Does my process need to mature?

Which processes need to mature? Where should I spend my time optimizing my processes? #ProcessEconomics

What pushes the need to optimize a process?

The process owner is responsible to deliver value in a quality and timely manner while using cost effective means for all their processes. BUT -- not all processes are equally important. Certain processes are simply more important to the business than others. And, while all processes are necessary (hopefully, else let's get rid of them), they just may not be critical to the business.

Important processes must and will gain the attention senior leaders, while other less important processes will not have that same level of attention. Its the law of process economics -- invest precious resource time in only those business activities that provides the greatest return to the business.

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“Process Economics - invest time in processes that generate the greatest return."

So, which factors drive businesses to optimize their processes? Here are eight factors to consider:

Strategic Importance:

These are processes that are absolutely critical to the company's success or failure. Yes, while all processes are important to some degree within a business (else they should be eliminated), not every one of the processes is business critical. The more critical, the more the process should be optimized.

As an example, landing commercial aircraft is a critical process for the airlines (and for passengers too!). So, the airlines are constantly working to optimize pilot training, aircraft maintenance, landing processes, and pilot-to-tower communication processes. While other processes, such as baggage handling, aircraft color scheme, in-flight food service, while still important have less process maturity urgency and investment.

“The more business critical, the more the process must be optimized."

Volume of Work:

The more volume, the more optimized the process must be. If the process only produces one item, there is no need to invest in maturing the process. It does not mean that the one-time event is not very important, but rather we don’t need to invest time to make it repeatable, predictable, and optimized. However, if the process repeats to generate millions of work items, then optimization is critical. Otherwise, the exception handing, higher costs, lower quality will impact the business.

For example, when a business moves to a new building, while that is important and needs strong oversight, it will not likely be a highly repeated process and so the investment to make it repeatable is not needed. Yet, for a business shipping millions of items nightly, they need to invest tremendous capital and resources to continually optimize the process.

Staff Turnover:

If your turnover is really low, processes might not need to naturally evolve very far due to the highly experienced and knowledgeable personnel that simply know how to work through issues to get the "stuff" done. However, if turnover is high, the processes must be fully mature with defined processes and efficient training in order for the business to continue to deliver value without negatively impacting the customer.

Competitive Markets:

In a competitive market, each business is trying to gain an edge on the others. Having great and very unique products is one way. Another common way is to have very mature optimized processes that continually give the business an edge in quality, value, cost, and/or delivery time frame. It will likely be short-lived as the competitors chase and improve also. So, the business must continually look for ways to improve and optimize its key processes..

“Competition drives business to optimize its key processes."

Age of Process or Industry:

As a process or industry ages, processes naturally mature over the years as various owners define and redefine their process, develop standard operating procedures, develop training, etc. As leaders come & go, their experiences result in efforts to eliminate pain points and make things more predictable over time. Older processes won't achieve process optimization naturally on their own, but will generally achieve standardization.

The US Army has been around for roughly 240 years and while many things have changed many things are still the same -- and have been standardized. Basic training today is similar to basic training from years ago. Of course, most companies won't survive if they wait to allow their processes naturally evolve. They must take a proactive effort to move maturity quicker.

“Companies won't survive it they wait for their processes to naturally evolve."

Customization:

The higher the customization of the process output, generally the less mature the process. While the less customization, the more mature the process can become. This is not to say that any customizable output can't be optimized. It can. It just requires more effort and thinking to maximize the customizable capabilities. Customization just puts limits on how much of the process and/or steps in the process that can be optimized.

Profit per item:

As profit per unit declines, it forces the business to optimize the process in order to hold down costs and improve/maintain profit margin. Conversely, when the business is making a strong profit per item, there is less pressure on the business to optimize and make an even greater profit. Leadership often accepts profitability as good enough. Yet, it is the responsibility of the business to always improve the process regardless of profit margin.

“Profit margin pressure is the most common reason that pushes companies to optimize their process."

There are many factors that drive organizations to optimize their process and no surprise the most common reason is profit per item.