Fragmentation is a killer.When your computer’s hard drive gets fragmented, more work must be done to retrieve data. Performance

deteriorates. In an extreme case, loss of data can occur.

When a habitat is fragmented in ecological systems, genetic recombination is hindered because the area ofany usable patch of habitat is severely reduced. Imagine planting a field of corn in hundreds of individual claypots, each separated by miles from its neighbors and you get the idea. As a result of this fragmentation, geneticdiversity decreases, and a population’s ability to adapt to environmental changes suffers. Species go extinct.

When organizations are fragmented, the effect is a catastrophic combination of the problems describedabove. More work is required to deliver value to the customer, and the ability of the organization to adapt toenvironmental changes suffers. In extreme cases, the loss of value is lethal. Businesses go extinct.

What causes businesses to become fragmented?

Business fragmentation occurs when critical processes aren’t managed as an integrated whole. Transactionstravel helter-skelter through a complex series of handoffs between functions, jobs, and information systems.Each handoff is an opportunity for error, delay, and unnecessary cost. Without an integrated process man-agement framework, transaction value deteriorates. What’s more, with no unifying focus, local processvariations grow so far apart that standardizing to best practices becomes a daunting change managementtask. The potential for resistance increases and the speed of implementing improvements decreases.

Processes in a highly fragmented organization resemble a labyrinthine system of poorly joined plumbing,with pipes that leak time, money, and customer value. Core business transactions are pushed, pulled, disin-tegrated and re-integrated numerous times on their way to the customer. This alone would be cause for greatsuffering and gnashing of teeth. Unfortunately, most businesses today are subject to a number ofvariables that are making the problem still worse…

Silo-visionIn their article “How Process Enterprises Really Work” (Harvard Business Review, Nov-Dec

1999), authors Mike Hammer and Steven Stanton state:

The power in most companies still resides in vertical units—sometimesfocused on regions, sometimes on products, sometimes on functions—and thosefiefdoms still jealously guard their turf, their people, and their resources.

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DefragorDIE!How Fragmented Business Processes Destroy Value

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The “silo-vision” described by Hammer and Stanton is reinforcedby functionally oriented metrics that have no discernable connectionto process performance. Managers are rewarded for such things ascompleting key projects, hitting local financial targets, or reducingheadcount within their silo. While these may be desirable goals,failing to understand how these objectives will affect processperformance puts the organization at risk.

Of course, there are valid reasons to structure reporting relation-ships on principles other than process. However, process should bethe underlying organizing principle for operations for any business.In other words, regardless of what the org chart says, the attentionand efforts of employees should be focused on getting products andservices out the door as effectively and efficiently as possible.

Processes are your direct connection to customers. Customers areyour direct connection to revenue. In the long run, all other con-siderations are subordinate. Without process metrics or manage-ment systems, the silos will obscure this essential connection andfragmentation will increase. Silo-vision leads to two forms of frag-mentation:

Physical Fragmentation: This is the inevitable result of spatialseparation of functions. One consequence of separation is the timeit takes a transaction to travel from one group to the next, time inwhich no value is being added. Potentially more serious, however,is the degradation of information associated with transactions asthey travel. It’s like the game “telephone,” where one person withina small circle starts a message that each person whispers into his orher neighbor’s ear until it returns to the originator, hopelessly gar-bled. In addition to being delayed or misinterpreted, there is alwaysthe possibility that the transaction will simply fall through thecracks. How many times have you placed an order with a companythat simply vanished? Never, right?

Cultural Fragmentation: This type of fragmentation is less obvi-ous than physical fragmentation but is often far more damaging. Itstems from a lack of alignment on priorities, which is exacerbated byfunctionally focused metrics. Items that are top priority in onegroup’s work queue move to the back burner as organizational bar-riers are crossed. As the degree of misalignment increases, so toodoes the “leakage” of value. The effect is analogous to driving downa highway where speed limits, traffic laws, signage conventions, andinvestment in road maintenance change dramatically each time youcross a county line. A business transaction traveling such a highwayloses momentum and takes a real beating before it finally reaches itsdestination—a paying customer.

The Turnover TrapIn the absence of integrated process management, high employee

turnover accelerates fragmentation. Tribal knowledge about bestpractices and the variables that affect process performance walks outthe door with each exiting employee. Without a clear understandingof how their work fits into the process as a whole and no processmetrics to focus their attention, new employees will gravitate towardpractices that make their lives easier. Who can blame them? In theabsence of meaningful feedback, where would you focus? Without aprocess context, jobs lose their meaning, employee moral drops andturnover accelerates. This vicious cycle can be difficult to break.

