Analyzing Your Corporate Processes

Because of their repeating nature, corporate processes are substantially more important (with few exceptions) than corporate projects for maximization of your corporate performance and for achieving your strategic corporate objectives.

Actually, the most heinous corporate inefficiencies can be found in the corporate business processes system. It is not uncommon for the corporate business process operate at 5% or even 1% of its top performance capability. For graphic examples see Reengineering the Corporation: A Manifesto for Business Revolution by Michael Hammer and James Champy.

Obviously, to maximize your aggregate corporate performance and to achieve your strategic objectives, you must ensure that all of your corporate processes operate at or near their maximum efficiency. To make it happen, you will need to conduct a corporate processes reengineering (optimization) project (CPR). Or – more often - business process reengineering (BPR). Often quite radical reengineering.

You can optimize/reengineer only what you can manage. You can manage only what you can measure. And you can measure only what you can see. Therefore, the first step in conducting a corporate processes reengineering project is visualization of your corporate processes by developing a comprehensive corporate processes map.

To make this step, you will need the optimal processes visualization methodology (or visual modeling methodology as it is often called). The most widely used (practically the only) corporate process visualization methodology is IDEF0 which is now part of the ISO system of standards.

IDEF0 is a ‘compound acronym’; it stands for Icam DEFinition for Function Modeling, where 'ICAM' itself is an acronym for Integrated Computer Aided Manufacturing. IDEF0 was initially developed for visualization (modeling) of manufacturing processes and later was very successfully used for visualization of corporate processes and for software engineering.

Every corporate process consists of subprocesses (which are sometimes called jobs, activities or functions). Each subprocess is a process in itself and is represented on a visualization diagram as a rectangular box with the subprocess name on it. The name typically begins with a commanding verb (e.g. Satisfy aggregate needs of corporate stakeholders).

Each box has outputs (e.g. a corporate document such as marketing report), inputs (such as primary or secondary marketing data), controls (such as guidelines for processing, interpreting and analyzing of marketing data), tools (such as marketing data analysis software) and personnel (such as marketing analyst responsible for writing the report in question). In ‘classic’ IDEF0 tools and personnel are collectively referred to as ‘mechanisms’.

Corporate cockpit methodology is based on the object-oriented Business Description Language (BDL). Which means that in corporate cockpit processes (called ‘methods’ in object-oriented methodology) are linked (attached) to the corresponding corporate objects. For example, a product management process for a particular product is linked to the icon representing the product in question. This is the only way to make corporate processes map manageable – due to its inherent complexity.

Your business processes analyst (who obviously must be a highly competent one) begins constructing your corporate processes map with identifying key corporate processes for each key business object (e.g. your risk management system) and objects portfolio (e.g. corporate brands) on a comprehensive corporate objects map and a decomposition map. And compiles a list of such processes (in BPR, they are called ‘Level 1 processes’) for each object in question.   

Then he or she develops for each corporate process on this list a comprehensive process description. Which includes a visual diagram (described above), detailed textual description of the process in question, description of arrows (outputs, inputs, controls, tools and personnel) and process valuation models for estimating financial, functional and emotional value created by the process in question. Obviously, these models must include process-related KPI (and a comprehensive set at that). In addition, it must include all relevant process-related corporate documents.

More often than not, the analyst will have to perform a decomposition of one or several subprocesses for each Level 1 process because the latter are far too general for successful and efficient optimization. After decomposition, each subprocess becomes a process in its own right and is referred to as the ‘Level 2 process’.  

Some of these processes may need further decomposition, creating ‘Level 3 processes’ and so on. However, it is highly unlikely that you will ever encounter processes of Level 5 and higher numbers (unless your business is excruciatingly complex).

After a comprehensive process description (in BPR it is called ‘AS IS’) is completed, the analyst puts together a brainstorm where all process stakeholders (personnel, users of process outputs and suppliers of its inputs) get together to find the best way to structure this process (in BPR it is called ‘TO BE’) and the best way to make a transition from ‘AS IS’ to ‘TO BE’.

This transition is typically expressed in a form of a comprehensive reengineering plan (financial, operational and a business plan). Which requires reengineering of not only of subprocesses and their structuring, but of inputs, outputs, controls, tools and personnel as well.

From the narrative above, it becomes clear that to optimize your corporate processes and thus to maximize your corporate performance, you will need to develop and implement a comprehensive corporate processes management system. Which must be tightly integrated into your overall strategic and operational management system.

This system must be based on a comprehensive processes documentation (more precisely called corporate processes knowledge base) which must be truly comprehensive, accurate and up-to-date. This knowledge base must include historic, benchmark, planned and current actual values for all process-related KPI. Like project-related KPI values, planned KPI values must exhibit just the right ‘stretch’ – not impossibly difficult but also not too easy to achieve.

Obviously, this knowledge base must be developed using highly efficient methodologies for (1) visual modeling; (2) financial modeling; (3) non-financial modeling – measuring functional and emotional value created in the business process in question and (4) textual description of the process. No less obviously, the comprehensive description of each process must match the actual way in which the process in question operates.

To maximize the aggregate efficiency (financial and operational) of each corporate process, you need to employ not only highly competent corporate processes analyst but process managers (each process must have one and only one manager) and process personnel (‘actors’).

The primary objective of process managers and personnel is to make sure that the process in question satisfies aggregate needs and desires of process stakeholders – internal or external. After all, this is the only raison d'être for any corporate process.

These individuals must use the optimal – and highly efficient – corporate process management tools for building visual, financial and other models, textual descriptions, KPI analysis, etc.

In terms of ‘quality-of-fit’, your corporate processes must definitely match your KEF, your DCI, your corporate mission statement (if you have one), your corporate vision statement, your corporate strategies, your corporate culture and your corporate code of conduct.

In our modern fast-paced world, none of your corporate processes can be set in stone. Rapidly changing corporate environment requires lightning-fast adaptation of your corporate processes to these changes. Which, in turn, requires a highly efficient process of monitoring this environment and making this adaptation.

Another process that needs to be implemented and optimized, is the one that monitors execution of each corporate process and performs corrective actions whenever this performance goes down – to bring it back on track. Which requires a comprehensive corporate processes reporting system.