The Best Way to Improve Business Processes
Insurance Experts' Forum, May 16, 2013
A question we often hear is: “What’s the best way to improve business processes?” More often than not, this is a backhanded way of asking, “Which ‘fad of the day’ is the best approach to process improvement?” While fads have come and gone over the years — including Reengineering, Total Quality Management (TQM), Value Analysis, Six Sigma, and Lean — the answer has really remained the same: The best way to improve business processes depends on your objectives.
Each of the process improvement fads mentioned above brought several improvement capabilities forward. Reengineering gave us the “clean sheet of paper” concept that has yielded many innovative transformations of processes. TQM put the customer center stage by improving processes to standards that were important to the customer. Value Analysis took a different approach depending on where the process segment fell in the Importance-Reliability-Cost matrix. Six Sigma helped organizations gain statistical control of their processes to reduce or eliminate errors. And last but not least, Lean is helping businesses remove waste and improve flow. Add to this list of highly publicized approaches, a few others that have proven effective, like Value Analysis, FAST Diagrams and Strategy-Driven Process Design, the last being a popular one that starts with setting the strategy and guiding principles, and then designing or redesigning to them. All of these are really good things.
The problem is that there is rarely an improvement effort with a narrow and singular focus. So if you counter that initial question with, “What are you trying to improve?” the answer is usually more complex than any one of the focused approaches can handle. Thus, the approach should be a blend of techniques to achieve the desired result.
Often the drive for a specific process improvement methodology is connected to attempts to build up internal consulting capabilities. Building it around a specific methodology can be appealing for a number of reasons — training is readily available via books, seminars and videos. Also, building a new capability that people are reading about in the business press or hearing about at conferences has image value.
Experience shows, however, that internal capabilities built around a singular methodology rarely last past the fad stage for exactly the same reason consultancies and vendors usually deploy customized approaches. Internal groups are as unlikely as external ones to find simple, singular problems that can be solved with a single approach.
Which leads us back to the question: “What’s the best way to improve business processes?” To answer it, start with understanding the problem and follow this process:
• Understand what needs to be improved—what are the desired business outcomes?
• Have a working knowledge and experience with a broad range of improvement methodologies.
• Build a custom approach based on needs.
This approach is your best path to producing meaningful, balanced and durable process improvement results.
Ed Fenwick is SVP at The Nolan Company, a management consulting firm specializing in the insurance industry.
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