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Process Innovation: Reengineering Work

through Information Technology

Book January 1992

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 ProcessInnovation
ReengineeringWorkthroughInformationTechnology

ThomasH.Davenport
Ernst&Young
CenterforInformationTechnologyandStrategy

HarvardBusinessSchoolPress
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Boston,Massachusetts

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 CONTENTS

Preface

Introduction

Chapter1TheNatureofProcessInnovation

PartIAFrameworkforProcessInnovation
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Chapter2SelectingProcessesforInnovation

Chapter3InformationTechnologyasanEnablerofProcessInnovation

Chapter4ProcessesandInformation

Chapter5OrganizationalandHumanResourceEnablersofProcessChange

Chapter6CreatingaProcessVision
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Chapter7UnderstandingandImprovingExistingProcesses

Chapter8DesigningandImplementingtheNewProcessandOrganization

PartIITheImplementationofInnovativeBusinessProcesses

Chapter9ProcessInnovationandtheManagementofOrganizational
Change

Chapter10ImplementingProcessInnovationwithInformationTechnology

PartIIIInnovationStrategiesforTypicalProcessTypes

Chapter11ProductandServiceDevelopmentandDeliveryProcesses

Chapter12CustomerFacingProcesses

Chapter13ManagementProcesses

Chapter14SummaryandConclusions

AppendixACompaniesInvolvedintheResearch

AppendixBTheOriginsofProcessInnovation

Index
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 AppendixACompaniesInvolvedintheResearch

AppendixBTheOriginsofProcessInnovation

Index

 Pageix

PREFACE
Amongthetechnologyorientedconsultantsandbusinessacademicswith
whomIassociatedinthemidtolate1980s,therewasageneralsenseof
greatopportunityintheair.Theopportunitywastoapplyinformation
technologytotheredesignofbusinessprocesses.Noneofusknewexactly
whatthismeant,butoccasionallywewouldfindapioneeringcompanythat
seemedtohavetriedit.

JimShort(thenofMIT,nowatLondonBusinessSchool)andIdecidedto
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capturetheeffortsofthesecompanies,andsomegeneralprinciplesaboutwhat
workedandwhatdidn't,inanarticle.Ittookusacoupleofyearstofind
enoughexamplesofprocessredesign(aswecalleditthen)tomakeagood
article.BythetimeitwaspublishedbySloanManagementReviewinJune
1990,interestinthetopichadincreasedconsiderably.

WhentheSloanarticlewaspublishedIwasworkingatErnst&Young's
CenterforInformationTechnologyandStrategy,whichprovedtobeagreat
platformforlearningmoreaboutthistopic.Manyfirmsvisitedthecenterfor
briefingsandinformaldiscussionsaboutprocessinnovation(aswebeganto
callit),andIcouldalsolearnabouttheimplementationoftheseideasby
gettinginvolvedinvariousE&Yconsultingengagements.Westarteda
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multiclientresearchprogramonprocessinnovation,inwhichwecouldtryout
ideasandframeworksonabroadvarietyofcompaniesthatwereinterestedor
activeinthefield.ThecenterplayedanimportantroleineducatingE&Yclients
aboutprocessinnovation,andindevelopingthefirm'sconsultingmethodology
inthisarea.AlanStanford,whodidmorethananyoneelsetoestablishthe
center(andwhohiredmetoworkinit),andBudMathaisel,whoranthe
centerandraninterferenceforitsresearchers,deservemuchcreditformaking
thebookandtheselearningactivitiespossible.

Severalmembersofthecenterassistedbywritingfirstdraftsofchapters:Mary
SilvaDoctorwithachapteronapproachthatwaslaterblendedintothefirst
sectionofthebookAlexNedzel

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 Pagex

withthechapteronITbasedimplementationofprocessinnovationSuzanne
PitneywiththechapteronorganizationalchangemanagementandLarry
Prusakwiththechapteroninformationasanenablerofprocessinnovation.

Othermembersofthecenterwhoresearchedorreviewedaspectsofthebook
includeJenniferBurgin,ScottFlaig,ChrisGopal,JimMcGee,Vaughan
Merlyn,PhilPyburn,andGregSchmergel.CarolOulton,JanetSantry,Jean
Smith,andSusanSutherlandwereveryhelpfulwithgraphicsorword
processing.

WorkingatErnst&Young,whichhadastrongconsultingpracticeintotal
qualitymanagement,alsohelpedmeunderstandhowprocessinnovation
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differedfromprocessimprovement.Inowfeelthatthesetwoconceptsare
polesonacontinuumofapproachestooperationalperformanceimprovement.
JimHarrington,PraveshMehra,andTerryOzanofE&Ywereparticularly
helpfulinthisregard.

SeveralfriendsandformercolleaguesattheHarvardBusinessSchoolread
andinfluencedthebook.TheyincludeLyndaApplegate,BobEccles,Nitin
Nohria,andJohnSviokla.JimCashandWarrenMcFarlangavemefeedback
ontheoriginalarticlethatwasusefulinwritingthebook.

CarolFranco,myeditorattheHarvardBusinessSchoolPress,madethe
publishingprocessseemeasy,madethebookseembetter,andmadeallmy
the publisher, except fair uses permitted under U.S. or applicable copyright law.

questionsseemreasonable.JohnSimonandNatalieGreenbergmademy
prosemuchmorecompactandreadable.Tworeviewersonbehalfofthepress
(JudyCampbellatXeroxandananonymousacademic)alsomadevaluable
suggestionsonissuesofbothcontentandstructure.

Abookisafamily'sproject,notanindividual's.MywifeJodiremained
cheerfulandencouragingthroughthelatenights,earlymornings,andweekends
devotedtothebookratherthanthefamily.Evenmysons,HayesandChase,
onlyoccasionallyresentednotbeingabletoplaywithmeorwiththefamily's
bestcomputer.

Iamalsoextremelygratefultothemanagersofcompaniesthatwere
undertakingprocessinnovationinitiatives,whosharedtheirexperiencesand
insightswithmequitefreely.Processinnovation(orreengineering,redesign,
andsoforth)wasinventednotbyconsultantsoracademics,butbythesebold
andintelligentbusinesspeople.Isimplyjumpedontheirbandwagonata
relativelyearlystage.

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 Page1

Chapter1
TheNatureofProcessInnovation
Inthefaceofintensecompetitionandotherbusinesspressuresonlarge
organizationsinthe1990s,qualityinitiativesandcontinuous,incremental
processimprovement,thoughstillessential,willnolongerbesufficient.
Objectivesof5%or10%improvementinallbusinessprocesseseachyear
mustgivewaytoeffortstoachieve50%,100%,orevenhigherimprovement
levelsinafewkeyprocesses.Todayfirmsmustseeknotfractional,butmulti
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plicativelevelsofimprovement10Xratherthan10%.Suchradicallevelsof
changerequirepowerfulnewtoolsthatwillfacilitatethefundamentalredesign
ofwork.

Theneededrevolutionaryapproachtobusinessperformanceimprovement
mustencompassbothhowabusinessisviewedandstructured,andhowitis
improved.Businessmustbeviewednotintermsoffunctions,divisions,or
products,butofkeyprocesses.Achievementoforderofmagnitudelevelsof
improvementintheseprocessesmeansredesigningthemfrombeginningto
end,employingwhateverinnovativetechnologiesandorganizationalresources
areavailable.

Theapproachwearecallingfor,processinnovation, combinestheadoption
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ofaprocessviewofthebusinesswiththeapplicationofinnovationtokey
processes.Whatisnewanddistinctiveaboutthiscombinationisitsenormous
potentialforhelpinganyorganizationachievemajorreductionsinprocesscost
ortime,ormajorimprovementsinquality,flexibility,servicelevels,orother
businessobjectives.

Executivesintheorganizationswestudiedandconsultedforhaveexpressed
greatinterestinprocessinnovation.Theyhavespentmuchmoneyandtimeon
lessstructuredandlessambitiousapproachestobusinesschangewithlittle
result.Thesuccessesofpioneeringfirmswithprocessinnovationinitiatives
offerthemnewhope.

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Theearlyresultsofprocessinnovationareundeniablyattentiongrabbing.IBM
Creditreducedthetimetoprepareaquoteforbuyingorleasingacomputer
fromsevendaystoone,whileincreasingthenumberofquotesprepared
tenfold.Moreover,morethanhalfitsquotesarenowissuedbycomputer.
FederalMogul,abilliondollarautopartsmanufacturer,reducedthetimeto
developanewpartprototypefromtwentyweekstotwentydays,thereby
triplingthelikelihoodofcustomeracceptance.MutualBenefitLife,alarge
insurancecompanyseekingtooffsetadecliningrealestateportfolio,halvedthe
costsassociatedwithitspolicyunderwritingandissuanceprocess.Eventhe
U.S.InternalRevenueServiceachievedsuccessfulprocessinnovation,
collecting33%moredollarsfromdelinquenttaxpayerswithhalfitsformerstaff
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andathirdfewerbranchoffices.

Radicalprocesschangeinitiativeshavebeencalledvariousnamese.g.,
businessprocessredesignandbusinessreengineering.Forseveralreasons,we
preferthetermbusinessprocessinnovation.Reengineeringisonlypartofwhat
isnecessaryintheradicalchangeofprocessesitrefersspecificallytothe
designofthenewprocess.Thetermprocessinnovationencompassesthe
envisioningofnewworkstrategies,theactualprocessdesignactivity,andthe
implementationofthechangeinallitscomplextechnological,human,and
organizationaldimensions.

BusinessDriversofProcessInnovation
the publisher, except fair uses permitted under U.S. or applicable copyright law.

ThatJapanesefirmsdiscovered(oratleastimplemented)processmanagement
longbeforetheWest(seeAppendixB)helpsexplaintheirworldwide
economicsuccess.Processimprovementandmanagementhavecharacterized
someJapanesecorporateculturesfordecades,andenabledfirmsinanumber
ofindustriestodevelopfast,efficientprocessesinsuchkeyareasasproduct
development,1logistics,andsalesandmarketing.2Often,thesehighlyrefined
processesareintroducedwithlittleattendantuseofadvancedtechnologyor
radicalapproachestohumanresourcemanagement.3Theysimplyarelogical,
balanced,andstreamlined.TheJapanesefirmsthathavedevelopedsuch
processesconstituteamajorcompetitivedriverfortheadoptionofprocess
innovationbytheirWesterncounterparts.

Today,withcompetitionextendedtotheexecutionofstrategy,firmsfrequently
woocustomersonthebasisofprocessinnovation.

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Theobjectiveoftheinnovationmightbeprocesstimereductioninhome
mortgagefinancing,forexample,timelyapprovalofloans,totheextentthatit
reducestheperiodofuncertaintyforhomebuyersandsellers,constitutesa
competitiveadvantage.Citicorphasreducedprocesstimeforsomemortgage
approvalstofifteenminutes(althoughrecentlossesinitsretailbanksuggest
thatitmightalsooptimizeitsprocessesforconsistencyandriskavoidance).

Processinnovationcanalsosupportlowcostproducerstrategies.Companies
thateliminate,forexample,costlyaspectsoftheirproductdeliveryprocesses
canpassthesavingsontocustomers.Thelifeinsurancefirm,USAA,hasa
processobjectiveofavoidingthecostsofanagencyrelationshipbyrelyingon
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telephonebasedmarketing.USAA'stelephonecustomersareconsequently
payinglowerpremiumsthanthoseofferedbyotherinsurersforthesame
coverage.TheCharlesSchwabdiscountbrokeragehousealsousesthis
approach.

Competitivepressureisnottheonlydriverofprocessinnovationincreasingly,
customersaretheimpetusforradicalprocesschange.Theautomobileand
retailindustriesoffertwonotableexamplesofcustomerdrivenchange.Auto
manufacturers,respondingtointenseforeigncompetitioninthe1980s,forced
supplierstoincreasethequality,speed,andtimelinessoftheirmanufacturing
anddeliveryprocesses.4Intheretailindustry,WalMarthasestablished
practicesofcontinuousreplenishment,suppliershelfmanagement,and
simplifiedcommunicationsthathavesignificantlyinfluenceditssuppliers,
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includingsuchgiantsasGeneralElectricandProcter&Gamble.5

Financeisanotherpowerfuldriverofprocessinnovation.Companiesthathave
assumedheavydebtloadsasaresultofleveragedbuyoutsorfendingoff
corporateraidersoftenneedtocutexpensessubstantiallytoimprove
profitability.Processinnovationcanbemoreeffectiveatremovingunnecessary
coststhanmanyotheralternativessuchasbusinessunitsalesandearly
retirementprograms(whichresultinacompany'smostemployablepeople
leavingtofindotherjobs).Itmaybethatinthe1990soverburdened
companieswillcometotermswiththeirdebtthroughoperational,process
basedrestructurings,ratherthanfinancialmaneuvering.

Thereareotheroccasionsthatprovide"freshstart"opportunitiesforprocess
innovation.Forexample,itmaybedesirable

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toredesignaprocessthatistobeoutsourcedbeforeturningitovertoan
outsidefirm.Amergercanprovideanopportunityforreplacingredundant
processeswithanewlydesignedprocessthatbetteraccommodatesthenew
firm'sobjectives.EvenapoorITinfrastructurecanbeanopportunityfor
processinnovationmanyfirmstodayneedtorebuildmajorsystems,butthey
shouldnotconstructthemtosupportinadequateorinferiorprocesses.

Processinnovationcanalsorespondtotheneedforbettercoordinationand
managementoffunctionalinterdependencies.6Bettercoordinationof
manufacturingwithmarketingandsales,itisreasoned,willallowacompanyto
makeonlywhatitscustomerswillbuy.Intheconsumerfoodsbusiness,this
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processobjectiveoftentakestheformofreducingthelikelihoodthatgoods
willbecomestalepassinginformationfromsalestomanufacturinghasenabled
FritoLay7andPepperidgeFarmtorealizesubstantialreductionsinstales.The
automobileindustryhaslabeledthistypeofcoordination''leanproduction,"an
approachcitedbyamajorMITstudyaskeytoJapanesesuccess.8Achieving
ahighdegreeofinterdependencevirtuallydemandsboththeadoptionofa
processviewoftheorganizationtofacilitatetheimplementationofcross
functionalsolutions,andthewillingnesstosearchforprocessinnovations.
Existingapproachestomeetingcustomerneedsaresofunctionallybasedthat
incrementalchangewillneveryieldtherequisiteinterdependence.

Ofthemanyoperationalreasonsthatprivatesectororganizationsembarkon
processinnovationinitiatives,almostallcanbetracedtotheneedfor
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improvingfinancialperformance.Processcostreductiontranslatesdirectlyinto
thatobjective.Otherprocessobjectives,suchastimereductionandimproved
qualityandcustomerservice,areassumedtotranslateintohighersalesorless
expensiveproduction.Evenprocessobjectivesthatinvolveworkerlearning
andempowermentareultimatelyorientedtowardimprovingfinancial
performance,theassumptionbeingthatfulfilledworkerswillbemore
productiveworkers.Becauseprocessinnovationinitiativesconsumeresources
thatmightbespentinsomeotherway,itisreasonabletoexpectthattheywill
yieldfinancialbenefits.However,aswillbeshownlater,improvedfinancial
performanceisoftenproblematicastheonlystatedvisionorobjectivefor
processinnovation.Nonfinancialobjectivesarenormallymorelikelytoinspire
vigorouseffortstoimprovework.

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Afinalrationaleforprocessinnovationisthatitsuitsourbusinessculture.Even
ifWesternfirmscouldsolvetheirfinancialproblemsandsatisfytheircustomers
throughincrementalimprovement,whyshouldtheysuppresstheirappetitefor
innovation?PerhapswhatAmericancompaniesneedisaprocessapproach
thatmarriesradicalinnovationandthedisciplineofcontinuousimprovement.A
Westernversionofqualitymightfocusonresultsaswellasprocess.U.S.firms
needaprocessmanagementapproachthatembracesbothhumanenablersof
processchangeandthetoolthathaschangedbusinessmostoverthepast
threedecadesinformationtechnology.Westernfirmscanonlyhopethatthe
combinationofprocessthinkingandeffectiveuseoftechnologicalandhuman
innovationenablerswillallowthemtocatchupwithandevensurpasstheir
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globalcompetitors,someofwhomhavebeenoptimizingandstreamliningtheir
processesformanyyears.AsXeroxCEOPaulAllaire,whosefirmhas
successfullycreatedandmarketedproductsofworldclassquality,observed:
"We'renevergoingtooutdisciplinetheJapaneseonquality.Towin,weneed
tofindwaystocapturethecreativeandinnovativespiritoftheAmerican
worker.That'stherealorganizationalchallenge."9

WhatisaProcess?

Adoptingaprocessviewofthebusinessakeyaspectofprocess
innovationrepresentsarevolutionarychangeinperspective:itamountsto
turningtheorganizationonitshead,oratleastonitsside.Aprocess
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orientationtobusinessinvolveselementsofstructure,focus,measurement,
ownership,andcustomers.Indefinitionalterms,aprocessissimplya
structured,measuredsetofactivitiesdesignedtoproduceaspecifiedoutput
foraparticularcustomerormarket.Itimpliesastrongemphasisonhowwork
isdonewithinanorganization,incontrasttoaproductfocus'semphasison
what.

Aprocessisthusaspecificorderingofworkactivitiesacrosstimeandplace,
withabeginning,anend,andclearlyidentifiedinputsandoutputs:astructure
foraction.Thisstructuralelementofprocessesiskeytoachievingthebenefits
ofprocessinnovation.Unlessdesignersorparticipantscanagreeontheway
workisandshouldbestructured,itwillbeverydifficulttosystematically
improve,oreffectinnovationin,thatwork.

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Processstructurecanbedistinguishedfrommorehierarchicalandvertical
versionsofstructure.Whereasanorganization'shierarchicalstructureis
typicallyasliceintimeviewofresponsibilitiesandreportingrelationships,its
processstructureisadynamicviewofhowtheorganizationdeliversvalue.
Furthermore,whilewecannotmeasureorimprovehierarchicalstructureinany
absolutesense,processeshavecost,time,outputquality,andcustomer
satisfaction.Whenwereducecostorincreasecustomersatisfaction,wehave
betteredtheprocessitself.

Somemanagersviewthedynamicnatureofprocessesinanegative,
bureaucraticsense:"Wecan'tdoanythingaroundhereunlesswefollowa
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process."Tothecontrary,thisbookisbasedontheassumptionthatfollowing
astructuredprocessisgenerallyagoodthing,andthatthereisnothing
inherentlysloworinefficientaboutactingalongprocesslines.

