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I have attached the instructions and Parts A, B, and C assignments in order to leverage the data that was gathered. Please follow all instructions. I've also attached the scorecard from weeks 1 & 9 which must be used as well. Hi I'm good thanks! How are you? I have attached everything needed. Parts A B and C are to be used to leverage the data that was collected in those assignments. You must use the PEMM Scorecard I attached and the instructions. If you have any questions please don't hesitate to ask  I almost forgot please use the same business as before. The Broward County School Board.Please follow all instructions. I've also attached the scorecard from weeks 1 & 9 which must be used as well. Hi I'm good thanks! How are you? I have attached everything needed. Parts A B and C are to be used to leverage the data that was collected in those assignments. You must use the PEMM Scorecard I attached and the instructions. If you have any questions please don't hesitate to ask  I almost forgot please use the same business as before. The Broward County School Board. Running Head: PROJECT PART B 1 PROJECT PART B 8 Part B Detailed Agenda (s) for Kaizen or Work-Outs Claudia Barnes JWI 550 Dr. Richard Chua May 11, 2020 Part B Detailed Agenda (s) for Kaizen or Work-Outs The Kaizen event is one of the lean tools that are effective in optimizing the value streams. The framework solves many challenges and chronic problems in an organization, depending on the nature of the issue (Lima et al., 2017). Kaizen events seek to improve innovation in the teams and build positive changes. Broward County School Board is the decision-making unit of the organization and runs the operations of the schools in the county. The workflow in the process for the board is very slow and has a higher chance of bias due to a high workload. The processing and waiting time for the board is also very long, which are 127 and 37 days, respectively. These delays slow down the implementation process of critical regulations. The board needs to fasten these processes to shorten the process of delivering services to its customers. Potential Kaizen Events One of the potentials for the improvement of the Broward County School Board is upgrading the flow of workstation through the 5S tool. It is a lean improvement approach that applies the principle of just-in-time in the improvement of quality and time of service delivery. The board can remove the bottlenecks in its service delivery in the value stream. This can be achieved by reducing the wastage of time and streamlining the decision-making process to ensure quick and efficient implementation of policies. Another potential Kaizen event for the board is to invest in understanding customer experience. The county community is the immediate customer of the board. Developing an understanding of customers is critical in streamlining services according to their expectations. The board has a potential of mitigating the risks of process failure using tools such as FMEA and process mapping. The tools can identify all the potential risks in the development and implementation of policies to minimize failures. Broward County School Board can also embark on conducting root cause analysis to identify inherent problems that are associated with its operations. This event can ensure that all causes of problems in making decisions and implementing policies are identified and addressed appropriately. The selected Kaizen event for the Broward County School Board is improving the flow of work through 5S. The scope of this tool is on the pillars of sorting, setting in order, standardizing, shining, and sustaining. The involved teams reduce space and time of operations by organizing and cleaning these factors (Lima et al., 2017). This event is prioritized for the board because it faces inefficiencies in the decision making and implementing policies. This tool can be critical in addressing these problems because it brings everything in its place, which is the streamlining of the workflow process. It can help the board in eliminating wastage of time and optimize its efficiency (Mahey, 2018). Besides, it puts the effectiveness and safety ahead of the set deadlines. The results of using the 5S are the overall success and increasing collaborations in teams. Agenda for Kaizen Event Day Time (hours) Session Topic/Objective Lean Tools Output/Deliverables Rationale 1 1.5 Documentation of the current state of the board Value Stream Map (VSM) The board members should share information on the improvement process. All teams should be trained. The process should be viewed physically. This is the first step in the improvement process, which entails preparation for change (Meudt et al. 2017). 2 2 Evaluation of the current state Cause and Effect Matrices Failure Mode and Effect Analysis (FMEA) Quantification of the impact of time wastage in terms of process measures Identification and prioritizing bottlenecks Updating the VSM The commencement of root cause analysis on the wastage The work of this day is instrumental in subsequent steps. The involved lean tools in this process are time-consuming, but they are essential foundations for understanding the areas where there is a wastage of time (Lacerda et al., 2016). 3 2 Envision the future state of the board after the implementation of the plan Flow chart diagrams Process mapping This agenda will involve the definition of resources and time for short and long term changes. The improvement can incorporate low-tech, self-managed, and simple solutions. All the complicated solutions should be reviewed according to the available resources and the objectives of the board. Implementation should, on this day, to support the elimination of workload in the fourth day. 4 2 Implementation of the future change 5S technique The focus of this stage is implementing the changes with the least negative impacts on the operations. The new process should be pilot tested. All the teams should be trained to work in the context of the new process. The changes are executed smoothly by bringing all the teams together. Data should be collected for future reference and improvement. The 5S is applicable in the entire facets that need to be implemented for the board. Frequent and multiple iterations of changes are necessary to optimize the process. All the results are documented and quantified and prioritized. This depends on the impacts of the process efficiency of the board. 5 2 Operationalizing and examination of future Tasks checklist The new process is launched. A report is prepared based on the achieved results. A final formal report is also prepared for review. The prepared reports need to be simple. They should summarize the entire process of and document in the Kaizen newspaper. Explanation of the Choice Kaizen events involve a meeting of the necessary teams and focusing on analyzing the problems that need redress. The event may take about a week for implementation. However, the duration is between three and five days. The Kaizen event for the Broward County School Board has been set as five days to offer the team sufficient time for critically analyzing the current state of the process. Adequate time is necessary for successful planning and preparation. The components are essential in laying the foundation for the Kaizen events (Lacerda et al., 2016). The sequence of the session is explained by the fact that Kaizen events have different agendas. They require specific tools, different approaches, and have varied objectives. The topics identify the process that needs to be examined together with the expected objectives. They are the measures of performance that are specific to the needs of the board that outlines the next direction of the implementation process. The Kaizen agenda supports the scope and objectives of this process for the Broward County School Board. The agenda brings together all the board members in utilizing their multiple skills and functions towards the improvement of the decision making and policy implementation processes. Collaboration is critical in the success of the Kaizen’s goals and objectives (Lima et al., 2017). It pulls together active participation and learning from others to help the team members overcome the challenges of functional silos. The result is mapping out the goals of the new process and identifying clear and specific strategies for improvement. Conclusion The efficiency of the Broward County School Board can be improved by reducing wastage in time for making decisions and implementing new policies. The board can use the Kaizen events framework to achieve improvement goals. The event should have a maximum of five days and two hours for each session. Successful use of this tool will help the board eliminate wastage and optimize its workflow. References Lacerda, A. P., Xambre, A. R., &Alvelos, H. M. (2016). Applying Value Stream Mapping to eliminate waste: a case study of an original equipment manufacturer for the automotive industry. International Journal of Production Research, 54(6), 1708-1720. Lima, F.J. M, Todaro,C.E. M & Rocha, S. M. (2017). A methodological approach for Kaizen event in assembly line. Retrieved from https://www.researchgate.net/publication/329098461_A_Methodological_approach_for_kaizen_events_in_assembly_lines Mahey. (2018). Kaizen event: Types, examples, agenda and checklist. Retrieved from https://draminu.com/kaizen-event/ Meudt, T., Metternich, J., & Abele, E. (2017). Value stream mapping 4.0: Holistic examination of value stream and information logistics in production. CIRP Annals, 66(1), 413-416. Running Head: COURSE PROJECT PART C 1 COURSE PROJECT PART C 2 Course Project Part C Claudia Barnes JWI 550 Dr. Richard Chua May 24, 2020 Course Project Part C The Selected Six Sigma Project and Justification Six Sigma is a popular lean tool used by organizations in order to improve internal and external customer satisfaction