One of the most important tasks that your senior management team will perform is strategy management. This is a fundamental part of their role and responsibility and designing your management system fts absolutely into this category of activity. It is, after all, the defnition of how your organization will be managed to deliver your objectives. There are a number of key steps within a successful strategy management approach, and Table 3.1 shows how the major elements of the PBMS fulfl these key requirements. It should be noted that if you want to maximize your performance, all of these activities should appear somewhere within the key processes that make up your PBMS.
Table 3.1 The key elements of a system
Strategy step PBMS activity
1 . Understand key stakeholder needs
This is likely to be part of your current activity but there will be an ongoing need to continue understanding such needs for any organization to be successful
2. Prioritize these needs into the strategic objectives for your organization
You may have already defned your strategic objectives and will need to have an understanding of these in order to defne your key processes. The processes are, after all, the way in which they are delivered
3. Defne the organizational structures that can best deliver these objectives
This includes developing both the functional structure that you wish to adopt and the defnition of the key business processes that comprise your PBMS – both are essential. As objectives change over time, you will need to review both your key processes and your organizational structure to make sure they are still appropriate
Strategy step PBMS activity 4. Develop and gain agreement
to the business plan and performance measures
This includes defning the business plan itself, your
organizational policies and identifying the standards (including customer standards) and frameworks to be incorporated.
This then needs to be reviewed with appropriate
stakeholders, or at the very least against your understanding of their needs. This review aims to ensure that it provides overall consistency, that it refects a correct understanding of what is to be delivered and of how its performance is to be measured and reviewed (system/strategic KPIs)
5. Communicate the business plan to all people involved in implementing it and gain their commitment
Communication and involvement are the key elements of this stage, whether for a PBMS or for traditional approaches.
Involvement of your people (and key suppliers where appropriate) in the development of the detailed processes themselves provides signifcant support in achieving this 6. Implement the business plan This includes managing the performance of your processes,
both at process output (system) and process element (process) level. This is achieved through adopting effective process ownership by appropriate managers, and the routine use of cross-functional process teams to manage and improve at each detailed level. Their knowledge of and commitment to the process objectives makes this possible
7. Review performance Reviewing process performance is achieved by using the targets set for each of the KPIs. This is carried out through regular senior management and process team meetings that focus on process performance rather than departmental performance. An appropriate review routine creates the best way to do this, supported by ad hoc reviews for specifc short-term issues that arise. This routine will refect the frequency required to ensure appropriate levels of management are achieved
8. Improve performance Carry out changes and implement improvement projects based on performance areas that are not meeting requirements, or which can be further enhanced to add value. Effective prioritization is essential if ‘initiative overload’
is to be avoided. These can either be strategic changes, where the senior management team decide on major issues, or tactical changes, where the process teams or team members are empowered to improve their part of the process
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Strategy step PBMS activity
9. Review strategic performance with stakeholders and set new objectives
At appropriate intervals check that customers and stakeholders have been satisfed by both the products and services, or other deliverables, you have provided them with.
Check also that customers and stakeholders are satisfed with the way those products and services were delivered. There also needs to be a review of their anticipated needs so that they can be considered and prioritized for future changes of product, service or organizational structure
You will perhaps have recognized the pattern shown within the table, which demonstrates one of the key elements of any successful system and which comes straight from performance improvement theory. This is the fact that strategic management is basically the same as any other management activity – it is based on the Plan, Do, Check, Act cycle. As indicated just before this table the other thing that is important to understand is that the items under the PBMS activity column should all form activities within the processes that constitute the PBMS itself. If these activities are essential for effective strategic management they need to be covered somewhere within the ‘system’.
The starting point
The activity of creating your PBMS is really encapsulated within steps 3 and 4 of Table 3.1. Before jumping into the activity of trying to defne your key processes, it is essential to understand that there are a number of important prerequisites that need to be available in order to be successful. These provide the required inputs into the process of creating the management system itself. They are:
• a defnition of the strategic business objectives that your organization is aiming to achieve. If you don’t know what these are, and cannot describe them in a way that is clear, concise and measurable, then it will be diffcult to defne the processes that will deliver them. It will be more by luck than by judgement that your organization will achieve everything that you desire.