Aprocessapproachtobusinessalsoimpliesarelativelyheavyemphasison
improvinghowworkisdone,incontrasttoafocusonwhichspecificproducts
orservicesaredeliveredtocustomers.Successfulorganizationsmust,of
course,bothofferqualityproductsorservicesandemployeffective,efficient
processesforproducingandsellingthem.ButU.S.companiesspendtwiceas
muchresearchinganddevelopingnewproductsasnewprocesses(these
proportionsarereversedinJapan10),andalmostalloftheamountspenton
processesistargetedatengineeringandmanufacturing.Marketing,selling,and
administrativeprocessesreceiveverylittleinvestment.Adoptingaprocess
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perspectivemeanscreatingabalancebetweenproductandprocess
investments,withattentiontoworkactivitiesonandofftheshopfloor.

Researchersofinnovationinorganizationsfrequentlydistinguishbetween
productandprocessinnovation,theformerreceivingbothmoreattentionby
firmsandmorestudybyresearchers.Butatleastonerecentstudyhaspointed
outthatthetwotypesofinnovationoftenseemtooccurtogether.11Indeed,in
serviceindustriesitisnearlyimpossibletodistinguishbetweeninnovativenew
servicesofferedtocustomersandtheinnovativeprocessesthatenablethem.
Astheseindustriesmatureandseekinnovationintheirofferings,itisperhaps
inevitablethattheywilladoptmoreofaprocessorientation.

Processesthatareclearlystructuredareamenabletomeasurementinavariety
ofdimensions.Suchprocessescanbemeasuredintermsofthetimeandcost
associatedwiththeirexecution.

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Theiroutputsandinputscanbeassessedintermsofusefulness,consistency,
variability,freedomfromdefects,andnumerousotherfactors.Thesemeasures
becomethecriteriaforassessingtheworthoftheinnovationinitiativeandfor
establishingongoingimprovementprograms.

Takingaprocessapproachimpliesadoptingthecustomer'spointofview.
Processesarethestructurebywhichanorganizationdoeswhatisnecessaryto
producevalueforitscustomers.Consequently,animportantmeasureofa
processiscustomersatisfactionwiththeoutputoftheprocess.Becausethey
arethefinalarbitersofprocessdesignandongoingperformance,customers
shouldberepresentedthroughoutallphasesofaprocessmanagement
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program.

Processesalsoneedclearlydefinedownerstoberesponsiblefordesignand
executionandforensuringthatcustomerneedsaremet.Thedifficultyin
definingownership,ofcourse,isthatprocessesseldomfollowexisting
boundariesoforganizationalpowerandauthority.Processownershipmustbe
seenasanadditionaloralternativedimensionoftheformalorganizational
structurethat,duringperiodsofradicalprocesschange,takesprecedenceover
otherdimensionsofstructure.Otherwise,processownerswillnothavethe
powerorlegitimacyneededtoimplementprocessdesignsthatviolate
organizationalchartsandnormsdescribing"thewaywedothingsaround
here."
the publisher, except fair uses permitted under U.S. or applicable copyright law.

Ourdefinitionofprocesscanbeappliedtobothlargeandsmallprocessesto
theentiresetofactivitiesthatservescustomers,oronlytoansweringaletterof
complaint.Thelargertheprocess,however,thegreaterthepotentialforradical
benefit.Akeyaspectofprocessinnovationisthefocusonbroad,inclusive
processes.Mostcompanies,evenverylargeandcomplexones,canbe
brokendownintofewerthan20majorprocesses.IBM,forexample,has
identified18processes,Ameritech15,Xerox14,12andDowChemical9.
Keygenericbusinessprocessesincludeproductdevelopment,customerorder
fulfillment,andfinancialassetmanagement.Figure11depictsatypicalsetof
broadprocessesforamanufacturingfirm.

Becauseaprocessperspectiveimpliesahorizontalviewofthebusinessthat
cutsacrosstheorganization,withproductinputsatthebeginningandoutputs
andcustomersattheend,adoptingaprocessorientedstructuregenerally
meansdeemphasizingthefunctionalstructureofthebusiness.Todayalmost
everylarge

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Operational

Productdevelopment

Customeracquisition

Customerrequirementsidentification

Manufacturing

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Integratedlogistics

Ordermanagement

Postsalesservice

Management

Performancemonitoring

Informationmanagement

the publisher, except fair uses permitted under U.S. or applicable copyright law.

Assetmanagement

Humanresourcemanagement

Planningandresourceallocation
Figure11
TypicalProcessesinManufacturingFirms

businessorganizationischaracterizedbythesequentialmovementofproducts
andservicesacrossbusinessfunctionsengineering,marketing,manufacturing,
sales,customerservice,andsoforth.Notonlyisthisapproachexpensiveand
timeconsuming,itoftendoesnotservecustomerswell.Infunctionallyoriented
organizations,handoffsbetweenfunctionsarefrequentlyuncoordinated.Asa
result,noonemayberesponsibleformeasuringormanagingthetimeandcost
requiredtomoveproductsfromlaboratorytomarketorfromcustomerorder
toreceipt.Processinnovationdemandsthatinterfacesbetweenfunctionalor
productunitsbeeitherimprovedoreliminatedandthat,wherepossible,
sequentialflowsacrossfunctionsbemadeparallelthroughrapidandbroad
movementofinformation.

Majorprocessessuchasproductdevelopmentincludeactivitiesthatdrawon
multiplefunctionalskills.Newproductdesignsaregeneratedbyresearchand
development,testedformarketacceptancebymarketing,andevaluatedfor
manufacturabilitybyengineeringormanufacturing(seeFigure12).Processes
thatinvolveordermanagementandservicecrosstheexternalboundariesof
organizations,extendingintosuppliersandcustomers.Consequently,viewing
theorganizationintermsofprocessesandadoptingprocessinnovations
inevitablyentailscrossfunctionalandcrossorganizationalchange.
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 multiplefunctionalskills.Newproductdesignsaregeneratedbyresearchand
development,testedformarketacceptancebymarketing,andevaluatedfor
manufacturabilitybyengineeringormanufacturing(seeFigure12).Processes
thatinvolveordermanagementandservicecrosstheexternalboundariesof
organizations,extendingintosuppliersandcustomers.Consequently,viewing
theorganizationintermsofprocessesandadoptingprocessinnovations
inevitablyentailscrossfunctionalandcrossorganizationalchange.

Adoptingaprocessviewimpliesacommitmenttoprocess

 Page9

Figure12
ATypicalCrossFunctionalProcess

betterment.Muchrecentattentionhasbeengiventotimereductionasan
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objectiveofbusinesschange13costreductionandqualityimprovementare
alsofamiliar.Butnosingleobjectiveissufficientlyambitiousforaprocess
innovationinitiative.Manyfirmshavefoundthattheycanachievemultiple
objectiveswitheachprocessinnovationinitiative.Indeed,theymust:customers
demandcycletimereductionandoutputqualityimprovements,whilethe
competitiveandfinancialenvironmentssimultaneouslydemandthatprocess
costsbesubstantiallyreduced.

Someoftheseimprovementobjectivescanbefoundwithinafunctional(i.e.,
nonprocess)context.Manufacturing,forexample,hasbeenimprovingcycle
timeandqualityformanyyears.Buttheseimprovementsoftenarenot
perceivedbythecustomerbecauseofpoorcoordinationwithotherfunctions.
the publisher, except fair uses permitted under U.S. or applicable copyright law.

Aproductismanufacturedmorequickly,forexample,butsitsinthe
warehouseawaitingacustomercreditcheckorresolutionofadiscrepancyin
anorder.Consequently,theimpactoffunctionalbetterment,evenwhenfully
achieved,maybelimited.Processimprovement,ontheotherhand,whether
internalorexternal,shouldimmediatelybenefitthecustomer.

Tosome,aprocessorientationmightimplyaprocessindustry,thatis,an
industry,suchaschemicals,thatproducesaproductcontinuouslyratherthanin
discreteunits.Butprocessimprovementandinnovationaswediscussthem
hereapplytoallindustries.Itmaybeeasiertoapplyprocessthinkingto
manufacturingfirms(bothdiscreteandprocess),becausestructureand
measurementhavetraditionallybeenappliedtomanufacturingprocesses,but
thebenefitsofprocessthinkingareclearlyattainablebyserviceindustriesas
well.

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WhatConstitutesInnovation?

Definedsimply,innovationis,ofcourse,theintroductionofsomethingnew.
Wepresumethatthepurposeofintroducingsomethingnewintoaprocessisto
bringaboutmajor,radicalchange.Processinnovationcombinesastructurefor
doingworkwithanorientationtovisibleanddramaticresults.Itinvolves
steppingbackfromaprocesstoinquireintoitsoverallbusinessobjective,and
theneffectingcreativeandradicalchangetorealizeorderofmagnitude
improvementsinthewaythatobjectiveisaccomplished.

Processinnovationcanbedistinguishedfromprocessimprovement, which
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seeksalowerlevelofchange.Ifprocessinnovationmeansperformingawork
activityinaradicallynewway,processimprovementinvolvesperformingthe
samebusinessprocesswithslightlyincreasedefficiencyoreffectiveness.The
actuallevelofbenefitderivedfromoperationalbettermentinitiativesfalls,of
course,acrossacontinuum,butinpracticemostfirmsseekeitherincremental
orradicalchange.Itispossiblethatprocessinnovationmightyieldonly
incrementalbenefit,inwhichcasewewouldclassifyitasanimprovement.14
Wearealsofamiliarwithatleastoneinstanceinwhichaprocessimprovement
initiativeyieldedradicalbenefit,albeitinanarrowlydefinedprocess.15

Forexample,afirmthatanalyzesitscustomerorderfulfillmentprocessand
theneliminatesredundantornonvalueaddingstepsispracticingprocess
improvement.Thisactivitymighteliminateseveralunnecessaryjobs,improve
the publisher, except fair uses permitted under U.S. or applicable copyright law.

customersatisfaction,andreducedeliverytimefromthreeweekstotwo.
Anotherfirmthatlookedatitsorderfulfillmentprocesswithaneyetoward
processinnovationmightprovidecustomerswithorderentryterminals,
eliminateitsdirectsalesforce,guaranteeorderfulfillment,arrangeforathird
partytomanageitswarehouse,andempowerfrontlinepersonneltohandleall
financialandshippingdetails.Thelatterfirmmighthalveitscostsandorder
fulfillmenttimes.EventhebestAmericanperformersintermsofquality(i.e.,
thehighestscoresintheBaldrigeawardcompetition)improvereliability,cycle
time,inventoryturns,andsoforthanaverageofonly5%to12%16firms
undertakingprocessinnovationcouldnotaffordtobesatisfiedwiththese
results.

Thereareotherimportantdifferencesbetweenprocess

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improvementandprocessinnovation,amongthem,thelocusofparticipationin
organizationalchange,theimportanceofprocessstabilizationandstatistical
measurement,theenablersandnatureofchange,andthedegreeof
organizationalrisk.ThesearesummarizedinFigure13.

Processinnovationinitiativesstartwitharelativelycleanslate,ratherthanfrom
theexistingprocess.Thefundamentalbusinessobjectivesfortheprocessmay
bepredetermined,butthemeansofaccomplishingthemisnot.Designersof
thenewprocessmustaskthemselves,"Regardlessofhowwehave
accomplishedthisobjectiveinthepast,whatisthebestpossiblewaytodoit
now?"
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Whereasprocessimprovementinitiativesareoftencontinuousinfrequency,the
goalbeingongoingandsimultaneousimprovementacrossmultipleprocesses,it
isdifficulttoconceiveofcontinuousprocessinnovation.Processinnovationis
generallyadiscreteinitiative.Assuggestedbelow,itisbestcombinedwith
improvementprograms,bothconcurrentlyacrossdifferentprocessesandina
cycleofalternationforasingleprocess.

Processimprovementcanbeginsoonafterchangesinaprocessareidentified,
andincrementalbenefitscanbeachievedwithin

Improvement Innovation
the publisher, except fair uses permitted under U.S. or applicable copyright law.

LevelofChange Incremental Radical

StartingPoint Existingprocess Cleanslate

FrequencyofChange Onetime/continuous Onetime

TimeRequired Short Long

Participation Bottomup Topdown

TypicalScope Narrow,within Broad,crossfunctional

functions

Risk Moderate High

PrimaryEnabler Statisticalcontrol Informationtechnology

TypeofChange Cultural Cultural/structural

Figure13
ProcessImprovementversusProcessInnovation

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months.Becauseofthemagnitudeoforganizationalchangeinvolved,process
innovationoftentakesamuchlongertime.Weknowofnolargeorganization
thathasfullyidentifiedandimplementedamajorprocessinnovationinlessthan
twoyears.Ford'swidelyreportedeliminationofthreequartersofitsaccounts
payablestaff,achievedbypayingonreceiptofgoodsandeliminatinginvoices,
tookfiveyearsfromdesigntofullimplementation.17Thisimplementationcycle
waslongdespitethefactthattheprocessFordadoptedwasalready
operationalwithinMazda,itsJapanesesubsidiary,andwasarelativelynarrow
process.Inthissituation,managingthechangesrequiredinaccountspayable
tooklongerthanitshouldhave,butprocessinnovationchampionsshouldbe
preparedforachangecyclemeasuredinyears.Clearly,ifthecycleofprocess
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innovationtakestoolong,theaverageimprovementperyearmaynotexceed
thatofprocessimprovement,andforthisreasonweurgebothhasteand
concurrentrelianceonprocessimprovementapproachesaimedatrealizing
shorttermgainsinexistingprocesses.

Bottomupparticipationisahallmarkofcontinuousqualityimprovement
programs18employeesareurgedtoexamineandrecommendchangesinthe
workprocessesinwhichtheyparticipate.Visitorstoqualityoriented
companiesfrequentlyseebanners,posters,andnewslettersbearingquality
relatedslogansandprogressmeasurements.Somequalitydrivenfirmsboast
thateverymemberoftheorganizationisamemberofaqualitycircle.

Processinnovationistypicallymuchmoretopdown,requiringstrongdirection
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fromseniormanagement.Becauselargefirms'structuresdonotreflecttheir
crossfunctionalprocesses,onlythoseinpositionsoverlookingmultiple
functionsmaybeabletoseeopportunitiesforinnovation.Aclerkinthe
shippingdepartmentisunlikelytoconceivearadicalredesignoftheentire
ordermanagementprocess.Ideasfromworkersandlowerlevelmanagers,
thoughtheyshouldbesolicited,arelikelytotargetincrementalimprovement.
Butinasmuchasworkersandlower/middlemanagersareaslikelytoresistas
toproposemajorchange,implementersofprocessinnovationmuststriveto
gaincommitmentandbuyinatalllevelsoftheorganization.Encouraging
participationintheprocessdesignactivitycancertainlyfacilitatethis.

Processimprovementprograms,includingthoseinitiatedunderthequality
banner,aregenerallyappliedtoexistingorganizationalstructuresandthus
involvechangeinnarrowlydefined

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functionalorsubfunctionalprocesses.Processinnovation,ontheotherhand,
involvesdefinitionofandinnovationinbroad,crossfunctionalprocesses.Just
theidentificationofsuchprocesses,oftenforthefirsttime,canleadto
innovativewaysofstructuringwork.19

Bothprocessimprovementandprocessinnovationrequireculturalchange.The
necessaryfocusonoperationalperformance,measurementofresults,and
empewermentofemployeesareallaspectsoftheculturalshift.Butwhereasit
ispossibletoimplementacontinuousimprovementprogramwithoutmaking
majorchangesinorganizationalstructureindeed,avoidinguncontrolled
changeisprerequisitetocontinuousimprovementprocessinnovation
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involvesmassivechange,notonlyinprocessflowsandtheculturesurrounding
them,butalsoinorganizationalpowerandcontrols,skillrequirements,
reportingrelationships,andmanagementpractices.Thewrenchingnatureof
thisorganizationalchangeisthemostdifficultaspectofprocessinnovationand
accountsatleastpartiallyforitstypicallylongcycletimes.

Theprimaryenablerofcontinuousprocessimprovementprogramsisstatistical
processcontrol,atechniqueforexplainingandminimizingsourcesofvariation.
Neitherthis,northeotherkeyqualitytechniques,iswelladaptedtothelarge
variationsinprocessoutcomesproducedbyprocessinnovation.

Processinnovationalsoimpliestheuseofspecificchangetools.Oneofthese,
informationtechnology,hasbeenhailedbymanyasthemostpowerfultoolfor
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changingbusinesstoemergeinthetwentiethcentury.Thedramaticcapabilities
ofcomputersandcommunicationsarepowerfulenablersofprocess
innovationbutthoughtheyhaveyieldedimpressivebenefitsformanyfirms,
theyhavenotbeenasfullyexploitedastheymightbe.

Humanandorganizationaldevelopmentapproachessuchasgreateremployee
empowerment,relianceonautonomousteams,andflattenedorganizational
structuresareaskeytoenablingprocesschangeasanytechnicaltool.Infact,
informationtechnologyisrarelyeffectivewithoutsimultaneoushuman
innovations.

Ifcontinuousimprovementinvolvesrelativelylittlereward,italsoinvolveslittle
risk.Withafewexceptions(suchasatFloridaPowerandLight,wherean
awardwinningqualityinitiativewasabruptlydiscontinuedbyanewCEO),
qualityprogramsdonotdieinavisibleandobviouswaytheyaremuch

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morelikelytofadeintooblivion.Becauseprocessinnovationinitiativeshave
(orshouldhave)welldefinedandambitiouschangeobjectives,failureto
achievetheseobjectives,whilenotbeyondcoverup,isusuallyhighlyapparent.
Thelevelofchangeinvolvedandthecrossfunctionalnatureofprocess
innovationgreatlyheightentheriskoffailure.Managerslikelytolosepeople,
power,orotherresourcesasaresultofprocessinnovationwillnaturallybe
temptedtoresistthechange.

Howeverdifferentincharacter,continuousprocessimprovementandprocess
innovationpresentsimilarchallenges.Bothrequireastrongcultural
commitmentandhighdegreeoforganizationaldiscipline,aprocessapproach,
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ameasurementorientation,andawillingnesstochange.Acompanythatis
unsuccessfulatonewillprobablynotsucceedattheother.

Butalthoughcontinuousqualityimprovementmaybegoodpractice,itisnota
prerequisiteforsuccessatprocessinnovation.Theskillsandenablersof
changearedifferent.Successatqualityinitiativesisaqualificationforsuccess
inprocessinnovation,butsoaremanyothertypesofcorporatechangethat
involveseriousnessofpurposeandflexibilitysuccessinmerginglarge
organizations,successindownsizing,successinmajorproductorserviceline
innovations.

Inpractice,mostfirmsneedtocombineprocessimprovementandprocess
innovationinanongoingqualityprogram(seeFigure14).Ideally(thoughnot
the publisher, except fair uses permitted under U.S. or applicable copyright law.

necessarily),acompanywillattempttostabilizeaprocessandbegin
continuousimprovement,thenstriveforprocessinnovation.Lestitslideback
downtheslipperyslopeofprocessdegradation,afirmshouldthenpursuea
program

Figure14
ProcessImprovementandProcessInnovation

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ofcontinuousimprovementforthepostinnovationprocess.Furthermore,
acrossanentireorganization,innovationinitiativeswillbeappropriateforsome
processes,continuousimprovementinitiativesforothers.

