Reframing process for an Outside-In world
A fundamental principle of Outside-In is the understanding of where your process starts and ends.
In the 20th century many techniques and approaches developed to better understand and create processes. In its earliest form pioneering work undertaken by the United States Airforce created modelling approaches based on the Structured Analysis and Design Technique (SADT) that produced iDEF (Integrate DEFinition Methods). iDEF became recognised as a global standard as a method designed to model the decisions, actions, and activities of an organization or system. iDEF as a method has now reached iDEF14 [i] and embraces a wide range of process based modelling ideas. Concurrent with the development of iDEF technology providers created proprietary modelling approaches, and subsequently developed into modelling language standards, used by many organisations to represent their systems and ways of working. The convergence of business process modelling and business process management (BPM) has now produced a rich set of tools and techniques
able to model and ideally manage an organisation. In fact one of the more accepted definitions of BPM (based on the British Journal of Management[ii]): “Business process management (BPM) is a management approach focused on aligning all aspects of an organisation with the wants and needs of clients. It is a holistic management approach”
Until a few years ago process management approaches looked within the boundaries of the organisation and the combination of modelling and management approaches were adequate to understand the enterprise. The impact of process management in improving organisation performance has been profound however we now face a different reality driven by the customer.
As a consequence both disciplines now present a series of problems that include
(a) understanding the beginning and end of the process,
(b) the techniques used to model process are inadequate and focused on the wrong things
Strangely customer involvement in a process often appears as an afterthought and the actual representation systems (left to right, top to bottom) create an illusion that fosters the belief that “the customer isn’t my job”.
Let’s deal with each in turn by example:
a. The beginning and end of process
To aid the discussion let’s look at two airlines, British Airways and Southwest, and we’ll review how they ‘think’ about their business through the eyes of process. If you sit down with British Airways executives and asked the question “where does your process start and end?” the response reflects the main source of revenue, seat sales.
So the answer “the process is from the ticket purchase to the collecting the bags off the carousel” is no great surprise. In fact that is the way we have mostly thought about process in that it starts when it crosses into organisation, and finishes when it leaves. We can easily model that, identify efficiency improvements, improve throughput and optimise apparent value add.
As far as British Airways is concerned what you do outside of that process is no concern of theirs, after all they are an airline and that’s what they do. Now let’s change our perspective and visit Love Field in Texas and meet the executive team of Southwest. Ask the guys the same question “where does your process start and end?” and the answer is a whole different viewpoint.
The process begins when the potential customer thinks of the need for a flight, and only ends when they are back at home following the journey. The scope of this process is defined by the phrase “the customer experience is the process”. That’s an Outside-In perspective and creates opportunities across the whole customer experience.
More than that it raises the prospect of additional revenue streams, spreads the risk associated with a dependency on seat sales, reinforces the customer relationship and develops an entirely different way of doing business. So let’s ask another question of our friends at Southwest “guys, what business are you in?”, and the answer changes everything you ever thought about airlines forever “we’re in the business of moving people”.
Downstream Southwest may well turn the industry further on its head as they move from being the low cost airline to the ‘no cost airline’ and give their seats free of charge. What would that do to your business model if 95% of your revenues, as with British Airways, comes from seat sales?
The business challenge for Southwest becomes one of controlling the process to benefit and maximise the customer experience. That involves partnering, sharing information and doing all necessary to make customers lives easier, simpler and more successful.
Now how do you model that?
b. The techniques used to model process are inadequate and focused on the wrong things
We have reviewed the ultimate cause of work for all organisations is the customer. Organisations exist to serve the customer though the provision of products and services and in this way develops revenue that goes to the profit and onward distribution to the stockholders.
In other organisations without the profit motivation, for instance the public sector, then the effective delivery of services is measured by citizens and stakeholders. Accordingly it stands to reason that everything happening within the organisation should be organised and aligned to deliver customer success and anything that isn’t is potentially ‘dumb stuff’. The techniques we use to ‘capture’ process are however not suitable to understanding the causes of work and focus attention instead on the visible tasks and activities that are perceived to create value for customers. In the context of the enlightened customer[iii] this is at best misleading and at its worst actually part of the broader problem. In Outside-In companies the focus has shifted to understanding the causes of work, and then engineering those causes to minimize negative effects.
