The challenges of operating and growing a business are becoming increasingly complex for businesses of every size.
Even relatively small companies now often need the ability to sell in different countries, operate in multiple regulatory environments and customize the customer experience they deliver based on attributes such as client profile, size, location or behavior.
Business complexity at this level poses a huge challenge when it comes to successfully managing and standardizing business processes.
Standard Processes Look So Good on a Flowchart
I remember well my first experience with ‘standard’ processes and the challenge of multiple process variations.
One of my earliest projects in the 1990s entailed working on a global accounting change program for a well-known international airline. The project was designed to standardize airline revenue processes.
Everyone involved was excited by the best-in-class processes we had developed. They all agreed to the plan. They all signed off. We hailed our new standard processes as a true breakthrough.
Then came the implementation phase.
Not a single country across Europe could apply the breakthrough ‘standardized’ processes we had created. Everywhere we looked, slight changes were required. Each region demanded customization of the process to meet local needs and regulations.
It felt like our concept of standard processes was a fiction — something that worked well in theory, on a flowchart, but completely failed when exposed to the real world.
We ended up creating separate processes in each region, which translated into major headaches, major investments in time and energy and major project overruns — not to mention process inconsistencies and increasing complexity with every new process variation.
Process Management's Dirty Secret
Twenty-five years later, managing process variations remains a huge problem for many organizations, particularly for multi-nationals, those with numerous locations or those that offer multiple core products or services.
Managing process variations is still unnecessarily complex, costly and inconsistent. Experts agree. Steve Stanton, an analyst with FCB Partners, says: “Ninety percent of the organizations I know have failed at standardization.”
It’s the dirty secret of process management. Process owners know their so-called “standard” processes do not meet the requirements of the teams expected to apply them. And they know these processes can’t be applied, which means they may as well not exist.
3 Approaches to Process Standardization (and the Headaches They Induce)
You can usually find three common responses to the problem of process standardization:
- Create standardized processes at a high-level only.
- Create mega-processes that include every possible variation.
- Owners are free to create separate individual variant processes.
Scenario one is the most common for early maturity organizations. It creates high level information that is so summarized that it’s no use to anyone — for day to day process guidance, or as a platform from which to navigate future change.
Scenario two is the most common response from technical teams and large transformation projects. Their attempt to tame all this complexity is often detailed, technically correct process documents that apply approved process notation standards.
The main challenge with this approach has been its poor history of winning engagement from teams after these projects end. They find the processes incomprehensible. And another failure point — it can stall agility and future change because process owners aren’t confident applying changes and improvements to this documentation. They’re not ‘living’ documents.
The third scenario is the most common for organizations further along the process maturity curve. Separate individual variant processes, owned, managed and changed independently creates the administrative and change management headaches you would expect from such an approach.
7 Criteria of Standardized Processes
These seven underlying capabilities will help you achieve the benefits of standardized processes across an organization, provided there's an option to control process variations when and where necessary:
- The ability to agree on the core or standard process, owned by global process owners, which forms a platform to consider local variations against.
- Local process variants should then only be established off this standard process base, with any changes applied by variant experts highlighted and visible against the core process.
- The ability to compare and report on all the process variations that exist for each standard process. Doing so allows visibility of activities that have been added, removed or changed, compared to the standard process.
- When navigating to processes, it should allow business teams to select the variant they seek from a list, or automatically reroute them to their variant if they have a ‘default’ location, product team, business unit, etc.
- Any changes the global process owners make to the standard process should be submitted to the applicable local variant owners for their approval to merge into each variant process, or for amendment.
- Include a global reporting capability so that process champions can see the list of processes that exist for each variant type.
- Process variant costing and timeframe tracking should calculate the difference in cost and time between variations and the standard process. This allows organizations to make informed decisions about whether to keep or eliminate process variations.
These capabilities allow organizations to understand the extent of variations they are managing, to control and report on them and to challenge them. Teams can then be more agile, more flexible and able to customize (or eliminate) activities as they see fit because the variations will exist in an environment they actually have clarity and control over.
The most important result of simplifying process variation management is that it allows organizations to apply a standardized customer experience, customized for where the market demands it.