The Second Guiding Principle of Business Management – Results Come From Processes

A fundamental shift is taking place in management’s approach to getting more consistent and better results – from managing people to managing processes through people.

Have your management practices changed?

In many organizations, the mindset of leadership might have changed due to their exposure to the emerging concepts. The concepts are simple, perhaps deceptively simple. How well are they internalized in your enterprise? The key question is ‘are your management practices keeping pace with changing mindset?’ Are the new practices encouraged and rewarded within your enterprise?

The guiding principles

The 6 guiding principles that high performance enterprises adopt to survive and prosper in the 21st century (presented in an earlier post) are:

1. Salaries are paid by satisfied customers
2. Results come from processes
3. Continually improve processes
4. Manage with facts, not opinions
5. Management must establish priorities
6. Involve everyone through teamwork

These guiding principles form the core of a culture that helps enterprises retain and expand their base of satisfied customers. Prosperity follows.

Let us examine the second guiding principle – results come from processes – what has changed and what the implications are.

People produce output – so, manage people

For ages, we believed that people produce output. Therefore we managed people in order to manage output. Believing that human beings act like homing torpedoes, we gave them objectives and set them free. People tried to get results any-which-way. Fire-fighting was common. Managing tasks is what we did. We rewarded those who met their objectives.

Some people met their objectives by stepping on others’ toes and left a lot of wounded soldiers behind. The results-any-which-way approach lead to fire-fighting, wasted resources, delays, inconsistent and unpredictable results. It created winners and losers and we found that, over time, winners become losers.

In this conventional style, when things go wrong, the normal tendency is to ask ‘who did it’ and blame someone. Blaming people for no fault of theirs (when it is a system deficiency) and failing to address inadequacies in the system have fatal consequences. It demoralizes the workforce. This style of management leads to massive inefficiencies.

Still, we survived! (But, only where our competitors did the same thing).

Sound familiar? It might, since most of us grew up in that environment. Task management has been entrenched for over 200 years. This is what we knew. This mode of operation worked well until a new concept emerged that has proved to be more efficient.

Processes produce output – so, manage processes

In the later part of the last century, a new concept evolved – processes produce output!

A process, simply put, is a sequence of steps which include ‘activities’ and ‘decisions’. The output we get is the output of the final stage of the sequence and is produced by the process we followed. The quality of the output is determined by the quality of the process. So, in order to manage the output, we manage the process – the sequence.

If the result we get is not satisfactory, then something in the sequence is not correct – either the activities are not well defined, well executed, or proper decisions are not taken at proper stages. It has been observed that the lapses in the process account for more than 90% of the problems in the output and less than 10% of problems are caused by people making mistakes or not following the laid down processes. A mistake is something that people are doing incorrectly in spite of being trained and being capable of doing the right way.

Therefore, in this emerging style, when things go wrong, we first ask what in the process broke down, not ‘who did it?’ Find the root causes for the problem and improve the process. If the systems and processes are capable of giving the desired result, yet there is a shortfall, then look into the causes of human error. (The module on the Anaar Process Review System covers this topic).

This concept turned out to be a major breakthrough in improving competitiveness. The field of Business Process Management (BPM) came into existence. Those who adopted this concept outperformed their competitors by a mile.

Traditional Management vs. a Process Based Approach

Let us recapitulate what we do in the conventional style and what we should do in the emerging style, when something goes wrong.

Under the conventional ‘people produce output’ style:

• We blame the people. They pay more attention to what they are doing.
• Less than 10% of the problems decrease. We continue to blame people. They can’t do anything more and they get frustrated and antagonism develops. Adversarial relations develop.
• Employees get demoralized.
• The other 90% of problems remain until the process that is causing these problems is improved.

Under the emerging ‘processes produce output’ style:

• We should ask people: ‘where did the process breakdown?’ and ‘what are the root causes of this problem?’; ‘what can we do to prevent recurrence?’
• Employees find the root causes and come up with suggestions
• About 90% of the problems get addressed and decrease
• Efficiency improves
• Morale increases and there will be greater pride in work
• For the remaining 10% of problems, we should take appropriate actions to address human errors – retraining, counseling, reassignment, etc.

Is process management applicable to your industry?

Process management and improvement methods can be applied to businesses of all sizes and verticals. Every workflow requires a process, and each of those processes can be detailed and reviewed to evaluate efficiency and cost, essential to improving your bottom line.

The concept of ‘managing processes through people’ is extremely relevant in manufacturing as well as the service industry – in healthcare, hospitality, construction, etc. Wherever rework, delays, and excessive waste exist, this concept would help.

Introspect – At your workplace:

How do your employees behave? When things go wrong do they tend to sweep the problem under the rug and walk away from the scene? Do they report the problem, even if nobody has noticed it?

How do your managers behave when things go wrong? Do the managers throw a tantrum? Go around asking “who did it”? Punish someone? OR do they attempt to find the root causes of the problem? Try to prevent recurrence of the problem?

So, if you want better results tomorrow, adopt process focus today. When things go wrong, first ask ‘where are our processes breaking down?’ and not ‘who did it?’ Move from managing people to managing processes through people.

More on ‘Continually improve’ in my future posts.

Good luck! I welcome your comments. Please let me know your thoughts.

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J. Nirdosh Reddy

Founder at Anaar

We at Anaar are now entering a new phase with the launch of our process management digital tool - the APRS Platform. It is designed to help improve profitability and excellence through better alignment and accountability at all levels within an enterprise.

We are looking to connect with Small and Medium Enterprises (SMEs) as well as Value Added Reseller Partners.

Over the past 30 years, it has been a great privilege to work with over 100 businesses in over 10 countries in such diverse fields as manufacturing, engineering, textiles, chemicals, information and communication technology, government agencies and banking.

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