Opening the Door for Process Standardization in Europe

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y Victor Cascella

Processes which deliver value to customers across a wide geographic area in the United States are considerably less complex than the processes needed by companies doing business across Europe.

In the United States, companies can, and often do, use the same process to reach their customers, even nationwide. Regional or local differences can be almost non-existent; there is one primary language and regulatory variation is minimal. On the other hand, doing business in Europe requires dealing with national differences in almost any process – multiple languages, tax laws, different customer cultures and sometimes significant regulatory variation. And, although the European Union is aiming more and more to standardize and harmonize across its membership, differences that have been around for centuries are likely to remain for at least the next few decades. As a result, most companies in Europe operate through local subsidiaries whose processes are geared towards satisfying the requirements of the local situation.

The meaning of this is not lost on Six Sigma practitioners in Europe: The task of improving processes and the bottom line is easier when there is only one variation of the process instead of ten. A traditional Six Sigma deployment approach used in Europe would probably require a significantly greater number of projects to achieve the same outcome such a deployment would attain in the United States.

Process management offers a powerful alternative to repeating the same project in each country. By understanding the differences and the commonalities among local processes, an organization can start to assemble a pan-European process that is able to satisfy the needs of each country, opening the door for process standardization and resource pooling. The different types of process management system deployments and the three different "categories" cited here can help provide executives with a deployment framework.

Premises on Which Process Management Is Built

Process management can be defined as a system for building and sustaining fact-based accountability for the performance and continuous improvement of business processes. Process management is built on these premises:

1. Understanding a business in terms of the processes which deliver value to internal and external customers
2. Having the measurement systems which indicate the relationship between business processes and business outcomes
3. Developing "line of sight" accountability for process performance to individuals and departments
4. Engaging the organization's members in identifying and pursuing improvements which have bottom line impact

This approach compels measurable, organization-wide improvement that is linked to the achievement of strategic business priorities. It also fosters a high-involvement, high-performance culture that can become self-sustaining and provide ongoing support of continuous improvement systems.

The decision to develop and use process management systems primarily occurs under three conditions. One is as a result of an effort to sustain the performance and reliability of a recently implemented process effort, such as in the Control phase of a Six Sigma improvement project. Another is when the "owner" of a business process has recognized the limitations of current management decision-making approaches and the need for improved accountability and control of process performance. The third is after the business leadership (in the case of an enterprise- or business unit-wide deployment) has chosen to adopt continuous improvement disciplines and measurement systems and use process management to improve process orientation and thinking and to better select Six Sigma projects. These can be referred to as Category 1, 2 and 3 Process Management System level deployments (Figure 1).

Figure 1: Scope of Process Management Development Systems

In the figure, the aqua-colored graphics indicate the likely process and organizational scope of a process management system deployment associated with each of the three categories. Each arrowhead graphic is intended to illustrate a business unit. "Core business processes" can be considered major business organizational and system investments, such as new product development, or order generation within the supply chain. Core business process owners are usually associated with direct reports to general managers and CEOs. Of course, the deployment also may include major support of "enabling" processes such as talent acquisition and development or performance management. A Category 2 process management system may not necessarily originate at the core process level, as the one shown, but it would involve some degree of coordination and "roll-up" among processes.

Common Thinking of the Leadership

These three main "entry points" into process management share many commonalities, namely in the thinking of the leaders at the respective levels where the decision to pursue process management has been made. This thinking includes an understanding (or in some cases, a trust) that:

• Operating processes must be designed to meet customer requirements and drive business performance.
• Processes are measurable and must be continually improved.
• Managers and process owners are personally accountable for process performance.
• Decision-making should be based on facts, not assumptions.
• Process control systems describe process priorities and performance and should be understood and used by all associates.
• Best practices should be identified and replicated wherever possible.
• Each associate should seek continuous improvement in everything they do.

While these beliefs are common, not all process management system deployments are the same. Based on the organizational scope of the deployment, the systems can vary widely in terms of cost, time to develop, level of effort required, and the amount of coordination between levels of management and functions. A framework for categorizing different types of process management systems becomes clear when considering the three primary entry points into the decision behind any effort to develop a process management system. This distinction is important because it has significant implications on where the development begins, who needs to be involved, the time and resources associated with design and deployment, and the extent to which the effort impacts other management and information systems.