Inordernottoconfusetheemployeeswhoparticipatein,orareaffectedby,
innovationandimprovementinitiatives,allsuchactivitiesshouldbecarriedout
withinthecontextofasinglequalityprogram,anditshouldbeclearwhichtype
ofprocesschangeisunderwayforagivenprocessataparticulartime.For
example,wefoundaveryconfusingsituationatanelectricalutilityinwhich
bothimprovementandinnovationinitiativeswerebeingundertakenatthesame
timebydifferentsponsors.Thequalityorganizationhadbeguncontinuous
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improvementprogramsalongfunctionallinestheinformationsystemsfunction
wassponsoringprocessinnovationprogramswithradicalchangeobjectives,
structuredalongmajorcrossfunctionalprocesslines.Eventheleadersofthese
twoinitiativeswereunsurehowtheyrelatedtooneanother.

Thedifferencesbetweenprocessimprovementandinnovationcanmakeit
difficulttocombinethetwo.Onewaytofacilitatetheircombinationistoassign
themtodifferentmanagers.AtAmeritech,wherethiswasdone,themanager
withresponsibilityforprocessinnovationandthemanagerassignedtoquality
andprocessimprovementcommunicateregularlyandthelevelofcooperation
ishigh,perhapsbecausetheyreporttothesameperson.

Afirmshouldbeawarethattherisksofprocessinnovationareatleast
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proportionaltotherewards.Giventhisequation,organizationsthatcanavoid
suchwrenchingchangeshouldprobablydoso.Inenvironmentsthatare
relativelynoncompetitiveorinwhichbasicbusinesspracticesarenotin
question(e.g.,somesegmentsoftheutilityindustryorotherhighlyregulated
businesses,orwellfundedgovernmentorganizations),continuousimprovement
maybepreferredoverprocessinnovation.Butcompetitiveandother
pressuresforcemostfirmstoseekradicalchange.

ProcessInnovationandtheVoiceoftheCustomer

Acorrectlydesignedbusinessprocesshasthevoiceandperspectiveofthe
customer''builtin."Aprocessshouldbedesignedtoproduceoutputsthat
satisfytherequirementsofthecustomer.

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Aprocessinnovationinitiativeshouldbeginwithagoodunderstandingofwho
thecustomersoftheprocessareandwhattheywantoutofit.Asking
customersabouttheirrequirementsandgettingthemtochoosebetween
processtradeoffsshouldbeexplicittasks.Improvementorinnovation
objectivesshouldbeprimarilythoseofthecustomer.

Infact,thecustomer'sperspectiveshouldbebuiltnotonlyintothefinal
processdesign,butalsointotheearlyvisioningandpostimplementation
activities.Whenpossible,customersshouldbeincludedonprocessdesign
teamsand,afteraprocessdesignhasbeencreated,shouldparticipatein
prototypesoftheprocessandhelprefinethedesign.Ongoingmeasuresofthe
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processshouldbefromthecustomer'sperspective,withcustomersassessing
processperformancetotheextentpossible.

Processessuchasordermanagementandcustomerserviceextendacrossfirm
boundariesintothecustomerorganizationintheseprocesses,thecustomeris
notaguestinthedesignactivities,butanownerofthem.Aninterorganizational
processshouldbejointlydesignedandmanagedbytheorganizationswhose
boundariesitcrosses.Costsorbottlenecksshouldnotbepassedfromone
firmtotheother,butdesignedoutoftheprocessaltogether.Thischangetoa
more"networked"viewofprocessesisalreadybeginningtohaveimportant
consequencesfordaytodaymanagementandorganization.20

EnablersofProcessInnovation
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Theidesoffocusingonenablersofinnovationaspotentialdriversofchangeis
perhapsradical.Conventionalwisdomaboutbusinessinitiativesholdsthatthey
mustfirstbeplannedintheabstract,withoutreferencetospecifictoolsor
leversofchange.Inthetraditionalplanningapproach,wedefine
"ends"(corporateobjectives),the"ways"inwhichtheseendsaretobe
achieved(specificvisionsorcriticalsuccessfactors),andthe"means"bywhich
weexpecttobringtheseendsabout(enablersofchange).Hayes,observing
thatabstractplanningonlyrarelyanticipateshowafirmwilladdressits
environmentwithspecificinitiatives,arguesthatoftentheappropriateorderis
"means,ways,ends."21Providethetoolsforchange(includingfinancial,
technological,andhumanresources),andthespecificdirectionsinwhichto
applythemwillbecomeapparentastheenvironmentchanges.

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Althoughfreshandappealing,Hayes'sviewmaynotbeentirelyapplicableto
processinnovation.Somesortofcontextforprocessinnovationasenseof
the"end"isnecessarytoprovidefocusandinspiration.Changeenablersfor
processinnovationareclearly"means"inHayes'sterminology.Ratherthan
followinginsomefixedorder,endsandmeansarebetterviewedasinfluencing
eachother.Theuseofinformationtechnologyinprocesses,forexample,can
stronglyinfluence,andshouldbeinfluencedby,strategy.Regardlessofthe
orderofends,ways,andmeans,itisimportanttoconsiderthemeansor
enablersofprocessinnovationbeforeaprocessdesignissolidified.

Byvirtueofitspowerandpopularity,nosinglebusinessresourceisbetter
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positionedthaninformationtechnologytobringaboutradicalimprovementin
businessprocesses.Itistheleastfamiliarofkeyresources,havingexistedina
formusefultobusinessesforamere40years.Especiallyinhardwareand
communicationscomponents,ITcapabilitieshavegrownfasterthanthoseof
otherresourcesortechnologies.Weareonlybeginningtounderstandthe
powerofinformationtechnologyinbusiness.Butevenaswebegintograsp
existingITcapabilities,innovationsmakeourperspectivesobsolete.

Itsgreatpotentialnotwithstanding,ITcannotchangeprocessesbyitself,noris
ittheonlypowerfulresource.Thereisawelldevelopedliteraturesuggesting
thattheprimaryenablersofchangeinorganizationsaretechnology(including
technologiesnotbasedoninformation)andorganizational/humanfactors.22
Processinnovationcanseldombeachievedintheabsenceofacarefully
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consideredcombinationofbothtechnicalandhumanenablers.23

Possibilitiesforapplyingorganizationalandhumanfactorstoprocess
innovationextendoverabroadrange.Throughoutthisbook,wetreatthemas
equalpartnerswithinformationtechnologyineffectingprocesschange.For
everyexampleofITasanenablerofnewprocessdesigns,thereisalmost
invariablyanaccompanyingchangeintheorganizationalorhumanresource
type.Forexample,creatingamoreempoweredanddiversifiedworkforce,
eliminatinglevelsofhierarchy,creatingselfmanagingworkteams,combining
jobsandassigningbroaderresponsibilities,andupgradingskillsaresome
organizationalandhumanresourcechangesthatfrequentlyaccompanytheuse
ofIT.

Otherprocessinnovationresourcesnewapproachesto

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assessingfinancialcostsandbenefits,24andglobalbusinessmanagement,for
example25havebeeninmanagers'portfoliosmuchlongerthaninformation
technologyandneworganizationalformsandthusmayhavelesspotentialas
enablersofradicalinnovation.Moreover,eventhesetraditionalresources
workbestwhenusedinconcertwithinformationtechnologyand
human/organizationalinnovations.

Firmsundertakingprocessinnovationinitiativesshouldnot,ofcourse,become
preoccupiedwithparticularenablersortools.Theobjectiveofsuchefforts
shouldbeimprovedbusinessperformance,notalessonintakingadvantageof
anewtechnologyoralternativehumanresourcetactic.Butitisjustasfoolish
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toinventnewprocessdesignswithoutexaminingfirmsthathavesuccessfully
employedITandhumanenablersinsimilarprocessinnovationinitiatives.Just
asanarchitectbringstothedesignofabuildingknowledgeofthetechnologies
neededtooperateit(e.g.,elevators,airconditioning,plumbing,andsoforth)
andthetypesofpeoplewhowillworkinit,soaprocessdesignermustbe
cognizantofthetechnologiesandpeopleinvolvedinmakingaprocesswork.

OverviewandBackgroundoftheBook

Thisbookistheresultofmorethanfouryearsofresearchintoprocess
innovation,inbothacademicandconsultingcontexts.Itreflectshundredsof
conversationswithexecutivesandprofessionalsinmorethan50companies.
(ThesecompaniesarelistedinAppendixA.)Inaddition,werevieweda
the publisher, except fair uses permitted under U.S. or applicable copyright law.

wealthofcasematerialsonotherfirmsthatwereinthemidstofprocess
innovation.Asdoesmostusefulbusinessresearch,ourworkonprocess
innovationdescribesthestateoftheart,andthenattemptstogobeyonditin
termsofanalysis,developmentofframeworks,andprescription.

Thebreadthoftheresearchnotwithstanding,processinnovationremainsmore
artthanscience.Manyoftheprocessinnovationinitiativeswestudiedhadonly
recentlybegun.Theapproachesandmethodsdescribedherearenottheonly
possibleroutestosuccess.Thisbookisforthemanagersofcompaniesnow
embarkinguponsuchinitiatives,whoneedinformationaboutthenatureof
processinnovationandtheexperiencesofearlymovers.Indescribingthe
effortsofpioneers,thebookisitselfpioneering.Thebookisorganizedinthree
parts.Wefirstpresentthe

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componentsofageneralapproachto,andcontextfor,processinnovation.
Thesecomponents,althoughtheydonotformadetailedmethodology,mustbe
aspectsofasuccessfulprocessinnovationprogram.Thecomponentsofthe
approacharedepictedingraphicformintheintroductiontoPartIandare
discussedindetailinthechaptersthatfollow.Chapter2examinestheselection
ofprocessesforinnovation,Chapters3,4,and5theenablersofprocess
innovation,includinginformationtechnology,information,andorganizational
andhumanresourceapproaches.InChapter6wediscussthecreationofa
visionforprocessesanditsrelationtocorporatestrategy,andinChapter7,
theissueofmeasurementandshorttermimprovementofexistingprocesses.
Chapter8concludesPartIwithadetailedreviewofthedesignand
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implementationofnewprocesses.

PartIIisdevotedtoimplementationissuesassociatedwithradicalprocess
change.WerecommendinChapter9approachestomanagingsuccessfullythe
kindoflargescaleorganizationalchangethatattendsprocessinnovation.In
Chapter10,weviewtheimplementationofinformationsystemswithina
processinnovationcontextthatis,weexaminehow,givenanewprocess
design,wecanemployITtorapidlyandeffectivelyimplementsystemsthat
supportit.

InPartIII,wefocusonspecificapproachesthatfirmsareemployingto
innovatekeyoperationalandmanagerialprocesses.Chapter11examines
innovativeapproachestoproductdesign,development,andmanufacturing
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processes.Chapter12focusesoncustomerfacingprocesses,including
marketingandsalesmanagement,ordermanagement,andcustomerservice.
Chapter13discussesinnovationinmanagementandadministrativeprocesses,
whichhavebeenneglectedevenbyfirmsundertakingprocessinnovation
elsewhere.

InChapter14,aftersummarizingkeypointsofthebook,weurgebothcaution
andhasteinadoptingprocessinnovation.Giventherapidlygrowingpopularity
ofthisapproachtobusinessimprovement,abalancedviewofrisksand
rewardsisessential.Butneitherthesecautions,northemyriadcomplexities
introducedthroughoutthebook,shouldbepermittedtodiminishtheappealof
thisexcitingapproachtoenhancingbusinessperformance.

AppendixBtracesthehistoricalrootsofprocessinnovation.Thisdiscussion
furtherelucidatesthedistinctionsbetweenprocessinnovationandearlier
approachestooperationalimprovement.Thecurrentrelationshipofprocess
innovationtoquality,

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sociotechnical,workdesign,andcompetitivesystemsinitiativesisalso
discussed.

Notes

1SeeHirotakaTakeuchiandIkujiroNonaka,"TheNewNewProduct
DevelopmentGame,"HarvardBusinessReview(JanuaryFebruary1986):
137148.Forcomparisonsbetweenautomotivefirms,seeKimB.Clarkand
TakahiroFujimoto,ProductDevelopmentPerformance:Strategy,
Organization,andManagementintheWorldAutoIndustry(Boston:
HarvardBusinessSchoolPress,1991).
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2See,forexample,KaoruIshikawa,WhatIsTotalQualityControl?The
JapaneseWay(EnglewoodCliffs,N.J.:PrenticeHall,1985):171184.

3JamesP.Womack,DanielT.Jones,andDanielRoos,TheMachineThat
ChangedtheWorld(NewYork:RawsonAssociates,1990).

4SusanHelper,"HowMuchHasReallyChangedBetweenU.S.Automakers
andTheirSuppliers?,"SloanManagementReview(Summer1991):1528.

5Forarigorousdiscussionofthesetypesofprocessesintheretailindustry,
seeJamesV.McGee,"ImplementingSystemsAcrossBoundaries:Dynamics
ofInformationTechnologyandIntegration,"Ph.D.diss.,HarvardBusiness
the publisher, except fair uses permitted under U.S. or applicable copyright law.

School,1991.

6Thismovementtowardinterdependencewithreferencetoinformation
technologyhasbeendescribedinJohnReckartandJamesShort,"ITinthe
1990's:ManagingOrganizationalInterdependence,"SloanManagement
Review(Winter1989):718.

7MelissaMeadandJaneLinder,"FritoLay,Inc.:AStrategicTransition(A),"
91187012.Boston:HarvardBusinessSchool,1987alsoNicoleWishart
andLyndaApplegate,"FritoLay,Inc.:HHCProjectFollowUp,"9190
191.Boston:HarvardBusinessSchool,1990.

8See,forexample,JohnF.Krafcik,"TriumphoftheLeanProduction
System,"SloanManagementReview(Fall1988):4152.

9AllaireisquotedinBrianDumaine,"TheBureaucracyBusters,"Fortune,
June17,1991:37.

10EdwinMansfield,"IndustrialR&DinJapanandtheUnitedStates:A
ComparativeStudy,"AmericanEconomicReview78(1988):223.

11UrsE.Gattiker,TechnologyManagementinOrganizations(Newbury
Park,Calif.:SagePublications,1990):1920.

12The14processesidentifiedbyXeroxapplyonlytoitsdocument
processingbusiness.Sincetheywereoriginallyidentified,Xeroxhasadded
andchangedsomeprocesses,andthefirmisnowdevelopinganewprocess
architecture.

13ThemostprominentexampleofthismovementisGeorgeStalk,Jr.,and
ThomasM.Hout,CompetingAgainstTime(NewYork:FreePress,1990).
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 12The14processesidentifiedbyXeroxapplyonlytoitsdocument
processingbusiness.Sincetheywereoriginallyidentified,Xeroxhasadded
andchangedsomeprocesses,andthefirmisnowdevelopinganewprocess
architecture.

13ThemostprominentexampleofthismovementisGeorgeStalk,Jr.,and
ThomasM.Hout,CompetingAgainstTime(NewYork:FreePress,1990).

14See,forexample,R.D.DewarandJ.E.Dutton,"TheAdoptionofRadical
andIncrementalInnovations:AnEmpiricalAnalysis,"ManagementScience
32:11(1986):14221433.

15ThomasH.Davenport,"RankXeroxU.K.(A)and(B)"N9192071and
N9192072.Boston:HarvardBusinessSchool,1992.

16U.S.GovernmentAccountingOffice,"ManagementPractices:U.S.
CompaniesImprovePerformanceThroughQualityEfforts,"Reporttothe
HonorableDonaldRitter,HouseofRepresentatives,May1991.

 Page21

17TheFordexampleisdescribedinThomasH.DavenportandJamesE.
Short,"TheNewIndustrialEngineering:InformationTechnologyandBusiness
ProcessRedesign,"SloanManagementReview(Summer1990):1127also
MichaelHammer,"ReengineeringWork:Don'tAutomate,Obliterate,"
HarvardBusinessReview(JulyAugust1990):104112.

18DeanM.SchroederandAlanG.Robinson,"America'sMostSuccessful
ExporttoJapan:ContinuousImprovementPrograms,"SloanManagement
Review(Spring1991):6781.

19Thisaspectofthedifferencebetweenimprovementandinnovation
programsisdiscussedinRobertB.KaplanandLauraMurdock,"Core
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ProcessRedesign,"McKinseyQuarterly(Summer1991):2743.

20RaymondE.MilesandCharlesC.Snow,"Organizations:NewConcepts
forNewForms,"CaliforniaManagementReview18:3(Spring1986):62
73.

21RobertHayes,"StrategicPlanning:ForwardinReverse?"Harvard
BusinessReview(NovemberDecember1985):111119.

22Forareviewofthisliteraturefromtheprocessperspective,seeDorothy
LeonardBarton,"TheRoleofProcessInnovationandAdaptationinAttaining
StrategicTechnologicalCapability,"1991007.Boston:HarvardBusiness
the publisher, except fair uses permitted under U.S. or applicable copyright law.

School,DivisionofResearch,1990republishedintheInternationalJournal
ofTechnologyManagement6(1991):34.Forareviewofthe
sociotechnicalliterature,seeKenyonB.DeGreene,SociotechnicalSystems
(EnglewoodCliffs,N.J.:PrenticeHall,1973).

23SeeShoshanaZuboff,IntheAgeoftheSmartMachine:TheFutureof
WorkandPower(NewYork:BasicBooks,1988)andRichardE.Walton,
UpandRunning:IntegratingInformationTechnologyandthe
Organization(Boston:HarvardBusinessSchoolPress,1989).

24Onthecostside,seeH.ThomasJohnsonandRobertS.Kaplan,
RelevanceLost:TheRiseandFallofManagementAccounting(Boston:
HarvardBusinessSchoolPress,1987)onthebenefitside,TomCopeland,
TimKoller,andJackMurrin,Valuation:MeasuringandManagingthe
ValueofCompanies(NewYork:JohnWiley,1990).

25ChristopherA.BartlettandSumantraGhoshal,ManagingAcross
Borders:TheTransnationalSolution(Boston:HarvardBusinessSchool
Press,1989).

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PARTI
AFRAMEWORKFORPROCESSINNOVATION

Introduction

HundredsoffirmsthroughoutEuropeandAmericaareundertakingprocess
innovationinitiatives.Closeexaminationofanumberofearlyinitiativeshasled
ustocreateahighlevelframeworktoguideprocessinnovation.Wepresent
theprimarycomponentsofaprocessinnovationapproachoverseveral
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chapters.Thepurposeofthesechaptersisnottoprovideadetailed
methodology,inasmuchasspecificactivitiesundertakenbyspecificfirmswill
bevariationsuponthesecomponents,differinginorder,emphasis,andflavor.
Rather,webelievethateachcomponentisnecessaryinsomeformfora
successfulinnovationinitiative.Weknowofnocompletedradicalprocess
changethathasnotinvolvedallofthesecomponentsinsomeform,whether
implicitorexplicit,andweareawareofseveralfailedeffortsthatdidnot
employallthesesteps.

