It is not enough to do things well; you must do well those things that take you towards your goal. Efficient people do things right, but effective people do the right things right, at the right time.i
Efficiency is an internal measure—how well you do what you do. Effectiveness is an external measure—how well what you do meets the needs of who you are doing it for. The key to effective operations and to consistently achieving your goals is to develop, document and implement repeatable, scalable and teachable processes. This is especially true when a team of people have to interact to accomplish a task.
For example, when a sailboat changes direction relative to the wind, known as a tack, hundreds of square yards of sail stretched along one side of the boat have to move across the boat’s front end and get trimmed in along the other side. During a race, this happens within a few seconds. The only way a boat can smoothly and effectively tack is when everyone involved is working together and following a common process.
Whether process creation is called systematizing, Lean or Six Sigma, the result is a defined series of interrelated actions performed to turn inputs into outputs in pursuit of a goal. The process may be, for example, the steps to follow when manufacturing a widget. It could also be the steps involved when filling a widget order, producing a creative product, or delivering a service. By developing and documenting your processes, you identify and define the right things that need to be done, how, by whom, where and when. The why is quantifiable, desirable business outcomes, such as:
• Consistent, predictable output.
• Improved customer satisfaction.
• Increased productivity.
• Operating cost reductions and revenue increases.
• Efficient resource utilization.
• Easier knowledge transfer; integration of new team members faster.
• Reduced chaos.
• Enhanced organizational agility enabling greater responsiveness to changing business circumstances.
How to design processes
Management guru, Peter Drucker said, “No institution can possibly survive if it needs geniuses or supermen to manage it. It must be organized in such a way as to be able to get along under a leadership composed of average human beings.”ii Strive to design and document each process step so it can be performed by someone with the lowest necessary skill level. And then design the overall process to be open and agile enough to respond to the changing needs of the market and your clients.
“Perfection is finally attained not when there is no longer anything to add, but when there is no longer anything to take away…” Antoine de Saint-Exupéry (1900–1944), French aviator, writer. Wind, Sand, and Stars, page 42.
Below we outline a 9-step process for developing your processes. Process development requires time, effort and collaboration. It even requires some inspiration. But companies with defined and documented repeatable processes have a higher success rate. And as an added benefit, having documented processes increases your business’s sale value.
Start with the critical work processes essential to your business operations. Then move on to other challenging areas, such as: where people make mistakes often, areas with inconsistent results, or activities on which you’re spending the most time or resources. Prioritize process development opportunities by determining the ease of implementation and the potential payoff from process development. Look for those that will yield the largest payoff with the least effort.
Documenting the process
1. Involve the best people who actually do the work when developing processes. They do the job day in and day out and have a better idea of the detailed steps involved than you do. Team members who do the actual work are also most familiar with the common roadblocks and bottlenecks. They can tell you what conflicts with other systems or processes may occur; they can tell you what new obstacles may arise. When people are asked for their input, they are much more likely to be engaged in the process – even if not all of their suggestions are incorporated.
2. Identify the goal. When developing written processes, start with the desired outcome in mind. Then focus each process step on and measure each process step against its contribution to the desired outcome.
3. Identify process start and end activities. For each process, start by answering the question: What triggers this process to start? Is there a phone call, an order, a complaint, a widget dropping down a chute? Then clearly identify the start and end point for each step in the process and for the overall process.
4. Identify process inputs and outputs. From a manufacturing perspective, what are the raw materials and what are the finished goods? What do you start with, what do you accomplish? How does the process add value? If the process does not add value and achieve a desired outcome, the process isn’t necessary. Be sure to include how outputs are handed-off to the next step or process, or to the customer.
5. Identify Customers and Suppliers. Who supplies your process inputs and who is the customer for the process output? If a process does not have a customer, the process is not necessary. Every process should serve an internal customer, an external customer, or both.
6. Identify a Process Owner. Identifying the one person who is responsible for the process end-to-end is critical to ensuring process efficiency. The key to long-term effectiveness is to empower every team member to take ownership of their successful process outcomes.
7. Get everyone engaged in the process. When team members are involved with process creation, they are more likely to ensure its success. For those team members who were not part of process creation, help them understand how what they are doing contributes to the company’s goals.
8. Document the process and outcomes. Once you’ve defined the process, the desirable business outcomes, and all the data identified in the previous steps, write them down and make it available to everyone who needs to see it. Include within the process design what actions to take when something goes wrong. Use company-standard or industry-standard terminology, but keep acronyms and jargon to a minimum. Your initial process design serves as a baseline for ongoing process improvement and it also makes an excellent induction and training resource.
