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Overcoming The Obstacles Of TransformationDerek Miers Principal AnalystTwitter @bpmfocusApril 18, 2012 2009 Forrester Research, Inc. Reproduction Prohibited
2012 Forrester Research, Inc. Reproduction Prohibited#AgendaUnderstand the transformational journey.Engage the businessboard room to front line.Translate strategic intent into effective processes.Design compelling customer experiences.Weave your own organizational change fabric.
2012 Forrester Research, Inc. Reproduction Prohibited#
The age of the customer requires transformation. 2012 Forrester Research, Inc. Reproduction Prohibited#Image Source: iStockPhotoSPEAKER: Derek
This age of the customer power requires a top to bottom transformation. Thats not limited to new servers, or killer applications or even highly efficient processes
For many organizations it means a change to the way the organization thinks about itself. It means getting at the heart of the brand and working that throughout your business.
or Wellness Program 2012 Forrester Research, Inc. Reproduction Prohibited#Most companies
You think you are running vibvrant org . Something goes wrong and you put a bandaid on it.
Band aids dont work on plants the pressure of blood flow 4#BP Maturity ModelLevel 1InitialBasic MgtControlLevel 2RepeatableLevel 3DefinedLevel 4ManagedLevel 5OptimizedStandardizedProcessesProcessMeasurementCulture of OptimizationInconsistentResultsWork UnitManagement BusinessManagement Change Management Capability Management 2012 Forrester Research, Inc. Reproduction Prohibited#5Achieving corporate agility means different things to different organizations. It depends on your start point. Most of you will recognize this slide from the Capability Maturity Model developed by the Software Engineering Institute. But the same sort thinking applies to virtually any business process. Either way, meticulously defining and managing your processes will provide a powerful source of competitive advantage for many companies. For example, look at Toyotas highly engineered manufacturing processes. They not only give it superior productivity but also provide a platform for constant learning and improvement. The formal structure, which is anything but democratic, spurs both efficiency and innovation - productive innovation - simultaneously. Another example would FedEx who now know so much about their delivery process (logistics) that they can give their customers a choice of times when a package should be delivered (or choose a one-hour delivery window). But structured, well-thought-out processes are also essential to most knowledge work, from product development to financial analysis to software engineering to sales and marketing. And the more complex the effort, the greater the need for clear processes. Far from making business less effective and agile, increasing the attention to process increases effectiveness and agility.But moving up the ladder of Business Process Maturity is a long-term transformational approach and different organizations have different start points on the journey. For some, the challenge is to achieve basic efficiencies (by applying standardized procedures). For others, it is about loosening up their procedures in certain places to allow them to step around those show stopping incidents and respond more easily to customer demands. Or really working out which variation of the process is best. But the implications of where you are on this journey are many and various. For example The sorts of Processes that you would be designing at Level 2 are entirely different from the sort of Process Architecture you might build at level 4. The sort of organizational form that the BPM program will take will vary moving from one-off project at Level 2, through Center of Excellence, to distributed CoE at level 4. The degrees of empowerment go through the roof as move up the ladder at level 2 it tends to be all about control, by the time you get to level 4 your employees understand and are capable of dealing with the process adaptability required to deliver unique customer experiences. Even your understanding of what technology you might look for will evolve as you move up. #Political challenges aboundSilod FunctionalFunctions supported by processes Processes supported by functionsFrom Traditional Line ManagementTo Processes & Services Management 2012 Forrester Research, Inc. Reproduction Prohibited#6The challenges posed on this journey are immense. Most organizations have grown up with a strong functional orientation. The managers of those organizations exercise their power to control their own fiefdoms. Depending on where you are, you could be trying to get them to engage in the transition to the next step. Initially, it is a challenge to get them to engage in cross functional processes, where the Processes are designed to support the work of the Function. The next mental shift for them is to realize that the Function is there to support the Process. Then, the ultimate goal is to manage the business based on the processes themselves. The functional groupings become loci for knowledge and expertise.Each one of these transitions sees a transfer of power. Those with the power that you are changing will feel increasingly uncomfortable. And although they may not even consciously realize it, it is this loss of power which drives their resistance. They may engage in all sort of behaviors to undermine the initiative, since in the end it will see them loose the position of dominance and control they have built up.
