Part 1 of 4: There are four distinctly Outside-In ways that you can rethink process and in doing so achieve Triple Crown benefits.

I explore these more thoroughly in the new book however for now let’s take them in bite sized chunks.
•     Understand and applying Process diagnostics
•    Identify and aligning to Successful Customer Outcomes
•    Reframe where the process starts and ends
•    Rethink the business you are in

Let’s start with…
1. Understand and applying Process diagnostics:
(These will be familiar to CPP people however a refresher is always nice)
Earlier we have mentioned Moments of Truth, those all important interactions with customers. Let’s take that discussion further and include other closely related techniques for uncovering the real nature of process – breakpoints and business rules.

Firstly Moments of Truth (MOT) were first identified by Swedish management guru Richard Normann (1946-2003) in his doctoral thesis “Management and Statesmanship” (1975).
In 1989 Jan Carlson, the CEO of Scandinavian Airlines (SAS) immortalized the phrase with his book ‘Moments of Truth’. He clearly linked all customer interaction as the Causes of Work for the airline and set about eradicating non value added MOT’s and then improving those he couldn’t remove. 
a)    Moments of Truth are a Process Diagnostic
b)    They occur ANYWHERE a customer “touches” a process
c)    They can be people-to-people, people-to-system, systems-to-people, system-to-system, and people-to-product
d)    ANY interaction with a customer is a Moment of Truth
e)    Moments of Truth are both process Points of Failure and Causes of Work

Carlson transformed the fortunes of SAS with this straightforward insight – all work in our organisations is ultimately caused by the Moment of Truth. Fix them and you fix everything else.
All Moments of Truth should be eradicated and those remaining improved. In doing so the customer experience is improved, costs are reduced and productivity maximised.

Next let’s review Breakpoints. Breakpoints (BP’s) are the direct consequence of MOT’s and are all the internal interactions that take place as we manage the processes caused by the customer interactions. 
a) Any place that a hand-off occurs in the process is a Break Point
b) Break Points can be person to person, person to system, system to person or system to system
c) Break Points are both process Points of Failure and Causes of Work

By identifying BP’s we can set about uncovering actions that would in turn remove them, or if not improve them. BP’s are especially evident were internal customer supplier relationships have been established say between Information Systems departments and Operations. Empirical research suggests that for every Moment of Truth there are an average of 3 to 4 Breakpoints. In other words a process with ten MOT’s will typically yield 30-40 Breakpoints.
All Breakpoints should be eradicated and if not at the very least improved. In doing so we get more done with less, red tape is reduced, control improves and the cost of work comes down.

The third in our triad of useful Outside-In techniques is Business Rules.
Business Rules are points within a process where decisions are made.
a)    Some Business Rules are obvious while others must be “found”
b)    Business Rules can be operational, strategic or regulatory and they can be system-based or manual
c)    Business Rules control the “behavior” of the process and shape the “experience” of those who touch it
d)    Business Rules are highly prone to obsolescence
e)    We must find and make explicit the Business Rules in the process

Business Rules (BR’s) are especially pernicious in that they are created for specific reasons however over time their origin is forgotten but their effect remains. For instance one Life insurance company had a delay of eight days before issuing a policy once all the initial underwriting work was complete. This has a serious impact on competitiveness as newcomers were able to issue policies in days rather than weeks. After some investigation it was discovered that the ‘8 day storage’ rule was related to the length of time it takes ink to dry on parchment paper. This rule hadn’t surfaced until the customer expectations changed. There are many examples of previously useful rules evading 21st century logic and blocking the achievement of successful customer outcomes. All Business Rules should be made explicit and challenged in todays context.

Next time we’ll take a look at the second way to radically redefine process:

  • Identify and aligning to Successful Customer Outcomes

Is BPM trending Outside-In?

Through 2009 we ran a survey, for a large part in conjunction with LinkedIn.
Thank you to all the contributors especially so the BP Group (www.bpgroup.org) membership.

More than 260 people took the time to respond and produced the following result. A selection of supporting comments and authors reveals a startling trend as business process management as a purely ‘inside’ the organisation activity, to one now best reflected in the phrase “the customer experience is the process”. This latter view coined ‘Outside-In’ fundamentally changes every aspect of the way we do business in terms of people, processes, strategy and technology. The next poll will build on this understanding….

