Is your small business a consistent, smooth-running operation characterised by order, discipline and continuous growth? If not, improving your internal processes might be a worthwhile investment of your time. Steve McGrady, managing consultant with Meridian 1 Consulting guides you through the intricacies of business process re-engineering.
Process is a word that is used a lot in business, but that doesn’t mean we should ignore it. Thinking about your business in process terms can be very helpful in improving customer service, product quality, business efficiency etc.
What is a process?
Dictionaries define process as a series of actions or steps taken in order to achieve a particular end, and in business it is typically described as the transformation of an input to an output. For example, sheet steel undergoes a process to become a car door, or an invoice is processed, resulting in a payment.
In business we hear terms such as process excellence, process improvement or process management. These all describe ways of thinking about process and what you want to achieve. For example, The Process Excellence Network describes process excellence as “improving the way that businesses create and deliver value to customers." This seems to be a pretty good aim for most businesses.
Why do we talk about business process?
Throughout most of the 20th Century, organisations were structured around Adam Smith’s idea of breaking work down into discrete tasks performed by workers with basic skills, which was managed by organising around functions.
The problem with functional organisations is that they can be inflexible which can make them slow to respond to customers.
The trend to thinking about process rather than function arose as a response to this problem. If you think of a traditional organisation as a series of vertical silos with responsibility for specific areas such as finance, research, operations and support etc., processes are groups of activities that cross these functional boundaries and connect the input (an order, for example), with the output (a completed service delivery).
How does thinking about processes help?
A functional organisation chart tells you who is responsible for a particular function, and a process view enables you to understand:
- Who is involved in delivering a product or service
- What they do
- What changes as a result of their actions
Most small businesses in the developed economies are service providers rather than manufacturers, and in a service business you are defined by what you do and how well you do it. W. Edwards Deming, the American, professor, and consultant who drove the quality movement in Japan said: “If you can't describe what you are doing as a process, you don't know what you're doing.”
In order to survive and thrive in a service economy, you need to understand and fulfil your customers needs better than your competition and thinking about your business in process terms helps you achieve that.
Wasn’t business process re-engineering just a fad 20 years ago?
Business Process Re-engineering (BPR), the first wave of the process movement, had a number of failed projects and they were well publicised, but a lot of the problems were related to focussing on the wrong thing (cost cutting), over-ambitious aims (e.g. Michael Hammer: “Don’t automate, obliterate”), and IT projects that were using immature technology. As technology improved in the late 1990s, and the focus moved to continuous, incremental improvement, real benefits started to be realised. The current Business Process Management school of thought is highly effective and delivers significant improvements for relatively little effort by focusing on customer satisfaction. As Henry Ford said almost a century ago: “A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large.”
How does this apply to a small business or sole trader?
Large corporations have done a lot of work in this area, but thinking about process rather than function can benefit small businesses and even sole traders as well.
One of the challenges for entrepreneurs is that they typically have specific interests and expertise and, therefore, there are tasks they try to avoid or minimise. For example, a marketing specialist who enjoys sales might hate bookkeeping, finance and administration and vice versa. Unfortunately businesses require attention to every aspect of their strategy and operation, so our blind spots have a tendency of creating problems for us.
This problem was addressed bluntly by Michael Gerber in his book “The E-Myth revisited”, where he describes the “fatal assumption that an individual who understands the technical work of a business can successfully run a business “ and urges small businesses to pretend that the business will be franchised one day and document all the work in Operations Manuals in order to provide a uniformly predictable service to the customer.
Gerber’s program contains seven steps that develop your strategy that can then be used to develop operations systems:
- Your primary aim
- Your strategic objective
- Your organisational strategy
- Your management strategy
- Your people strategy
- Your marketing strategy
- Your systems strategy
This approach is good, and has proven highly successful over many years. However, as the book expands on how to do each step, it builds out a functional organization about functions (Marketing, Operations, Finance etc.).
Extending the idea to think about your internal processes from the customer perspective makes it even more powerful.
How do I improve my internal processes?
A proven way to improve your internal processes is to think about a product or service that you provide from the perspective of a customer. Imagine that they are standing outside your organisation looking in at the various steps required to deliver the product or service to them.
The aim is to answer these three questions:
- What roles are involved in delivering your product or service?
- What do you do at each step?
- What changes as a result of your actions?
You have to decide what roles are involved in your business, here is a list to use as a prompt: Marketing, Sales, Service delivery, Customer Support, Research & Development, Sales & Marketing Support, HR, Finance, Legal, Administration, IT, Purchasing, Business Strategy, General Management, etc.
This list may not fit your business, but if you think there are too many roles and that you only have, say, ‘sell’ and ‘deliver’; think again! Many of the roles that are in a large business are required by small business as well but an individual will have to wear a number of hats. Even if you are a sole trader, the key is to think about what you do as if you had to document each step to create an operating manual for when your business expands for other people to follow so they can replicate what you do and how you do it.
Documenting your processes doesn’t have to be time-consuming or difficult. A simple diagram with a series of connected boxes, or even just a list of bullet points is good enough; the real value comes from thinking through the steps and recognising that you can take on many different roles during a working week. Documenting your processes saves you the effort of thinking it through again in future. Also, you might start to spot areas where you can improve by streamlining the process.
Here is a simple example of what part of a process in a small business might look like after you have written it down.
|Receive client call
||Use answering service
||Use CRM service
|Send service details
||Create folder of promotional material
A little time spent on your business rather than in your business can pay dividends and move you closer towards the consistent, smooth-running operation characterised by order, discipline and continuous growth that we all aspire to.
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