Once more to go Outside-In we need a perspective shift and we can achieve this by identifying those three causes of work and then set out to reveal them and their negative impact.
How big is the size of the prize? Efficiency and productivity gains of 30% to 60% are common. Cost reduction of services by 50% is not unusual.
Cause elimination is a seek and destroy mission. It’s the challenge to weed out the “dumb stuff” in our organizations.
By truly fixing the Causes of Work, rather than messing around with the Effects (a bit like moving the chairs on the deck of the Titanic) we will all find our customers and employees life simpler, easier and more successful. Are you ready to challenge your assumptions and start eliminating those causes of work? Fix the Cause, remove the effect.
[ii] Understanding Business Process Management: implications for theory and practice, British Journal of Management (2008) (Smart, P.A, Maddern, H. & Maull, R. S.)
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“Not everything old is bad and antiquated and not everything new is shiny and good. The real secret to success is to combine the best of both.” Rene Carayol, Senior Executive & Former Board Member for Pepsi, Marks & Spencer, IPC Media & The Inland Revenue
Process has indeed come a long way from it humble routes amidst the early industrial revolution and Adam Smiths ‘Wealth of Nations’.
One of the first people to describe process was Smith who in 1776 describes a new way for process in an English pin factory. He outlines the production methods and created one of the first objective and measureable enterprise process designs. The consequence of ‘labour division’ in Smith’s example resulted in the same number of workers making 240 times as many pins as they had been before the introduction of his innovation.
Adam Smith participated in a revolution that transformed the planet. He lived at a time when the confluence of factors, political change, emergence of the New World, industrialization and a new optimism that the world could move from the shackles of the past.
In heralding a movement that developed into Scientific Management the foundation was laid that established a way of working that has survived and thrived for 200 years.
And yet now, more than ever, is a time to perhaps take a careful glance back to the past to guide the way for not only surviving the current economic turmoil but to also prepare us to thrive in the seismic shifts of the 21st century ‘new world’ order where the customer has become central to everything we do.
Leading global corporations are now evolving their tried and tested approaches into methods suited to the changed challenges of customer promiscuity, globalisation, IT innovation and the Prosumer. That is the essence of what we call Outside-In.
“The Customer Experience is the Process”
Outside-In can really be summarised in the statement that “the customer experience is the process”. We can no longer just look within our organisation boundary to create a sustainable competitive advantage. We have to extend our scope and embrace a broader view of optimising process by understanding, managing and developing customer expectations and the associated experience. We need to articulate Successful Customer Outcomes and let those guide our product and service development as we move beyond the limiting scope of silo pyramidal based left to right thinking.
In 2006 BP Group Research identified the ‘Evolution of Approaches’ and how steps can be taken to grow Lean Six Sigma’s influence and success into a strategic Outside-In toolkit. In fact the last 4 years are seeing the fruition of these advances with recent Best in Class 2009 Award winners PolyOne, a dyed in the wool Lean outfit, advancing their stock price six fold in 18 months on the back of radical and innovative changes across its customer experience.
The Death knell for BPR, TQM, Lean and Six Sigma?
Some see Outside-In as the death knell for approaches developed during the late 20th century. Not so as that narrow and simplistic view does not acknowledge the stepping stones available to embrace the new customer centric order. In fact the foundations of our futures are always laid on the learnings of the past with those innovators who recognise the need to evolve leading that charge.
Victory will go to the brave who seize the moment and push forward their approaches into the brave new world of Outside-In. The sector leaders have set a precedent – can you embrace the challenge?
If you wish to read and listen more on this theme the following references are useful.
Join the community discussing these issues, challenges and opportunities.
Steve is the founder of the Business Process Group (www.bpgroup.org) a global business club (originally formed 1992) exchanging ideas and best practice in Business Performance Management, Transformation and Process Improvement.
He leads from the front and works with many of the leading fortune 500 companies as a mentor and coach specializing in the implementation of performance improvement, process change and transformation.
Steve is ‘Expert Advisor’ for IQPC and participates as a judge, workshop and track leader for the Lean Six Sigma and Process Excellence summits in the US and Europe.
He recently co- judged the Best Improvement Project category and selected US company PolyOne as the foremost Lean company on their journey to Outside-In.
