A strong process culture is the indispensable, critical foundation to start working towards higher levels of the Objective & Analytical Culture maturity model.
Without a process culture, a company is likely stuck on the suboptimal side of analytical maturity model. Although this may be obvious to some, others hold a stigma against a process culture. So, let’s debunk those first.
What is Process?
Like many other common words used in business environments, there are a lot of opinions on what “process” implies. Without using the textbook version, a practical definition in a business context is: Process is the well-articulated set of guidelines, criteria, and conditions that employees are expected to perform or technologies are designed to replicate, in order to achieve the same repeatable (same person should get the same result every time) and reproducible (several people should get the same result every time) outcome, which in turn helps the company achieve its overall goals with improved productivity over time.
As an additional note, process definitions are documented and sharable. A basic sniff-test for existence of process definitions is “show me, don’t tell me!”; an environment that discusses processes verbally, without documentation, is likely to be operating in process chaos (see Myth #3 below).
Process definitions get a lot of flack these days, especially at small- and mid-sized companies. Why is that? A strong process culture makes everyone’s life easier and creates more value for companies. No company grows slower because they have process rigor; no company gets less exit valuation because they are operationally excellent. It is likely because many employees in small- to mid-sized companies have never operated in environments that achieved operational excellence and enjoyed the benefits. So, there are biases surrounding strong process cultures. Let’s go through some of the common myths.
Myth 1: Process doesn’t allow agility
On the contrary, clarity on processes enable companies and Frontline “Variable” Resources to move extremely fast. Consider this: Is a well-mapped and well-travelled path easier or harder to take than an arbitrary, untraveled one? Obviously, the former.
Saying that processes slow operations down is analogous to saying that it is faster to get in a car and start driving immediately without looking up directions or knowing the roads. Usually, it just results in drivers taking wrong turns and stumbling their way to the destination, if at all. That’s what well-defined processes remedy; they allow employees performing similar tasks to follow predefined directions on the fastest roads to reach the desired destination quickly and at similar times.
Myth 2: Process design is resource intensive
One should not confuse the difference between process design and process reengineering. If process design is a prevention effort to run an efficient organization, process reengineering is the cure against past sins of running an organization in operational chaos. The latter is considerably harder than the former!
Process design in small- and mid-sized companies can be very quick and adoption can be quick as well, if the company has the culture to embrace it. The prerequisites for adoption are the right Core Values and a Comparative Advantage Culture. Senior executives’ advocacy and unwavering support about the importance of operational excellence is a foundational expectation to drive towards an Objective & Analytical Culture, spearheaded by process definitions.
In addition to senior executive support, the second most common challenge to process design is that it is often assigned to people who have little experience with doing it or are trained in it. Poor first-time designs lead to a continuous cycle of reengineering, which creates a perception that process design is resource intensive. It would not be, if the task is delegated to resources with appropriate expertise.
Myth 3: Process design is an option
The choice isn’t whether a company defines its processes or not – it always has processes. The choice is only whether they are good or bad. Even if a company chooses not to choreograph day-to-day activities of its critical teams, it has processes. Unfortunately, the default state is every employee choosing their own way and leaving the organization in operational chaos.
Every human develops good or bad habits and they change them as they wish. In this default state of process chaos, the organization pays for it because it cannot explain what employees are actually doing or which activities are working well. So, the only choice a company has is to improve upon the default state of poor process culture.
Process: The Central Nervous system
The temptation to ride the early stage growth wave without developing consistent operational behaviors is understandable; but not advisable. The moment an organization hits a rough patch and needs to course correct, the organization will need a baseline to course correct from. The organization will need data to understand which direction to go next; without process there is no data. Scaling without behavioral consistencies is a huge resource tax on the company. Let’s dive into these a bit more.
Benefit 1: No data without process
Often data and process are considered separate concepts. Nothing could be further from the truth. Data is just the ongoing recording of measurements associated with behaviors demonstrated during specific steps in processes. These measurements are meaningful if the process and specific steps are designed well. Conversely, measurements are practically useless and impossible to assess if the underlying behaviors are not well-defined and unpredictable.
If you are an analyst, have you ever tried to make sense out of a data set and decided that the conclusions don’t make sense? You might have call the data set “bad”. The truth is data is just data. It is the underlying process that is bad. We will explore this concept in detail in Understanding Data; but for now – one of the major reasons to have well-defined processes is to capture coherent data in order to understand the company’s performance.
Benefit 2: Improved efficiency of frontline resources
As an extension from Myth #1, in a strong process culture, Frontline ‘Variable’ Resources will be able to spend more of their time executing their core skills that drive most value for the company. They will have support from the company in the shape of solutions to repetitive problems, preventing each employee from losing time to solve the same problems independently – these solutions are part of process definitions.
Poor processes significantly reduce productivity of expensive resources. As a practical example, a company where sales reps spend 50% of their time on administrative tasks is essentially throwing away a significant portion of revenue upside. In turn, the company will likely have several more sales reps on staff than necessary. This unnecessary spend on sales reps takes away from product design and development investment, limiting future growth prospects. A strong process culture allows employees to focus strictly on value creating activities, thus creating significant organizational efficiencies.
Benefit 3: Improved efficiency of managerial resources
Let’s plug back into the same scenario under Benefit 2 about the company with poor sales processes. At such a company, a sales manager is likely only able to manage fewer sales reps than at a company with a strong process culture. In a poor process culture, an effective sales manager will have to spend a lot more time managing each rep because reps operate differently and there are no economies of scale for the manager’s activities. Now, we have a company that also needs more sales managers on staff due to poor sales processes, compounding the company’s woes around investment allocation and future growth.
The takeaway here is that a strong process culture doesn’t just create efficiencies for Frontline Resources. It eliminates waste at all levels of the organization, which can be redirected to revenue generation or customer value creation initiatives.
Benefit 4: Necessary problem-solving foundation
Imagine getting lost in a huge shopping mall, while you are looking for a specific store. What do you do? You look for a map of the mall. Why? Because it orients you and tells you where you are in the big complex building. Process plays exactly the same role in day-to-day business operations.
If a specific operational problem arises in a company, there is absolutely no way senior executives and operational managers will be able to diagnose and resolve the problem without a frame of reference on how things work at the company. Too often, senior executives, managers, and frontline roles talk in circles about operational problems and have little success explaining their perspectives to each other. This happens because there is no frame of reference that everyone can look at and work from, to understand each other and solve problems. That frame of reference is a well-articulated process design.
To summarize, a process culture is the first and foundational step to maturing as an analytical organization. Once key stakeholders get beyond myths around processes and embrace its power, the company opens itself up to availability of deep internal data and significant operational efficiencies that enable diversion of investment into initiatives that improve future growth prospects.