Comments include:

BPM will never die. It may change names and technology, but never die. It is essential for continuous improvement. Without continuous improvement an organization dies.
By Fred Held Former Marketing and Operations Executive Mattel for McDonald’s and Burger King.
Executive Consultant IBM
 
Process improvement is essential, however the vernacular will continue to evolve.
By Lezlee Emerson Customer Care Manager at Gilsa Products & Services Co
I voted for the outside-in approach by definition (after attending your excellent training). I think, that those three BPM should be separated EXPLICITELY — this will help us to move from current vendor-centric BPM to correct customer-centric BPM. Thanks, AS
By Alexander Samarin Enterprise & Business Architect / BPM & SOA & ECM & IT Governance / Business process modeling
“Encouraging” results. Good to know that enterprises and specialists are converging to an approach that delivers value. Successful BPM has to be is client-oriented / ”outside-in”. (I know … some still disagree …). If possible Top-Down. Never a Technology. Regards, NMusa
By Nilson Musa Quality & Corporate Process Manager at Brasil Telecom.
It’s crazy that so many organisations still focus on the inside-out approach. It seems that fundamental marketing practises are forgotten as soon as we get to work. I still recall Kotler from my MBA over 10 years ago defining marketing as understanding and producing what the customer wants… When we link our internal processes and architecture to truly deliver that then we succeed!
By James Rosenegk (Smith) Consultant at Kaizen Training and Managing Director of Future State Consulting Ltd
However I think this comment sums up the majority:
Imagine designing anything from the inside out. What is the likelihood that if you had all the components of a car designed separately that it would ever fit together? What if you designed a house by having people design each room and then see how they fit together. A design principle is: Top Down Outside In.
By Stan Kirkwood Business designer, Process designer, Leader
You can join the follow-up survey here – Is your business ‘Inside-Out’ or ‘Outside-In’?  

Outside-In wins the Triple Crown

The headline claim of advanced process management approaches such as ‘Outside-In’ is winning the triple crown. What do we mean by that?

Triple Crown is the ability to simultaneously reduce costs, improve service and grow revenues as a direct consequence of implementing advanced process management. Outside-In shifts attention from ‘doing things right’ to ‘doing the right things’ and as a consequence much of the work taking place within an organisation becomes ‘dumb stuff’ when tested against the achievement of the successful customer outcome. This ‘dumb stuff’ can be eliminated and typically will result in cost reductions of 40-70% within three to six months of implementation across traditional processes.

What does the cost reduction include?

A large slice of reduction is in the potential effort to run a process – the people. It also includes considerable swathes of information technology, now no longer required to manage the significantly simplified ‘outside-in’ processes.  Saves are also available across the enterprise from reducing the need for ‘outsourcing’ that does not explicitly contribute to the delivery of successful outcomes. Progressive Outside-In companies such as Google, Apple, Gilead Sciences and Southwest airlines actively redeploy staff to the benefit of the bottom line – making more with less. Service improves and revenues grow.

Traditional inside-out companies have a massive opportunity

The size of the prize exceeds normal ‘inside-out’ expectations as many companies who measure efficiency and effectiveness struggle to realise single digit improvements against legacy processes. However when you look at processes through the ‘outside-in’ lens much of the previously assumed ‘must be here’ activity is no longer required.

Why is this so?

Work has grown over time and become complicated and separated into functional specialist areas supported by a multitude of IT systems undertaking specific tasks such as CRM, accounting, claims management and HR systems. In the context of Outside-In these activities can be challenged with the question “does this activity specifically contribute to the achievement of the SCO? “. If the answer to that question is ambiguous then applying relevant techniques creates a  realignment of work and releases significant cost previously disguised as necessary process.

Triple Crown plus

It gets better. The reality of processes in an Outside-In context means they are specifically contributing to the achievement of the SCO and corresponding meet additional requirements such as compliance and regulation more effectively. Transparency of process – seeing who does what, where, when and why – is another by product of the new environment. So in addition to reducing costs, improving service and growing revenues we better meet regulatory requirements. The latter is especially important in the new business reality created following the recent recession and reshaping of industries such as banking.