while at the same time reducing the cost of delivering quality. The tool can be applied in part of the organization where a problem has been identified or implemented comprehensively to help an organization achieve operational excellence (Mahalingam, 2018). The Six Sigma relies on certain tools to deliver solutions to already defined problems. These tools include templates, techniques analyzing processes, statistical tests as well as deployment aids. It is these tools that form the basis of implementing the two Six Sigma fundamentals which comprise the DMAIC (define-measure-analyze-improve-control) and DMADV (define, measure, analyze, design, verify) (Bernardinez et al. 2016). The project utilizes the DMAIC approach to provide a solution to the underlying problem of the huge cycle time of formulating and adopting new policies by the Broward County School Board. It is the mandate of the Broward County School Board to formulate new policies that govern the institution in its day to day operations. The amount of time allocated for the process is a total of 44 days which is way longer than the amount of time spent by the state legislature to process a bill. The importance of first tracking policy formulation processes is embedded in the needs that influence new policy direction (Hylton, 2017). While it may be argued that the subjects of these policies are aware of the formulation process of the policies therefore must always prepare for the whole process to conclude, it can as well be argued that past experiences should always influence a change of mind. Experience shows that some policies were born out of emergencies such as unfortunate incidences of a school shooting. It is almost immoral to subject policies meant to shield the institution from such happenings, as well as a lot more others that touch on emergency spending for such a long period. The Project Charter Problem Statement The current cycle time for formulating and adopting new policy by the Broward County School Board is currently 37 days which is a relatively longer period than the rest of county school boards in the state. Given that majority of these new policies are born out of emergency situations, the board’s style of management appears not to in touch with reality on the ground. The county community as well as the institution’s low ranking workforce is growing concerned. Objective Statement To use the DMAIC approach to reduce the current cycle time for formulating and adopting new policies by the Broward County School Board from a total of 37 days to 20 days by July 30th, 2020. Project Scope Complete cycle time for new policy formulation and adoption process encompasses process time (PT) which is the amount of time the board takes to make new policy, approve and update. The PT lasts for 7 days. There is the lead time (LT = PT + WT) which comprises waiting time (WT) that takes 30 days to complete and 7 days of PT hence bringing the LT to 37 days. Critical-to-quality Requirements There resulted from translations from sentiments and comments made by the policy implementing workforce as well as the community which constitutes the primary customer segment of the institution. The intention is to develop specific, measurable performance requirements from the below broad needs expressed by customers. Comments made by customers What are they saying? Further understanding (Why are customers making such sentiments?) The Requirements (What exactly they need?) The board members are only nine but spend weeks to agree on an issue yet Congress with over 400 members pass bills in one week The policy formulation process unnecessarily drags Reduce the policy-making cycle time from 20 days Policies to address emergencies should not wait for a month plus to be approved Emergency premeditated policies should not be treated the same as other policies. Policies to deal with emergency issues to be fast-tracked in a record 5 days It is said that a sick departmental head will only get a sick leave after the board has deliberated for over 30 days. Not everything concerning the management of the institution should be a policy issue. Matters of employee welfare and related emergencies should be addressed by the head of the HR department Key metric Y Expected operational and financial benefits of the project The idea of reducing the cycle time for policy delivery by the board is to enhance the efficiency of downward tasks and processes that depend on policy direction. From the above analysis, it is possible to reduce the processing time (PT) which is the amount of time the board takes to make new policy, approve and update from 7 days to three. Subsequently, it is also possible to reduce the lead time (LT = PT + WT) by first capping the WT that takes 30 days to 17 days so that in total there results in 20 days. Milestone dates for each phase of DMAIC Milestone Tasks Date Requirements Elicitation · Data Collection · Requirements analysis · Requirements documentation May 22nd, 2020 Analysis · Data analysis · Presentation of results Project Team The team included the Project manager and the rest derived from groups of interest as follows. There were a total of two data specialists derived from own private practices, the project champion, the Vice-Chairperson to the Broward County School Board representing the management staff of the institution. Project Champion The Vice-Chairperson to the Broward County School Board took the responsibility of ensuring everyone board member is behind the success of the project. The champion undertook responsibilities such as identification of the project objectives, working hand in hand with the project team to ensure all the requirements are translated into the envisaged solution, and working together with the project team to collect data from the requisite sources. Also, the champion took the reasonability of relaying timely updates to the rest of the board members since the beginning of the project to its conclusion. References Bernardinez, M., Buradha, K., Cochie, K., Saenz, J., & Furterer, S. L. (2016). 4 Sunshine High School Discipline Process Improvement—A Lean Six Sigma Case Study. Lean Six Sigma in Service: Applications and Case Studies, 73. Hylton, L. C. (2017). Improving learning center usage verification processes using Six Sigma. Mahalingam, S. (2018). An empirical investigation of implementing Lean Six Sigma in higher education institutions. International Journal of Quality & Reliability Management. JWI 550: Operations Management Course Project Part D © Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University. This course guide is subject to change based on the needs of the class. 1 Assessment Scorecard using the PEMM Framework Due: Sunday, Midnight of Week 9 (10% of course grade) Overview Making changes to improve processes is a powerful and necessary step in building competitive strength, but organizations must ensure that their (current and new) processes are capable of sustaining higher performance over time. To do that, they must develop two kinds of characteristics: process enablers, which pertain to individual processes, and enterprise capabilities, which apply to the entire organization. To help in this endeavor, it is useful to leverage a proven model or “framework.” One of the most effective models is the Process and Enterprise Maturity Model (PEMM). 1 In the final component of your Operations Management Course Project, you will leverage PEMM to create a “scorecard” that will help you to assess your organization’s process and enterprise capabilities to support and sustain the improvements you have targeted. Specifically, you will assess and evaluate the: Five process enablers of…  Design: The comprehensiveness of the specification for how the process is to be executed  Performers: The people who execute the process, particularly in terms of their skills and knowledge  Owner: A senior executive who has responsibility for the process and its results  Infrastructure: Information and management systems that support the process  Metrics: The measures the company uses to track the process’s performance Four enterprise capabilities of…  Leadership: Senior executives who support the creation of processes  Culture: The values of customer focus, teamwork, personal accountability, and a willingness to change  Expertise: Skills in, and methodology for, process improvement and design  Governance: Mechanisms for managing complex projects and change initiatives Instructions 1) Assess your value stream and your organization using the PEMM Scorecard exhibit on the last two pages of the Hammer article, “The Process Audit” (HBR), provided in Week 1 and Week 9 2) Discuss your findings, and highlight the strengths and opportunities for improvement 3) Develop actionable recommendations for presentation to senior management 1 The Process and Enterprise Maturity Model as described in “The Process Audit” by Michael Hammer in the Harvard Business Review, April 2007. JWI 550: Operations Management Course Project Part D © Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University. This course guide is subject to change based on the needs of the class. 2 Submission Requirements Since this is the part of the Operations Management Course Project where you will assess the capability of the organization to proceed and make the case for your recommendations (and requirements) for moving forward, your assignment should be written in the form of a recommendation report delivered to senior management This means that you must leverage the data and findings you have already gathered in Parts A, B and C, but not simply repeat it. Your focus must be squarely on moving forward and include recommended actions and explanations of how success will be measured. As you gather your information and craft your report around the PEMM scorecard, put yourself in the position of someone who has not been as close to the process as you have been. Help them to focus on what really matters, specifically:  The opportunity for wins if the improvement is successful  The risks to the organization if the initiative is not implemented (or not implemented successfully)  What conditions need to be in place to provide the greatest likelihood of success Scorecards are powerful tools for providing easy-to-understand snapshots, so make sure your scorecard tells the story you want it to tell. Keep your narrative tight and your paragraphs short. The report should be approximately 3 pages in length and definitely no longer than 4 pages. JWI 550: Operations Management Course Project Part D © Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University. This course guide is subject to change based on the needs of the class. 