5 Steps To A Lean And Agile Business Process Model

Tuesday 13 December, 2011

by Daniel Lock

Using a process model is the best way to make your business lean and agile. Follow five steps to achieve a lean and an agile business that is effective and efficient, and that can easily change direction when your business model requires it.

What does using a process model mean? It means you don't make assumptions, but test. Use the metrics and get the figures, and then change what isn't right and put it back into your model.  Being lean is being better at lower cost: effectiveness comes first and then efficiency. Being agile is changing direction when your process model tells you. How do you achieve this?

1. Plan, apply it, test it and act on your results
   
   A business process model was introduced by Dr W. J. Demming in the 1950s. After World War II, he helped Japan get back on its industrial feet, and came up with the PDCA model: Plan, Do, Check, Act.
   
   This means you come up with a theory - carry it out, check the results and act to improve it based on these results. Iterate that sequence as often as necessary to get as near to perfection as you can get. That's how the PDCA process model works.
   
   It's important to measure everything measurable. Metrics are critical to ultimate success, and you must use statistics, or SPC - statistical process control - to get the right information and control over your processes. Separate randomness in your statistics from controllable parameters, and then control these controllable parameters as finely as you are able to.
   
   Check each parameter change, and then make further changes based on the results until you can improve no more. That is agility:  the ability to keep changing rapidly to effect continuous improvement.
   
2. Continual measurement
   
   No business process model can work without continually measuring everything you do. Target those factors that affect your business most: costs, sales, margins, profits. Measure every factor that can affect these parameters, and make changes to maximise each of these.
   
   A failure to measure on a continuous basis is likely to result in the failure of your business.
   
3. Examine causes - not blame
   
   Find out why failure occurs. Do not seek blame, but causes, and reasons that can lead to solutions. There is a system known as the "5-Why's": ask "Why?" five times to find the root cause of why the failure occurred. Identify the problems and find out how to solve them: get to the root causes, not just the symptoms. Solving these root problems can dramatically improve your business.
   
4. Prepare for change
   
   Be prepared to make changes when your process model demands it.  You start out with one theory or idea of the way things should be done, but the model will rapidly point to a better way. Act on that, and assume that your first hypothesis will be wrong.
   
   As you check and act, each succeeding hypothesis will get closer to where you should be. Never be reluctant to change direction.
   
5. Large organisations are no different
   
   In order to be agile, you must be able to change direction rapidly according to your business process model. A big business can be just as agile as a small business if it separates into a number of parts. Each part of the organisation should run its own models and apply the PDCA to its own part of the business.
   
   Encourage this in your business: apply their own hypotheses and test them with multiple iterations, including an increasing number of customers with each iteration of the process model.
   
   Cut those that don't work - become leaner but more effective and efficient by removing processes shown not to work. Focus on those that do work.

Source:ceoonline.com