An inspirational speaker and author of several books including “A Senior Executives guide to BPR”, “In Search of BPM Excellence”, “Thrive! How to Succeed in the Age of the Customer” and recently “Customer Expectation Management – Success without Exception”. The new book, “Outside-In. The Secret of the 21st century leading companies” chronicles the rise and approaches shared amongst the best companies in the world. Steve is noted for his direct and pragmatic approach.
Steve previously worked for Citibank where he led restructuring and business process transformation programs both in the US and Europe. Steve advises many boards and sits on the steering panel of the influential California based BPM Forum, a group of distinguished C-Level executives heading up Global 500 companies
Steve has bases in Europe (UK) and Colorado.
Interesting discussion thread this week on the BP Group LinkedIn is certainly provoking a debate – see http://bit.ly/4Er8N6 for the latest.
The debate was sparked by Mark Barnett (SVP Process Bank of America) who delivered an eye opening presentation at the Lean Six Sigma and Process Improvement summit in Florida in Janaury 2010.
A key contributor to the merger and acquisition program of Countrywide involved the use of process simulation to test and validate certain assumptions. The result? Well let Mark tell you in his presentation here > http://bit.ly/czBdtc – biggish file< Jim Sinur (Gartner) has dusted off his thoughts on process simulation (see http://bit.ly/dvIUv0) so I think we can now officially call Simulation ‘flavor of the month!’
Thoughts, observations and commentary – here’s the mini article with additional links http://bit.ly/a9oNHu
What are the guiding principles of moving your company to Outside-In thinking and practice?
Well with ten years of implementation under the belts of leading companies the top five looks something like this..
1. Be Customer centric in everything you think and do.
Outside-In is about the Customer. It is about people. it is about you and me.
2. Be engaged and be collaborative.
There will be others who think like you and you need support to overcome inside-out entrenched mindsets. Together we are stronger.
3. Be Optimistic. Feint heart never won fair lady.
You will need to encourage others and help them realise the personal and organisational benefits of Outside-In.
4. Be Open to new ideas and new technology.
Change happens fast, keep pace and be prepared to elarn new things every day.
5. Be ambitious.
You may have to start small however the longest journeys begin with the first step. Do what you can within your sphere of influence and work for that green light. When it comes get moving and embrace the opportunity.
Would you like to know more?…
> For collaboration and networking visit and join the BP Group
> For Coaching and professional qualifications visit www.bp2010.com
> For more indepth discussion please contact steve.towers @ bpgroup.org
There is no easy way to introduce a new order of things however there are some principles that can be followed based on this type of mind shift.
1, Objective and immediate.
The results we achieve with Outside-In are significant and substantive e.g. Triple Crown*. Accordingly any effort should first of all identify the clear tangible benefits.
2. Talk is cheap.
Fine words and phrases will not win hearts and minds without substance. Delivery is key, hence the ‘start where you are’ sentiment. In current projects (where support may be lacking) introduce the techniques within the CEMMethod(tm) by stealth.
Lift the heads of those around you to think of Moments of Truth, Break Points and Business Rules for instance. “Nothing new mate, just some stuff other guys have used within… Six Sigma../..Lean../..EA../..complaince etc. (delete as appropriate)”
3. Build support.
With (2) underway you will build support. That is the point to shift focus and begin the more practical discussion of where and how.
4. Go for broke.
If you are extremely lucky/persuasive and have the top team already onboard go for broke. Discover the worst most problematic issues and set to righting em. By fixing the Cause you will remove the Effect.
5. Move on.
It is a 4-500 year shift in mindset (Dee Hock, VISA founder).
It will ultimately transform the planet. The jury is in fact back and the results speak for themselves. So when all looks desolate and casting your pearls before swine is depressing, remind them that they are part of the problem and move on.
6. Make it so.
YOU ARE NOT ALONE it just feels that way when surrounded by flat-landers (doh). Learn, exchange and do.
As an aside Charles Bennetts links to the cartoons are thought provoking. We have links to them in the respective Alumin’s in the subgroup areas 🙂
Join the worlds first and largest Outside-In community at: http://www.oibpm.com
Once on-board review the subgroups and join the specialist communities – you will
find friends and support as we transform the planet one person,one process, one organisation at a time!
*Triple Crown: Jim Sinur (Gartner) coined this phrase. Through the delivery of advanced BPM you will simultaneously reduce costs, enhance service and grow revenues. In public sector/not for profits replace revenue growth with delievry of strategic objectives.