Rather than just managing processes, the organization is moving toward a situation where it is using processes to manage. This a very challenging journey for most organizations and the individuals within them. #Assess BP maturityManagement AreaImmatureAspiringMatureStrategyGovernanceStructurePerformance CultureWasteeliminationValue innovation 2012 Forrester Research, Inc. Reproduction Prohibited#36%68%60%35%Value innovationCustomer experience improvementCost reductionWaste eliminationMaturity level 2-3 (n = 136)Value innovationCustomer experience improvementCost reductionWaste elimination60%59%45%32%Maturity level 3-4 (n = 88)Value innovationCustomer experience improvementCost reductionWaste elimination58%50%46%46%Maturity level 4-5 (n = 24)Mature firms achieve a balanced approach"What are the primary goals of your business improvement program?" 42%39%74%43%Value innovationCustomer experience improvementCost reductionWaste eliminationMaturity level 1-2 (n = 77)Base: 325 business process professionals Source: Q2 2011 Global Forrester/IQPC Business Process Maturity Online Survey 2012 Forrester Research, Inc. Reproduction Prohibited#Our research shows that while the initial focus is on efficiency and cost containment (waste elimination), the longer term opportunity is to use BPM to deliver better and more consistent customer outcomes (value innovation).
Eureka Moment If I improve my customer experience, taking out what the customer doesnt want then that will gives me cost reduction.
But then I discover that by focusing more on the customer experience, I learn new things that the customer wants, that I wouldnt have discovered anywhere else. It allows me to innovate that experience and deliver more value, distinguishing my offering from that of the competitors.
And hey presto, I realize that the balanced approach is what works.
The theme behind it is the learning process competitive advantage comes from focusing on the needs of the customer.
Therefore the ability to design and deliver compelling customer experience becomes a key objective.
Percentage of companiesBase: 154 large North American brands score in Forresters Customer Experience Index, 2010 Very few companies deliver an outstanding customer experience Very poor 11% Poor
29% Excellent7% 2012 Forrester Research, Inc. Reproduction Prohibited#Source: North American Technographics Customer Experience Online Survey, Q4 2010 (US)
Improving customer experience is worth many millionsSource: Q4, 2011, The Business Impact Of Customer Experience, 2012 Forrester report HotelsWireless Service ProvidersAirlinesInsurance$1,364$1,297$590$452 2012 Forrester Research, Inc. Reproduction Prohibited#If a $10B company, makes a 10% improvement in their customer experience index the net result is the additional revenue from Referrals, repeat business and cross selling additional products#High-emotion firms out-perform the major indices 11x
2012 Forrester Research, Inc. Reproduction Prohibited#Derek 1 minuteSource: Built To Love - Peter Boatwright and Jonathan Cagan, Professors at Carnegie Mellon University
A couple of Professors at Carnegie Mellon selected 40 firms that provide high emotion experiences and looked at how they performed - over a 10 year period, they outperformed the S&P by more than 10 times. And if you subtracted Google and Apple its still 8 times.
Thats powerful evidence for why this sort of transformation is necessary (and an important part of the business case). 11#
Fill your toolbox wiselyDifferent tools at different levels 2012 Forrester Research, Inc. Reproduction Prohibited#Image source: istockphoto12#Develop vision before the To-Be processes PrioritizeOutline processesOutcome metricsRoles and skillsEstablish customer experience visionOperational process architecture Executive engagementBusiness services(Capability set) Business services(Capability set) Business services(Capability set) Business area(Capability set) Business engagementBaseline(As-Is)Process definitions (To-Be) A322+Process definitions (To-Be) A322+A322+A322+ 2012 Forrester Research, Inc. Reproduction Proh