3 RUBRIC: Assignment Part D CRITERIA Unsatisfactory Low Pass Pass High Pass Honors Assess your value stream and your organization using the PEMM Scorecard found in the Hammer article, “The Process Audit” (HBR) . Weight: 40% Missing PEMM Scorecard. PEMM Scorecard is included but it is partially filled out or poorly presented. PEMM Scorecard is fully filled out and adequately presented. . Good, detailed PEMM Scorecard, fully filled out and well presented. Exemplary PEMM Scorecard, fully filled out, and excellently presented. Discuss your findings, and highlight the strengths and opportunities for improvement Weight: 25% No discussion of findings and/or off- topic discussion with poorly structured overview of opportunities for improvement. Basic discussion of findings, but incomplete or unclear overview of opportunities for improvement. Clear discussion of findings and basic overview of opportunities for improvement. Clear discussion of findings and detailed overview of opportunities for improvement. Excellent discussion of findings and detailed overview of opportunities for improvement, with specific references to past initiatives and comparison to current situation. Develop actionable recommendations for presentation to senior management Weight: 25% Incomplete, unclear, or missing actionable recommendations for presentation to senior management. Basic explanation of actionable recommendations but lacking specific details needed to support decision making. Good explanation of actionable recommendations with some specific details needed to support decision making. Excellent, well- written explanation of actionable recommendations with clear and concise details needed to support decision making. Excellent explanation of actionable recommendations with clear and concise details needed to support decision making. Very persuasively presented. Finished product presents responses and recommendations in a well- organized format that is easy to read and free from grammatical errors Weight: 10% Finished product is disorganized and/or difficult to understand and includes significant grammatical errors. Finished product is free from significant grammatical errors, but it lacks organizational cohesion, making it challenging to read and/or to understand recommendations. Finished product is free from significant grammatical errors and presents responses and recommendations in a satisfactory manner. Finished product is well designed and written, with a clear, easy-to-read layout and few grammatical errors. Finished product is well designed and written, with a clear, easy-to-read layout and few grammatical errors. Student makes good use of color and/or other design elements to create a visually appealing report. www.hbrreprints.org T O O L K I T The Process Audit by Michael Hammer • A new framework, as comprehensive as it is easy to apply, is helping companies plan and execute process- based transformations. Reprint R0704H This document is authorized for use only by Claudia Barnes in Operations Management at Strayer University, 2020. http://www.hbrreprints.org http://harvardbusinessonline.hbsp.harvard.edu/relay.jhtml?name=itemdetail&referral=4320&id=R0704H T O O L K I T The Process Audit by Michael Hammer harvard business review • april 2007 page 1 C O P Y R IG H T © 2 0 0 7 H A R V A R D B U S IN E S S S C H O O L P U B L IS H IN G C O R P O R A T IO N . A L L R IG H T S R E S E R V E D . A new framework, as comprehensive as it is easy to apply, is helping companies plan and execute process-based transformations. Business has embraced process management as a way of life. New and controversial when I first described the concept 17 years ago in the pages of this magazine (see “Reengineering Work: Don’t Automate, Obliterate,” HBR July– August 1990), the process-based approach to transformation is now used routinely by enter- prises all over the world. Few executives question the idea that redesigning business processes—work that runs from end to end across an enterprise—can lead to dramatic en- hancements in performance, enabling organi- zations to deliver greater value to customers in ways that also generate higher profits for shareholders. In virtually every industry, com- panies of all sizes have achieved extraordinary improvements in cost, quality, speed, profit- ability, and other key areas by focusing on, measuring, and redesigning their customer- facing and internal processes. Sadly, however, casualties litter the road. Since 2000, I have personally observed hun- dreds of companies try to rejuvenate them- selves by creating or redesigning business processes. In spite of their intentions and in- vestments, many have made slow or little progress. Even businesses that succeeded in transforming themselves have found the en- deavor arduous and harrowing. All change projects are tough to pull off, but process- based change is particularly difficult. Contrary to widespread assumptions, designing new business processes involves more than rear- ranging work flows—who does what tasks, in what locations, and in what sequence. To make new processes work, companies must redefine jobs more broadly, increase training to support those jobs and enable decision making by frontline personnel, and redirect reward sys- tems to focus on processes as well as outcomes. As if that weren’t enough, enterprises also have to reshape organizational cultures to em- phasize teamwork, personal accountability, and the customer’s importance; redefine roles and responsibilities so that managers over- see processes instead of activities and de- velop people rather than supervise them; and realign information systems so they help cross- This document is authorized for use only by Claudia Barnes in Operations Management at Strayer University, 2020. The Process Audit • • • T OOL K IT harvard business review • april 2007 page 2 functional processes work smoothly rather than simply support departments. In most of the companies I studied, execu- tives were floundering. They realized that they needed to change many things to harness the power of processes, but they were unsure about what exactly needed to be changed, by how much, and when. Their uncertainty was manifest in hesitant decisions and confused planning, in endless debates and unproductive discussions, in unwarranted complacency and equally unwarranted despair, in errors and re- work, in delays and abandoned efforts. People kept asking one another questions such as, Did we start with the right thing? How do we know we are making progress? What will the organi- zation look like when we finish? Moreover, ex- ecutives, especially when they work in differ- ent functions, often disagree about the factors that aid process-based transformations. Each has a pet idea based on his or her expertise. Like the six blind men and the elephant, one focuses on technology, another on human re- source issues, a third on organizational struc- ture, and so on, creating confusion and con- flict. Managers also have a tendency to swing from wild optimism that developing new pro- cesses will be painless to unremitting gloom that the task is hopeless. Without knowing what they must concentrate on and when, ex- ecutives have been unable to master the sci- ence of transforming business processes. Five years ago, I started a research project in conjunction with the Phoenix Consortium—a group of leading companies with which I work closely—to develop a process implementation road map. My aim was to create a framework that would help executives comprehend, plan, and assess process-based transformation ef- forts. Over time, I identified two distinct groups of characteristics that are needed for business processes to perform well and to sus- tain that performance (see the exhibit “The Process and Enterprise Maturity Model”). One set of features applies to individual processes. These process enablers determine how well a process is able to function over time. They en- compass the comprehensiveness of a process’s design, the abilities of the people who operate the process, the appointment of a top-level process owner to oversee the process’s imple- mentation and performance, the match between the organization’s information and manage- ment systems and the process’s needs, and the quality of the metrics that the company uses to measure process performance. My research shows that not all organizations are equally prepared to put these enablers in place. Companies that are able to do so possess im- portant enterprisewide capabilities: Their se- nior executives support a focus on processes; their employees greatly value customers, team- work, and personal accountability; they em- ploy people who know how to redesign pro- cesses; and they are well organized to tackle complex projects. Together, the enablers and capabilities pro- vide an effective way for companies to plan and evaluate process-based transformations. I presented the model’s first version to the Phoe- nix Consortium’s members in 2004, and they tested and revised it extensively. In 2006, I fi- nalized the framework, which I call the Process and Enterprise Maturity Model (PEMM). In the following pages, I discuss the five process enablers and four enterprise capabilities