If it is so good why aren’t we all doing Outside-In?
Large bureaucratic organisations typically suffer from senior management inertia, disbelieve and arrogance.
The reality of successful Outside-In companies is plain to see as they become leaders of their business sectors. Their performance outstrips competitors by several factors and they are often regarded as having some magic ingredient – you may have heard your management team say ‘ha yes they are quite different to us as our challenge is unique’.  The bottom line is that Outside-In companies utilise a range of tools and techniques that improve alignment to the successful customer outcome and these approaches go way beyond the industrial/information age mind-set.

A new way of working
Outside-in approaches create a completely new reality that reshapes how we manage and organise work so much so that functional pyramidal structures become artefacts of the past. A senior manager who may have spent considerable time clambering to the top of these rigid monolithic structures is directly threatened by the shift to Outside-In and may be understandably reluctant to embrace a new order of business that completely changes most things you have ever known.

How can you embrace Outside-In?
The shift in mind-set is underpinned by method and new techniques appropriate to process alignment for successful customer outcomes. Several organisations offer support, training and coaching towards the new order and include emergent technologies that enhance our ability to better organise work. Direct training is available through the BP Group (www.bp2010.com) where people are encouraged to qualify as Certified Process Professionals. Associated companies offering consultancy and technology support can be reviewed at www.oibpm.com

Join the community
You can read more in the latest book ‘Outside-In. The secret of the successful 21st century companies’ at www.outsideinthesecret.com and join the global community through LinkedIn at http://bit.ly/I0tvw

Outside-In. A definition?

“Outside In is a way to focus an
organisation on doing one thing,
achieving one goal and doing it right.
By focusing the organisation on this one goal,
the unnecessary complexity of all other things
that do not contribute to this goal can be eliminated.

Outside Inners know that customers are the key
to achieving this goal.”

Steve Towers & David Mottershead


Some organisations may avoid the term Outside-In
and use other terms such as ‘customer centricity’ or
‘customer alignment’. But at their heart such approaches
fit this definition precisely.

Global Business Processes: the means to succeed in the 21st century.

What is a global process and what business benefit does it provide?

Companies with a worldwide presence face many challenges such as globalization, regional trading agreements and the uncertainty of the economic markets. These challenges require a coordinated approach which maximizes the benefits of a world-wide presence and at the same time provide a local focus. Global processes are the way to achieve this balance and include front end activities like customer acquisition or new business processing, support processes like information systems right the way through to back end customer retention and financial management.

How does a company create, implement, and manage global processes?

Co-ordination. Teams need to develop a common process approach which regardless of culture speaks the same language i.e. what is the successful customer outcome (SCO)? Figuring out how work gets done and achieves the SCO is key to global process success. Implementation needs a pragmatic approach which acknowledges cultural perspectives. Bringing a strategic multi disciplinary team together led by qualified process leaders familiar with cultural and economic challenge is a starting point. Rolling out that discipline and process approach through geographic teams provides a means to learn and exchange and grow key processes to maturity.

What are the most common challenges associated with global processes?

Getting everyone on the same page. Even the way we think and speak of processes is different and so developing a common way of looking at work is critical to a successful operation. For instance the ‘collecting the money process’ has a very specific objective however each location may have different custom and practice – how do you ensure a uniform and yet different approach? The underpinning technology that supports a global process can be common, however the business rules that we operate to make sure our endeavour is successful often need to be different.


What is the relationship between global processes and performance improvement?
The relationship is absolute. In the 20th century we may have talked about standardization and conformity. Performance is now much more driven by the capability to act in the moment e.g. a US insurance company has the slogan ‘think global, act local’ which provides both a degree of uniformity and empowers the people locally to act in the best interests of the business – there and then.


Why should the average employee care about global processes?

It is the understanding that there is a framework and common structure to running the business successfully that provides assurance that senior management knows what they are doing and are operating as a team. Process is the way we get work done. It is the way we deliver value to our customers. It’s the way we create profits for our shareholders. This can then be encapsulated in our rewards systems and provide a framework for success, both in process, people, systems and global strategy.

Process Simulation | BPM | Customers – mutually exclusive?

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!’