9. Commit to Continuous Process Improvement. As your knowledge and experience with each process deepens, be on the lookout for incremental ways to improve the process. This is referred to variously as Continuous Process Improvement (CPI), Business Process Management (BPM) or Kaizen. First identify and eliminate points of constraint within the process, then identify and eliminate wasteful, non-value added activities. This allows you to accomplish more without working harder. Though, when a political, economic or technological disruptive shift affects your process, you may have to institute revolutionary changes.
Theory of Constraintiii
The successful completion of a process comprised of a series or chain of interrelated actions is dependent on the success of the weakest link in the processiv. This weakest link, this point of constraint, determines your entire process’ maximum output. Identifying and strengthening the weakest link — the system’s point of constraint — is the only way to strengthen the chain itself. Strengthening any link other than the weakest is a waste of time and effort.
Constraints can occur anywhere in the process, and are generally either internal or external. Internal points of constraint may be due to a physical bottleneck, such as limited manufacturing or equipment capacity. Internal constraints may also be management induced, such as from poorly designed systems, untrained workers, adverse company policies, and even ineffective managers. There are also operational constraints, such as slow lead follow-up, order fulfillment bottlenecks, etc. External constraint examples include demand less than capacity and material or labor shortages.
Physical constraints are usually easy to spot. Just ask your team members what is limiting their output and they’ll give you an immediate response. Managerial and operational constraints are harder to identify, and any constraint may be a challenge to resolve.
In many cases, the entrepreneur-founder is the constraint. When all decisions need to pass through one person, the decision-making process constrains all others. With established processes in place, owners and managers no longer have to micro-manage the business. They can focus on strategic matters that create business growth. It also makes the company easier to sell, but that’s a subject for another day.
Here is the Theory of Constraints five step process to help you improve process throughput and your business.
1. Identify system constraints. A constraint is any resource with less throughput than the demand placed on it; anything that is delaying the process or stopping you from achieving your goal. Start with the worst offender. That’s your weakest link or point of constraint.
2. Maximize constraint efficiency. Reassign people, equipment, or schedules so that the constraint is working at its full capacity. For example, add people, add a night or weekend shift, buy more equipment or improve operator skills—whatever it takes to get the maximum throughput from the constraint.
3. Subordinate everything else to the constraint. Adjust the output of all other related tasks and processes to the capacity of the constraint—the weakest step. Do not let preceding processes over-produce and cause a build-up of work-in-process.
4. Elevate the constraint. The constraint is the most expensive process in a system because it restricts throughput. Increase the constraint’s capacity so that it ceases to be a constraint. This can be achieved, for example, by either speeding up the equipment or by reducing the load or demand on it. By doing these things, you elevate the task to a non-constraint.
5. Look for a new constraint. When the constraint identified in Step 1 is no longer the weakest point of the system, look for the new constraint that has taken its place. Some other task or step will become the slowest part of the process. Thus, by always focusing efforts on your business’ weak links and bottlenecks, you get the maximum benefit from your improvement efforts.
Defining and documenting your processes makes your business more competitive: With defined processes, you are better able to evaluate your strengths and weaknesses and identify opportunities for improvement. You can improve your product and service quality, and deliver more consistently to your customers, increasing customer satisfaction and loyalty. You are better able to cope with the unknown and to react swiftly to changes in the competitive landscape. In short, by defining, documenting and following your processes, you are consistently doing the right things right, at the right time, and can more quickly course-correct when you are not.
i – Based on Kaplan, Robert S. and Norton, David P, Strategy Maps, Harvard Business School Press, 2004.
ii – Drucker, P, American writer, 1909-2005, Concept of the Corporation, (1946) John Day Company p 26-1983 reprint.
iii – Cox, Jeff; Goldratt, Eliyahu M. (1986). The goal: a process of ongoing improvement. [Great Barrington, MA]: North River Press.
iv – Thomas Reid, Essays on the Intellectual Powers of Man, 1786, “In every chain of reasoning, the evidence of the last conclusion can be no greater than that of the weakest link of the chain, whatever may be the strength of the rest.”
About the author:
Bob Roitblat is the guy to know when you want your profits to grow, because he can help you discover the profit hidden within your business and how you can achieve your maximum profit potential. Bob speaks and writes about profit optimization and is the president of Mainsail Consulting Group, a business-advisory firm.
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