in detail. I also show how companies that use PEMM can take the task of process transforma- tion out of the arena of intuition and mystery and subject it to measurement, evaluation, im- provement, and replication. Can Your Processes Deliver High Performance? My two decades of experience with business processes have taught me that form influences function—that is, process design determines performance. By design, I mean the specifica- tion of which people must perform what tasks, in what order, in what location, under what circumstances, with what information, and to what degree of precision. Certainly, compa- nies can use techniques such as Six Sigma and TQM to ensure that employees execute pro- cesses correctly. However, redesigning pro- cesses is often the only way to improve their performance dramatically. Doing so elimi- nates many of the nonvalue-adding activities that are the source of costs, errors, and delays and helps companies come up with process in- novations (see my article “Deep Change: How Operational Innovation Can Transform Your Company,” HBR April 2004). Although process redesign is no longer the terra incognita it once was, one issue stub- bornly persists: Most companies tend to overlay new processes on already established functional organizations. However, the appur- Michael Hammer ([email protected] hammerandco.com) is the founder of Hammer and Company, a management research and education firm based in Cambridge, Massachusetts. This document is authorized for use only by Claudia Barnes in Operations Management at Strayer University, 2020. mailto:[email protected] mailto:[email protected] The Process Audit • • • T OOL K IT harvard business review • april 2007 page 3 tenances of a traditional organization—such as job definitions, performance measurement sys- tems, and managerial hierarchies—don’t al- ways support high-performance processes. For instance, senior executives might encourage managers to create a cross-functional process but then prevent them from altering the com- pany’s performance measurement system ap- propriately. That’s shortsighted. The revamped business process needs employees to focus on a broad, common outcome; if the organization measures performance as it has always done, it will reward people for focusing on narrow, functional goals. How can the process live up to its potential under those circumstances? Companies will invest in retraining employees to work in a new process, but they balk at foot- ing the bill for helping people understand how the process works as a whole. If employees don’t know the context in which they work, they will be prone to making decisions that aren’t in the best interests of the entire process. Similarly, leaders will try to create processes without altering managerial respon- sibilities. That’s problematic, too. A high- performance process extends across functional boundaries, so a senior executive must super- vise it. Without such a person, the process won’t gain traction within the organization. While studying organizations that were im- plementing new processes, I kept track of their errors of omission. I also analyzed the various factors that were necessary to sustain business processes. I tested both lists over several years and winnowed them down to the five characteristics that I find are essential for any process to perform well. A process must have a well-specified design; otherwise, the people performing it won’t know what to do or when. The people who execute the pro- cess, the performers, must have appropriate skills and knowledge; otherwise, they won’t be able to implement the design. There has to be an owner, a senior executive who has the responsibility and authority to ensure that the process delivers results; otherwise, it will fall between the cracks. The company must align its infrastructure, such as information technologies and HR systems, to support the process; otherwise, they will impede its per- formance. Finally, the company must develop and use the right metrics to assess the perfor- mance of the process over time; otherwise, it won’t deliver the right results. These en- ablers give a process the potential to deliver high performance. The enablers are mutually interdependent: If any are missing, the others will prove to be ineffective. A weak owner can’t implement a strong process design, poorly trained perform- ers can’t carry out the design, a bad design can- not optimize the process metrics no matter how well thought-out they are, and so on. A process that is missing an enabler might de- liver results in the short term through superhu- man performance or executive intervention, but those results won’t last. Of course, having all the enablers in place doesn’t guarantee that a process will perform well; for instance, the mere existence of a process design doesn’t mean it’s a good one. I have witnessed repeatedly how missing en- ablers can derail processes. At a well-known electronics giant, for example, a team designed a new order-fulfillment process and conducted a successful pilot. However, the process owner didn’t have the authority to force unit heads to implement it, so the effort floundered. In an- other instance, a major consumer goods manu- facturer created a new process and trained its workers to perform new jobs. However, it didn’t educate them about the overall process. As a result, some employees made decisions The Process and Enterprise Maturity Model Companies need to ensure that their business processes become more mature—in other words, that they are capable of delivering higher perfor- mance over time. To make that hap- pen, companies must develop two kinds of characteristics: process en- ablers, which pertain to individual processes, and enterprise capabilities, which apply to entire organizations. There are five process enablers… Design: The comprehensiveness of the specification of how the process is to be executed. Performers: The people who execute the process, particularly in terms of their skills and knowledge. Owner: A senior executive who has re- sponsibility for the process and its results. Infrastructure: Information and man- agement systems that support the process. Metrics: The measures the company uses to track the process’s performance. …and four enterprise capabilities. Leadership: Senior executives who support the creation of processes. Culture: The values of customer focus, teamwork, personal accountability, and a willingness to change. Expertise: Skills in, and methodology for, process redesign. Governance: Mechanisms for manag- ing complex projects and change initiatives. Companies can use their evaluations of the enablers and capabilities, in tan- dem, to plan and assess the progress of process-based transformations. This document is authorized for use only by Claudia Barnes in Operations Management at Strayer University, 2020. The Process Audit • • • T OOL K IT harvard business review • april 2007 page 4 You can evaluate the maturity of a business pro- cess and determine how to improve its perfor- mance by using this table. Decide how the state- ments defining the strength levels, from P-1 to P-4, for each enabler apply to the process that you are assessing. If a statement is largely true (at least 80% correct), color the cell green (medium gray here); if it is somewhat true (between 20% and 80% correct), shade the cell yellow (light gray here); and if it is largely untrue (less than 20% correct), make the cell red (dark gray here). For companies trying to advance to the next level Assessing the Maturity of Your Processes Design Performers Infrastructure Owner Metrics Purpose Context Documentation The process has not been designed on an end-to-end basis. Functional managers use the legacy design primarily as a context for functional performance improvement. The process has been redesigned from end to end in order to optimize its performance. The documentation of the process is primarily functional, but it identifies the interconnections among the organiza- tions involved in executing the process. There is end-to-end documentation of the process design. Performers can name the process they execute and identify the key metrics of its performance. Performers can describe the process’s overall flow; how their work affects customers, other employees in the pro- cess, and the process’s performance; and the required and actual performance levels. Performers are skilled in problem solving and process improvement techniques. Performers are skilled in teamwork and self-management. Performers have some allegiance to the process, but owe primary allegiance to their function. Performers try to follow the process design, perform it cor- rectly, and work in ways that will enable other people who execute the process to do their work effectively. The process owner is an individual or a group informally charged with improving the process’s performance. Enterprise leadership has created an official process owner role and has filled the position with a senior manager who has clout and credibility. The process owner identifies and documents the process, communicates it to all the performers, and sponsors small- scale change projects. The process owner articulates the process’s performance goals and a vision of its future; sponsors redesign and im- provement efforts; plans their implementation; and ensures compliance with the process design. The process owner lobbies for the process but can only encourage functional managers to make changes. The process owner can convene a process redesign team and implement the new design and has some control over the technology budget for the process. Fragmented legacy IT systems support the process. An IT system constructed from functional components sup- ports the process. Functional managers reward the attainment of functional excellence and the resolution of functional problems in a process context. The process’s design drives role definitions, job descrip- tions, and