or alignment concepts sufficiently to make it all work. Instead, they tried to implement TQM within departments or other silos. The concept of customers became “anyone and everyone you do something for”. It was given to HR in most organizations to implement--a bad idea at best. Thus, TQM gave way to small-mindedness, bureaucratic methods, suggestion boxes, fishbone diagrams and other inadequate tools and approaches.
For Business Process Alignment (BPA) to work, it needs to be integrated into the business planning process. The planning process should contain the following components:
GAP Analysis that identifies the company’s short falls in achieving alignment with stakeholder needs and expectations.
Operationally measurable goals and objectives focused at closing Stakeholder Value Delivery Alignment Gaps.
Business Process-level GAP Analysis that identifies existing impediments within the way core (end-to-end) business processes are performed and managed that stifle the organization’s ability to achieve its goals and objectives.
Business Process-level goals and objectives that focus on the changes needed to be implemented within each core business process (procedures, technologies, people, policies, etc.) in order to support the achievement of the enterprise level initiatives.
Scorecards that focus on each business process level objective’s achievement in context to its contribution to the enterprise level goals and objectives.
Commissioning of Business Process Oversight Groups that gather monthly to review progress against the goals and objectives, identify and implement corrective actions to recalibrate the processes as needed to stay aligned as well as to review potential impact of future non-controllable events.
Communication Plan and Process for keeping the workforce at all levels informed of the progress being achieved.
Group and Individual Performance Plans supported by an Incentive Program designed to reward all who measurably contribute to the achievement of the objectives.
Part of the alignment effort is the creation of an environment and culture that fosters buy-in, both emotionally and economically. By driving the business planning effort down to the individual performance level, a natural buy-in process occurs.
This Top-Down/Outcome-Driven/Bottom-Up/Solutions-Driven approach virtually guarantees that initial and continuous alignment will be achieved and maintained. The annual and monthly renewal cycles provide the framework needed to rivet focus on the critical needs of the organization and to change the way business processes are performed quickly and pro-actively.
In addition, IT as an integrated participant in the process is properly engaged, and therefore has the input and information it needs to stay a step or two ahead of the organization, instead of lagging two to four years behind the change curve.
When an organization adopts and embraces a business process alignment approach to planning, executing and rewarding the outcomes it achieves, sustained success is virtually guaranteed.
Moving from the current approaches to a BPA approach does not come without a price, however. The first year can be fraught with growing pains, fears and doubts. After all, we are talking change with a monumental capital “C” for most companies--in philosophy, approach and process. Plus, the changes needed to bring the company into initial alignment may be widespread and take multiple years to achieve. It is therefore important that the company be objective and prudent in how it pursues the changes needed. Trying to do too much at once could be like trying to boil the ocean: impossible.
Instead, once the total gaps and corrective actions are defined, a systematic change strategy should be developed that moves the organization toward alignment via a series of implementation waves. Just like any major change, the body is going to resist, time must be given and momentum sustained. Waves of continuous achievement will insure momentum and will provide the framework for buying enough time to achieve the end-game.
Most seemingly problematic to the overall process is IT’s ability to change its business applications quick enough to support the business changes planned. However, by engaging IT in the process from Day One, acknowledging that changing foundation stones is more difficult than window dressings, and by approaching the business application change process correctly (data structure deficiencies first, presentation layers last), the IT-related issues should not represent the biggest challenge. Instead, the real challenge will most likely be that of human resistance to change, of doing things differently, of letting go of old ways. This is why the approach and tools used is so very important. The effort must be consistently driven by top management downward. The message must not rely on layers of communication (chain of command) to be delivered, but rather delivered by the CEO directly and echoed accurately by every middle manager throughout the organization.
Zero tolerance for passive resistance, subtle sabotage and outright revolts should be initiated. The workforce will be skeptical and fiefdoms threatened, dismantled and destroyed. But steady, un-daunting pressure will win the day. In the end, the company will be more successful, with happier and more dedicated employees and a far more satisfied and loyal customer base. Oh, and those owners? They will be smiling ear-to-ear as profits grow. Remember, its all about alignment... Business Process Alignment.
