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IS 788 [Process] Change Management

Lecture: Process Redesign Methodologies

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For the next Class: Wednesday. 10/17/09

Each group should prepare a presentation of work to date on their project

High level overview of the project and the organization

Where does this process fit in the (a) value chain

Highlights of what you’ve accomplished to date and what remains

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Process redesign methodologies Methodology and method are

synonyms A way of doing process redesign A process for redesigning processes What does a formal methodology add

to an activity? The experience of others Structure Checklists, forms and other tools

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Harmon’s methodology (Ch. 9) Generic Used for a major redesign of a high-value

process Communication and securing top-level

management involvement are as important as the actual design steps in the methodology

Uses lots of committees for communication and buy-in (as did Telecom Eirann)

Will work for ERP unless a company has already purchased software. If so, what then?

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Consultants Harmon strongly and repeatedly

recommends outside. experienced ‘facilitators’ == process redesign process managers

Why? Experience not available in the company 3-6 months vs. 2 years and abandoned Frequently neutral outsiders can make

suggestions that would be inflammatory coming from insiders

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The players (1) Executive committee – highest level

approval for finished phases and project overall

Project sponsor – high level manager who assures resources and ensures the project aligns with organizational goals

Process redesign steering team: high level representatives of all concerned functional groups

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Players (2)

Project facilitator – the process redesign project manager

Business process redesign team: activity and (sub)process managers, IT, domain experts, i.e. HR

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Redesign methodology phases

What’s going

on here?

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Planning phase Refine the scope – is it realistic

Review goals – are they aligned Document project assumptions

This step is difficult and an outside consultant can help – some constraints have been in place for so long they are invisible – can’t do this or must do this or must do it here

Plan, schedule and budget Define process analysis team

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Analysis phase (1)

Document current process Start with a ‘strawman’ diagram and run

it by all stakeholders for refinement Define in “as much detail as necessary” Reconcile semantic differences: different

groups may call the same process, equipment, etc. by different names

Document known problems with current process

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Analysis phase (2) Detail all activities – not

diagrammatically but with written descriptions

Develop a process management design Goals for each sub-process Measures Corrective actions Who’s responsible?

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Analysis phase (3) Revisit old goals and assumptions –

think out of the box Summarize findings – on new goals,

challenged assumptions, directions for the new process design – in a plan document, and

Communicate, communicate, communicate, to gain approval and resources to proceed

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New process design phase Challenge past processes and assumptions

again Define the TO-BE process

May create several alternative COULD processes Design the management process to support

the TO-BE process Measures Roles (HR) Responsibilities (HR)

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New process design phase (2) Rationalize reporting relationships

This is a critical and difficult step (HR again) and the Executive Committee

Redraw the org chart Cost out or run simulations on the TO-BE

process Document new activities in detail Communicate up the committee chain to

gain approval and resources for the next step

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Resources development phase

The new process will need: Physical plant Equipment Job descriptions Training programs Management systems (in place) Software and IT support

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Resources development phase (2)

Appoint a process manager Reorient managers currently

reporting to functional department heads Harmon and many of our readings view

this as a critical step. “To redesign a process, and then leave

subprocess managers responsible to department heads . . . is a recipe for disaster.”

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Implementation phase

Many companies have proceeded smoothly through phases 1-4 and failed to implement the changed processes. (Name that case:) Senior managers resist change Functional managers resist change Employees resist change Salaries and incentive systems remain

unchanged

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Implementation phase (2) The most important work of the

implementation phase – communication and gaining top level support and universal buy-in should already have been accomplished by following the change plan developed in Phase 1!

Meet, communicate, and enlist top management to apply judicious force when necessary

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Process redesign patterns

Redesign patterns are slight specializations of the generic process redesign methodology to accomplish common types of redesign Reengineering Simplification Value-added analysis Gaps and disconnects

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More specialized patterns

Table 10.2 on pp. 238-239 lists 8 more specialized patterns. We will address four of these in later lectures: Workflow automation ERP driven redesign Six Sigma Design for BP languages

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A radical redesign success: the redesign pattern

Texas Instruments knew how to inexpensively make huge quantities of chips

With their existing process they were decidedly not-agile and had to ignore fast moving or niche markets

The mission: change the process to be able to manufacture small quantities of chips inexpensively

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TI continued

Rethinking the process steps would NOT have been effective in itself

New technology conceived expressly for the new process was required

Not new fundamental discoveries, but new application of existing knowledge and new technology i.e. manufacturing equipment.

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TI continued

The result was spectacular TI dominated the field for almost a

decade Other companies wishing to compete

had to license TI technology

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The simplification pattern

Redesign of a process with the focus on eliminating redundancy

Assumes most established processes include redundancies and duplicated efforts (what’s the difference?)

Challenge each process – is this step necessary?

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Another great – and successful – micro-case: Xerox purchasing

4.3 billion a year on non-production procurement

Three initial steps Document existing processes – 100’s of

different activities Blue-sky visioning Surveying other organizations for best

practices

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Xerox, continued

Initially each group insisted they needed their variant processes

Ultimately – with the help of outside consultants who were likely less politically suspect than in house teams – NPP was reduced to three simple activity sequences

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Xerox – radical simplifications Issue credit cards and the authority to

use them for quick, unanticipated purchases (a species of bean-counter will deny that such a thing should exist ;-)

Eliminate a large chunk of the bureaucracy – simply no longer needed!

Enact worldwide mega-purchasing deals

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The Value Added pattern

A thorough analysis of key (how determined) existing processes with a 3-criteria focus: 1. Is the customer willing to pay for this? 2. Does the process or activity physically

transform a product or service 3. Is the process performed correctly the

first time (most of the time)

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Non-value adding processes(the 80(non)/20 rule applies here)

Involves preparation or setup Is a control or inspection activity Simply moves a product Is a correcting action resulting from

upstream errors or delays

These activities may be necessary, but they don’t add value. (see examples, p. 248)

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The Gaps and Disconnects pattern

Analyze and eliminate the communication or coordination failures between silos.

Look for goal misalignment – to coordinate well teams have to want the same result

Look for shortcomings in the management of process – if its not being measured, its probably not being done well!

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Gaps and disconnects continued As Harmon points out regularly –

many times a process is fine – it simply isn’t managed well.

Fixing the process management increases throughput by 20+ %

See list of potential disconnects, p. 250

A good process diagram can help pinpoint handoff’s (p. 252-253)