There is nothing so useless as doing efficiently that which should not be done at all. ~ Peter F Drucker

Typical workplace scenarios

Consider the following scenario. Two bakeries produce the exact same bread — tastes the same, looks the same, weighs the same — the only difference is that they are in different packages. They also produce the same number of loaves per week. However, on further inspection you realise some differences. The unit cost to produce one bread from Yellow Star Bakery is $300 and it takes ten steps from acquisition of the raw materials to get it into the hands of the customer. Blue Ribbon Bakery on the other hand spends $180 to produce their bread and takes only five steps to deliver the product to the customer.

Continue to imagine now that both bakeries sell their bread for $400. So Blue Ribbon boasts a profit margin of 55 per cent, while Yellow Star’s is 25 per cent.

To complicate matters, Carol Goldwin, the manager of Yellow Star, keeps getting complaints from the Baking Room Supervisor, John Goldsen, that his workers are frustrated and always need to be working late to get things done. So he wants two more workers, even though he had got two five months ago. This additional request would take the complement in that department to 12. Ms Goldwin is troubled because she had received information from a former employee who “defected” to the competitor, that Blue Ribbon has no staffing complaints, and are quite merrily producing the same volume as Yellow Star, but with only five workers, and making more money doing it!

The second scenario is similar to one I referred to in the MBA Forum on April 19, 2015. To try to eliminate errors, sometimes the temptation is to keep adding layers of people to check and verify that the work was done properly. So, to make sure there is an accurate accounting entry, you have one person prepare the entry, another one to make the entry, a third one to verify the entry, a fourth one to… I think you get the picture right?! The dramatic irony about this situation though is that at the end of day, errors still happen! Why?! You would have to understand both human nature and process improvement.

So here is the reason. The first person doing the job thinks, “I have four persons after me who will be checking to make sure this is done right, so even if I make an error, it will get caught.” Note the “even if”, which psychologically causes a substantial increase in the probability of errors happening. The fourth and fifth people in the process think, “why do I need to check this in detail, two/three persons have already checked this!” Even though the word “bureaucracy” is not inherently negative, this is an example of its dark side!

Now, for those of you who think I am making this up… think again! These two scenarios are prevalent! What was it about low productivity levels in Jamaica again?… Hmmm!

The business process

This brings us to the matter at hand — business process improvement. The answer to both scenarios above is to review the process. Apparently, from the first scenario above, Blue Ribbon Bakery has a handle on business process improvement, and is reaping the benefits. Many practising managers are not aware of the wonderful benefits from just a simple review of their processes. There are several clues indicating that a process review is overdue — frustrated workers, you just cannot stop getting errors and mistakes, and throwing more people and more money at a problem just is not working.

Even with respect to computerisation — many managers believe that one way to fix problems as described above is just to automate. But guess what — again it just does not work that way. If the process is broken and you automate it, then all that will happen is that you will churn out the errors faster! Even when you plan to automate, you first need to review and fix the process.

I will be the first to encourage people and organisations to implement information systems to help to improve productivity. But every MBA student worth their salt would remember the MIS course that taught that an information system consists of people, process and technology. That is, a successful information system is 50 per cent people, 30 per cent process and 20 per cent technology!

We will therefore spend some time reviewing business process improvement. This is one of those courses that are not in every MBA programme, and when it does it usually shows up as an elective. I think though that it should be a critical tool in the arsenal of every manager, as the need for it is so pervasive.

Business process improvement vs business process re-engineering

Before we start delving, let us clarify a few terms. Many people like to use the term business process re-engineering, but this is really different from business process improvement. Re-engineering technically means a total one-off revamping of all the business processes of an organisation. For this, your change management skills better be top-notch — because you are attempting massive changes in one fell swoop. Also process re-engineering is usually done using consultant(s) who sweep through, make massive changes, and then are gone. So, the success rates for these types of programmes are about 30 per cent.

Process improvement though implies smaller changes, tweaking of the processes over time. It would imply then that to be successful, the change agent needs to be within the organisation, understand the processes, and more importantly, understand the people. The success rate for business process improvement is much higher than that for re-engineering. We will continue next week.

Dr Kenroy Wedderburn, JP, is a part-time lecturer on the MBA programme at the University of Technology, Jamaica. Send your e-mails to drkwedderburn@gmail.com.