Processinnovationinitiativesareinherentlydistinctfrombusinessasusual.In
fact,anumberofresearchershavearguedthattheexistingWestern
managementparadigmviewsbothimprovementandinnovationaslyingoutside
routinemanagementactivities.1Ourexperiencesuggeststhatcompaniescan
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institutionalizeincrementalimprovementthroughorganizationalandcultural
changeprograms,withthosedoingtheworkidentifyingandimplementingsmall
changesinproductandprocess.Butweseenorealisticwaytoconduct
processinnovationduringthenormalcourseofbusiness.Companiestypically
treatinnovationactivitiesasspecialtasks,assignedtoprojectteamsortask
forces.Webelievethattheprojectorspecialinitiativestructureistheonlyway
toaccomplishradicalinnovation.Aprojectorientationappearstobethebest
waytointroduceandgainexperiencewithprocessthinkingandinnovation
withinanorganization,andonly

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adhoc,crossfunctionalteamsmaybeabletoinnovateprocessesthattraverse
organizationalboundariesandareasofmanagementresponsibility.

ThematrixinFigureI1categorizesvariousprocessbasedoperational
improvementmethodsintermsoftherelationshipbetweenlevelofchangeand
contextorfrequencyofapplication.Valueanalysisapproachessuchas
process,overhead,andactivityvalueanalysisareprojectoriented,butyield
onlyincrementalimprovement.Qualityorientedmethodssuchasbusiness
processimprovementandactivitybasedcostingmechanismsareintendedto
yieldcontinuousbutincrementalimprovement.Theseapproachesaretreatedin
greaterdetailinChapter7,wherewediscussimprovementoftheexisting
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processintheoverallcontextofprocessinnovation.

Onlyprocessinnovationisintendedtoachieveradicalbusinessimprovement.
Itisadiscreteinitiativethatmustbecombinedwithotherinitiativesforongoing
change.Thenotionofcontinuousinnovationadvancedinthemanagement
literaturepertainstoproduct,ratherthanprocessinnovation2wehavenot
observedcontinuousprocessinnovationofthetypeandscaleseeninatypical
onetimeprocessinnovationeffortandbelievethatsuchlevelsofinnovation
wouldbedifficulttomaintainandcoordinateonacontinuousbasis.Ifnothing
else,peopleandorganizationsneedperiodsofrestandstabilitybetween
successiveinnovationinitiatives.

Althoughitmaynotbepossibletoachieveradicalinnovation
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Context\ Project/OneTime Continuous

Outcome Improvement/Ongoing

Activityvalueanalysis Totalqualitymanagement
Incremental Overheadvalue Businessprocess
Improvement analysis improvement
Processvalueanalysis Activitybasedcosting

Radical Processinnovation Notmeaningful

Innovation (reengineering,business
processredesign)
Figure11
ApproachestoBusinessImprovement

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whilepracticingcontinuousimprovement,companiesneedtolearnhowtodo
bothconcurrentlyacrossdifferentprocesses,andcyclicallyforasingle
process.Ultimately,amajorchallengeinprocessinnovationismakinga
successfultransitiontoacontinuousimprovementenvironment.Acompany
thatdoesnotinstitutecontinuousimprovementafterimplementingprocess
innovationislikelytoreverttooldwaysofdoingbusiness.

Ourframeworkforprocessinnovationconsistsoffivesteps:identifying
processesforinnovation,identifyingchangeenablers,developingabusiness
visionandprocessobjectives,understandingandmeasuringexistingprocesses,
anddesigningandbuildingaprototypeofthenewprocessandorganization
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(FigureI2).Exceptingchangeenablers,eachstepisdiscussedinachapter
eachofthethreemajorenablersofchangemeritsitsownchapter.

AlthoughthesequenceoftheactivitiesinFigureI2mayvary,aspectsofthe
orderingareimportant.Selectingprocessesforinnovation,forexample,should
bedoneearlyinordertofocuseffortandresources.
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FigureI2
AHighLevelApproachtoProcessInnovation

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Ourhighlevelapproachalsopresumestheestablishmentofaninfrastructure
forprocessinnovation.Aswithanyprojectorientedbusinessinitiative,a
projectteammustbeselectedandtrained.Aspectsofteamselectionthat
influencethechangemanagementprocessarediscussedinChapter10.The
teaminfrastructurerequiredforinnovation,thoughsimilarinsomerespectsto
thatrequiredfororganizationwidecontinuousimprovement,3differsmost
significantlyintheneedforinnovationteamstobefamiliarnotonlywith
particularprocesses,butalsowiththeenablersofchangediscussedlater.

Notes
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1RichardD.Sanders,GipsieB.Ranney,andMaryG.Leitnaker,''Continual
Improvement:AParadigmforOrganizationalEffectiveness,"Surveyof
Business(Summer1989):1220.

2IkujiroNonaka,"TheKnowledgeCreatingCompany,"HarvardBusiness
Review(NovemberDecember1991):96104.

3H.JamesHarrington,BusinessProcessImprovement:TheBreakthrough
StrategyforTotalQuality,Productivity,andCompetitiveness(New
York:McGrawHill,1991).

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 Page27

Chapter2
SelectingProcessesforInnovation
Processinnovationmustbeginwithasurveyoftheprocesslandscapeto
identifyprocessesthatarecandidatesforinnovation.Boththeoveralllistingof
processesandthefocusonthoserequiringimmediateinnovationinitiativesare
crucialtothesuccessofinnovationefforts.Theselectionprocessestablishes
theboundariesoftheprocessesthataretobeaddressed,enablingafirmto
focusonthosemostinneedofradicalchange.
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TheprincipalactivitiesintheselectionprocessarelistedinFigure21.Thefirst
istoidentifythemajorprocessesintheorganization.Aninformedselectioncan
bemadeonlywhenalloftheorganization'sprocessesareknown.Asurvey
alsoservestodetermineprocessboundariesthathelpestablishthescopeof
initiativesforindividualprocesses.

EnumerateMajorProcesses

Considerablecontroversyrevolvesaroundthenumberofprocesses
appropriatetoagivenorganization.Thedifficultyderivesfromthefactthat
processesarealmostinfinitelydivisiblethe
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Enumeratemajorprocesses

Determineprocessboundaries

Assessstrategicrelevanceofeachprocess

Renderhighleveljudgmentsofthe"health"ofeachprocess

Qualifythecultureandpoliticsofeachprocess

Figure21
KeyActivitiesinIdentifyingProcessesforInnovation

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activitiesinvolvedintakingandfulfillingacustomerorder,forexample,canbe
viewedasoneprocessorhundreds.The"appropriate"numberofprocesses
hasbeenpeggedatfromtwotomorethanonehundred.Thethreemajor
processesidentifiedbyRockartandShortdevelopingnewproducts,
deliveringproductstocustomers,andmanagingcustomerrelationships1are
themselveshighlyinterdependentandHarvardresearchersworkingonorder
managementissueshavearguedforonlytwoprocesses(1)managingthe
productline,and(2)managingtheordercycle.2Awellknownmanagement
consultingfirmhasassertedthatthereareonlythreeorfour"core"processes,
thoughnotallbusinessactivitiesarepartoftheseprocesses.3Finally,atleast
onefirm,XeroxCorporation,hasidentifiedalargernumberofprocesses,but
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hasfocuseditschangeeffortsonthoseitconsidersmostcriticalorcore.IBM,
whichinthe1980shaddefinedatleast140processesacrossthecorporation,
istodayworkingwith18muchbroaderprocesses.

Theobjectiveofprocessidentificationiskeytomakingthesedefinitionsand
determiningtheirimplications.Iftheobjectiveisincrementalimprovement,itis
sufficienttoworkwithmanynarrowlydefinedprocesses,astheriskoffailure
isrelativelylow,particularlyifthoseresponsibleforimprovingaprocessare
alsoresponsibleformanagingandexecutingit.Butwhentheobjectiveis
radicalprocesschange,aprocessmustbedefinedasbroadlyaspossible.A
keysourceofprocessbenefitisimprovinghandoffsbetweenfunctions,which
canoccuronlywhenprocessesarebroadlydefined.Moreover,ifaprocess
outputisminor,radicallychangingthewayitisproducedislikelytoresultin
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suboptimizationor,atbest,onlyminorgains.

Asnotedearlier,mostofthecompaniesthathaveidentifiedtheirprocessesin
thecontextofprocessinnovationhaveenumeratedbetween10and20.Key
processesidentifiedbyIBM,Xerox,andBritishTelecom4arepresentedin
Table21.Theappropriatenumberofprocessesreflectsatradeoffbetween
managingprocessinterdependenceandensuringthatprocessscopeis
manageable.Thefewerandbroadertheprocesses,thegreaterthepossibility
ofinnovationthroughprocessintegration,andthegreatertheproblemsof
understanding,measuring,andchangingtheprocess.

Ourexperienceleadsustosettheappropriatenumberformajorprocessesat
between10and20.Withinthisrangewhich

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 Page29

Table21KeyBusinessProcessesofLeadingCompanies

IBM Xerox BritishTelecom

Marketinformation Customerengagement Directbusiness

capture

Marketselection Inventorymanagement Planbusiness

andlogistics

Requirements Productdesignand Developprocesses

engineering
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Developmentof Productmaintenance Manageprocess

hardware operation

Developmentof Technology Providepersonnel

software management support

Developmentof Productionand Marketproductsand

services operationsmanagement services

Production Marketmanagement Providecustomer

service
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Customerfulfillment Suppliermanagement Manageproductsand

services

Customerrelationship Information Provideconsultancy

management services

Service Businessmanagement Planthenetwork

Customerfeedback Humanresource Operatethenetwork

management

Marketing Leasedandcapitalasset Providesupport

management services

Solutionintegration Legal Manageinformation

resource

Financialanalysis Financialmanagement Managefinance

Planintegration Providetechnical
R&D

Accounting

Humanresources

ITinfrastructure

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leavesuswithsomecrossprocessactivity,butrenderseachprocesssmall
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Humanresources

ITinfrastructure

leavesuswithsomecrossprocessactivity,butrenderseachprocesssmall
enoughtobeunderstoodchangemanagementisonlyverydifficult,rather
thanimpossible.Constrictingtherangealsopermitsustoidentifyboth
operationalandmanagementprocessesandtofinddifferentapproachesto
redesigningeachtype.Thisdoesnotmeanthatalloftheidentifiedprocesses
willbeofthesameimportance,oreventhatinnovationswillbeidentifiedforall
ofthem.

Somefirmsmaywishtomaintainbothbroadandnarrowprocesses.While
addressingbroadprocessesinaninnovationcontext,theymayalsobe
workingonnarrowprocessesfromanimprovementcontext.Inordertoavoid
confusion,somemappingof

 Page30

narrowprocessestobroadprocessesshouldbedeveloped.Thatis,abroad
processlikeordermanagementshouldbebrokendownintoitsconstituent
processes(orsubprocesses,ifthatisthepreferredterminology).Themapping
neednotbeperfectanarrowprocess,forexample,couldcutacrosstwo
broaderprocessesbutitshouldprovidesomeorientationforallparticipants
inprocessmanagementinitiatives.Amongthefirmswehaveresearched,only
BritishTelecomhasdevelopedsuchahierarchyofbroadandnarrow
processes.

Whateverthenumberofprocessesidentified,theidentificationprocessshould
beunderstoodtobeexploratoryanditerative.Asaprocessbecomesthe
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focusforinnovationorimprovementefforts,itsboundariesandrelative
importancebecomemuchclearer.Mostcompaniesthathaveworkedontheir
processesforanumberofyearshaverevisedtheiroriginallists.

Certainstrategicplanningandsystemsplanningapproachesthathavea
businessprocessperspectivemaybeusefulforidentifyingprocesses.For
example,Porter'sframeworkfororganizingacompany'sbusinessactivities
emphasizestheusefulnessofidentifyingandexploitinglinkagesinthevalue
chainasameansofidentifyingbothcompetitiveopportunitiesandhighlevel
processes,5andIvesandLearmonthhavedevelopedagenericcustomer
resourcelifecyclethatdescribestheprocessbywhichacustomeracquires,
uses,anddisposesofresourcesasavehicleforidentifyingstrategicinformation
systems.6Neitheroftheseapproachesdescribesexplicitlyhowacompany
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shoulddefinetheseframeworksforitsownuse.

Inthecontextofbusinessprocessimprovement,Harringtonsuggestshaving
executivesjotdowntheprocessesforwhichtheyareresponsibleandanalyzing
anddistillingtheirliststoarriveatthecompany'sslateofprocesses.Thistop
downapproach,guidedbyourruleofthumbof10to20majorprocesses,can
befairlyeffective.Amajormanufacturingconcernusedasimilarapproachto
defineitskeyprocesses.Acandidatesetofprocesseswasdevelopedbythe
corporateprocessinnovationstaffandexternalconsultantsandpresentedto
seniorexecutives,whorefinedandrevisedtheprocesslistduringafacilitated
workshopdiscussion.

DetermineProcessBoundaries

Oncetheprocesseshavebeenidentifiedatahighlevel,theboundaries
betweenthoseprocessesneedtobemanaged.Because

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processdefinitionismoreartthanscience,boundariesarearbitrary.Anumber
ofquestionsmayhelptodefineboundaries,amongthem:

Whenshouldtheprocessowner'sconcernwiththeprocessbeginand
end?

Whenshouldprocesscustomers'involvementbeginandend?

Wheredosubprocessesbeginandend?

Istheprocessfullyembeddedwithinanotherprocess?
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Areperformancebenefitslikelytoresultfromcombiningtheprocess
withotherprocessesorsubprocesses?

Inasmuchastheendofanyprocessisthebeginningofanother,eitherwithinor
outsidetheorganization,processinnovationwilloftenresultinchangesto
upstreamanddownstreamprocesses.Consequently,processmanagementis
bestviewedasaniterativeactivity,inwhichsubsequentinnovationinone
processgivesrisetoaneedtoreinnovate,oratleastmodify,others.

AssessStrategicRelevance

Havingidentifiedtheboundariesofitsmajorprocesses,acompanymustselect
individualprocessesforinnovation.Ourexperiencesuggeststhatthescopeof
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theinnovationeffortshouldbebasedonanorganization'scapabilitiesand
resources.IBMhasinnovationinitiativesunderwayinall18ofitskey
processesatonce,butmostcompaniescannotsuccessfullydealwith
innovationonsuchascale.Evengivenaclearneedtoredesign,most
organizationswouldlacksufficientresourcespeople,funds,andtimetodo
so.Beyondresources,mostorganizationscouldnotendurethemagnitudeof
organizationalchangethatinnovatingallprocessessimultaneouslywould
precipitate.Anorganizationmustunderstandthelevelofchangeandupheaval
itcanendureandmustusethatknowledgetodeterminehowmanyprocesses
itcansuccessfullyinnovate.

Moreover,simultaneouschangeinmultipleprocessescanbedifficultto
coordinate.Becauseredesignedprocessesmuststillinterfacewithupstream
anddownstreamprocesses,processownersormanagersmustcommunicate
frequentlyaboutdirectionsandinterfacepoints.Ifchangesinoneprocessmust
becoordinated

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withchangesin,say,17others,itwillbeverydifficulttomakemuchheadway.

Nevertheless,somefirmsfindthattheymustworkongroupsofprocessesto
solveparticularbusinessproblems.Xerox,forexample,foundthattoaffectthe
timeittakestobringproductstomarketithadtoaddressnotonlyitsproduct
designandengineeringprocesses,butalsoprocessessuchasmanufacturing,
service,andlogistics.Similarly,IBMdiscoveredthattospeeddeliveryof
custombuiltproductstocustomers,ithadtoaddresstheproduction,logistics,
andcustomerfulfillmentprocesses.

Mostcompanieschoosetoaddressasmallsetofbusinessprocessesinorder
togainexperiencewithinnovationinitiatives,andtheyfocustheirresourceson
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themostcriticalprocesses.Eachsuccessfulinitiativebecomesamodelfor
futureefforts.Wehaveidentifiedfourcriteriathatmightguideprocess
selection:(1)theprocess'scentralitytotheexecutionofthefirm'sbusiness
strategy,(2)processhealth,(3)processqualification,and(4)manageable
projectscope.Ideally,allfourfactorsshouldfavortheselectionofaparticular
processinpractice,resultsareoftenambiguous,anddifferentialweightingof
thefactorsmustbeapplied.

Themostobviousapproachtoprocessselectionistoselecttheprocesses
mostcentraltoaccomplishingtheorganization'sstrategy(thispresumesthatthe
organizationhasawellarticulatedstrategy).Manyfirms'strategies,for
example,focusonimprovingrelationshipswithcustomers.Oneaspectofa
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customerfocusedstrategyistheprovisionofsuperiorcustomerserviceat
everypointatwhichcustomerandenterprisemeet.Suchcompaniesarelikely
toselectforinnovationprocessesatthecustomerinterface,suchasorder
managementandcustomerservice.Inamoreformalapproach,the
associationsbetweenbusinessgoalsandbusinessprocessesareidentifiedand
somesortofprioritizationisdone,based,forexample,onthenumberand
importanceofgoalstheprocesssupports.Thisapproachtoprocessselection
ispartofanumberofplanningandimprovementmethods.7

Selectiononthebasisofhealthtargetsredesignprocessesthatarecurrently
problematicandinobviousneedofimprovement.Amongthemanysymptoms
ofunhealthyprocessesistheexistenceofmultiplebuffers,reflectedinworkin
processqueuingupateachstep.Onestudyofidleversusprocessingtimefor
workinprocessrevealedthat,fortheaverageprocess,actualworkingtime
comprisesonly.05%to5%oftotalelapsedtime.8IBMCredit

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Corporationdiscovered,forexample,thatvalueaddedtimeforthefinancing
approvalprocessamountedtoonly90minutesoutofathreetofourday
cycletime.Wehaveseenseveralinsurancecompaniesinwhichthetimespent
activelyprocessingandunderwritinganinsurancepolicywasonlytwoorthree
hours,inanoverallprocesscycleofmorethan20days.Processhealthisalso
suspectifaprocesscrossesmanyfunctionsandinvolvesmanynarrowly
definedjobsorhasnoclearownerorcustomers.Goodindicatorshereareif
noonegetsupsetwhentheprocessproductislateoroverbudget,ornoone
issurewhomtocallwhendeficienciesarenoted.