These objectives should be defned in the same way for any individual, team or organization – they should be SMART (Specifc, Measurable, Achievable, Realistic and Time Bound);
• a defnition of the scope of the management system – i.e. the defned purpose for the organization that will be managed by the system itself and the extent of the functions that will be included. In an ideal situation, this should cover
the whole of the business or business unit, so that it includes all resources and activities that jointly deliver the overall performance. However, often it is not possible to achieve this, especially within large organizations where only part of it is committed to developing a PBMS. Whichever situation you fnd yourself in, make sure that you have clarity about the scope of the system being developed;
• knowledge of the high-level activities currently carried out. The PBMS will need to include all activities required to deliver the scope, in order that it can be a comprehensive representation of what the organization actually does. There is no need, at this stage, for a very detailed understanding of these activities, as this detail will inevitably cloud the big picture, which is essential for the creation of the high-level process defnition. It would normally be expected that between them, the senior management team would have this knowledge and the problem is usually to keep them out of the detail. You will notice from the example we have been using that the system is not shown in a detailed way at the highest level. Remembering what level you are working at is important;
• an understanding of the principles of managing through key business processes.
It is essential that all participants in the key process defnition activity have an understanding of what they are trying to achieve, and the outline mechanism by which it will be achieved. This can be realized either by an effective session at the start of the process identifcation workshop, or at a pre-session briefng;
• real commitment by the senior member of the team (often the business unit manager, managing director, works manager etc.) to the development and use of a PBMS. Without this high-level sponsorship of the approach, it will become an academic exercise, adding no real value to the organization.
Without this commitment, the processes will never receive the focus of management attention that they require if they are to be effective.
Preparing for the system design session
At the outset, it should be strongly emphasized that there are no right and wrong answers about what your key processes should be. Your senior management team should be free to decide what is appropriate for your organization, and how they want your key processes to be defned. This defnition will provide focus on the individual processes that they feel are required for your success – it is part of their own development in process thinking, and is essential if they are to own the solution.
Don’t be worried about this apparently open approach. There are a number of essential checks that you will need to carry out once you have created your own
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provisional list of key processes. These checks make sure that the overall system is comprehensive, appropriate for your use and refect best-practice principles.
How you divide up your organization into your key processes will therefore be completely up to you. The checks will help you to make sure they are as good as they can be with your current level of knowledge. Time will enable this knowledge to be increased and further adjustments made as you develop your understanding and mature as process thinkers and as a process organization. Like all other parts of the system, the key process defnitions themselves will improve over time.
It is also necessary to think about the team dynamics and the way in which team members work together. This will be different in every organization, and you will need to use your knowledge and experience to assess this. Strong personalities should not be allowed to push their agenda and less strong ones should be given the opportunity for their ideas to be input and fully considered by the rest of the team. All participants need to feel that they have been fully involved and that the team has genuinely decided on the most appropriate solution for your organization. If you are to get real buy-in from the whole team, they all need to feel that they own the result.
The session will therefore need to be facilitated strongly if it is to achieve the required goals. This will be best achieved if the facilitator has no personal agenda. They should, by defnition, possess excellent general facilitation skills and the credibility to work with the senior management team. Ideally, they should also know and be competent with the various tools and techniques required to ensure the system that is developed is appropriate for the organization. This will include some level of experience and knowledge of what really makes a business successful – it is, after all, the facilitation of a strategic activity. You may well have these skills in-house, perhaps in another part of the business or an existing business improvement manager/facilitator. It may be more appropriate to use the services of an external facilitator if a candidate cannot be found in-house.
Whichever way you decide to do this, don’t underestimate the need – the senior team will be challenging the status quo, and need to think about your organization in a very different way to how they have done so in the past. Keeping focus during the session will be critical for the eventual success of the system itself.
Process identifcation session
If this is the frst time that you have tried to create a PBMS, then it is important to understand the limits of what you are trying to achieve. It is very tempting to see it as a blank piece of paper, as an opportunity to try and create what you would like to have in place, rather than what you currently do. Although this does seem to be a golden opportunity to drive improvement from day one, it is
in reality a very dangerous approach. You will have enough change to deal with as you tackle the implementation of your frst management system based on key business processes. You will already be trying to alter the way people in the organization think about how you deliver business performance. The cultural differences between this and the more traditional functional management system you are most likely to be coming from would be enough of a challenge on its own for most organizations. If you try to change the processes that you currently operate as well, then there will be no frm foundation on which to build – everything will be changing at once and people will become very confused. The implementation of a PBMS is very likely to fall at the frst fence if you initially try to do too much.
The best approach is to focus the content of the processes on exactly what you currently do. You will have a great number of activities already in place, many of which will have been very effective in the past. The frst stage is therefore to look at how these join together into the new key business processes. Just by identifying this joined-up process will, in itself, identify where there are current problems between departments, and these are likely to drive improvement in their own right, without even changing any process activities. You can then use the improvement cycle, over time, to update the detailed activities within the process, leading to change in a better-managed and better-prioritized way. However, should you identify critically important issues within the newly defned processes that need immediate action to rectify, then treat it as your frst improvement activity – possibly immediately following its defnition. Such change may be related to statutory or legally required shortfalls. Change can then be planned from a known starting point, making it much more likely to be successful.
