Processes May Be Outsourced, Maturity Cannot

Raju Oak, a Consultant, Researcher and Change Agent specializing in Business Process Management, joins the Process Excellence Network to discuss Business Processes and Complexity. PEX Network: To start, can you give me some background on your role? Raju Oak: I have been a consultant, researcher and change agent in the last 27 years of my career. I have been privileged to have witnessed the early days of IT in India, the opening up of the economy, the great migration of intellectual resources, and the rise of international process outsourcing, the growing understanding of process maturity and Business Process Management through its many incarnations, seen through the eyes of very different industries. I have had the opportunity to work with the first few companies as they attempted and scaled CMMI level 5. This gives me a unique perspective on process that I use to inform my PhD research. I help organizations develop their process maturity based upon the principle that “processes may be outsourced, maturity cannot”. PEX Network: Can you tell us a bit about how Process Excellence fits into the culture at Kleinwort Benson (KB), where you worked previously? Raju Oak: In a word, uneasily. In common with much of the industry, KB clearly aspires to Process Excellence. However, like many similar organizations, it is challenged in the following ways:
• Priority: It has been a turbulent couple of years, with multiple changes of ownership and the implementation of varying systems replacement strategies. Consequently, while the concept of process excellence has always been supported in principle, there has been little management bandwidth and airtime afforded to the reality of Process Excellence. Clarity: The definition of Process Excellence is at best ambiguous. It focuses at different times on different operational characteristics such as ‘no mistakes’ (quality), ‘minimizing cost’ (efficiency), ‘maximizing resource capability’ (effectiveness), ‘doing that bit more’ (flexibility), ‘reducing risk’ (transparency), ‘predictability’ (control) and ‘performance’ (throughput, responsiveness). It is driven at different times variously by internal departments, the front office, specific customer needs, regulatory events and owner aspirations. The focus tends to be fleeting and fragmentary so that local improvements can sometimes propagate undesirable changes in the global process picture. Visibility: The process space in KB is not really mapped in a complete or sustainable way. Because of the variety of products and services, processes tend to be overlapped and interdependent with a high degree of resource sharing and distributed accountability.

Approach: There is little consensus as regards the process of achieving Process Excellence as indeed the ownership of the process. This is largely a consequence of the issues of priority, clarity and visibility already mentioned. It is important to point out; however, that KB is hardly unique in this regard. Indeed, in the current environment, it would be unusual to find a financial services organization not facing challenges.

PEX Network: How do organizations typically respond to business process complexity and in what key ways can this be improved? Raju Oak: This was the subject of my last presentation to the BPE in Financial Services, and this largely depends upon two factors: 1. Whether the organization can indeed differentiate between complex and complicated processes 2. The prevailing mindset in the organization. The former requires a degree of process maturity to have already been achieved. The latter is dictated by the dominant organization mindset. Organizations with the mindset: • • • • • • That the organization is a machine - tend to deny complexity, and label the consequences as flaws in someone’s competence; That complexity is a necessary characteristic of organizations - tend to suffer the consequences and accept domination; That the organization is a self-managing organism - tend to ignore complexity as long as they can hoping it will somehow resolve itself; That the organization is a constant flux and transformation process - try to control complexity, seeing it as a temporary state to be tamed or simplified; That the organization is an information-processing brain which can think its way out of complexity - recognize complexity well but avoid it and find a way to survive without getting in its way; That the organization is essentially a culture pick and choose opportunities - to build a bridge over complexity (and often charge you to cross it safely)

Addressing complexity involves three R’s, Recognition, Resourcing & Response: • • • Recognition is key, because complexity is different and invidious. It doesn’t come organized in neat packages that can be labeled and delegated for resolution. Resourcing is important because resources skilled at managing complicatedness, however large, are rarely appropriate for managing complexity. Response is important because complexity is more tractable to certain types of response whereas conventional responses tend to further increase complexity.

PEX Network: Can you give some examples of initiatives to deal with complexity outlining the challenges and solutions used to overcome them? Raju Oak: Complexity tends to arise in contexts characterized by: • A network of related entities;

• • • •

That have behaviors determined by (often dynamic and recursive) relationships which can in turn depend on other relationships; That all tend to share resources; That are characterized by distributed ownership; and That pursues different (often conflicting) outcomes at the micro and the macro levels. Within organizations - Strategy and Performance Management, Enterprise Architecture and IT Asset Management, Change and Transformation, Compliance, etc… Within industries - complex value chains (consider the payments industry), large program management, administration of complex financial/legal structures, etc. Successful initiatives dealing with complexity are characterized by: Clarity on outcomes; Emphasizing understanding before transformation; Multiple parallel but coordinated actions in a divergence/convergence learning pattern; Focus on building capability in managing complexity rather than purely on complexity resolution

Examples are: • • • • • •

PEX Network: What top tips can you offer to businesses looking to avoid common pitfalls? Raju Oak: My top tips would be: • • • • • It is very important to recognize complexity as it is easy to confuse it with complicatedness; Managing complexity requires a very different approach as compared to managing complicated processes; Less is often more when dealing with complexity; Stability and understanding must precede predictability and change when planning transformations involving complexity; and Understanding is continuous and dynamic. What one understood yesterday may not be relevant today.

PEX Network: And finally, what is the one take-away that you would like attendees at the Summit to get from your session? Raju Oak: At the heart of complex processes (and indeed complexity) is the dynamic interdependence of its constituents, and the understanding and visibility of those interdependencies must precede any successful attempt to manage complex processes.

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