This is something scribed three years ago just after the launch of the book ‘Customer Expectation Management – Success without Exception’.
Has anything changed? Well yes and no – however you be the judge.
The application of Business Process Management (BPM) is known to have multiple benefits that produce a hard return on investment (ROI). Automation, quality, compliance, management, and optimization of activities represented by business processes are the areas most often cited in this regard. Yet generally the focus of BPM started – and remains – as an “inside-out” perspective, placing hard limits on the benefits BPM can achieve.
At a time where customer satisfaction and loyalty have reached historic lows, and competition has reached its historical peak, the question must be asked, “where in BPM is the customer?” Yes, the customer is a missing piece in the vast majority of BPM practices and products. Management principles have traditionally approached business success from the inside-out perspective, concentrating on margin-based improvements. That made a lot of since during the time when internal activities suffered from substantial bloat and competition was limited by geography and time to market.
Yet over the years we have dipped into that well many times, and the well is about to run dry. Some statistics suggest as we continue to try to achieve the same percentage of gain through each improvement cycle, each iteration produces significantly less tangible value to the organization. It’s a funnel affect that just gets narrower and narrower through every cycle, leaving less and less real benefit for the business.
Meanwhile what is really driving business success? The answer, of course, is the customer. In the 21st Century Value Chain. It is the number of customers and the lifecycle of the business-customer relationship that determines business success.
Known as Customer Expectation Management, the setting of customer expectations and the delivery of those expectations without exception is the “secret sauce” behind the success of market-leading companies such as Virgin, Fedex, Zara, Best Buy, and Southwest Airlines, to name a few.
Many of these market leaders are not competing on price. Sure, their prices are competitive but that is not where their success lies. In many cases they are even able to charge a premium for their products because they are setting and managing customer expectations with a vengeance. They are telling customers what to expect, making their customers’ lives simpler and easier while delivering on these expectations with consistency.
Meanwhile, price competitors are stuck in a no-holds barred dogfight for the worst customer any business can have, the customer who buys predominately by price. There is no place where customers are less loyal and more demanding than in the arena of lowest-price decision buying.
Taking Customers to Heart
Yet BPM by-in-large doesn’t include the customer except as an adjunct to inside-out activities. Improving quality and streamlining processes can help reduce really poor customer experiences or align a business with the market expectation a competitor has set. But these are only secondary effects to the goals of reducing internal costs, increasing worker productivity and so on.
In an age verging on unlimited choice, global competition, and customers often livid with dissatisfaction, the only way to be a market leader is to be a customer leader. We all know that our businesses must have customers and we have all had our share of unsatisfactory customer experiences. In spite of this, why is it so difficult for us to quit viewing our business from the inside-out? Habit and tradition is all that is holding us back. Will we allow our history to determine our future? It’s our choice.
Is there a way to know if the customer is really part of the BPM practice?
Absolutely. Take a look at your business processes. All business processes have an outcome, right? So how many of your business processes have a customer outcome? What about the concept of a successful customer outcome (SCO)?
To fulfill its destiny of being the Next-Generation Business Enabler that its proponents want it to be, BPM must realign its focus to the customer. Business processes must focus on the customer, minimize potential points of failure (such as Moments of Truth, which yield either Moments of Magic or Moments of Misery), and produce successful customer outcomes at all points where the customer touches the business.
That’s the essence behind Customer Expectation Management. It is the critical element in the drive to increase growth and profitability. Traditional inside-out process improvement leverages customer success by maximizing the net positive effect to the organization’s bottom line but it won’t create success by itself.
The only reason we are here is to serve our customers and by serving our customers, making their lives simpler and easier, and helping them be successful we will make our businesses successful. It’s simple and straightforward. Focusing on the customer from the customer’s point of view is our opportunity to achieve the success we all want. It’s the experience we all want when we are in the role of the customer. It should be at the heart of everything we do and should be woven into the fabric of every application and system we use.
Will BPM be a cornerstone in the creation of success for your business?
It could be, but the question you should be asking yourself is far simpler:
Is the customer at the heart of your BPM plan?
The principles above are derived from direct experience and research within world leading companies. Prospective Certified Process Professionals gain full exposure to the techniques, tools and CEMMethod(tm) in the Business Professional programme