The process identifcation session itself requires a structure (or process) that has the greatest likelihood of delivering the required results. There is no single right way, but the following is one that we know works in the vast majority of situations. The session needs to be completed at pace, with the facilitator keeping the team focused on the required outcomes and away from the detail.
If it starts to slow down it will not deliver a satisfactory result and will become tactical in nature – exactly what you are trying to avoid with this senior management team. It is also best if this is designed as a low-tech session so that everyone can be fully involved – technology can very much get in the way at this stage rather than help. The use of sticky-notes and a large wall make this a very active session, with high levels of energy and involvement, as the process defnitions are developed based on the current activities of the organization.
Although other approaches could be used, the following steps have been proven to work as follows.
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1. Confrm understanding by attendees of the principles of process
management. This can often be carried out at the start of the session, taking usually no longer than 1 hour. If there is likely to be a signifcant level of debate and discussion around the principles, issues and applicability of the approach to your organization, then it is best done before the process identifcation session itself. This is the basic knowledge that everyone needs to be able to contribute effectively to the session. It has to be understood by all, and the commitment of the system owner to its implementation can also be fully reinforced.
2. Reconfrm the strategic objectives of the organization. This is necessary to ensure that everyone is focused on the same organizational (and system) outcomes. This is often best done by the system owner (often the most senior manager) going through these with the team, which in most cases should not be news to them – they should, after all, have had at least an input into their development. If this is not the case, then it may take longer, and be best achieved before the process identifcation session itself, like the frst item above.
3. Reconfrm the scope of the management system. This is best approached in the same manner as the previous item. Should there be a lack of clarity about what is included within the scope of the system, then there will be real diffculty in developing the appropriate process defnitions, and it needs to be clearly defned.
4. Individually, team members identify the key activities that they believe are currently carried out within the organization (scope). Each team member works individually to think of these, from across the organization, not merely from within their current department. They write them on sticky- notes, one activity per note. These activities should not show the very detailed tasks undertaken by the organization, but should be more general in nature, e.g. pay invoices, receive goods, monthly management meetings, etc. It is almost inevitable that there will be some detailed activities
identifed, but don’t worry about this unless everyone is working at this level. This stage of the process should only take about 15 minutes. Don’t allow more, or it will become very detailed and the team will lose interest.
5. Individually, each team member shares the activities they have identifed, and the team builds them into potential process groupings. The individual team member feeding back the activity will ensure that everyone else understands the scope of the activity they have identifed, and the team will consider the most appropriate process grouping into which it should be accumulated. Where there is no suitable process group already agreed, a new one should be started. These groupings will be created by fxing the sticky-notes on the wall, providing a very visible determination of the process groups so far identifed by the team. Where activities don’t seem
to naturally ft into a single process group, or seem to be a principle rather than an activity, they are kept out of the process groupings but still added to the wall, forming a set of ideas to consider at the end. Do not worry if there is duplication – stick them all up so that everyone’s contribution has been recognized.
6. The team reviews the process groupings that have been created after a few team members have fed back their list of activities. This is done to ensure that these groupings do indeed feel signifcant enough to be individually represented, and so that you continually review the signifcance of each one. It also saves you creating far too many groups that will only need consolidating later on.
7. Continue until every team member has fed back their list of activities, and the ‘process groupings’ include all activities that team members have identifed.
8. Review the fnal process groupings that remain after the last team member has fed back their activities. The aim here is to ensure that there are
between 8 and 15 distinct process groups, as discussed in an earlier chapter, and this is the frst test to carry out on what has been developed so far. If there are fewer than this number, it is highly likely that you have grouped together too many activities that should better be split into one or more distinct groups. If you have more than this number, then you have probably not grouped some of them together when they should be. The number is only a guide, but you should certainly ask yourself the questions to make sure you have process groupings that are appropriate for you.
9. Name each of the process groups. Use an appropriate title, ideally not a department name, to describe what they are about. Remember that these are all cross-functional so should help everyone within the organization understand what is important cross-functionally. Ultimately these titles will be the process names and using a department title will steer the content and ownership of the process to that department rather than being the cross- functional activity it represents.
10. Check the process groupings against the objectives. Consider if you focused on these processes, and could only see their system performance (i.e. their system KPIs), you would be confdent of progress towards achieving your objectives. If there is something missing – there often is in the detailed activity identifcation carried out earlier – do you need another process to cover it?
11. Check the process groupings by removing them one at a time. If you believe that when you remove one of them and therefore cannot see their performance, that you can still be confdent of achieving your objectives, then it is probably not a key process. It should probably be incorporated within one of the other groupings that is required. Do this for every process