ProcesshealthassessmentatCignaisaidedbyaprocessinnovationgroup
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createdbytheinsurancecompanytoassistbusinessunitsintheirprocess
innovationefforts.Uponreceivingarequestfromabusinessunit,thegroup
conductsabriefstudytoevaluateopportunitiesforprocessimprovement.The
groupthenadvisesthebusinessunitwhethertoproceedwiththeinnovation.9
AmongthefirstprocessesCignaselectedforinnovationwereinreinsurance,a
relativelysmallbusinessinwhichitwaslosingground.Believingthatthe
divisionhadnochoicebuttopursueradicalchange,theheadofthebusiness
unittoldheremployees:"Ifwesucceed,halfofuswillnolongerhaveajobin
thisdivision.Ifwefail,noneofuswill."

Evenafteraspecificprocesshasbeenselected,theenterprisemustdefinethe
processinawaythatresultsinamanageableinnovationprojectscope.Some
ofthecommonwaysofdefiningtheprocessarebygeographyorbyproduct
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line.Onemanufacturerseekingtoimprovetheproductdevelopmentprocess
decidedtofocusonitsmostprofitableproductline.Afarachievingdramatic
resultsforthisproduct,thenextstepwastobeginintroducingtheother
productstothenewprocess.

Afinalpointregardingprocessselectionrelatestoprocess"qualification,"an
activityweobservedinnearlyeverycompanyinwhichweobservedprocess
innovation.Theprimarygoalofprocessqualificationistogaugethecultural
andpoliticalclimateofatargetprocess.Aprocess"consultant,"akeyrole
discussedinalaterchapter,isengagedtoselectonlyprocessesthathavea
committedsponsorandexhibitapressingbusinessneedforimprovement.
Wherecommitmentislukewarmorthebusinessneedlessthandramatic,the
consultantwouldbeexpectedtoadviseagainstattemptingprocessinnovation.

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Thedeterminationofhighpriorityprocessesisoftenfairlyobvious.At
ContinentalBank,becausethefirmhadfocusedheavilyonbuildingbroad
relationshipswithcorporatecustomers,therelationshipmanagementprocess
wasanaturalplacetostart.AtBethlehemSteel,theprocessofschedulinga
customerorderintotheproductionschedulewaschaoticandinefficientand
oftenledtocustomerdissatisfactionandsalesforcefrustration.Therefore,the
customerserviceprocess,whichincludedproductionscheduling,wasaneasy
selection.WhenFederalMogul'sChassisProductsDivisionanalyzedits
business,executivesconcludedthatthefailuretodelivernewproduct
prototypesquicklywasamajorimpedimenttoincreasedsales.Applying
radicalchangetothisprocesswasthennotadifficultdecision.
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Regardlessofhowmuchcareistakenintheidentificationandselectionof
processes,theprocesslandscapewillalmostinevitablychangewithtimeand
experience.Thefirmswehavestudiedspentseveralyearstravelingthe
processinnovationpath,inthecourseofwhichmostchangedthenumberof
processestheydefined,theboundariesofindividualprocesses,andtherelative
prioritiesofprocessesascandidatesforinnovationinitiatives.

TheFateofProcessesNotSelected

Processesnotselectedforearlyinnovationinitiativesmuststillbeaddressed.
Recognizingthatitcanonlybeapproximate,sincebusinessdirectionsoften
changequicklyandtheresourcesforprocessinnovationmayriseandfall
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unpredictably,weadvisecreatingatimetableforinitiatinginnovationefforts.
Wedonotrecommendextendingsuchatimetableovermorethanthreeyears,
sincebeyondthisperiodpredictionsofbusinesspriorityandresourcesare
likelytobepoor.Finally,innovationinitiativesshouldbeundertakensoonafter
detailedprocessqualificationactivities,sincemanagementcommitmentsand
processcapabilitiesarealsovolatileoveraperiodofseveralyears.

Anotheralternative,discussedinthepreviouschapter,istoapplyprocess
improvementtoprocessesnotselectedforinnovation.Thisposestwo
problems.One,processimprovementreliesonacompletelydifferentsetof
methodsandapproaches.Andtwo,itisdifficulttoapplyincremental
improvementtoprocessesscopedbroadlyforpurposesofachievingradical
change.Becausethebottomup,participativenatureofprocessimprovement
presumes

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aprocessthatworkersatlowerlevelsintheorganizationcangettheirarms
around,itmaybenecessarytobreakuptheprocessintolessunwieldy
subprocesses.Shoulditlaterbecomeacandidateforaninnovationinitiative,
theprocesscanbeattackedinitsbroaderform.

Atleastonefirm,IBM,ispursuingimprovementeffortsconcurrentlywith
processinnovationwithinthesameprocess.Theinnovationeffortsfocuson
broadprocesses,theimprovementeffortsonnarrowerconstituent
subprocesses.ButitisnotcleartomanylowerlevelIBMprocess
improvementteamshowtheireffortsrelatetotheenterpriselevelprocess
innovationinitiatives.Althoughthenotionofconductingtopdowninnovation
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andbottomupimprovementatthesametimemightseemappealing,muchof
theprocessimprovementactivityislikelytobefornaught,inasmuchasteams
mightstrivetoimprovenarrowprocessesthatdonotevenexistinthenew
processdesign.Whenevertheseactivitiesaretobeattemptedsimultaneously,
itshouldbemadecleartoallpartiesthattheimprovementsarelikelytobe
shortlivedandshouldthereforebeimplementedquicklyiftheyaretoyieldany
benefit.

Summary

Identifyingandselectingprocessesforinnovationisanimportantprerequisite
toprocesschange.Butthisstepisalsosignificantinitsownright.Without
somefocusoncriticalprocesses,anorganization'senergies,resources,and
the publisher, except fair uses permitted under U.S. or applicable copyright law.

timewillbedissipated.Especiallyduringtheearlyphasesofprocess
innovation,itisimportantthatanorganizationdemonstratesomesuccesses.It
candosoonlyifitisselectiveintheprocessesitchoosestoinnovate.

Afteraprocesshasbeenselectedforinnovation,afirmcanbegintothink
abouthowitwillcreatequantumimprovementsintheprocessandwhat
changetoolsitwillemploy.Thenextthreechaptersaddresstheissueofhow
radicalchangeinprocessdesignsisenabled.Eachconsidersadifferentenabler
ofprocesschange.Chapter3beginsthisdiscussionwithanindepthanalysis
oftheroleplayedbyinformationtechnologyinprocessinnovation.Chapters4
and5addresstheenablersofinformationandhuman/organizationalfactors.

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Notes

1JohnF.RockartandJamesE.Short,''InformationTechnologyandtheNew
Organization:TowardsMoreEffectiveManagementofInterdependence,"
workingpaperCISR180,MITSloanSchoolofManagement,Centerfor
InformationSystemsRasearch,September1988.

2BensonP.Shapiro,JohnJ.Sviokla,andV.KasturiRangan,"ItFellThrough
theCracks,"9591098.Boaton:HarvardBusinessSchool,1991and
Sviokla'spresentationatErnst&Young,October1990.

3RobertB.KaplanandLauraMurdock,"CoreProcessRedesign,"
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McKinseyQuarterly2(Summer1991):2743.

4BritishTelecomhasidentifiedmultiplelevelsofprocesses.The15listedin
Table21areatthesecondlevelthefirstlevelprocessesare:(1)Managethe
Business,(2)ManagePeopleandWork,(3)ServetheCustomer,(4)Runthe
Network,and(5)SupporttheBusiness.

5MichaelE.Porter,CompetitiveAdvantage:CreatingandSustaining
SuperiorPerformance(NewYork:FreePress,1985).

6BlakeIvesandGerardP.Learmonth,'"TheInformationSystemasa
CompetitiveWeapon,"CommunicationsoftheACM(December1984):
the publisher, except fair uses permitted under U.S. or applicable copyright law.

11931201.

7MauriceHardakerandBryanK.Ward,"GettingThingsDone,"Harvard
BusinessReview(NovemberDecember1987):112120.

8GeorgeStalk,Jr.,andThomasM.Hour,CompetingAgainstTime(New
York:FreePress,1990).

9MarleneAmmarito,director,Agency&FinancialSystems,CignaSystems
presentationatManagementintheInformationTechnologyEra,R&DForum,
WorkshoponOrganizationalTransformation,Cambridge,Mass.,October
2223,1990.

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Chapter6
CreatingaProcessVision
Creatingastrongandsustainedlinkagebetweenstrategyandthewayworkis
doneisanenduringchallengeincomplexorganizations.Becausebusiness
processesdefinehowworkisdone,wearedealingwiththerelationship
betweenstrategyandprocess.Processinnovationismeaningfulonlyifit
improvesabusinessinwaysthatareconsistentwithitsstrategy.Infact,
processinnovationisimpossibleoratleastonlyaccidentalunlessthelens
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ofprocessanalysisisfocusedonaparticularlystrategicpartofthebusiness,
withparticularstrategicobjectivesinmind.Eventhepowerfulenablersof
processinnovationdiscussedaboveshouldbeapplied,notindiscriminately,but
inthecontextofastrategicfocus.Earlier,wediscussedtheselectionof
strategicprocessesforinnovation.Here,thefocusisonembodyingan
organization'sstrategyinavisionofthefutureprocessstate.

Inspiringavisionforoperationalprocessesclearlyisnottheonlyrolefor
strategy.Highquality,lowcycletimeproductsandservicesareonlyusefulif
theyfittheexternalenvironmentandsatisfyacustomerdemand.Thisisnot
alwaysthecasewithcompaniesthatmakequalitywhichisnotastrategy,but
awayofimplementingstrategyakeyaspectoftheirstrategies.Examplesof
thisproblemabound.Adefenseindustrythathasinvestedheavilyinqualityata
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timewhengovernmentsaredeterminedtospendlessondefensemightbetter
havedevotedresourcestofindingcommercialmarketsforitsproductsand
expertise.TheCadillacdivisionofGeneralMotorswontheMalcolmBaldrige
qualityaward,yetcontinuestolosemarketsharetoLincolnMercury,even
amongbuyersofAmericanluxurycars.1Thislackoffitbetweenoperations
andstrategyhasbeencalled"thesixsigmabuggywhipcompany"problem.

Congruenceoralignmentbetweenstrategiesandprocessesisessentialto
radicalchangeinbusinessprocesses.Strategyandprocessobjectivesmust
reinforceoneanotherandechosimilarthemes.Theconceptofstrategic"fit"is
notnewitunderliesthe

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notionoffitasdevelopedbyJamesBrianQuinn,2andAnthonyAthosand
RichardPascale's"7S"model,whichcallsforalignmentamongstrategy,
structure,style,systems,skills,staff,andsuperordinategoals.3

Whatismissinginthediscussionsofstrategyexpertsisthenotionofprocess
orprocessinnovation.Fitbetweenstrategyandprocess,alwaysimportant,is
particularlyimportantwhenthegoalisradicalbusinesschange.Awelldefined
strategy,inparticular,isessentialtoprovidebothacontextforprocess
innovationandthemotivationtoundertakeit.Radicalchangecannotbe
accomplishedwithoutcleardirection.

Butstrategycannotmotivateinnovationintheabsenceofawelldefined
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processvision.Aprocessvisionconsistingofspecific,measurableobjectives
andattributesofthefutureprocessstateprovidesthenecessarylinkage
betweenstrategyandaction.Unlesssuchavisionissharedandunderstoodby
alltheparticipantsinaprocessinnovationinitiativebeforeredesignbegins
theeffortwillalltooeasilyslipfrominnovationtoimprovement.

Useoftheterms"processsimplification"or"processrationalization"ina
processchangeinitiativeusuallyindicatesthatnovisionispresent,andthatonly
marginalchangeislikelytobeachieved.Thesetermspertaintotheelimination
ofobviousbottlenecksandinefficiencies,withnoparticularbusinessvisionas
context.Rationalizationhasalongtraditioninindustrialengineering,as
evidencedina30yearoldmanufacturingorientedreferencenotefromthe
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HarvardBusinessSchool:
Agoodmanager...isexpected...toshowthatjobimprovementor
simplificationofworkisnotonlyimportantbutalsoisbasedoncommonsense
questioningaimedatuncoveringtheeasiest,mosteconomicalwayof
performingajob.4

Processinnovationismuchmorethanrationalizationorsimplification,and
morethancommonsense.Itquestionsconventionalwisdomaboutwhatis
easyandeconomicalandthusattimesleadstomorecomplex,ratherthan
simpler,processes.PhoenixMutualInsurance'snewunderwritingprocess,
whichspeededunderwritingbymakingactivitiesparallelratherthanserial,isa
muchmorecomplexprocessthanitspredecessor,5andFederalMogul'snew
processforproducingautomobilecomponentprototypes,thoughithasmore
stepsthantheoldprocess,takesonesevenththetime.Notonlyare
rationalizationandsimplificationinvalidobjectivesforprocessinnovation,they
canbedistracting

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orevenmisleadingasawayofcommunicatingwhattheeffortisallabout.

Processvisions,likestrategies,shouldbeeasytocommunicatetothe
organization,nonthreateningtothosewhomustimplement(orwhoareaffected
by)them,andasinspirationalasmeasurabletargetscanbe.Thesecriteria
generallymakecostorheadcountreductionobjectiveslessthansatisfactory,
sincetheyarerarelyinspiringandarealmostcertaintobeperceivedas
threateningbyemployees.Whencostreductionistheultimateobjective,it
shouldbemixedwithotherintermediateobjectives,suchastimereductionor
qualityimprovement,thatmightleadtocostsavings.Intheseveralfirmswe
haveobservedinwhichcostsavingsisthestatedrationaleforprocess
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innovationinitiatives,therehasbeenanotablereluctancetoparticipateinor
otherwiseaidtheprogram.

Althoughtheempiricalevidenceisslight,webelievethatfirmsthathavequality,
improvedworklifeorlearning,ortimeorientedobjectivesoftenachievecost
reductionintheirprocessinnovationinitiatives,whilethosethatstriveonlyfor
costreductionmaynotachieveeventhat.Thefutilityoffocusingexclusivelyon
costwasobservedinanErnst&Youngsurveyoffactorsleadingtoproduct
competitiveness,6thoughitdidnottakeanexplicitprocessperspective.

Processchangewithoutstrategyandvisionseldomgoesbeyondstreamlining,
witharesultingincrementalreductionintimeandcost.Evenprocess
improvementismostvaluableinastrategiccontextstreamliningismostuseful
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inareasthatreallymattertoabusiness.Changeismuchmorelikelytobe
successfullyimplementedbyandtobenefitabusinesswhenitisfocusedon
whatmattersmost.GeneralElectric'scorporatewide"WorkOut"programfor
eliminatingunnecessarywork,forexample,isfocusedonnoparticularbusiness
strategyotherthanproductivityimprovementandlacksspecificobjectives
regardingthelevelofworktobeeliminated.Amasterpieceofemployee
communicationthatencouragesoverworkedemployeestotrytofindwaysto
reducetheirownworkloads,theprogramhasbeenpraisedinthepopular
press,andanalysishasrevealedexamplesoffunctionalproductivity
improvements.7ButseveralmanagersweinterviewedreportedthatWorkOut
hadyieldedatbestincrementalresults,andthattheprogram'smethodswere
betterdescribedasprocessimprovementthaninnovation.

FarmoreimpressiveresultshavebeenachievedbyGeneral

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ElectricinamorefocusedeffortatitsSalisbury,Maryland,electrical
equipmentplant.Thisplant'sbusinessstrategywastoreverseseveralyearsof
poorfinancialresultsinthecircuitbreakerbusinessthroughinnovationin
process,organizationalstructure,andtechnology.Theplantadoptedself
managingworkteams,establishedelectroniclinkageswithcustomers,and
developedhighlyvisiblemeasuresofprocessperformance.Theseprocess
innovationshavereducedcustomercomplaintstenfold,costsby30%,and
deliverycyclesfromthreeweekstothreedays.

ThiscontrastoftwooperationalimprovementinitiativesatGEsuggeststhat
businessunitsaretheappropriatelocusforprocessinnovationefforts.When
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multiSBUcorporationsdefinestrategiesatthecorporatelevel,theygenerally
involvefinancialormarketshareobjectivessuchasGE'sdesiretobethe
largestorsecondlargestbusinessineveryindustryinwhichitparticipates.It
maynotbepossibleforanorganizationthesizeofGeneralElectrictodefineat
thecorporatelevelstrategiesthatcaninspireprocessinnovationinspecific
businesses.

Keyactivitiesrequiredtocreatevisionsforprocessinnovationarelistedin
Figure61.Afirm'sbusinessstrategyprovidestheoverallcontextforan
innovationeffortandisassumedtobeaninputintotheinnovationinitiative.The
primaryoutputisprocessvision,consistingofspecificobjectivesand
attributes.
the publisher, except fair uses permitted under U.S. or applicable copyright law.

Inthischapter,wediscusshowbusinessstrategyshouldinformprocessvisions
andwhatrolecustomerperspectivesandexternalbenchmarkingshouldplayin
formulatingthem,andweconsiderindepthwhattheircontextoughttobe,
includingperformanceobjectivesandspecificprocessattributes.

Figure61KeyActivitiesinDevelopingProcessVisions

Assessexistingbusinessstrategyforprocessdirections

Consultwithprocesscustomersforperformanceobjectives

Benchmarkforprocessperformancetargetsandexamplesof
innovation

Formulateprocessperformanceobjectives

Developspecificprocessattributes

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AssessingExistingBusinessStrategy

Whereasmostrecentliteratureonstrategyandvisionfocusesonthecontentof
strategyandtheformulationofstrategicpositionrelativetoenvironment,
customers,competitors,andsoforth,8hereweareconcernedwiththe
implementationofstrategyasameanstoguideandinspireprocessinnovation.
Definitionsofstrategyandvisionabound.Weviewstrategyaslongterm
directionalstatementsonkeyaspectsofafirmorbusinessunit,andvisionasa
detaileddescriptionofhow,andhowwell,aspecificprocessshouldworkin
thefuture.Visionisthusmoretacticalthanstrategy,althoughbothmustbe
formulatedatahighlevel.Moreover,astrategyshouldbevisionary(i.e.,look
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intothefuture),andavisionstrategic(i.e.,haveabroad,keyissuefocus).This
givesrisetopossibilitiesforconfusion.

Weassumeforpurposesofthisbookthatawelldefinedbusinessstrategyis
antecedenttoaprocessinnovationinitiative.Wedonotassumethatthereisa
single,correctstrategyforanindustryorproduct.Companiescansucceed
withverydifferentstrategiesaslongastheyarewellexecuted.

Adefinedstrategyisaprimarydeterminantinboththeselectionof,and
developmentofprocessvisionsfor,processestobeinnovated.Therolesof
businessstrategyandotheraspectsofafirm'senvironmentinselecting
processesforinnovationwerediscussedearlierhere,weexaminethe
relationshipsbetweenstrategyandprocessvisions.
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Becauseitbearsaheavyloadinestablishingacontextforprocessinnovation,
astrategy,inadditiontopositingabroadviewofafuturestate,mustalsomeet
thefollowingcriteria.

