Sunday, April 16, 2006

The challenge of modern business managers: How to solve the agility / maturity dilemma?

There are two contradictory schools of expertise for how the organizational management system should be realized and developed:
  • The Maturity School
  • The Agility School
Representatives of the maturity school say that one should build a consistent system for management that covers organization’s all activities. Then the organization is capable to fulfil successfully all relevant requirements from organization’s stakeholders. This is typical approach e.g. among traditional quality experts and their quality management systems based on international standards.

The agility people think in a completely different way. They say (see The Agile Manifesto): “We are uncovering better ways of doing business. Through this work we have come to value:
  • Individuals and interactions over processes and tools.
  • Working solutions over comprehensive documentation.
  • Customer collaboration over contract negotiation.
  • Responding to change over following a plan.

That is, while there is value in the items on the right, we value the items on the left more.” Their approach is also very well justified and it has recognized advocates especially among modern software and ICT businesses.

Thus, we have really a dilemma: A situation that requires a choice between options that are equally unfavorable or mutually exclusive. And business practitioners easily confront with these both options in their every day activities. But how to solve the dilemma that seems to be already in principle impossible to be solved?

The dilemma cannot be solved at the operational level where the problematic situation exists. One should consider the question at higher level of comprehension. Then it is possible to find that solution is in maturity – not necessarily in building practical operational system(s) – but in maturity in having profound knowledge and understanding reality of the business case holistically. Then one can recognize how comprehensive and what kind of systematic approach is suitable and how to behave in an agile way in practice.

One may find this solution to the dilemma already from the ancient poem #26 of Chinese Lao Tzu:

"Heaviness is the root of lightness.
Stillness is the master of agitation.
And so the wise person:
Travels all day, not departing from the heavy baggage wagon although there are grand sights, he sits calmly aloof.
Why is this?
A 10 000 chariot lord,
mindful of his self, takes the world lightly.
Light, then lose the root.
Agitated, then lose the mastery."

Saturday, April 15, 2006

Achieving quality through managing business processes

Management of business processes is definitely the most important and practical subject matter to get quality happen in all kinds of organizations. Proved practices, however, demonstrate that although process management is an incredibly simple thing, its implementation seems incredibly difficult because it always puts a strain on the company's leadership issues. Development of the business processes and their management is a long-term effort and should take into account realities of business environments in question.

Systematic process ideas were used already in ancient plant and construction activities. The concept is also often referred to in cases of natural development. Through industrialization processes became an everyday concept in so called process industry. From 1980’s process approach has been used for computers’ internal activities according to structured analysis and design technique (SADT). However, in a large scale business process approach has been used comprehensively for the benefits of business management only for less than twenty years, and during that time a lot of practical means have been developed for managing business processes. In these approaches, especially learning from system theory and system dynamics was used. To the quality management standards ISO 9000, process concept was introduced in the 1990’s.

Processes in general adhere always to all kinds of doings or activities. In fact, originally the process concept just denotes any kind of activity or operation. When these activities within an organization are linked together to achieve organization’s business results, one may talk about business processes. Organization's business processes is an orthogonal dimension to organizational structure. Organization's overal business performance is the result of managerial solutions both in processes and in structures, however, naturally the the structures should support the processes.Structural questions of business processes have become an interesting management issue in order to increase effectiveness and efficiency of the business operations. In some cases, however, there has been a danger that structural aspects, e.g. formal process diagrams, were being harmfully over-emphasized in process management.

Due to its business significance, process management is a comprehensive business management issue by its basic nature. Today, however, truly effective and efficient process management implies a radical change to the established management thinking and structures in many organizations.

Major motivation in organizations for strengthening process-focus in business development is based on the following objectives:

  • Focusing through the whole organization on customers and aiming to fulfill customer-needs competitively
  • Avoiding problems of company-internal interfaces and responsibilities: operating effectively and efficiently, ”smoothly”, through the whole organization
  • Making human quality (i.e. individuals and teams) development effective based on the needs real process activities
  • Enhancing process-innovations in addition to product innovations
  • Getting benefits of real options from process-based investments

All business results are achieved through managing business processes and projects. Basic (or core or key - different terms are used in different organizations) business processes imply continuously running interlinked business activities, and projects are singular processes for unique business tasks.

Both strategic and operational management are needed in a comprehensive process approach, the strategic one focusing on managing the network of inter-linked business processes as a whole business system, and the operational one on managing single processes and projects.

Most practical means to support organization-wide management of business processes are:

  1. Process plan for managing each single business process
  2. Business process framework for managing the whole system of business processes within an organization
  3. Procedure document defining the principles, responsibilities, structures, and practices being used for process management in an organization

Business processes are managed within an organization through strategic and operational decisions and methodologies by responsible business people. However, business processes are to interact with external actors that are not necessarily under contol of the organization. Especially modern flexible and dynamic business environments set challenging requirements for managing business processes. In fact, business processes are complex responsive processes of relating.