Rolling out the Red Carpet

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Friday, January 2, 2009

21st Century Companies

growth, Organizational leaders agree that versatility and the ability to envision possibilities set a plan of action in the midst of chaos are qualities, which produce success. Organizations need more than members who adapt to changes. More importantly, they need members who can produce changes within the organization. Organizations of 21st century need leaders.

Successful companies have figured out the secret to success in the 21st century - that of process excellence. Future success seems will come to those companies that figure out functional management innovations in the 20th century augmented with process excellence, which places more emphasis on end-customer satisfaction than optimal utilization of company resources.

The 20th century saw organizations embrace functional management concepts that divide the company into functional silos such as product design and management, order management, manufacturing, finance, sales/marketing, warehousing/logistics and customer service/support. This approach saw the growth of many large companies. Functional management concepts help streamline an otherwise chaotic set of activities into logical groups and helped large organizations function effectively. They helped organizations make the transition from an agricultural age to an industrial age.

Since the last decades of the 20th century, computer technology and communications have become cheaper and more powerful by orders of magnitude, in the rendering many of these 20th century functional management approaches obsolete. The 21st century demands a transition from an industrial age to an information age, and a process-excellence approach is the alternative that will augment a functional management approach for optimal organizational performance.

Organizations have started talking about order to cash cycles, viewing the end-to-end demand chain and supply chain from customers’ point of view rather than functional silos such as finance, sales and marketing and manufacturing.

This process excellence view has evolved from companies’ realization that it is an unfair burden on the end customer to have to deal with the companies’ functional silos when doing so adds no additional value to the products or services they buy from the organization. Functional silos are for internal efficiencies of a company. A number of trends dictate that only process excellence combined with functional management will work in the future.

The 21st century has starting out with computers and communications enabling order of magnitude and faster, cheaper execution of business processes, often spanning multiple organizations and even multiple continents. Dell, UPS and FedEx have computer systems that any organization can seamlessly integrate with and provide visibility of processes to end-customers. Here, the emphasis seems to have shifted considerably to one of process excellence rather than functional excellence. In fact, UPS formerly picked up Toshiba laptops that customers want to send back to the company for Warranty repairs. Now UPS finds it can deliver a more efficient and effective process by also doing the repairs in their delivery center.

If I am an end customer of a company that sells me goods or services, I am more impressed by efficient and effective processes that benefit me, rather than how well the functional silos if they perform internally. Process excellence is one of whether the end customer’s expectations are met faster, cheaper and more effectively. Many organizations have started asking the question regarding any activity within a company: why should the customer care? This brings up a process orientation to most activities even if different functional silos within a company perform parts of processes. If an activity does not directly add value to the end customer, process excellence demands that you try to eliminate it or at least make it faster.

Many organizations are starting to make available single points of contact for customers, especially their valued ones. These single points of contact or account managers navigate the internal processes with the functional silos of the company on behalf of the customer within the organization and get things done. After all, why should the customer care about billing and provisioning departments of a telecommunications company? They have placed an order for a new landline and it is the telecom company's responsibility to take the order and deliver the landline. Process excellence is the key here.

Those that have slower process cycles do not stand a chance of competing very effectively in the longer run with nimbler online alternatives. A very heavy process orientation and excellence is the only way the older ways of doing business can right themselves and prepare for the 21st century.

With digitization and automated workflow, people within the company or an outsourcing vendor can perform the same business process without concern about physical location! Digitization and automated workflow have enabled process excellence to be realized at levels not possible before.

Companies such as UPS and FedEx already make it possible for any company's computers integrate with their internal systems effortlessly, eliminating unnecessary and inefficient manual steps between companies. For example, once an order is picked and packed at a company warehouse, the company computers can talk to UPS or FedEx computers and create a delivery order and a tracking number. UPS or FedEx employees will not have to key in all these details again.

General Electric and Motorola have popularized Six Sigma approaches to quality management. Six Sigma and Lean Six Sigma impose a process discipline when applied. These are increasingly being applied outside of manufacturing, where they originated, and being applied to all kinds of business processes like product service and support, healthcare and so on.

The last century contributed functional management as a way to do things more efficiently and effectively within organizations. However advances in technology and innovative new companies have brought process-oriented approaches to doing things that make it easy for an end customer to do business with them. A process orientation and process excellence that augments functional management seems to be the secret to success in the 21st century. Organizations that leverage the latest technological advances and trends in a relentless quest to make business processes more efficient and effective will be the only ones that survive. (