Category 1

A Category 1 process management system focuses on a single, narrowly scoped business process. The purpose is to provide a very robust control system for a recently or soon-to-be completed process improvement effort, such as a Six Sigma project. The decision to implement is made by a team and/or its respective process owner. Process improvement teams should not limit their deliverables to good ideas and great process maps which, if implemented, would improve performance. Even testing or successfully piloting the solution falls short of the true objective. Rather, these teams must see their responsibilities to include documented standard operating procedures for managing the process and the various situations it may need to accommodate, a process dashboard to provide timely information on how the process is performing, and a clear set of accountabilities supported by management defining who and how process performance will be managed and reported. The intent here is to sustain the gains achieved through an improvement effort or process change. In this case, the process management system is a stand-alone effort that is not necessarily linked to any other process.

Category 2

A Category 2 process management deployment scenario exists when the owner or leadership team of a single process has made the decision to implement a fact-based measurement and control system to identify potential improvement efforts and to improve the line of sight accountability for process results. This may be for a process that is narrow in functional breadth such as an inventory pick process, or wide in scope, such as in an order generation process for an entire business unit. Again, the scope is limited to a single process. The difference, however, is that in this instance the system includes all sub-processes. While there is not necessarily a clear linkage to business strategy and corporate objectives (eventually there should be), the system includes detailed process maps and dashboards or process scorecards that are aligned across the entire process scope. The deliverables would include clear process definitions at several levels, alignment of overall process metrics with the "Voice of the Customer" at several process levels, and the implementation of process dashboards. Coordination of sub-processes and a roll-up of process measures are required across each level of the process.

Category 3

A Category 3 model involves an executive-level decision to develop an enterprise- or business unit-wide process management system for developing process accountability and serving as an organizing framework for selecting and pursuing improvement efforts. Such an effort starts with the strategic business objectives and the overall process architecture. It involves executives and managers across all functions and results in the definition of processes at all levels as well as understanding the extent to which improving process performance will result in competitive advantage. Process dashboards are aligned with strategic objectives and coordinated across all primary functions and departments. These efforts are comprehensive, lengthy, and may involve a great deal of resources, depending on the organizational or process depth which the process management system is designed to penetrate. In most cases, they are accompanied by adjustments to executive level performance management systems to ensure proper alignment between desired process outcomes and top- and bottom-level business results. A summary of how each of the categories of process management deployment may differ in terms of what they involve is shown in the table below.

Category of Process Management Deployment	Requires Metrics Aligned Across Processes	Involves Sub- Processes	Clearly Linked to VOC	Clearly Linked to Business Strategy	Degree of Impact on Mgmt. and Info. Systems
1	No	No	Unlikely	No	Low
2	Yes	Yes	Yes	Level-Dependent	Medium
3	Yes	Yes	Yes	Yes	High

By categorizing process management deployments into one of these three scenarios, a business can better understand the commitment and resources that will be required for deployment, and can better manage the complexities and tasks associated with each deployment model. It also can help to provide the appropriate members of the business with the tools and guidance needed for the process management system deployment to succeed. An informed decision by the right level of leadership to develop a process management system will increase the likelihood that the right resources can be secured and engaged in activities that lend greater discipline and value to business decision-making.

Conclusion: Consider Categories of System Deployment

As European businesses consider the challenges of implementing a process management system in a diverse cultural, economic and regulatory business environment, they should take into account the various categories of system deployments. It can increase the likelihood of program success. And when process management systems are better integrated and shared, European business leadership is more likely to achieve process standardization, common business performance metrics, the sharing of best practices and responsible process variations to account for local differences.

About the Author

Victor Cascella, a partner at Valeocon Management Consulting, is responsible for the firm's strategy deployment center. As an expert in strategy and operations consulting, he works with executive-level leadership teams to translate business strategies into operational goals, and helps them develop leadership competencies and measurement systems to improve strategic clarity and accountability for business performance. Mr. Cascella has worked in a wide range of industries including pharmaceuticals, manufacturing, services and financial. Recent clients include Johnson & Johnson, Alstom, EDS, GE, Penske and Prudential. He is based in Washington, D.C., USA, and can be reached at victor.cascella@valeocon.com.