competency profiles. Job training is based on pro- cess documentation. The process’s inputs, outputs, suppliers, and customers have been identified. The needs of the process’s customers are known and agreed upon. Knowledge Skills Behavior Information Systems Human Resource Systems Identity Activities Authority The process has some basic cost and quality metrics. The process has end-to-end process metrics derived from customer requirements. Managers use the process’s metrics to track its perfor- mance, identify root causes of faulty performance, and drive functional improvements. Managers use the process’s metrics to compare its perfor- mance to benchmarks, best-in-class performance, and cus- tomer needs and to set performance targets. Definition Uses 2-P1-P This document is authorized for use only by Claudia Barnes in Operations Management at Strayer University, 2020. The Process Audit • • • T OOL K IT harvard business review • april 2007 page 5 of performance, the green (medium gray) cells indicate the enablers that aren’t impeding the process’s progress; the yellow (light gray) ones show areas where the company has a lot of work to do; and the red (dark gray) cells represent obstacles to a process’s attaining greater maturity. The shaded table to the right shows the results of such an exercise at a large U.S. company. In this case, the context of the process design and the performers’ knowledge are the roadblocks to the process’s attaining the P-1 level. The process has been designed to fit with other enterprise processes and with the enterprise’s IT systems in order to optimize the enterprise’s performance. The process has been designed to fit with customer and supplier processes in order to optimize interenterprise performance. The process owner and the owners of the other processes with which the process interfaces have established mutual performance expectations. The process owner and the owners of customer and supplier processes with which the process interfaces have estab- lished mutual performance expectations. The process documentation describes the process’s inter- faces with, and expectations of, other processes and links the process to the enterprise’s system and data architecture. An electronic representation of the process design supports its performance and management and allows analysis of environmental changes and process reconfigurations. Performers are familiar both with fundamental business concepts and with the drivers of enterprise performance and can describe how their work affects other processes and the enterprise’s performance. Performers are familiar with the enterprise’s industry and its trends and can describe how their work affects inter- enterprise performance. Performers are skilled at business decision making. Performers are skilled at change management and change implementation. Performers strive to ensure that the process delivers the results needed to achieve the enterprise’s goals. Performers look for signs that the process should change, and they propose improvements to the process. The process comes first for the owner in terms of time allo- cation, mind share, and personal goals. The process owner is a member of the enterprise’s most senior decision-making body. The process owner works with other process owners to integrate processes to achieve the enterprise’s goals. The process owner develops a rolling strategic plan for the process, participates in enterprise-level strategic planning, and collaborates with his or her counterparts working for customers and suppliers to sponsor interenterprise process- redesign initiatives. The process owner controls the IT systems that support the process and any projects that change the process and has some influence over personnel assignments and evaluations as well as the process’s budget. The process owner controls the process’s budget and exerts strong influence over personnel assignments and evaluations. An integrated IT system, designed with the process in mind and adhering to enterprise standards, supports the process. An IT system with a modular architecture that adheres to industry standards for interenterprise communication sup- ports the process. Hiring, development, reward, and recognition systems em- phasize the process’s needs and results and balance them against the enterprise’s needs. Hiring, development, reward, and recognition systems rein- force the importance of intra- and interenterprise collabora- tion, personal learning, and organizational change. The process’s metrics as well as cross-process metrics have been derived from the enterprise’s strategic goals. The process’s metrics have been derived from interenter- prise goals. Managers present the metrics to process performers for awareness and motivation. They use dashboards based on the metrics for day-to-day management of the process. Managers regularly review and refresh the process’s met- rics and targets and use them in strategic planning. 4-P3-P P-1 P-2 P-3 P-4 largely true somewhat true largely untrue One U.S. Company’s Self- Assessment of a Process This document is authorized for use only by Claudia Barnes in Operations Management at Strayer University, 2020. The Process Audit • • • T OOL K IT harvard business review • april 2007 page 6 that inadvertently created problems for col- leagues, which hurt performance and morale and forced the company to abandon the ef- fort. In yet another case, a pharmaceutical manufacturer transformed its sales and mar- keting processes but didn’t make the effort to realign its metrics and reward systems. That sent conflicting signals through the organiza- tion, elicited inconsistent behavior from em- ployees, and eventually derailed the project. What makes overhauling processes particu- larly tricky is the fact that these enablers are present in organizations at different levels of intensity, so they vary in the degree to which they support a process. For instance, the ques- tion is seldom as clear-cut as whether or not or- ganizations appoint process owners; many companies, after doing so, don’t give the pro- cess owners the authority to implement all the changes that are necessary to make processes work. I’ve identified and defined four levels of process enabler strength (P-1, P-2, P-3, and P-4), each of which builds on the preceding level, as shown in the exhibit “Assessing the Maturity of Your Processes.” In the case of performers, for instance, the P-1 level denotes that employ- ees are merely aware of the process and its metrics. At the P-2 stage, people must be able to describe the process and where they fit into it. At the P-3 level, employees can express how their work affects the company’s perfor- mance. Finally, at the P-4 stage, performers must know how their work affects customers and suppliers. The stronger the enablers, the better the results the process can deliver on a sustained basis. The enablers’ strengths determine how ma- ture a process is—that is, how capable it is of delivering higher performance over time. If all five enablers of a process are at the P-1 level, the process itself is at the P-1 level; if all five en- ablers are at the P-2 level, the process is at P-2; and so on. If only four out of the five enablers rise to a particular level, however, the process cannot be said to have achieved that level; it will belong to the one below. In particular, if any enabler is so weak that it doesn’t meet even the P-1 level, the process is by default at P- 0. That’s the natural state of affairs when orga- nizations haven’t focused on developing their business processes, and at this P-0 level, pro- cesses work erratically. At the P-1 level, a pro- cess is reliable and predictable; it is stable. At P- 2, a process delivers superior results because the company has designed and implemented it from one end of the organization to the other. At the next level, P-3, a process delivers opti- mal performance because executives can inte- grate it, where necessary, with other internal processes to maximize its contribution to the company’s performance. Finally, at P-4, a pro- cess is best in class, transcending the company’s boundaries and extending back to suppliers and forward to customers. The exhibit displays the four levels of pro- cess maturity, with the rows showing the en- ablers and the columns indicating the strength levels. (There are 13 rows because I broke the five enablers down into more finely grained components.) Companies using this table to evaluate the maturity of their processes find it effective to treat the propositions regarding the enablers (the cells of the table) not as true or false statements, but as largely true, some- what true, or largely untrue. Where quantita- tive assessments are possible, largely true means that the statement is at least 80% cor- rect, somewhat true suggests that the state- ment is between 20% and 80% correct, and largely untrue means the statement is less than 20% correct. Executives often color the cells green, yellow, or red, respectively, depending on their responses. The green cells indicate the things that aren’t impeding a process’s progress and don’t need a great deal of focus; the yellow cells show areas where the com- pany has considerable work to do; and the red cells represent roadblocks that keep the pro- cess from achieving a higher level of perfor- mance. Companies usually face red cells when they are ignoring problems or handling them the wrong way, and so, they must tackle them urgently. Let me show you how useful it can be for managers to know the state of a company’s process enablers. In 2004, Michelin launched a process redesign effort to help increase cus- tomer focus and reduce costs. At the time, the global tire manufacturer’s order fulfillment process forced customers to deal with multiple departments and to go back and forth repeat- edly with the company. To tackle the problem, Michelin created a new high-performance process, which it named Demand