I remember the excitement generated in the mid 1990s by the publication of several books on business process reengineering (BPR). In the classic, Reengineering the Corporation, authors Michael Hammer and James Champy made the case that value creation was only accomplished through business processes, and that optimizing the business processes, by removing idle time within and between steps, eliminating unnecessary steps, performing work steps in parallel, etc., should be at the forefront of any performance improvement or systems implementation initiative. Since then, almost every organization has invested quite a lot of work in improving their core business processes. We now have highly refined process workflows that stretch around the globe and involve combinations of onshore and offshore locations and combinations of employees and subcontractors.
What has surprised us during our consulting work is the extent to which knowledge has been extracted out of important decision-making steps. In the goal of achieving the greatest level of process efficiency, many of the process steps occur with little or no human thinking. Maximizing efficiency is generally appropriate for high-volume processes with identical and repetitive steps—those typically associated with a single output. But maximizing efficiency is not optimal for processes that involve decision making, issue resolution, and multiple outcomes.
Deconstructing a Business Process
Core business processes can be decomposed into subprocesses, tasks, and steps that show increasing specificity about how the process is carried out. Embedded in every process step are three types of knowledge.
- Knowledge about how to perform the activities in the step. Activities are the fundamental building blocks of a process and are grouped into discrete steps. Knowledge about how to perform the individual activities are captured in standard operating procedures and policy manuals and are explained during training programs.
- Knowledge about what decisions need to be made and how to make them. During training, employees are taught the decisions they must make and are given the policies, guidelines, and tools to help them make these decisions.
- Knowledge about the context for making decisions, including the values of relevant input parameters. For example, in a customer service environment, it is critical to know if you are interacting with a long-time, loyal customer (e.g., platinum/elite member) or an infrequent customer.
Greater Knowledge Yields Better Decision Making
When employees have access to better information, they make better decisions. While this may seem self-evident, the unique insight is that when business processes are deconstructed and the knowledge about the activities, decisions, and context is made explicit, then business processes can be redesigned to fully access and leverage the organization’s enterprise knowledge to improve the organization’s aggregate decision making.
Doing this right involves the systematic analysis of the core business process and the involvement of IT and HR. IT is necessary because a variety of knowledge management technologies can be used to put knowledge back into your core business processes. Among the most important include data and application integration across content repositories and systems, search, workflow automation, rule-based decision models and artificial intelligence, and real-time collaboration with experts. HR is necessary because training and a variety of organizational change management programs are necessary to change the internal culture by empowering employees with the initiative and creativity for issue resolution and problem solving.
An Example from a Customer Service Engagement
During a recent client assignment at a major customer service center, we analyzed the core business processes for responding to all types of customer inquiries. Our client had a set of antiquated and siloed IT systems and their customer service representatives (CSRs) often provided incomplete, inaccurate, and outdated information in their responses.
A major business process redesign effort was undertaken with two primary goals: (1) to empower customers to perform tasks using a new self-service portal; and (2) to empower the CSRs by providing them with the authority and the software tools to resolve customer issues directly. As part of the engagement, the processes for customer interaction were fully reengineered, leading-edge technologies were deployed (including online Q&A databases, collaborative user forums, and a customer-initiated trouble ticket system), and training and other organizational change management programs were developed and rolled out to the CSRs. To support the CSR decision-making, new guidelines were prepared to help them when interacting with customers. With up-to-date information about the case history, current product information (including information about upgrades, replacement parts, warranty information, software patches, etc.), and approved guidelines for problem resolution, the company greatly improved its customer satisfaction, loyalty, and retention metrics.
A great number of business processes, such as planning, R&D, vendor selection, sales, and most customer-facing processes, involve knowledge intensive steps. Our premise is that BPR, the use of appropriate knowledge management technologies, and organizational change management can be used to enhance decision making and put knowledge back into the core business processes. Real-time access to information enables process flexibility, effectiveness, and issue resolution.
Learn more. Reach out to Bernie Palowitch.