Strategyshouldbeatleastpartiallynonfinancial.Revenue,profitability,
orROIbasedvisionsoftenlackmeaningforthosewhowillnotnecessarily
benefitfromtheirachievement(i.e.,mostemployees).Nordosuchvisions
helpemployeesunderstandhowtheirtargetsaretobeachieved.Itis,infact,
alltooeasyforexecutivestostatefinancialstrategieswithoutknowinghow
theywillbeachieved.Financialgoals,thoughimportant,mustbecombinedina
balancedwaywithprocessandproductorientedgoals.

Thecomponentsofastrategyshouldultimatelybemeasurable.
Nonfinancialstrategiesarenotaseasilymeasuredas

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financiallyorientedstrategies.Yetastrategyismeaninglessunlessprogress
towarditsgoalscanbeassessed,arequirementfrequentlyviolatedinmany
companiesasnotedintheliteratureonnonfinancialperformancemeasures
9
and"strategiccontrol."10

Strategyshouldfocusanorganizationonspecificaspectsofitsbusiness
towhichprocessinnovationcanbeusefullyapplied.Tostrategizeabout
becominga"worldclass"companyisnotterriblyusefulbecomingtheworld's
bestatlogisticsanddistributionisamuchmoreworkablestrategy.

Strategyshouldbedistinctivetoanindustryandcompany.Weare
familiarwithmanysteelindustrystrategiesthatdon'tmentionsteel,airline
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companystrategiesthatdon'tmentionflying,andsoforth.Thisaspectof
strategy,althoughnotimportantinitself,rendersotherrequirementsmorelikely
tobemet.

Astrategyshouldbeinspirational.Inordertoinspire,astrategymustbe
clearlyunderstoodandmeaningfultoitsaudienceandbethegenesisofa
considerableamountofwork.Aninspirationalstrategycanprovideenergy
whensetbacksoccurorimplementationteamslosemomentum.Theemotional
contentofastrategyissometimescapturedinitsmissionstatement.Thisissue
hasoftenbeenignoredorpaidlipservice,butcompaniesthathave
acknowledgedithavehadsuccessfulresults.11
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Astrategyshouldbeforthelongtermfiveoreventenyears.Itshould
bebroadenoughtoencompassavarietyofopportunisticdirectionswithinits
overallcontext.12Thenotionofalongtermyetflexiblestrategyiscapturedin
therecentliteratureon"strategicintent."13Aflexiblestrategyshouldbecapable
ofaccommodatingmovementintonewbusinessesbuiltaroundinformationand
informationtechnology.Forexample,BaxterHealthcare,AmericanAirlines,
andanumberofotherfirmsthathavecreatedelectronicdistributionprocesses
nowusethemtodistributeproductswelloutsidetheirmainstreambusinesses
(inBaxter'scase,officesupplies,inAmerican's,flowersandcandy).

Themethodemployedtocreateastrategy,likethechange

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leversthatenableprocessinnovation,shouldbebroadlyfocusedand
addresskeytoolsforchange.Theplanningmethodthatbestseemstodo
soisscenariobasedplanning.14

Amongthecompaniespursuingprocessinnovationthathavestrategieswell
suitedtotheirprocessneedsisContinentalBank,whichhasastrategythat
callsforbeingabusinessbankthatprovidesexcellentservicetoasmall
numberofmediumsizedcustomers.ContinentalBank'schairmanThomas
Theobald'sfrequentspokenandwrittencommentsabouttheneedforradical
changeinbanksandbankingregulatione.g.,"Frankly,Ijustdon'tthinkthat
cutsof10or15percentwilldothejob"motivateinnovationratherthan
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improvement.15Continentalisstrugglingtoadheretoitsstrategyandachieve
strongfinancialresults,butitclearlyhascomealongwaysinceitsbankruptcy
intheearly1980s.

RankXeroxU.K.'sstrategicshiftfromsellingcopierstomarketingdocument
managementsystemsmightseemasubtledistinction,butthefirm'sexecutives
havedevelopedexplicitmeasuresofsuccess(e.g.,50%ofrevenuesfrom
systemsby1990)andorientednewprocessdesignstowardimprovingthese
measures.16Incontrast,IBMhaslaunchedanambitiousprocessinnovation
programbasedonastrategyof"marketdrivenquality,"which,though
admirableandlikelytoyieldsomebenefits,maynotbesufficientlyfocusedto
bringabouttrulyradicalchangeorinspirespecificandaggressiveprocess
visions.Indeed,inattacking18keyprocessessimultaneously,thecompanyis
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morelikelytoachieveprocessimprovementthaninnovation.17

Satisfyingtheforegoingcriteriaforstrategyimprovesafirm'schancesof
successinthesearchforprocessinnovation.Yetanyoftheserequirementscan
betakentoofar.Nonfinancialstrategiesmakesenseonlytothedegreethat
theyleadtobetterfinancialperformance.Overemphasisonmeasurabilityand
anoverlydetailedfocuscaninhibitbothastrategy'slongtermapplicabilityand
itsabilitytoinspireemployees.Strategy,moreover,providesonlyaninternal
perspectiveincreatingaprocessvision.Therearemanywaystoimplement
evenawelldefinedstrategy.Manyinnovativeideasforprocessdesignandthe
useofenablerscancomefromsourcesoutsidetheorganization,including
customers,competitors,andfirmsincompletelydifferent

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businesses.Toincorporatethesesourcesintoitsvisioningactivity,an
organizationmustincludeinitsprocessinnovationinitiativebothastructured
exercisetounderstandcustomerperspectivesandaroundofexternal
benchmarking.

CustomerInputsintoProcessVisions

Akeyaspectofcreatingaprocessvisionistounderstandthecustomer's
perspectiveontheprocess.Asnotedpreviously,thecustomerofaprocess
canbeeitherinternalorexternaltothefirminpractice,mostfirmsaremore
concernedabouttheperspectivesofexternalcustomers,andthereforeplacea
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highpriorityoncustomerfacingprocesses.

Askingcustomerswhattheyrequireofprocessesservesmultiplepurposes.In
thecontextofcreatingvisions,thecustomerperspectivefurnishesbothideas
andobjectivesforprocessperformance.Seekingcustomerinputalso
demonstratesadesireforacloserelationship,althoughthisinputmustbe
actuallyfactoredintoprocessdesignstofullyachievethisobjective.Finally,
newprocessesmayrequirethatcustomerschangetheirownbehaviorforthe
processtobefullyeffective.Seekinginputatanearlystagestartsbuilding
customercommitmenttotheneededchangesandletscustomersbegintheir
ownprocesstransition.

Ofcourse,mostprocesseshavemultiplecustomers.Itisoftennotveryuseful
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totreatallcustomersequallyawrittenquestionnairesenttohundredsof
customers,forexample,willseldomdelivermeaningfulresults.Itismuchmore
valuabletoselectalimitedsetofcustomers,basedeitherontheirimportance
tothefirmortheirability(andwillingness)tofurnishthoughtfulinput,andspend
moretimewitheachone.Focusingonafewcustomersalsoallowsforless
structuredinterviewprocessesinwhichinnovativeideascanbesought.

Thetypeofinputsthatshouldbesolicitedfromcustomersarebroad,
encompassingdesiredprocessoutputs,performance,flow,enablers,andother
relevantfactors.Themethodofcustomercontactmaytakeseveralforms.A
focusgroupmaybethebestwaytodealwithindividual,ratherthan
organizational,customers.Somefirmsprefertosendconsultantstotalkto
customers,sothattheywillnotholdbackontheirtruefeelings.Otherfirms
wouldneverpassupanopportunitytobuildcloserpersonalrelatioushipswith
customerexecutives.Sometimesthesolicitation

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ofopinionsfromcustomerscanbedoneinaninformalsetting.Forexample,
thediscussionsthatledtoProcter&Gamble'scontinuousreplenishment
processesforWalMarttookplaceduringafishingtripbySamWaltonanda
P&Gexecutive.

Inourexperience,customersrarelyprovidebreakthroughideasforprocess
innovations.Instead,theirobjectivesaretoimprovetheexistingprocess
incrementally:''Iwouldliketohavemoreontimedeliveries."Thesetypesof
inputsareimportant,however,becausetheyspecifytheareasinwhich
innovationshouldtakeplace.Ifthecustomerfeedbackprocessissomewhat
iterative,takingplacethroughoutaprocessinnovationinitiative,customerscan
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reacttosuccessivelymoreconcreteprocessdesigns.Asistrueforuser
participationinthedesignofinformationsystems,customersoftendonotknow
whattheywantuntiltheyseewhattheycanget,oruntiltheyseesomethingthat
theyknowtheydon'twant.

ProcessBenchmarking

Aspracticedinthequalitymovement,benchmarkinghelpscompanies
formulateobjectivesforcontinuousimprovementprograms.Butitcanalsobe
aneffectivetoolfordeterminingprocessobjectivesandidentifyinginnovative
processattributes.Insofarasitenablescompaniestolookoutsidefor
alternativewaysofdesigningprocesses,benchmarkingcanhelptobreaka
company'sinwardlyfocusedmindset.
the publisher, except fair uses permitted under U.S. or applicable copyright law.

Mostappropriateforthepurposesofprocessinnovationisa"bestpractice"or
"innovation"benchmarkthatselectscompaniesonthebasisoftheperformance
ofaparticularprocess,withoutregardtotheindustry,andaddressesspecific
innovationsandusesofchangeenablersaswellasoverallprocess
performance.Acompanyattemptingtoinnovateitsordermanagement
process,forexample,mightstudyDigitalEquipmentCorporation'sexpert
systemsforautomatedconfigurationorUSAA'sempoweredcustomerservice
representatives,whereasafirmstudyingnewproductdevelopmentmight
analyzehowJ.C.Penneyemploysvideoconferencingtoplacenewfashion
designsinstores.Benchmarkingcanidentifyrealisticperformanceobjectives
andtargetcharacteristicsforcompaniestomatchorsurpass,informationthat
canbeusedduringinnovationbrainstormingworkshopstofueltheredesign
process.

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Innovationbenchmarkingneednotfocusonthetraditionalconcernsof
benchmarking.Processmeasuresandcostsmayhelptoestablishobjectives
foranewprocess,butevenapoorlyperformedprocessinapoorly
performingcompanycanhaveinnovativeaspects.Itisalsoimportantto
benchmarkdistinctiveusesofenablersandinnovativeworkdesigns.Even
relativelynarrowaspectsofprocessescanbeworthyofanalysis.Severalfirms
thatareredesigningtheirordermanagementprocesses,forexample,have
visitedadivisionofAT&Tinwhichfieldpersonneluselaptopcomputersand
portablenetworkingtoworkwithoutoffices.Thisinnovation,althoughitdoes
notcompriseacompleteprocess,canbeanimportantcomponentofanorder
managementapproach.
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Otherindustryinnovationsshouldnotbeneglectedinformulatingtheobjectives
andattributesofaprocessvision,butmanagersmaybemorereadilydisposed
toadoptinnovationsforwhichthereisevidenceofuseintheirownindustry.
Benchmarkersmustthereforestrikeabalanceinpresentingvaluablecross
industryinnovationsandclearlycompetitive,relevantwithinindustry
innovationslikelytogainquickacceptance.

Thesourcesofbenchmarksarevaried,rangingfromcompanyvisitsto
telephonediscussionswithconsultantsandexecutivesinotherfirmstoindustry
publicationsandacademiccasestudies.Becausethirdpartyaccountsof
processinnovationsmayglossoverimportantissuesorstopshortofthefinal
chaptersofastory,acompanyiswisetocontactbenchmarkedorganizations
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directlyatsomepointinthebenchmarkingprocess.Detailsofbenchmarking,
suchastheetiquetteofcontactingfirms,aresimilarforqualityandinnovation
orientedbenchmarking(seeCamp18forspecifics).

LinkingStrategyandExternalInformationtoProduceProcessVisions

Strategy,customerperspectives,.andexternalbenchmarksarenecessary,but
notsufficient,toestablishthecontextforprocessinnovation.Foraprocessto
betransformed,thecontextmustbemadeexplicitandoperationalthrougha
setofvisionsthatdefinethedesiredprocessfunctionality,specifychange
objectivesfortheredesignoftheprocess,andidentifyqualitativeattributes

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oftheprocess'sfuturestate.Thesevisionsprovidenecessarydirectionforthe
designteam.

Processvisionslinkstrategyandactiontheytranslatehighlevelstrategiesinto
measurabletargetsforprocessperformanceandunderstandablecharacteristics
ofprocessoperations,andtheysettargetsbothforthedesignersofaprocess
andforthosewhomustsubsequentlymanageit.Justasanalysisofcorporate
strategyiscombinedwithinformationfromexternalsourcestocreateprocess
visions,soprocessvisionsgiverisetoobjectivesandattributes(seeFigure6
2).
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FormulatingProcessObjectives

Processobjectivesincludetheoverallprocessgoal,specifictypeof
improvementdesired,andnumerictargetfortheinnovation,aswellasthetime
frameinwhichtheobjectivesaretobeaccomplished.Bothgeneralprocess
functionalityandchangegoalsshouldbeaddressedbytheseobjectives.

Processobjectivecreationbeginswithavisionteamaskingitself,andkey
stakeholders,"Whatbusinessobjectiveisthisprocesssupposedto
accomplish?"Thisanalysisshouldbroadlyaddress
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Figure62
Strategies,Visions,Objectives,andAttributes

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thefunctionsandvaluetheprocessisexpectedtobringcustomers.Toavoid
whatTedLevitthascalled"marketingmyopia,"itshouldconcernitselfnotonly
withtraditionaloutputsoftheprocess,butalsowithrealcustomerneeds.A
teamredesigningacompany'sordermanagementprocessmightdiscover,for
example,thatitscustomersneedadditionalservicestotakebetteradvantage
ofthecompany'sproducts,orcustomersmightbeinterestedinpurchasing
productsinalessfinishedstate.Theanalysisshouldalsoaddresstheaspects
ofthebusinessthataremostimportanttocustomers.Firmssometimesfindthat
theyarefocusingononeprocessobjectivewhenanotherismoreimportantto
customersforexample,stressingproductvarietywhencustomerswant
faster,morereliabledelivery,orstrivingforcostreductionwhencustomers
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wouldwillinglypaymoreforabetterproductorservice.

Processobjectivesmustbequantifiedasspecifictargetsforchange.Examples
ofquantitativeprocessobjectivesforvariousindustriesmightinclude:

reducenewdrugdevelopmentcycletimeby50%inthreeyears

doublecustomerservicesatisfactionlevelsintwoyears

reduceinvoluntaryemployeeturnoverto10%bytheendofthenext
fiscalyearand

reduceprocessingcostsforcustomerordersby60%overthreeyears.
the publisher, except fair uses permitted under U.S. or applicable copyright law.

Processobjectivesshouldbederivedfromstrategy.ContinentalBank's
strategyofbeingabusinessbanklednaturallytoaprocessobjectiveof
doublingrelationshipmanagers'timespentwithcustomers.Althoughthis
objectivewasappropriate,theexecutivewho"owned"customercontact(now
CEOofanotherbank)chosenottopublicizeittotherelationshipmanagers.

RankXeroxU.K.'sprocessvisionwasnotsoeasilyderivedfromitsstrategy
ofsellingsystemsratherthancopiers.Thestrategyappliedtonumerous
differentprocessesandwasdifficulttotranslateintospecificredesigngoalsfor
anyone.Thesubstantialbenefitsrealizedfromthefirstroundofprocess
redesign(e.g.,reducingjobsnotinvolvedincustomercontactandreducing
orderdeliverytimefrom33to6days),didnotreflectthelevelofbusiness
changedesiredbytheseniormanagementteam.Consequently,thecompanyis
undertakingasecondroundofprocess

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innovationinwhichtheobjectivesaremorespecificandmorecloselytiedto
currentstrategy.Thisroundshouldbemucheasierthanthefirst,becausethe
companynowhasastrongprocessorientation.

Processobjectives,likestrategies,shouldmeetanumberofestablished
criteria.Forexample,thelevelofchangetargetedshouldberadical.This
usuallymeansgreaterthan50%improvement.Somefirmshavemuchmore
ambitiousgoals.IBM,forexample,isattemptingtoreducetime,cost,and
defectsbyafactorof10by1992andbyafactorof100by1995.However
unlikelytheachievementofthesegoalsformostprocesses,establishingthem
hasclearlystimulatedagreatdealofworkbyprocessdesignteams,andsome
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improvementiscertaintobeachieved.

DevelopingProcessAttributes

Processattributes,thedescriptive,nonquantitativeadjuncttoprocess
objectives,constituteavisionofprocessoperationinafuturestate.They
addressbothhighlevelprocesscharacteristicsandspecificenablers.Process
attributesforanordermanagementprocess,forexample,mightspecifythatthe
processwillemployexpertsystemsbasedcreditchecking,automated
proposalgeneration,increasedworkerempowerment,andafinancialstructure
resemblingdealershipsforcustomerfacingteams.Otherattributesmight
specifythattheprocessbeperformedbyonepersonorteam,andthatcredit,
shipping,andschedulingfunctionswillbeperformedbythecustomerfacing
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individual.Itissometimesusefultocategorizeattributesas"technology,"
"people,""processoutputs,"andsoforth.

Processattributesmightbeconsideredprinciplesofprocessoperation.19Like
principles,theyaresimplestatementsthatdescribeanorganization's
philosophyandintentregardingprocessoperationsandcanbeaneffective
meansofengagingseniormanagersindiscussionsaboutvisionsfornew
processes.

Theenablersofprocessinnovationthathavebeenidentifiedasrelevantin
earlierstagesoftheinnovationinitiativealsobecomeattributesoftheprocess.
Thesemayinvolveinformation,informationtechnology,ororganizationaland
humanfactors.

Anexampleofanorganizationalattributeistocollapsethedivisionoflaborina
process,thatis,toorganizeitinsuchawaythattheentireprocessisoverseen
byasingleemployeeorgroup.

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Inmanybanks,forexample,relationshipmanagersareresponsibleforhandling
allaspectsofacustomerrelationship,andmanyhospitalsemploycase
managerstocoordinateallaspectsofapatient'sstay.

Anexampleofahumanfactorsattributeistopushdecisionmakingdownin
theorganization.Onemanufacturerthathadmadepricingdecisionsthe
responsibilityofthedivisiongeneralmanagermovedthatdecisionmaking
downintheorganizationtocrossfunctionalproductdevelopmentteamsin
doingso,itrealizedoverallcycletimeimprovements.Othercompanies,by
applyingthisattribute,haveeliminatedlayersofmanagementandhierarchy.