to Cash (D2C). A year later, a streamlined process design— which provided large customers with single points of contact, with personnel who knew them, and with accurate information—was How can a process live up to its potential if an organization measures performance as it has always done and rewards people for focusing on narrow, functional goals? This document is authorized for use only by Claudia Barnes in Operations Management at Strayer University, 2020. The Process Audit • • • T OOL K IT harvard business review • april 2007 page 7 ready. During pilots, executives found that in some cases, the new process slashed the order fulfillment time from four hours to 20 minutes. Michelin decided to deploy the new process in 30% of its North American operations by 2006 before rolling it out across the entire re- gion. The company’s process redesign team had learned from my research that before it could implement a new process that would deliver superior performance—that is, a P-2 process—all its enablers had to be at the P-2 level. When the team, led by the process owner, undertook an assessment to confirm that was the case, it found that the human re- source systems that supported the new pro- cess were below P-2. Michelin hadn’t rede- fined managers’ jobs and the scope of their activities clearly enough. Before rolling out the new process, the company kicked off a se- ries of workshops to clarify managers’ new roles and departmental charters and to align them better with the D2C process. Michelin’s enabler analysis also suggested that the D2C process might run into trouble because performance-improvement projects had proliferated in the company. Senior execu- tives therefore placed the process owner in charge of all … www.hbrreprints.org T O O L K I T The Process Audit by Michael Hammer • A new framework, as comprehensive as it is easy to apply, is helping companies plan and execute process- based transformations. Reprint R0704H This document is authorized for use only by Claudia Barnes in Operations Management at Strayer University, 2020. http://www.hbrreprints.org http://harvardbusinessonline.hbsp.harvard.edu/relay.jhtml?name=itemdetail&referral=4320&id=R0704H T O O L K I T The Process Audit by Michael Hammer harvard business review • april 2007 page 1 C O P Y R IG H T © 2 0 0 7 H A R V A R D B U S IN E S S S C H O O L P U B L IS H IN G C O R P O R A T IO N . A L L R IG H T S R E S E R V E D . A new framework, as comprehensive as it is easy to apply, is helping companies plan and execute process-based transformations. Business has embraced process management as a way of life. New and controversial when I first described the concept 17 years ago in the pages of this magazine (see “Reengineering Work: Don’t Automate, Obliterate,” HBR July– August 1990), the process-based approach to transformation is now used routinely by enter- prises all over the world. Few executives question the idea that redesigning business processes—work that runs from end to end across an enterprise—can lead to dramatic en- hancements in performance, enabling organi- zations to deliver greater value to customers in ways that also generate higher profits for shareholders. In virtually every industry, com- panies of all sizes have achieved extraordinary improvements in cost, quality, speed, profit- ability, and other key areas by focusing on, measuring, and redesigning their customer- facing and internal processes. Sadly, however, casualties litter the road. Since 2000, I have personally observed hun- dreds of companies try to rejuvenate them- selves by creating or redesigning business processes. In spite of their intentions and in- vestments, many have made slow or little progress. Even businesses that succeeded in transforming themselves have found the en- deavor arduous and harrowing. All change projects are tough to pull off, but process- based change is particularly difficult. Contrary to widespread assumptions, designing new business processes involves more than rear- ranging work flows—who does what tasks, in what locations, and in what sequence. To make new processes work, companies must redefine jobs more broadly, increase training to support those jobs and enable decision making by frontline personnel, and redirect reward sys- tems to focus on processes as well as outcomes. As if that weren’t enough, enterprises also have to reshape organizational cultures to em- phasize teamwork, personal accountability, and the customer’s importance; redefine roles and responsibilities so that managers over- see processes instead of activities and de- velop people rather than supervise them; and realign information systems so they help cross- This document is authorized for use only by Claudia Barnes in Operations Management at Strayer University, 2020. The Process Audit • • • T OOL K IT harvard business review • april 2007 page 2 functional processes work smoothly rather than simply support departments. In most of the companies I studied, execu- tives were floundering. They realized that they needed to change many things to harness the power of processes, but they were unsure about what exactly needed to be changed, by how much, and when. Their uncertainty was manifest in hesitant decisions and confused planning, in endless debates and unproductive discussions, in unwarranted complacency and equally unwarranted despair, in errors and re- work, in delays and abandoned efforts. People kept asking one another questions such as, Did we start with the right thing? How do we know we are making progress? What will the organi- zation look like when we finish? Moreover, ex- ecutives, especially when they work in differ- ent functions, often disagree about the factors that aid process-based transformations. Each has a pet idea based on his or her expertise. Like the six blind men and the elephant, one focuses on technology, another on human re- source issues, a third on organizational struc- ture, and so on, creating confusion and con- flict. Managers also have a tendency to swing from wild optimism that developing new pro- cesses will be painless to unremitting gloom that the task is hopeless. Without knowing what they must concentrate on and when, ex- ecutives have been unable to master the sci- ence of transforming business processes. Five years ago, I started a research project in conjunction with the Phoenix Consortium—a group of leading companies with which I work closely—to develop a process implementation road map. My aim was to create a framework that would help executives comprehend, plan, and assess process-based transformation ef- forts. Over time, I identified two distinct groups of characteristics that are needed for business processes to perform well and to sus- tain that performance (see the exhibit “The Process and Enterprise Maturity Model”). One set of features applies to individual processes. These process enablers determine how well a process is able to function over time. They en- compass the comprehensiveness of a process’s design, the abilities of the people who operate the process, the appointment of a top-level process owner to oversee the process’s imple- mentation and performance, the match between the organization’s information and manage- ment systems and the process’s needs, and the quality of the metrics that the company uses to measure process performance. My research shows that not all organizations are equally prepared to put these enablers in place. Companies that are able to do so possess im- portant enterprisewide capabilities: Their se- nior executives support a focus on processes; their employees greatly value customers, team- work, and personal accountability; they em- ploy people who know how to redesign pro- cesses; and they are well organized to tackle complex projects. Together, the enablers and capabilities pro- vide an effective way for companies to plan and evaluate process-based transformations. I presented the model’s first version to the Phoe- nix Consortium’s members in 2004, and they tested and revised it extensively. In 2006, I fi- nalized the framework, which I call the Process and Enterprise Maturity Model (PEMM). In the following pages, I discuss the five process enablers and four enterprise capabilities in detail. I also show how companies that use PEMM can take the task of process transforma- tion out of the arena of intuition and mystery and subject it to measurement, evaluation, im- provement, and replication. Can Your Processes Deliver High Performance? My two decades of experience with business processes have taught me that form influences function—that is, process design determines performance. By design, I mean the specifica- tion of which people must perform what tasks, in what order, in what location, under what circumstances, with what information, and to what degree of precision. Certainly, compa- nies can use techniques such as Six Sigma and TQM to ensure that employees execute pro- cesses correctly. However, redesigning pro- cesses is often the only way to improve their performance dramatically. Doing so elimi- nates many of the nonvalue-adding activities that are the source of costs, errors, and delays and helps companies come up with process in- novations (see my article “Deep Change: How Operational Innovation Can Transform Your Company,” HBR April 2004). Although process redesign is no longer the terra incognita it once was, one issue stub- bornly persists: Most companies tend to overlay new processes on already established functional organizations. However, the appur- Michael Hammer ([email protected] hammerandco.com) is the founder of Hammer and Company, a management research and education firm based in Cambridge, Massachusetts. This document is authorized for use only by Claudia Barnes in Operations Management at Strayer University, 2020. mailto:[email protected] mailto:[email protected] The Process Audit • • • T OOL K IT harvard business review • april 2007 page 3 tenances of a traditional