The Systems SnowballBusinesses are utterly reliant on the systems that facilitate the flow

of information to where it is needed. This web of interactions canbe quite complex. A single system can support multiple businessprocesses, while a single process can be supported by multiplesystems.

In some organizations, the sheer number of systems and interrela-tionships seem to grow exponentially with little rhyme or reason.New systems are added without an overall strategy, legacy systems areleft running even as the people who understand them are leaving, andhomegrown applications with duplicate functionality pop up likeweeds. When this growth occurs without a process framework, busi-ness fragmentation increases.

“Ouch”-sourcingOutsourcing an intact process that is not a core competency can

offer significant advantages to a business. On the other hand, out-sourcing a “chunk” of a critical process to an outside vendor can leadto disaster if little thought is given to how its linkage to the rest ofthe process will be managed. Such piecemeal outsourcing can leadto serious performance problems.

Consider the example of a cable company hiring a third party tomanage repair calls from consumers. How can customer satisfactionbe ensured when the entity making commitments and qualifyingcalls is completely disconnected from accurate, timely informationabout the rest of the process? Unless process requirements are clear,information exchange is flawless, and service level agreements areaggressively managed, the outsourced call center will focus onminimizing their cost for handling each call at the expense of theultimate customer.

In this scenario, pressure will increase to reduce the time spentunderstanding each customer’s problem. The information captured

will lose important detail. Customer irritation will grow when theysense they are being rushed.

With less useful information, the effectiveness of repairs decreases.This causes customer satisfaction to plummet and there will be noremedy until the contract is up for review. In the long run, the unfor-tunate cable company ends up with a process that is more costly, lesseffective, and risks driving customers into the arms of its competitors.

Perhaps the most damaging thing about fragmented organizationsis the way they respond to performance issues. Without a coherentpicture of how the business operates, efforts to improve amount tolittle more than flailing in the dark. Sometimes the “fixes” createmore problems than they solve. Fortunately, there are steps you cantake to stop or even reverse the fragmentation of your businesswithout sacrificing flexibility.

Focus on Critical ProcessesCritical processes are those processes that will make or break your

business in the foreseeable future. They are essential to achievingyour strategic goals. Looking forward is important, because theprocesses that defined success in the past may not be the ones thatwill ensure your business survives and thrives in the future. Oncethese processes are identified, the next step is to quickly build processmanagement systems that redirect organizational attention to whereit’s needed.

Empower Process ManagersBefore you redesign or improve your critical processes, it’s essential

to make sure that they are managed. The good news is that it won’trequire a huge investment of time or money to design and deploymetrics. The bad news is that it may require a fundamental changein mindset. Process management relies on process ownership.Ownership means that each process has an individual who isaccountable for process performance and has the authority to makeany necessary changes. This individual’s voice must be louder thanthe voices representing the silos. If resources are needed to address a

performance gap, then the process owner needs the power to mobi-lize them. As mentioned earlier, functional priorities must be subor-dinate. Too many organizations assign process owners in name only,while the real power remains with the functional fiefdoms.

Manage First, Then TweakYour first step is to adopt a simple, disciplined approach to defining,

integrating, and managing processes. After this is accomplished, youcan concentrate on enabling employees to analyze and refine criticalprocesses.

What? No radical redesign? No cutting edge software? No cadre ofblack belts flexing their statistical muscles?

All in good time…

A systematic approach for evaluating and changing the design ofprocesses to improve performance is an important component ofprocess management. However, basic process management systemsshould be in place before adopting a rigorous improvement method-ology such as Six Sigma. Incremental improvements work best in anintegrated system. Individual pieces of a process can be optimized,and these improvements often add up to big improvements to theprocess as a whole. On the other hand, improvements made in theabsence of a process context can accelerate fragmentation and theresulting deterioration of performance. The only way to know when apiece of a process can be isolated and improved independently is tohave a clear grasp of the big picture and a robust system for managingperformance.

In the face of so many variables conspiring to increase fragmentation,the job of reversing the trend may seem overwhelming. Don’t fall preyto this illusion. If you follow the steps outlined above with sustainedmanagement support and commitment, measurable results will followin fairly short order. There are well-established tools and methodolo-gies to help your organization begin this journey.

The important thing is to start defragging—today.

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