Published on January 27th, 2014 | by WMG Editor0
Rethinking Process Redesign
In developing cutting-edge research and thinking, the Business Innovation Group works with like-minded individuals and organisations in academia, industry as well as the public sector. The BIG Blog invites some of them to share their work and thoughts with us. This month’s guest blogger is Exeter University Research Fellow Fred Ponsignon, who discusses recent research on process redesign best practices.
Process redesign and the customer value proposition
There is a plethora of best practices of process redesign that can be used for improving the quality, reliability and efficiency of business operations. A lack of evidence-based guidance forces managers to fall back on popular exhortations such as ‘identify and remove non-value added activities’, “automate”, “manage exceptions” and “outsource”. But are some best practices better than others? Are some of them dependent on the context? Is it possible to identify combinations of practices to guide the improvement efforts of organisations?
Our research team at the University of Exeter Business School has tackled just these questions. Using Q-methodology, we asked 48 experts who had embraced best practices in the redesign of their operations to rank order 16 practices based on their perceptions of relative success. The statistical analysis identified four process improvement strategies, two foundational practices and one questionable practice.
Each strategy consists of a unique configuration of improvement practices that can be applied to redesign an operational process. The strategies are directly related to the firm’s customer value proposition. Professional services and engineer-to-order manufacturers offering a highly-customised value proposition follow the “employee-focused strategy”. This focuses around redesigning processes for flexibility and the execution of a high variety of tasks. Decision-making authority is transferred to employees, and automation decisions are to be carefully thought through.
Conversely, service factories and mass manufacturers offering standardised products and services adopt the “cost-focused strategy”. It concentrates on a narrow range of activities that can be more easily automated. Rigid processes are designed for efficiency and workers make few judgmental decisions. The “hybrid strategy” simultaneously focuses on maximising efficiency gains and maintaining high levels of customer service. This is achieved by separating the customer-oriented front office from the back office, which is managed for cost reduction. For instance, retail banks often split up the end-to-end service process into distinct front-office and back-office parts, staff them with different employees and control them separately.
Finally, the “workstream-focused strategy” offers the ability to respond to frequent changes in customer requirements by operating separate, focused processes staffed with specialists. Processes redesigned based on this archetype are robust to customer-induced variation. For example, A&E (accident and emergency) units separate patients into ‘minors’ (i.e. patients who are not seriously ill or injured) and ‘majors’, and direct them to the appropriate pathways.
Furthermore, we found that “remove non-value adding tasks” and “re-sequence tasks” are widely applicable and independent from the value proposition and from the choice of a particular redesign strategy. These two practices represent the foundations of process improvement. They sound obvious – effective methods often do. Finally, managers should approach outsourcing with caution, especially in the case of customer-facing processes. Short-term financial returns need to be considered along with customer-proximity issues, which can significantly affect performance in the longer term.
In sum, rather than adopting generic approaches to improvement, we suggest that managers should select the strategy and the associated redesign principles in closest proximity to their specific value proposition. Understanding the nature of the value proposition is more important for process improvement than a service-manufacturing distinction.
Frederic Ponsignon, PhD (email@example.com) is a Research Fellow in service and process management at the Centre for Innovation and Service Research (ISR), University of Exeter Business School, where he leads several research projects focused on process design/redesign, work design, customer experience design and management, patient experience quality and service modularity. Currently, he is working with a leading financial services organisation to understand and assess the potential impact of the digital economy on future business models in the wealth management industry.