organization—such as job definitions, performance measurement sys- tems, and managerial hierarchies—don’t al- ways support high-performance processes. For instance, senior executives might encourage managers to create a cross-functional process but then prevent them from altering the com- pany’s performance measurement system ap- propriately. That’s shortsighted. The revamped business process needs employees to focus on a broad, common outcome; if the organization measures performance as it has always done, it will reward people for focusing on narrow, functional goals. How can the process live up to its potential under those circumstances? Companies will invest in retraining employees to work in a new process, but they balk at foot- ing the bill for helping people understand how the process works as a whole. If employees don’t know the context in which they work, they will be prone to making decisions that aren’t in the best interests of the entire process. Similarly, leaders will try to create processes without altering managerial respon- sibilities. That’s problematic, too. A high- performance process extends across functional boundaries, so a senior executive must super- vise it. Without such a person, the process won’t gain traction within the organization. While studying organizations that were im- plementing new processes, I kept track of their errors of omission. I also analyzed the various factors that were necessary to sustain business processes. I tested both lists over several years and winnowed them down to the five characteristics that I find are essential for any process to perform well. A process must have a well-specified design; otherwise, the people performing it won’t know what to do or when. The people who execute the pro- cess, the performers, must have appropriate skills and knowledge; otherwise, they won’t be able to implement the design. There has to be an owner, a senior executive who has the responsibility and authority to ensure that the process delivers results; otherwise, it will fall between the cracks. The company must align its infrastructure, such as information technologies and HR systems, to support the process; otherwise, they will impede its per- formance. Finally, the company must develop and use the right metrics to assess the perfor- mance of the process over time; otherwise, it won’t deliver the right results. These en- ablers give a process the potential to deliver high performance. The enablers are mutually interdependent: If any are missing, the others will prove to be ineffective. A weak owner can’t implement a strong process design, poorly trained perform- ers can’t carry out the design, a bad design can- not optimize the process metrics no matter how well thought-out they are, and so on. A process that is missing an enabler might de- liver results in the short term through superhu- man performance or executive intervention, but those results won’t last. Of course, having all the enablers in place doesn’t guarantee that a process will perform well; for instance, the mere existence of a process design doesn’t mean it’s a good one. I have witnessed repeatedly how missing en- ablers can derail processes. At a well-known electronics giant, for example, a team designed a new order-fulfillment process and conducted a successful pilot. However, the process owner didn’t have the authority to force unit heads to implement it, so the effort floundered. In an- other instance, a major consumer goods manu- facturer created a new process and trained its workers to perform new jobs. However, it didn’t educate them about the overall process. As a result, some employees made decisions The Process and Enterprise Maturity Model Companies need to ensure that their business processes become more mature—in other words, that they are capable of delivering higher perfor- mance over time. To make that hap- pen, companies must develop two kinds of characteristics: process en- ablers, which pertain to individual processes, and enterprise capabilities, which apply to entire organizations. There are five process enablers… Design: The comprehensiveness of the specification of how the process is to be executed. Performers: The people who execute the process, particularly in terms of their skills and knowledge. Owner: A senior executive who has re- sponsibility for the process and its results. Infrastructure: Information and man- agement systems that support the process. Metrics: The measures the company uses to track the process’s performance. …and four enterprise capabilities. Leadership: Senior executives who support the creation of processes. Culture: The values of customer focus, teamwork, personal accountability, and a willingness to change. Expertise: Skills in, and methodology for, process redesign. Governance: Mechanisms for manag- ing complex projects and change initiatives. Companies can use their evaluations of the enablers and capabilities, in tan- dem, to plan and assess the progress of process-based transformations. This document is authorized for use only by Claudia Barnes in Operations Management at Strayer University, 2020. The Process Audit • • • T OOL K IT harvard business review • april 2007 page 4 You can evaluate the maturity of a business pro- cess and determine how to improve its perfor- mance by using this table. Decide how the state- ments defining the strength levels, from P-1 to P-4, for each enabler apply to the process that you are assessing. If a statement is largely true (at least 80% correct), color the cell green (medium gray here); if it is somewhat true (between 20% and 80% correct), shade the cell yellow (light gray here); and if it is largely untrue (less than 20% correct), make the cell red (dark gray here). For companies trying to advance to the next level Assessing the Maturity of Your Processes Design Performers Infrastructure Owner Metrics Purpose Context Documentation The process has not been designed on an end-to-end basis. Functional managers use the legacy design primarily as a context for functional performance improvement. The process has been redesigned from end to end in order to optimize its performance. The documentation of the process is primarily functional, but it identifies the interconnections among the organiza- tions involved in executing the process. There is end-to-end documentation of the process design. Performers can name the process they execute and identify the key metrics of its performance. Performers can describe the process’s overall flow; how their work affects customers, other employees in the pro- cess, and the process’s performance; and the required and actual performance levels. Performers are skilled in problem solving and process improvement techniques. Performers are skilled in teamwork and self-management. Performers have some allegiance to the process, but owe primary allegiance to their function. Performers try to follow the process design, perform it cor- rectly, and work in ways that will enable other people who execute the process to do their work effectively. The process owner is an individual or a group informally charged with improving the process’s performance. Enterprise leadership has created an official process owner role and has filled the position with a senior manager who has clout and credibility. The process owner identifies and documents the process, communicates it to all the performers, and sponsors small- scale change projects. The process owner articulates the process’s performance goals and a vision of its future; sponsors redesign and im- provement efforts; plans their implementation; and ensures compliance with the process design. The process owner lobbies for the process but can only encourage functional managers to make changes. The process owner can convene a process redesign team and implement the new design and has some control over the technology budget for the process. Fragmented legacy IT systems support the process. An IT system constructed from functional components sup- ports the process. Functional managers reward the attainment of functional excellence and the resolution of functional problems in a process context. The process’s design drives role definitions, job descrip- tions, and competency profiles. Job training is based on pro- cess documentation. The process’s inputs, outputs, suppliers, and customers have been identified. The needs of the process’s customers are known and agreed upon. Knowledge Skills Behavior Information Systems Human Resource Systems Identity Activities Authority The process has some basic cost and quality metrics. The process has end-to-end process metrics derived from customer requirements. Managers use the process’s metrics to track its perfor- mance, identify root causes of faulty performance, and drive functional improvements. Managers use the process’s metrics to compare its perfor- mance to benchmarks, best-in-class performance, and cus- tomer needs and to set performance targets. Definition Uses 2-P1-P This document is authorized for use only by Claudia Barnes in Operations Management at Strayer University, 2020. The Process Audit • • • T OOL K IT harvard business review • april 2007 page 5 of performance, the green (medium gray) cells indicate the enablers that aren’t impeding the process’s progress; the yellow (light gray) ones show areas where the company has a lot of work to do; and the red (dark gray) cells represent obstacles to a process’s attaining greater maturity. The shaded table to the right shows the results of such an exercise at a large U.S. company. In this case, the context of the process design and the performers’ knowledge are the roadblocks to the process’s attaining the P-1 level. The process has been designed to fit with other enterprise processes and with the enterprise’s IT systems in order to optimize the enterprise’s performance. The process has been designed to fit with customer and supplier processes in order to optimize