Changing Processes – how to get started

I enjoyed reading this blog entry by Jack Jacoby so thought I’d share it with you. Jack presents some good points for all size organizations. Others would only apply to large organizations but we can all learn from different approaches.

You know something is wrong with the process but you don’t know where to start. Here are some rudimentary steps that will get you going and some cautions and traps to avoid.

  1. Clearly identify and quantify the outcomes (products, costs, volumes, quality, other corporate objectives, etc) that your existing processes are meant to provide. If you don’t have a strong understanding of the current state of your processes, then you will find it hard to identify the performance gap that the changed process is meant to remedy.
  2. Identify all the ways that your existing processes fall-short of these desired outcomes. This may be difficult so it might be valuable for you to benchmark your process performance against other companies with whom you compete who are doing similar activity (processes) to you. However, be careful of chasing motherhood objectives such as “world’s best practice” or similar since you may not need to be at “world’s best practice” in order to fulfill you corporate objectives.
  3. Calculate a theoretical dollar value of the shortfall between what “could be” and “what is”. If your shortfall is, say $500,000 then the potential benefit to your organization is huge if your annual sales are currently $1,000,000. You can theoretically improve performance by 50%. If on the other hand your sales are $50,000,000, then the time and effort (and cost) associated with changing the process takes on a different level of priority.
  4. Establishing the potential benefit in dollar terms places the proposed task into an organizational perspective.
  5. Establish the extent of change needed. If the shortfall is substantial (more than say 5-10% of the output from the existing process) then it probably indicates the need to re-engineer your processes (among other possible remedies). If the variation is relatively small, you might want to consider some quality circles from within the organization or a continuous improvement program to deal with small performance improvement issues.
  6. If the value of the short-fall is high, then the benefit you may achieve by solving your problem will, in all probability, exceed your cost of undertaking the change. This calculation is termed your “value proposition for change.”
  7. There are now two issues you need to address; do you have the authority to affect change by yourself, and how do you make the process changes indicated.
  8. You are now in a position to start “selling” the concept of process change within your organization. If you are the CEO, then you need to develop a Value Proposition concept document that you must get your Board to approve in order for you to move to the next step. If you are not the CEO, then you need to sell the Value Proposition to the Chief Financial Officer, the Head of Manufacturing or similar or the CEO.
  9. If your organization has not undertaken process-change before, it is recommended that you contemplate hiring process change consultants – of which there are many.
  10. First step is to write a “Terms of Reference” document that captures what you want to achieve and what your minimum expectations of benefit are from a changed process.
  11. Send the Terms of Reference and an invitation to tender to 5-10 consulting companies who are experienced in process change in your industry.
  12. Assess their responses in terms of experience, methodology, cost and their credentials with similar successful projects. Talk to their references and don’t take their work for anything. These companies are very “slick” and you must convince yourself that what they say is accurate and not just sales talk. If they provide a methodology that suggests that you can undertake the change yourself then you can consider doing so, but you MUST appoint an external, experienced project manager with authority to “make it happen”. If for any reason you cant appoint an external “facilitator,” then appoint the consultant with the best response to your tender.
  13. If you appoint a consulting company, make sure that “Knowledge Transfer” from the consultant to your staff is provided for. This will ensure that when you want to make the next process change, you will be in a better position (but no guarantee) to do it yourself. Also make sure that the consultants are kept to a strict time frame and that part of their payment (say 10%-35%) is made only after the new process is operational, for say one month. Check VERY carefully the person they nominate as their Project Manager as this person is critical. Make sure that the Partners who will be involved in the sales presentation are actually involved in the project. The Partner must manage the Quality Assurance aspects of the project and must commit to at least a once per week review of the Quality Plan and progress with you (the client) and the Project Manager. Partners tend to help “sell” the job then delegate the work to more junior staff – be warned.
  14. Remember that effective organizational and process change requires the simultaneous management of people, process and technology issues. According to Ernst & Young, poor people management causes 90% of organizational change that fails. Your consultant may have a superb process change methodology, but unless they effectively manage the people (and other issues) then the change will inevitably fail to deliver its potential.
  15. Establish methods to measure the on-going performance of the new process and compare performance with the “promises” made by the consultants. If there is a performance shortfall after implementation of change, make the consultant accountable for rectifying the situation. If they argue that “unforeseen” factors caused the shortfall, then respond by saying that they should have engineered the change process to be flexible enough to accommodate most reasonable business issues. If their change process doesn’t allow for this, then it is a suboptimal process.
  16. Develop systems to enable on-going monitoring and control of both the change process, and the final engineered process. Both are quite different and both need monitoring. Ensure your consultants provide a suitable and practical monitoring system/process/mechanism as part of their “solution.”
  17. Develop a review process that takes the monitoring outcomes and feeds them back into the engineered process for on-going improvement. Ensure your consultants provide a suitable and practical review procedure as part of their “solution.”
  18. Invite a senior consultant from the consulting firm who undertook the change process to sit on your process review team as part of their “after-sales” service obligation.

In summary, here are a few short tips about process change:

  • Be very clear about how your target processes currently perform.
  • Know the minimum benefit you need from undertaking the change.
  • Know exactly how much the change process will cost.
  • Know exactly how long the change process will take.
  • Know what impact the change process will have on your people, technology systems and impacted processes.
  • Make sure a very experienced person (team) is entrusted with the responsibility of making it happen. Give him/her (them) the authority they need. Make sure the CEO or Divisional Head sponsors the change process formally.
  • If the change process is a big one, the project manager, if an internal appointment, must be dedicated to the project and must be taken out of existing line management structure.
  • If the change process is a big one, establish a Project Office which reports directly to the sponsor, and not through existing line management.
  • Be ruthless with consultants if you employ them. Make them commit to specific outcomes then hold them accountable for those outcomes. Ensure that part of their remuneration is based on the successful implementation of the project.
  • Allocate resource to the monitoring, review and control of the change process and the re-engineered process.

Speak Your Mind

*

RSS
Follow by Email
Facebook
Facebook
Google+
http://www.igniteleaders.com/general/changing-processes-how-to-get-started">
YouTube
YouTube
LinkedIn
Instagram