Systemiser Part 2

Don’t leave your brains outside the building…

…use your brains to improve the process!

Was a key message delivered by Jaydeep Balakrishnan at our most recent discussion on the Systemiser, one of the ten characteristics found by researchers to be present and active in better performing SMEs. Jaydeep, a Professor in Supply Chain Management at the University of Calgary’s Haskayne School of Business, was keen to respond to the previous discussion on the Systemiser that focused on managing the ‘people’ system, to position the importance of ‘process’.

As a characteristic, the Systemiser understands the role that process plays in allowing an organization to respond appropriately to a given market need and deliver its value proposition to meet customer and consumer expectations.

Product vs process?

Which is more important? …was my first question to Jaydeep.

The reason behind my question is that our researches shows SMEs being more likely to invest in technical training for selling the features of product and services, and are less likely to invest in developing staff in process development techniques.

“Everything is a process. It is not products, it is processes. For successful products or services to get into the market you need processes. Whether to project manage design, or make your product, to deliver your product and service in a repeatable, consistent manner”

The key message? Reliability is important. If we don’t have the right processes, we won’t deliver the product or service that we (or our customers) were expecting. Processes have a key role to play in delivering to customer satisfaction, and developing customer loyalty.

What defines success in processes? It starts with strategy!

For processes to be successful they must be linked to corporate strategy. To achieve this, we all need to know what our corporate strategy is.

“If you aim for low cost, lower labour costs, you have a standardised process. There is little variation in what you do. You train people in simple things to deliver effectiveness, and you see that cost decreases over time”.

“This is set against a complex demand that will require flexibility. Consultant services [are a good example] and use teams. Each person is trained to do different things”.

Should it be helpful you can read more on the essence of good strategy in a previous session focused on the Strategiser characteristic.

How to achieve greater levels of productivity?

So process can lead to repeatability, consistency and reliability. It supports organisational efficiency. But, what about productivity? I used to have many debates on the contrast between efficiency and productivity when I worked in manufacturing. Quite often the terms are used synonymously, but they actually mean quite different things.

Say you are making and selling lemonade. It would be easy to imagine how a production line would be set up: you’d need separate functions like squeezing, bottling and selling. You’d also require a consistent line supply and removal of waste. Efficiency in one of these processes might just lead to the creation of oversupply in another process, which in turn could lead to wastage. None of this actually improves productivity, it’s actually quite counterproductive.

How do we become more productive, and what role do processes play? We can first understand the difference between “pull” vs “push” approaches to managing our supply chains, and which is most appropriate. Then we can consider how we achieve alignment in our organisations to deliver to the expectations set by customers. Jaydeep spoke to this challenge by referencing an insurance company:

“Silos are flexible within a narrow range of demands. The challenge is that should the client require a multiple portfolio you require greater flexibility, not necessarily volume. To deliver this you can use a matrix structure. [In the case of insurance] people were taken from functions and placed in cross functional teams. The team [held responsibility to] deliver to the client, not any one individual”.

So, what are the advantages of a matrix organisational design?

“Customers know who is responsible. The team is responsible, not the individual; they are accountable”

Jaydeep also highlighted that as part of a team, employees have a line of sight to the client. This results in employees having visibility of their impact on the whole process, in delivering customer expectations, and this can lead to improved employee motivation and well-being. People are better able to understand their impact on the whole system.

“What if a client calls into the team and the team doesn’t have the expertise? You draw in other skills from other teams”.

“There are always trade-offs [with a matrix structure], you may have to duplicate the expertise”.

Formality and informality dynamic

In much of our research, processes can often be given a bad name. Many SMEs we have researched see a greater level of process resulting in a greater level of formality, and that this formality might undermine flexibility and responsiveness; which in turn could result in becoming less competitive.

Our sense is that we need to debate what we really mean by informal and formal, that formal does not need to be rigid and time consuming, and that processes are often given a bad name. The risk by not having processes can be worse, leading to inconsistent delivery, which in turn can lead to increased costs.

“Even where there is complexity, flexibility and improvement, this can still be a process”

In putting forward this perspective, Jaydeep referenced Toyota and how such organisations are able to develop informality in their culture through more formalised processes.

What are the things all leaders should do? 

Jaydeep’s 4 top tips for leaders of organisations are to:

1. Think in terms of processes – processes get things done.
2. Link processes to strategy – be clear on you corporate strategy and how this informs delivery.
3. Respect that processes are dynamic – processes need to evolve, and change with the organisation.
4. Learning and sharing practice with others is important.

To listen to the live show again click here and scroll down to the bottom of the page.

Click here for further information on the collaboration between the Kent Business School and the Business Bunker Radio Show. Should you have any questions in regard to this piece of the wider work please do not hesitate to get in touch with Dr Simon Raby [email protected] or Paul Andrews [email protected]