Acommontechnologyorientedattributeistheoffloading,wheneverpossible,
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ofprocessactivitiestoprocesscustomersbygivingthemaccesstothe
provider'scomputersystems.OnefuturevisionofFederalMogul'scustomer
drivenproductdevelopmentistoallowcustomerstoexamineitsonline
productcatalogtodeterminewhetheranexistingproductmightsatisfytheir
requirements,anactivitycurrentlyperformedbyproductengineers.Federal
Expressandotherfirmsintheshippingindustryhavegivencustomersterminals
tochecktheprogressofparcelshipments.

Theseareonlyafewexamplesofattributesthatmightbeemployedwithin
processvisions.Theenablersselectedbyadesignteam,alongwithinputsfrom
customers,externalbenchmarkingpartners,andthebusinessstrategy,should
suggestmanymore.
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WhenNCRreengineereditsordermanagementprocessin1988,asetof
attributes(called"goalstates"byNCR)weredevelopedaspartofthe
visioningactivity.Managersoftheinitiativecreditedthegoalstateswith
presenting"acaseforaction"andbeingavehicleforachievingbuyinby
processownersandparticipants.Amongthe20attributes(somewerereally
performanceobjectives)theydeclaredwerethefollowing:

linkordermanagementsystemsworldwide,butkeepthemlocal

createautomatedsalesassistanttoolsforproductinformationand
pricing

offerdirectshipmentsfrommanufacturingtocustomersno
warehousesand

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renderinvoicesandpaymentselectronically.

SincetheoriginalattributesweredefinedatNCR,theyhavecontinuedto
evolve.Astheenvisionedprocesswasimplemented,boththebusinessand
relevanttechnologycontinuedtochangeitwasonlynaturalthattheprocess
attributeswouldalsochangethroughtheimplementationperiod.

TheVisioningProcess

Processobjectivesandprocessattributesarederivedfrommultiplesources
amongthem,analysesofcorporatestrategyandvision,highleveloverviewsof
therolesoftechnologyandpeople(asbothopportunitiesandconstraints),
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customerinterviews,benchmarkingofthebestprocessesinothercompanies,
andafirm'sperformanceobjectivesduringvisioningsessionsatthebeginning
ofaspecificprocessinitiative.

Thesevisioningsessionsshouldbeaseriesofworkshops,withincreasing
specificityaboutthevisionateachstep(seeFigure63).Inearlierstagesof
theprocess,thefocusisonattributesandobjectives,asdescribedabove.
Afterthesehavebeenarticulated,laterworkshopscanaddressthecritical
factorsforthesuccessfulimplementationofthevision,andanybarriersthat
mightstandintheway.

Regardlessofthetopicfocus,allaspectsofthevisionmustbestatedwitha
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highdegreeofspecificity.Thespecificityofprocessvisionsisthesourceof
boththeirpowerandtheirdifficulty.Specificattributesandmeasurable
objectivesarepowerfulbecausetheyclearlyexpressthepurposeofprocess
innovationefforts.Butbecausetheymaybeformulatedwellbeforetheprocess
teambeginsdetailedanalysisoftheexistingprocess,theyaredifficultto
formulatewithaccuracy,andtheyrelyonpredictionmorethanprecision.A
processvisionshouldthereforebedeterminedonthebasisofwhatis
necessaryfromabusinessstandpoint,ratherthanwhatseemsreasonableor
accomplishable.

Processobjectivesshouldbestretchtargetsforanorganization.Unlesstheir
reachseemstoexceedanorganization'sgrasp,theywillnotmotivatedesign
teamstogobeyondincrementalimprovement.Animprovementobjectiveof
10%permitsateamtostreamlineaprocesstoeliminateastephere,a
personthere.

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 Page132
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the publisher, except fair uses permitted under U.S. or applicable copyright law.

Figure63
TheVisioningProcess"Howcouldwedothingsdifferently?"

Specifyinganobjectiveof100%improvementensuresthataprocesswillbe
examinedwithaneyetowardradicalchange.Thepurposeofstretchtargetsis
primarilybehavioraltoletdesignersandimplementersknowthatinnovation
andcreativityareexpected.Totargetlowlevelsofimprovement,ortosay,
"Let'sjustlookattheprocessandseewhatwecanget,"istoinvitemarginal
improvementatbest.

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 Page133

Avisionmustnotbecompletelyunrealizable.Adesignteamthatperceives,for
example,thatastretchobjectivecannotbeachievedeitherbecauseitis
unreasonableorbecauseenvironmentalconstraintsaretoogreatbecomes
disillusioned,alessonlearnedinresearchonhighcommitmentorganizations.20

Processobjectivesandattributesareimportantnotonlyfornew,butalsofor
existingprocesses.Asexplainedinthenextchapter,itisimportantto
understandanexistingprocessbeforedesigninganewone.Thisunderstanding
mustincludemeasurementoftheaspectsoftheprocessuponwhichthenew
processistoimprove,andcomparisonsoftheattributesoftheoldandnew
processes.Withoutanexplicitprocessvisionforanewprocess,itisdifficultto
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knowwhattoexamineintheoldone."Safe"measures,suchasthecostofand
timeconsumedbyanoldprocess,shouldnotbeexaminedtotheneglectof
other,morevisionspecificmeasures.

Processvisionsareameansofenablingsomedegreeofwiderparticipationin
anactivitythatneedstobedrivenfromthetopoftheorganization.Theyplace
ontheshouldersoflowerlevelmembersofprocessteamstheworkof
designingnewprocessestoachieveobjectivesandattributesclearlystatedby
seniormanagement.Becauseprocessteammembersaretypicallydrawnfrom
corporatestaffandmiddlemanagementgroups,itisnotaccuratetoreferto
processimplementationas"topdownvision,bottomupimplementation"at
best,implementationis"middleup."Themiddleranksofanorganizationwill
alsoberesponsibleformanagingthenewprocesstoachievefullbenefits.
the publisher, except fair uses permitted under U.S. or applicable copyright law.

Processvisionsandthestrategiesthatsupportthemarekeyelementsofa
contextforprocessinnovation.Likeotheraspectsofmanagementpractice,
clearstrategiesandvisionsareagoodideaforallcompanies,buttheyare
essentialtoprocessinnovation.

Seniormanagementplaysanimportantroleincreatingprocessvisions.The
foundationofHallmark'sinnovationeffortsisavisionofthecompany'sideal
futurestateasarticulatedbyitstop40managers.21Processinnovationteams
atXeroxareguidedbyXerox2000,acorporate,highleveldescriptionof
corecompetenciesforthemillenniumdevelopedbyseniormanagement,with
strategicgoalsforspecificprocessinitiativessuppliedbydivisional
management.Someseniormanagersmustbeparticipantsinprocessvisioning
activitiesothersmustbeawareoftheprocessvisionsthatresult.

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 Page134

Summary

Thecreationofprocessvisionsreliesonassessinganorganization'sstrategy,
gatheringexternalinputsintoprocessdesignandperformance,andtranslating
thisinformationintospecificprocessobjectivesandattributes.The
relationshipsamongthesefactorsmustnotbeoneway.Lessonslearned
throughprocessinnovationshouldinfluencestrategy.Ifprocessorientationis
tobecomeakeydeterminantofhowbusinessisconducted,resultsofprocess
managementshouldfeedbackintoallaspectsoftheorganization.Strategies
shouldeventuallybephrasedintermsofwhichprocessesmustbechanged,
andtheirsuccessmeasuredthroughprocessgeneratedinformation.Objective
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settingshouldbetiedtoresultsachievedinpreviousprocesses.

Asfirmsbecomemorecomfortableandexperiencedwithinformationand
informationtechnologyasenablersofprocessinnovation,strategiesand
objectivesshouldshifttobetterexploitthesecompetitiveresources.
Informationmanagement,whenitbecomesacorecompetence,opensentirely
newcompetitivealternatives,includingthesaleofinformation,information
managementservices,andalternativeproductsthroughinformationbased
channels.22

Thusfar,wehavefocusedprimarilyonshapingdesignsfornewwaysofdoing
business.Butthecurrentprocessmustalsobethefocusofanalysis,bothin
termsofunderstandingandmeasurementandintermsofshortterm
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improvement.Itistothisthatweturninthenextchapter.

Notes

1JeremyMain,"IstheBaldrigeOverblown?,"Fortune(July1,1991):6265.

2JamesBrianQuinn,StrategiesforChange:LogicalIncrementalism(New
York:RichardD.Irwin,1980).

3AnthonyG.AthosandRichardT.Pascale,TheArtofJapanese
Management:ApplicationsforAmericanExecutives(NewYork:Warner
Books,1982).

4"ReferenceNoteonWorkSimplification,"9609060.Boston:Harvard
BusinessSchool,1961.

5B.Birchard,"RemakingWhiteCollarWork,"Enterprise(DigitalEquipment
Corporation:Winter1990):1924.

6WilliamSmith,TheAmericanCompetitivenessStudy:Characteristicsof
Success(NewYork:Ernst&Young,1990).

7ThomasA.Stewart,"GEKeepsThoseIdeasComing,"Fortune(August
12,1991):4149.

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 Page135

8MichaelE.Porter,CompetitiveStrategy:TechniquesforAnalyzing
IndustriesandCompetitors(NewYork:FreePress,1980)andMichaelE.
Porter,CompetitiveAdvantage:CreatingandSustainingSuperior
Performance(NewYork:FreePress,1985).

9RobertG.Eccles,''ThePerformanceMeasurementManifesto,"Harvard
BusinessReview(JanuaryFebruary1991):131137.

10See,forexample,MichaelGoold,"StrategicControlintheDecentralized
Firm,"SloanManagementReview(Winter1991):6981.

11AndrewCampbell,MarionDevine,andDavidYoung,ASenseof
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Misssion(London:EconomistBooks,1990).

12SeeDanielJ.Isenberg,"TheTacticsofStrategicOpportunism,"Harvard
BusinessReview(MarchApril1987):9297.

13GaryHamelandC.K.Prahalad,"StrategicIntent,"HarvardBusiness
Review(MayJune1989):6376.

14Foradiscussionofscenariobasedplanning,seePeterSchwartz,TheArt
oftheLongView(NewYork:DoubledayCurrency,1991).

15ThomasTheobald,"RestructuringtheU.S.BankingSystemforGlobal
Competition,"JournalofAppliedCorporateFinance3:4(Winter1991):
the publisher, except fair uses permitted under U.S. or applicable copyright law.

2124.

16TheseRankXeroxstrategieshavebeensupplantedbyotherssincetheir
originalcreation.See"RankXeroxU.K.,OfficeSystemsStrategy(C):
DevelopingtheSystemsStrategy,"casestudyfromHenleyTheManagement
College,Soptember1988.AlsoseeThomasH.DavenportandJamesE.
Short,"TheNewIndustrialEngineering:InformationTechnologyandBusiness
ProcessRedesign,"SloanManagementReview(Summer1990):1127.

17Thoughinnovationinitiativesexistforthese18processes,therearesome
signsthatIBMisbeginningtofocusitsmajorinitiativesonasmallernumberof
processes.

18RobertC.Camp,Benchmarking:TheSearchforIndustryBest
PracticesThatLeadtoSuperiorPerformance(Milwaukee,Wis.:ASQC
QualityPress,1989).

19ThomasH.Davenport,MichaelHammer,andTaunoJ.Metsisto,"How
ExecutivesCanShapeTheirCompany'sInformationSystems,"Harvard
BusinessReview(MarchApril1989):130134.

20RichardE.Walton,"FromControltoCommitment:Transformationof
WorkforceManagementStrategiesintheUnitedStates,"inKimB.Clark,
RobertH.Hayes,andC.Lorenz,eds.,TheUneasyAlliance:Managingthe
ProductivityTechnologyDilemma(Boston:HarvardBusinessSchoolPress,
1985).

21AllanE.Alter,"TheCorporateMakeOver,"CIO(December1990):32
42.
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Account: -264756288 22Theconceptofcorecompetenceisdefinedanddiscussedwithreferenceto
 RobertH.Hayes,andC.Lorenz,eds.,TheUneasyAlliance:Managingthe
ProductivityTechnologyDilemma(Boston:HarvardBusinessSchoolPress,
1985).

21AllanE.Alter,"TheCorporateMakeOver,"CIO(December1990):32
42.

22Theconceptofcorecompetenceisdefinedanddiscussedwithreferenceto
strategyinGaryHamelandC.K.Prahalad,"TheCoreCompetenceofthe
Corporation,"HarvardBusinessReview(MayJune1990):7991.Some
JapanesefirmsappeartohavethiscorecompetenceseeJamesMatarazzo
andLaurencePrusak,JapaneseSuccessandInformationManagement
(Washington,D.C.:SpecialLibrariesAssociation,1991).

 Page137

Chapter7
UnderstandingandImprovingExistingProcesses
Itisimportanttounderstandanexistingprocessbeforedesigninganewone.
Someapproachestoprocessredesignandreengineeringdonotincludethis
step,andsomecompanieshaveomitteditintheirprocessinnovation
initiativestotheirregret.Oneprocessteamatalargetelecommunications
firm,forexample,estimatesthatnottakingthetimetounderstandanexisting
processleftitunabletoestablishthebenefitofadoptingthenewprocess.The
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teamfounditdifficulttogetfundingfortheinitiative,resuitinginan18month
delay.

Thereareatleastfourreasonstodocumentexistingprocessesbefore
proceedingwithinnovation.One,understandingexistingprocessesfacilitates
communicationamongparticipantsintheinnovationinitiative.Modelsand
documentationofcurrentprocessesenablethoseinvolvedintheinnovation
activitiestodevelopacommonunderstandingoftheexistingstate.Thisaspect
isparticularlyimportantinthecaseofbusinessandmanagementprocesses
performedbyprofessionalsorotheremployeesengagedinrelatively
unstructured,nonroutinework,whichsuchindividualsfinddifficulttoviewasa
process.
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Forexample,alargedefensecontractorattemptingtoinnovateitsinformation
systemsdevelopmentprocesseswasunabletogetitsprofessionalsto
recognize(oradmit)thataprocessunderlaytheworktheyperformed.The
firmwasforcedtouseanincrementalimprovementapproachtothe
developmentactivities,withnoprocesscontextormeasurementofeither
currentorimprovedactivities.Themerchantbankinggroupofamajor
investmentbankwantedtotakeaprocessperspectivetodefinemore
systematicwaysofidentifyingnewbusinessopportunitiesafterinvestment
opportunitiestookadownwardturninthelate1980s.

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 Page153

Chapter8
DesigningandImplementingtheNewProcessand
Organization
Ironically,thereislesstosayaboutthedesignphaseofprocessinnovationthan
abouttheactivitiesthatleaduptoit.Thedesignactivityislargelyamatterof
havingagroupofintelligent,creativepeoplereviewtheinformationcollectedin
earlierphasesoftheinitiativeandsynthesizeitintoanewprocess.Thereare
techniquesforfacilitatingthereviewprocess,butthesuccessorfailureofthe
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effortwillturnontheparticularpeoplewhoaregatheredtogether.

Thechoiceofparticipantsforanewprocessdesignteamshouldbegoverned
bybothdesignandimplementationconsiderations.Abalancemustbestruck
betweenteammemberswhocandeliverthemostcreativeandinnovative
processsolutionsandthosewhocanhelptoensurethattheyareimplemented.

Althoughinmostorganizations,thesameindividualswhoparticipatedinthe
processselectionandvisioningphaseswillparticipateinthedesignphase,itis
particularlyimportantthatkeyprocessstakeholdersfeeltheirinterestsare
representedduringthelatterphase.Stakeholderswhoshouldparticipateon
theteamduringthedesignphaseincludeheadsofkeyfunctionsintersectedby
theprocess,keygeneralmanagerswithoperationalresponsibilityforthe
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process,suppliersofimportantchangeresources(e.g.,theIT,human
resource,andfinancialfunctions),andprocesscustomersandsuppliers,both
internalandexternal.Itisworthnotingthatanumberofconsumergoods
manufacturers,amongthemProcter&Gamble,ScottPaper,andBlack&
Decker,invitedafewlargeretailerstoparticipateintheredesignoftheirorder
managementprocessesforquickresponseandcontinuousreplenishment.In
fact,exclusionofimportantcustomers

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 suchasWalMartfromthedesignphasewouldbevirtuallyunthinkable.Inclusion
makeadesignteamunwieldy,buttimelostachievinglargegroupconsensuscan
implementationtimes.

Ourdiscussionherecoverstheimplementationofnewprocessdesigns,including
andtheimplementationofneworganizationalstructuresandsystemsdesignedto
waysofworking.KeyactivitiesinthedesignphasearelistedinFigure81.

BrainstormingDesignAlternatives

Designinnovationisbestaccomplishedinaseriesofworkshops,andbrainstormi
surfacingcreativeprocessdesigns.1Bybrainstorming,werefertoanygroupfaci
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thatencouragesparticipationfromallgroupmembers,regardlessoftheirrolesan
organization.Emphasisduringbrainstormingsessionsshouldbeoncreativityand
judgmentalatmosphereisessential.Anyideashouldbefairgame,andparticipant
cansharetheirthoughtswithoutrisk.Theobjectiveofbrainstormingsessionsist
pragmaticnewprocessdesigns,takingasinputtheprocessvision,changeenable
knowledgedevelopedintheearlierphasesofprocessinnovation.

Graphicrepresentationofaprocessdesigncanbeextremelyhelpfulinunderstan
ofcomputerbasedtoolsfordesigndisplayandsimulationisdiscussedinalaterc
technologicalapproachescanalsobeveryuseful.

Figure81KeyActivitiesinDesigningandPrototypingaNewProcess
the publisher, except fair uses permitted under U.S. or applicable copyright law.

Brainstormdesignalternatives

Assessfeasibility,risk,andbenefitofdesignalternativesandselectthepre

Prototypethenewprocessdesign

Developamigrationstrategy

Implementneworganizationalstructuresandsystems

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 Firmshavesuccessfullyemployedlargewhiteboardsandlargepiecesofcolored
affixedtowalls.Mostcomputerbasedtoolsusearigorouslydefinedsetofsymb
differentprocessentities,butthesearenotessential.Theprimarypurposeofthe
iscommunicationandrecording,andanyconsistentsetofeasilyunderstoodsym

Itisoftenusefultodefinethenewprocessinaniterativefashion,withgreaterdet
successivelevel(seeFigure82).Tobeginwith,ahighlevelflowoftheoverallp
becreated.Thisshouldnotbedifficult,givenawellarticulatedprocessvision.At
ofdetail,eachsubprocesscanbedescribedwithroughlythesamethoroughness
describingthegeneralprocessinthefirstiteration.Finally,eachmajoractivitysh
describedintermsofsuchfactorsaswhowillperformit,theinformationneeded
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andsoforth.Forthesakeofcoherenceandconsistency,differentgraphiciconss
toportrayeachlevel.
SubprocessLevel(Boxes) ActivityLevel
ProcessLevel(Icons)
Inputs Objective Information
Outputs PerformanceMetrics DecisionPoi
Interfaces WhoPerforms WhoDoesIt
Flow ITEnablers ValueAdde
Measures InformationNeeds/Activities
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ValueAdded(prerequisites)
ActivitiesintheProcess
(narrative)

Figure82
LevelsofProcessDesign

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AssessingFeasibility,Risk,andBenefits

Themindsofdesignteamparticipantsshouldbefullofinformationasthe
designactivitybegins.Participantsshouldbewellversedinthehighlevelvision
fortheprocess,includingperformanceobjectivesandattributes,andbeaware
ofopportunitiesandconstraintspresentedbylikelyenablers,both
technologicalandhuman/organizational,ofthetargetprocess.Theyshouldbe
familiaratleastwiththebroadperformanceparametersofthecurrentprocess.
Analysisofthecurrentprocessneednotberigorous,buthighlevelaspectsof
theanalysisshouldbeinputstothedesigndeliberations.
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Brainstormingsessionsusuallyproduceanumberofdesignalternatives,which
mustbesubmittedtofeasibilityanalysestoevaluatetheirrelativebenefits,
costs,risks,andtimeframes.Thenewdesignandcurrentstatemustbe
comparedintermsofstructure,technology,andorganizationtofully
understandtheimplicationsofeachalternative.Theresultsoftheseanalyses
providethebasisforselectingtheoptimumdesign.

