Process Improvements

Have you identified which business process improvements are really critical to your strategy?
A. No.
B. We have identified some.
C. We have identified which process improvements are really critical in executing our strategy.
D. We have identified which process improvements are really critical in executing our strategy and which measures will track and feedback on these process improvements.
E. We have identified which business process improvements are really critical in executing our strategy, which measures will track and feedback on these process improvements, and converted these to an operating plan for the year.
[Score:  A=0, B=1, C=2, D=3 and E=4]

Why is this question important.

What business process changes does your strategy require?

The internal business processes [IBP] perspective is where you get to assess and improve the way your business is running.  Here managers need to identify the critical processes at which they need to excel if they are to deliver on strategic objectives.

The internal business processes accomplish two vital components of strategy:

  • They produce and deliver the value proposition for customers
  • They improve processes and reduce costs for the productivity component in the financial perspective

Internal Processes

An organisation’s overall effectiveness is fundamentally linked to the efficiency of its business operations or processes.  As your organisation develops and changes, you need to ensure that operations are carried out in a manner that is driven by the business needs of the organisation and that they are fit for purpose with respect to design, efficiency and effectiveness.

The strategic objectives are not merely to identify existing internal business processes, but also to identify new ones that may have the greatest impact on customer satisfaction and deliver greater returns.  Internal business processes include “long-term value creation wave” or innovation processes, and “short-term value creation wave” or production and other operations, and post-sale services.  Because these processes have different needs, they require separate treatment.  The BSC model deals with them separately, which in one sense amounts to the creation of sub-perspectives, thus making the IBP perspective the most complex.

For the innovation process, the BSC model indicates that management should choose measures that enable a business to identify future customer preferences and deliver new products that satisfy such preferences. Typical indicators include percentage of sales from new products, new product introduction compared to competitors, time to develop next generation, and time-to-market.

For the operations process, management should focus its measures on the efficient, consistent, and timely delivery of products and services to customers.  For this process, most managers use many traditional indicators that have been developed to measure cost, quality, productivity, and cycle time.

For the post-sale services process—which includes warranty, repair, and customer service— management should choose measures that ensure reliable, effective, and speedy service to customers. Typical indicators include time – response time to complaints / call-outs, quality, accurate information, customer treated and respected as valued, effective communication …

Adapted from the Balanced Scorecard by Robert S. Kaplan and Dave P. Norton.   Harvard School Press, 1996.

Operations Management Processes – Processes that produce and deliver products and services

  • Achieve lowest-cost-of-ownership
  • Efficiency in the  production of products and services
  • Efficient distribution to customers
  • Well-managed risk

Customer Management Processes – Processes that expand and deepen relationships with targeted customers

  • Customer selection
  • Customer acquisition
  • Customer retention
  • Customer growth, including up-selling

Innovation Management Processes – Processes that create new products and services

  • Identifying the opportunities and anticipating customer emerging needs
  • Managing the portfolio of products and services – choose the mix, extend applications …
  • Design and develop new

The Key Challenge

From the above it will be abundantly apparent that there are hundreds of processes taking place simultaneously in an organisation – the art of strategy is to identify the critical few processes that are the most important to the customer value proposition.