Business Reengineering and Knowledge Management
Many organizations invested heavily in process re-engineering efforts in the 1980s and 1990s, yet few achieved the anticipated benefits from their large investments. This led Michael Hammer to remark in December 1997 that process reengineering is really about re-inventing people.
Process reengineering is more about people – what they do and how they do it – then about process.
Changes to processes directly impact people. Achieving benefits from process reengineering is therefore heavily dependent on how well the impacts on people are managed.
Process Reengineering “Themes”
- Several jobs are combined into one
- Workers make decisions
- The steps in the process are performed in their natural order (i.e., allow for concurrency)
- Processes have multiple versions (where required)
- Work is performed where it makes the most sense
- Checks and controls are reduced
- Reconciliation is minimized
- Hybrid centralized/decentralized operations are prevalent
- There are five principles of process excellence:
- Process outcomes create value — for customers, and also for the organization and its stakeholders
- Target high-value processes — the most strategic, with the most opportunity
- Innovate, don’t duplicate — remember the seven Rs (heuristics):
- Rethink (why)
- Reconfigure (what)
- Reassign (who)
- Re-sequence (when)
- Relocate (where)
- Reduce (how much)
- Retool (how)
Principles of process excellence
- Excellent processes need excellent owners — someone needs end-to-end responsibility for achieving the outcomes of the process; also, process owners have three different roles: innovator, coach and advocate
- You get what you measure — good measures:
- Are accurate
- Are objective
- Contain one or more dimensions (e.g., time)
- Include targets (e.g., 75 percent faster)
- Balance the trade-off between cost/quality, and between speed/flexibility
- Are clear to all involved
- Support the organization’s strategy
Organization structure changes from a functional focus to a process focus, and from more hierarchical structures to flatter structures. These changes impact management processes, communication processes and leadership challenges.
- Peoples’ roles change (e.g. several jobs can be combined into one; jobs evolve from narrow, task orientation to multidimensional, results orientation).
- Competency development changes from a focus on training to perform tasks, to a focus on educating about the impact of decision-making on the rest of the process and about identifying and solving process problems.
- Continual learning becomes more important.
The People Impact of Process Reengineering
- Performance measures change from a focus on activity to a focus on results.
- Career advancement criteria change from a sole focus on performance to a mixture of performance and ability.
- Culture changes (e.g. team focus in addition to individual focus, ownership of problems rather than blaming of other functions, customer focus in place of internal focus).
- Managers act more like coaches of teams than like supervisors of individuals.
Process Reengineering – The Knowledge Management “Opportunity space”
- When trying to integrate knowledge management with reengineered business processes be sure to look at all three dimensions of the KM “opportunity space”:
- Communications — real-time data and information to aid decision making
- Memory — databases, policies and procedures that increase process efficiency and eliminate errors and/or duplication of effort (i.e., keeping from having to reinvent the wheel every time someone orders one)
- Command & Control — knowledge-based rules to guide operations and process execution
The Knowledge Management Opportunity Space – Sample Questions
- Develop Products and Services/Communication – How can we minimize design costs through collaborative design, prototyping and development with our customers, partners and suppliers?
- Generate Demand/Command and Control – What new market structures and pricing models can we exploit to improve margins.
- Fulfill Demand/Communication – How do we become “easy to do business with?” [ETDBW]
- Plan and Manage the Enterprise/Memory – How do I make better use of the knowledge [across the enterprise, or in ABC functional unit] to improve overall efficiency and effectiveness?
- Fulfill Demand/Memory – What customer service information could be provided to partners and suppliers in order increase overall customer satisfaction and reduce operating costs?
- Plan and Manage the Enterprise/Command and Control – How can we better manage our supply chains in order to enhance our ability to react to changing market conditions?
Process Reengineering and Knowledge Management – The Impact
- Several jobs are combined into one – more, and more complex knowledge is both consumed and created at a single point
- Workers make decisions – to do this consistently and accurately they need more than just data and information, they need knowledge
- Processes have multiple versions where appropriate – everyone involved will need complete, end-to-end process knowledge if the shift from one version to another is going to be swift and efficient
- Work is performed where it makes the most sense – knowledge is going to have be more portable and updateable
- Checks and controls are reduced – if you want to eliminate your armies of supervisors and quality control specialists performing non-productive work (i.e., not contributing directly to process output), you’re going to need smarter, more knowledgeable workers to get things right the first time.