PrototypingtheNewProcess

Developingaprototypeisawaytosimulateandtesttheoperationofanew
process.Itisaniterativeprocessinwhichthefitbetweennewprocess
structure,informationtechnology,andorganizationisrefinedandrerefined.A
prototypemightbeconsideredtheanalogofascientificexperimentperformed
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inalaboratorysetting.Ourdefinitionisasmallscale,quasioperationalversion
ofanewprocessthatcanbeusedtotestvariousaspectsofitsdesign.This
kindofprototypeisknownasanorganizationalprototype.2

Thereisnowaytopredicttheorganizationalimpactofaredesignedprocess
andassociatedinformationtechnologywithcompleteaccuracy.Thegoalofthe
prototypingistograduallyshapetheorganizationalenvironmentor,
alternatively,torevisethetechnology.Prototypingmustbeviewedasa
learningactivitybyprocessdesignersandusersalike.Manyiterationsmaybe
necessarytoachieveaproperfitthus,theneedtoreiteratemustnotbe
viewedasfailure.

AnewprocessfortaxpayercollectionsthatwasnotprototypedbytheInternal
RevenueService,althoughfarsuperiortotheold

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processandwellsupportedbyanewinformationsystem,hadanunanticipated
andnegativeimpactonworkersandsupervisors.Workerswereforcedto
spendalltheirtimeattheirterminalsoronthephone,supervisorstospendall
theirtimemonitoringworkers.Bothresignedinlargenumbers,forcingtheIRS
toreevaluatethenewprocessandjobroles.Eventually,itwasnecessaryto
spendmorethanamilliondollarstomodifythesystemstosupportateam
basedratherthanindividualprocessdesign.

Prototypingcanitselfbeviewedasaseriesofphasesthatyieldincreasing
degreesoftangibility(seeFigure83).Computersimulation,oneofthe
techniquesdiscussedlater,isakindoflimitedprocessprototyping,beyond
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whichitmaybereasonabletocreateapaperbasedinformationtestofthe
process.Insubsequentphases,theprototypemightbetakentoastandalone
processtest,usingpersonalcomputersforinformationsupport,andinterfaces
tootherprocessesandexistinginformationsystemsmightthenbeaddedtoit.
Theultimateprototypewouldincludeallenablingtechnologies,skills,and
organizationalstructures.Eachphasehelpsrefinetheprocessdesignandthe
informationrequiredtosupportittakentogether,thesephaseshelpreduce
implementationrisk.
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Figure83
LevelsofProcessPrototyping

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PhasesofPrototyping

Avideotapethatillustratesanewprocesscanbeusefulforpersuading
customerstochangeinterfacingprocessesandseniormanagerstofund
implementationofthenewprocess.Seeingaprocessontapelendsita
tangibilitythatpaperreportsandthirdhanddiscussionsseldomachieve.3

Clearlytheorganizationallearningperspectiveneedstoextendbeyond
prototyping.Itsometimestakesafewcyclestoarriveataneffectiveprocess
design.IBMCreditCorporation,forexample,hasimplementedanumberof
differentprocessdesignsoverthepastfiveyears.Whendesiredobjectives
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werenotobtained,ittriedagain.Infact,oneofthelessonsmanagersatIBM
Credithavelearnedisthatprocessinnovationneverreallyends.Having
achievedtenfoldimprovementsincycletimeandquotevolume,the
organizationisattemptingtopushprocessperformanceintothefieldtoachieve
evengreaterbenefits.

MigratingtoaNewProcess

Havingdesignedandtestedaprototypeprocess,anorganizationfacesthe
considerablechallengeofmigratingfromthecurrentprocessenvironmentto
theradicallynewdesign.Afullcutover''maybedifficultorimpossible.Ifthe
newprocessinvolvescustomers,revenues,orvaluedemployees,orifthe
processchangewillbehighlyvisibleinternallyorexternally(andforwhat
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importantprocessaretheseconditionsnottrue?),thefirmmaynotwanttorisk
anabrupttransition.Alternativestofullcutoverincludephasedintroduction,
creatingapilot,orcreatinganentirelynewbusinessunit.

Apilotisasmallerscale,butfullyoperational,implementationofanew
processinarelativelysmallunitoftheorganizationbasedonaparticular
geography,product,orsetofcustomers.Althoughpilotsareoftenviewedasa
meansoftestinganewprocess(orothertypeofintervention),thegoalshould
betoachievesuccessratherthanmerelyobjectivelytest.Thus,theunit
selectedshouldbetheonemostcapableofachievingsuccessfulchange.

Onemigrationapproachistobeginwithapilotandfollowwithaphased
introduction.Afirmmight,forexample,implementnewsystemscapabilities
andskillsastheybecomeavailable.Aphasedapproachmaybethemost
economicallyfeasible,inthat

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companiescanderivesomefinancialbenefitfromtheprocesschangeearlier
thanmightotherwisebepossibleitisnot,however,necessarilylessdisruptive
thanafullcutover.Infact,thesenseofconstantchangeandinstabilitymaybe
difficultforsomeemployeestohandle.

Ifconstraintswithintheexistingenvironmentaretoogreat,itmaybedesirable
tocreateaneworganizationforthenewprocess.Thisorganizationcanrun
paralleltotheexistingoneandbethelocusofspecificproducts,channels,or
customers.Themostprominentexampleofprocessinnovationinthebanking
industryinvolvedestablishinganeworganization.MidlandBankintheUnited
KingdomestablishedanorganizationcalledFirstDirecttoserviceretail
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customerswithoutnormalbranchesorotherbricksandmortar."Thenew
bankemploysinnovativecustomerserviceprocessesthatrelyonthetelephone
andautomatedtellermachines.Italsomakesextensiveuseofinformation
technologiestoidentifypatternsofcustomerbehaviorthatreflectcreditrisk.
Becauseitsprocessesdonotinvolveexpensiverealestate,FirstDirectcan
offer24hourserviceandhigherinterestratesthatcompetewithMidlands
moretraditionalbankingorganizationaswellaswithotherU.K.banks.

ImplementingNewOrganizationalStructuresandSystems

Firmsandorganizationstodaytendtobestructuredinawaythatworks
againstthesuccessoftheirnewprocessdesigns.Mostorganizational
structuresarebasedeitheronfunctionorproduct,withlittleornoprocess
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orientation.Functionallyorganizedfirmshavedifficultymeetingcustomerneeds
seamlesslyacrossdifferentfunctionsbecausenooneowns"theissueofhow
longittakesorhowmuchitcoststofulfillcustomerrequests.Certainkey
processestypicallynewproductdevelopmentandordermanagement
crosssomanypartsoftheorganizationthattheonlymanagertowhomalltheir
activitiesreportistheCEO.

Afirmorganizedaroundproductstructurehasadifficulttimeascertainingtotal
businessdonewithindividualcustomersorcrossselling"differentproductsto
thesamecustomer.Thelatterproblemisparticularlypressinginbanks,which,
beingorganizedaroundproductlines(forexample,manyhaveatrustsystem
fortrustcustomers,ademanddepositaccountingsystemforchecking

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accountcustomers,aconsumerloanssystemforconsumerloancustomers,
andsoforth)areencounteringsevereproblemsestablishingintegrated
customerdatabases.

Anumberofbanks,includingContinentalandChemical,areattemptingto
imposeanoverlay"architecturethatwouldenableacustomerrelationship
managertoreachintothevariousdatabasesinwhichcustomerinformationis
containedtocreateacompositecustomerfile.4Butuntilthebasic
organizationalstructureisnolongerproductdriven,thisactivitywillbe
contrarytothesystems,reportingresponsibilities,andcultureofthebank.

Althoughtheproblemofrigidfunctionalorganizationsiswidelyrecognized,the
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proposedsolutiontoabandonanyformofstructurebeyondtheself
managingteamisfrequentlyworsethantheproblem,oratleastmuchless
welldefined.5Wecannotimaginethatrealfirmswillabandonstructuretothe
degreesuggestedbythesetofconcentriccircles,6theorchestra,7orsomething
else,orthattheywouldbeeffectiveiftheydidso.Weare,ElliotJacqueshas
noted,creaturesofstructure,andhavebeensincethebeginningofformal
organization.8Amoreprocessbased,ratherthanpoststructural,organization
offersapowerfulcompromisebetweentheneedtomaintainstructureandthe
desiretoadoptaflexibleapproachtothewayworkisdone.Untilaprocess
basedorganizationisestablished,anewdesignforworkcannotbeconsidered
fullyimplemented.
the publisher, except fair uses permitted under U.S. or applicable copyright law.

Wedonotrecommendthatprocessesbecometheonlybasisfororganizational
structure.Functionalskillsareimportanttoaprocessorientation,asisconcern
forproductmanagementandtherunningofstrategicbusinessunits.Mostfirms
arewelladvisedtoadoptamultidimensionalmatrixstructure,withprocess
responsibilityasakeydimension.Anorganizationthatwishestobenefitfroma
processperspectivemustbepreparedtotoleratethewellknownproblems
withmatrixstructures,includingdiffusionofresponsibility,unclearreporting
relationships,andexcessivetimespentincoordinationactivitiesandmeetings.

Thereisanotherreasonapurelyprocessorientedstructurewillnotsolveall
structuralproblems.FirmssuchasIBMandXerox,whicharevigorously
pursuingmultipleprocessinnovationinitiatives,havemadeinteresting
observationsaboutstructure.Justaskeyactivitiescanfallbetweenthecracks
offunctions,importantactivitiescanfallbetweenthecracksofprocesses,even
broadlydefinedprocesses.Iforganizationsconvertedfullyto

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processbasedstructures,somefutureresearcherwouldundoubtedlyspeakof
theneedforcrossprocessintegration.Multipledimensionsofstructurecan
helpbridgethegapscreatedbyasinglestructuraldimension.

Butonlywhenfirmsadoptmoreprocessbasedorganizationalstructureswill
processesbemanagedincongruencewithotheraspectsoftheorganization.
Then,insteadofcuttingacrosstheorganization,processresponsibilitieswillbe
akeyfocusoftheorganization.Processownership,ratherthanconstitutinga
shadow"organization,assomecompanieshavereferredtoit,willbea
primarydimensionofreportingandperformancemeasurement.

Ineffect,aprocessbasedorganizationalstructureisastructurebuiltaround
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howworkisdoneratherthanaroundspecificskills.Anumberof
organizationaltheoristshavearguedthatorganizationsneedtoreducetheir
levelsofhierarchyandadoptactionbasedratherthanformalstructures.9A
processbasedstructurecombinesanactionorientationwithsomedegreeof
formalstructure.

Thereisaharbingeroftheeffectivenessofprocessbasedstructuresintheway
severalJapaneseautomobilemanufacturersapproachproductdevelopment.
KimClarkandTakahiroFujimotohavedescribedtheconceptofthe
heavyweightproductmanager"inthesefirms.10Thisrolehascoordination
responsibilityforproductdevelopmentfromconcepttomarket,acrosssuch
functionalareasasengineering,manufacturing,marketing,andsales.Although
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relativelyhighintheorganizationalhierarchy,theheavyweightproductmanager
exercisesrelativelydirectinfluenceovertheactivitiesofengineersatthe
workerlevel.

AlthoughClarkandFujimotodonottakeanexplicitprocessperspective,the
heavyweightproductmanagerrolemightbeequatedtoownershipofthe
productdevelopmentprocess.Onlythroughsucharolecancompanies
developproductsascomplexasthemodernautomobilewithspeed,efficiency,
anddesignandmarketingcoherence.

YetweknowofnoWesternorganizationthathasmaderadicalstridestoward
aprocessbasedstructure.Mostcompaniesthathaveundertakensubstantial
processinnovationinitiativeshavesimplyimposedprocessmanagementasan
additionaldimensionofstructureontopoftheexistingdimensionsassigning
processownershiptomanagerswhomayalsohavefunctionaland/or

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productresponsibilities.Inalmostnoneofthesefirmshasprocess
responsibilitybeenaccordedorganizationallegitimacy.

Thehesitationtomovetoprocessbasedstructuresgoesbeyondsimple
unfamiliaritywithprocessasanorganizationalunit.Whenaskedwhytheywere
reluctanttomovetowardprocessbasedstructures,processoriented
managersoffered,amongotherreasons:

concernthattheleveloforganizationalchangefromprocessinnovationis
alreadyhighandconvertingtoaprocessbasedorganizationmightconstitute
toomuchchange
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fearthatiffunctionsarenolongertheprimarybasisoforganization,
functionalskillswillbelostand

abeliefthatprocessisanunstablebasisfororganizationbecause
processeschangemorequicklythanfunctions.

Onlythefirstobjection,webelieve,hasanyrealmerit.Althoughitmaybe
moredifficulttopreservestrongfunctionalskillsinaprocessbased
organization,itseemsquitepossible.Marketingresearchskills,forexample,
arejustasimportanttoaproductdevelopmentprocessastheyaretoa
marketingfunction.Butbecausesuchskillsmaybespreadthroughoutseveral
processes,theremustbestructuralorsystemicapproachestonourishingand
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preservingthem.Withregardtothestabilityofprocesses,thepremiseofthe
objectionmaybevalid,butnottheconclusion.Thefactthatprocessesmay
changeoftentobettermeetcustomerneedsisnotanargumentforabandoning
themasabasisfororganization.Infact,manyorganizationaltheoristshave
arguedthatamoredynamicbasisoforganizationisexactlywhatisneeded.

Onlytheconcernthat.changesinorganizationalstructureontopof
organizationalchangesimposedbyprocessinnovationmightbetoomuch
changeallatonceiswellfounded.Companiescanbegintheirprocess
innovationinitiativeswithshadowprocessorganizations,andthenslowly
migratetowardafullprocessbasedstructure.AsBeeretal.haveobserved,a
congruentorganizationalstructureisimportant,butmanycompaniestoo
quicklycreatenewstructuresinmajorchangeprogramsratherthanaddress
organizationaldevelopmentandindividualbehavioralchangefirst.11Thetiming
andmanagementofthechange

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considerationsinvolvedinmovingtoaprocessstructureareexploredfurtherin
thenextchapter.

BeyondProcessDesign

Theinnovationapproachoutlinedinthelastseveralchaptersisonlythefirst
steptowardfullscaleimplementationofnewprocesses.Thecomplete
innovationcycleisdepictedinFigure84.Innovationandthecreationofanew
organizationalstructuremustbefollowedbydetailedsystemsdesign,
developmentofnewperformancemeasurementsystemsandskills,and
systemsconstructionanddeployment.Afullyimplementedprocessinnovation
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occursoverseveralyears,andalthoughourapproachisoutlinedasa
sequentialprocess,itshould,infact,beexecutedinahighlyiterativefashion.
Rigidpartitioningoftheactivitieswillnotyieldthemaximumbenefitsof
innovation.

Figure84
TheProcessInnovationCycle

Companiesinvolvedinprocessinnovationinitiativesoftenactasifthemost
difficultaspectoftheeffortisoverwhenthenewprocessdesignhasbeen
developed.Butrealizationofprocessinnovationbenefitsisnot,atthisstage,a
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faitaccompli.Likethoseofanyotherinnovation,thebenefitsofprocess
innovationappeargraduallyinresponsetoactivemanagement.Anumberof
companies,includingSeaLand12andDuPont,employspeciallydesignated
teamstofollowinnovationswellafterimplementationinordertodetermine
whetherbenefitsfromITenabledbusinesschangesarebeingrealized.
Althoughsuchteamstypicallydonottakeaprocessperspective,theconcept
ofbenefitmanagementandpostimplementationassessmentwouldbe
facilitatedbyprocessthinking,withitsemphasisonmeasurementandoutputs.

Notes

1GiniGrahamScott,MakingEffectiveDecisionsThroughBrainstorming,"
Manage,41:3(NovemberDecember1989):3436.

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2DorothyLeonardBarton,TheCaseforIntegrativeInnovation:AnExpert
SystematDigital,"SloanManagementReview(Fall1987):719and
ImplementationasMutualAdaptationofTechnologyandOrganization,"
ResearchPolicy(February1988):251267.

3IamgratefultoProfessorJamesCashofHarvardBusinessSchoolforthis
suggestion.

4StuartMadnickandR.Wang,EvolutionTowardsStrategicApplicationsof
DataBasesThroughCompositeInformationSystems,"JournalofMIS,5:2
(Fall1988):562.
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5See,forexample,StevenDichter,TheOrganizationofthe90s,"McKinsey
Quarterly1(1991):145155.

6ShoshanaZuboff,IntheAgeoftheSmartMachine:TheFutureofWork
andPower(NewYork:BasicBooks,1988).

7PeterF.Drucker,TheComingoftheNewOrganization,"Harvard
BusinessReview(JanuaryFebruary1988):4553.

8ElliotJacques,InPraiseofHierarchy,"HarvardBusinessReview
(JanuaryFebruary1990):127133.

9See,forexample,RobertG.EcclesandNitinNohriawithJamesD.
the publisher, except fair uses permitted under U.S. or applicable copyright law.

Berkley,BeyondtheHype:RediscoveringtheEssenceofManagement
(Boston:HarvardBusinessSchoolPress,1992).

10KimB.ClarkandTakahiroFujimoto,ProductDevelopment
Performance:Strategy,Organization,andManagementintheWorld
AutoIndustry(Boston:HarvardBusinessSchoolPress,1991).

11MichaelBeer,RussellA.Eisenstat,andBertSpector,TheCriticalPath
toCorporateRenewal(Boston:HarvardBusinessSchoolPress,1990).

12MichaelL.SullivanTrainor,ISKeepsSeaLandontheMove,"
ComputerWorld(April29,1991):6776.

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