Archive for January, 2010
January 18, 2010 Leave a comment
Dr. Kaiser, of Taraneon Consulting, mentions in his brief bio that enterprises squander their opportunities due to the “failure to align processes, organisation and daily business to a common objective”. How is alignment achieved? I contend that you can not manage alignment into a product, process or business. BMW does not manage alignment into its products. Alignment is the result of design. Once designed into a product, process or business then it must be managed.
Part of the challenge is every design become obsolete over time. A great process design in one decade is a competitive disadvantage in the next. Designs receive their relevance from the environments in which they exist and therefore as the environment changes the design either becomes more or less relevant. Typically in businesses, business model designs are out lived (IBM vs Microsoft, Sears vs Wal*Mart) and even Microsoft and Wal*Mart will fall by the wayside as the next generation of businesses designed to compete replace them.
Here is the rub as I see it. When I read the Bible I come to passages like “know thy self” or ‘judge not lest ye be judged”. I feel certain that is good advice but how does one actually go about doing those things. They are suggestions, not road maps. Pointing out that companies fail to align processes, organizations and daily business is good advice however one needs to have something tangible to use, some tool, to accomplish that goal. I have created exactly that tool.
I can document the design of a company’s business model design in four to six weeks. Why is that important? Because without a visible design it is all words. And we know a picture is worth at least 1,000 words. Actually it is worth much more. Having a documented business model design allows you to see where alignment issues exist.
In my approach there are five components or sub-models within a business model. Being true to the design principal of Form Follows Function the first model is the Strategic Model. Here is where the ‘Function’ information exists for the remaining four models. The Strategic Model contains the Vision, Mission, Strategic Goals and Desired Strategies as well as information about the competitive environment. Essentially the Strategic Model creates the performance requirements for the entire enterprise.
Next, and it is a sequential process, comes the Product Model. This system is an Outside-In approach. The products and services, processes, organization and support functions are all driven from the outside. When speaking about the Product Model I look to the markets, customer segments, product groups, products/services and Value Proposition to determine if the Product Model is aligned to the Strategic Model. For brevity (which I may have already violated) I will not go deeper but know that it does go deeper in several different directions.
After the Product Model one looks to the Process Model. Does the business have the right processes in place to deliver on the promises made to the customers in the Product Model? Or one could ask: Is the Process Model aligned with the Product Model? Process performance specifications or requirements are not arbitrary. They should be obtained from two different sources. One is the Product Model, to ensure the products and services are competitive. And also, from the investors to ensure the Return on their investment is acceptable. Focusing only on the customer or investor is not healthy for the business.
At this point we have the Process Model designed to be aligned to the MarkeProduct Model and the Product Model designed to be aligned to the Strategic Model. We need people to execute the processes so the next model is the People Model. There are two different alignments that need to occur within this model. First a business needs people with the right skills, talents, knowledge and experience in order to execute the processes in place. So there needs to be alignment at that level. Another type of alignment is with roles and responsibilities back to processes. There can only be one person responsible for a process. If more than one person owns it then no one owns it. Therefore the People Model is color coded to align align back to the Process Model.
And finally we come to the Support Model. People need tools to execute the processes. People need strategic partners, suppliers, facilities,… in order to deliver to the customer what the customer requires. The Support Model needs to align with the other models in order to ensure performance.
All of that is to say that I have developed a system that allows the alignment of processes, organizations, daily business as well as strategies, products, and systems.
A business can not be defined by one component – ie processes. A business is a collection of many different entities and to Dr. Kaiser’s point, those entities must be aligned as much as possible. That can be done in relatively few weeks.
One other point that should be made: Not all strategies can be executed. I believe strategies exist for one purpose only - for the attainment of a goal. However if the design of a business does not permit the strategy to be executed then that strategy is harmful. Strategies must work with design, they are not independent.
There are three keys to performance: Design, Strategy and Execution. Without all three a business will under perform.