interenterprise performance. The process owner and the owners of the other processes with which the process interfaces have established mutual performance expectations. The process owner and the owners of customer and supplier processes with which the process interfaces have estab- lished mutual performance expectations. The process documentation describes the process’s inter- faces with, and expectations of, other processes and links the process to the enterprise’s system and data architecture. An electronic representation of the process design supports its performance and management and allows analysis of environmental changes and process reconfigurations. Performers are familiar both with fundamental business concepts and with the drivers of enterprise performance and can describe how their work affects other processes and the enterprise’s performance. Performers are familiar with the enterprise’s industry and its trends and can describe how their work affects inter- enterprise performance. Performers are skilled at business decision making. Performers are skilled at change management and change implementation. Performers strive to ensure that the process delivers the results needed to achieve the enterprise’s goals. Performers look for signs that the process should change, and they propose improvements to the process. The process comes first for the owner in terms of time allo- cation, mind share, and personal goals. The process owner is a member of the enterprise’s most senior decision-making body. The process owner works with other process owners to integrate processes to achieve the enterprise’s goals. The process owner develops a rolling strategic plan for the process, participates in enterprise-level strategic planning, and collaborates with his or her counterparts working for customers and suppliers to sponsor interenterprise process- redesign initiatives. The process owner controls the IT systems that support the process and any projects that change the process and has some influence over personnel assignments and evaluations as well as the process’s budget. The process owner controls the process’s budget and exerts strong influence over personnel assignments and evaluations. An integrated IT system, designed with the process in mind and adhering to enterprise standards, supports the process. An IT system with a modular architecture that adheres to industry standards for interenterprise communication sup- ports the process. Hiring, development, reward, and recognition systems em- phasize the process’s needs and results and balance them against the enterprise’s needs. Hiring, development, reward, and recognition systems rein- force the importance of intra- and interenterprise collabora- tion, personal learning, and organizational change. The process’s metrics as well as cross-process metrics have been derived from the enterprise’s strategic goals. The process’s metrics have been derived from interenter- prise goals. Managers present the metrics to process performers for awareness and motivation. They use dashboards based on the metrics for day-to-day management of the process. Managers regularly review and refresh the process’s met- rics and targets and use them in strategic planning. 4-P3-P P-1 P-2 P-3 P-4 largely true somewhat true largely untrue One U.S. Company’s Self- Assessment of a Process This document is authorized for use only by Claudia Barnes in Operations Management at Strayer University, 2020. The Process Audit • • • T OOL K IT harvard business review • april 2007 page 6 that inadvertently created problems for col- leagues, which hurt performance and morale and forced the company to abandon the ef- fort. In yet another case, a pharmaceutical manufacturer transformed its sales and mar- keting processes but didn’t make the effort to realign its metrics and reward systems. That sent conflicting signals through the organiza- tion, elicited inconsistent behavior from em- ployees, and eventually derailed the project. What makes overhauling processes particu- larly tricky is the fact that these enablers are present in organizations at different levels of intensity, so they vary in the degree to which they support a process. For instance, the ques- tion is seldom as clear-cut as whether or not or- ganizations appoint process owners; many companies, after doing so, don’t give the pro- cess owners the authority to implement all the changes that are necessary to make processes work. I’ve identified and defined four levels of process enabler strength (P-1, P-2, P-3, and P-4), each of which builds on the preceding level, as shown in the exhibit “Assessing the Maturity of Your Processes.” In the case of performers, for instance, the P-1 level denotes that employ- ees are merely aware of the process and its metrics. At the P-2 stage, people must be able to describe the process and where they fit into it. At the P-3 level, employees can express how their work affects the company’s perfor- mance. Finally, at the P-4 stage, performers must know how their work affects customers and suppliers. The stronger the enablers, the better the results the process can deliver on a sustained basis. The enablers’ strengths determine how ma- ture a process is—that is, how capable it is of delivering higher performance over time. If all five enablers of a process are at the P-1 level, the process itself is at the P-1 level; if all five en- ablers are at the P-2 level, the process is at P-2; and so on. If only four out of the five enablers rise to a particular level, however, the process cannot be said to have achieved that level; it will belong to the one below. In particular, if any enabler is so weak that it doesn’t meet even the P-1 level, the process is by default at P- 0. That’s the natural state of affairs when orga- nizations haven’t focused on developing their business processes, and at this P-0 level, pro- cesses work erratically. At the P-1 level, a pro- cess is reliable and predictable; it is stable. At P- 2, a process delivers superior results because the company has designed and implemented it from one end of the organization to the other. At the next level, P-3, a process delivers opti- mal performance because executives can inte- grate it, where necessary, with other internal processes to maximize its contribution to the company’s performance. Finally, at P-4, a pro- cess is best in class, transcending the company’s boundaries and extending back to suppliers and forward to customers. The exhibit displays the four levels of pro- cess maturity, with the rows showing the en- ablers and the columns indicating the strength levels. (There are 13 rows because I broke the five enablers down into more finely grained components.) Companies using this table to evaluate the maturity of their processes find it effective to treat the propositions regarding the enablers (the cells of the table) not as true or false statements, but as largely true, some- what true, or largely untrue. Where quantita- tive assessments are possible, largely true means that the statement is at least 80% cor- rect, somewhat true suggests that the state- ment is between 20% and 80% correct, and largely untrue means the statement is less than 20% correct. Executives often color the cells green, yellow, or red, respectively, depending on their responses. The green cells indicate the things that aren’t impeding a process’s progress and don’t need a great deal of focus; the yellow cells show areas where the com- pany has considerable work to do; and the red cells represent roadblocks that keep the pro- cess from achieving a higher level of perfor- mance. Companies usually face red cells when they are ignoring problems or handling them the wrong way, and so, they must tackle them urgently. Let me show you how useful it can be for managers to know the state of a company’s process enablers. In 2004, Michelin launched a process redesign effort to help increase cus- tomer focus and reduce costs. At the time, the global tire manufacturer’s order fulfillment process forced customers to deal with multiple departments and to go back and forth repeat- edly with the company. To tackle the problem, Michelin created a new high-performance process, which it named Demand to Cash (D2C). A year later, a streamlined process design— which provided large customers with single points of contact, with personnel who knew them, and with accurate information—was How can a process live up to its potential if an organization measures performance as it has always done and rewards people for focusing on narrow, functional goals? This document is authorized for use only by Claudia Barnes in Operations Management at Strayer University, 2020. The Process Audit • • • T OOL K IT harvard business review • april 2007 page 7 ready. During pilots, executives found that in some cases, the new process slashed the order fulfillment time from four hours to 20 minutes. Michelin decided to deploy the new process in 30% of its North American operations by 2006 before rolling it out across the entire re- gion. The company’s process redesign team had learned from my research that before it could implement a new process that would deliver superior performance—that is, a P-2 process—all its enablers had to be at the P-2 level. When the team, led by the process owner, undertook an assessment to confirm that was the case, it found that the human re- source systems that supported the new pro- cess were below P-2. Michelin hadn’t rede- fined managers’ jobs and the scope of their activities clearly enough. Before rolling out the new process, the company kicked off a se- ries of workshops to clarify managers’ new roles and departmental charters and to align them better with the D2C process. Michelin’s enabler analysis also suggested that the D2C process might run into trouble because performance-improvement projects had proliferated in the company. Senior execu- tives therefore placed the process owner in charge of all …