Many experts are still predicting gloom and doom for the economy, and many business leaders are falling victim to their prognosis, which is fast becoming a self fulfilling prophecy for those companies who are unfortunate enough to be lead by those leaders. They seem to be waiting for government to bail them out or just wringing their hands in utter despair. We will only rise out of this recession when individual leaders become committed to re-invigorating their companies.

The reinvigoration process stems from business process reengineering (BPR), which began as a private sector technique to help organizations fundamentally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become world-class competitors. Business everywhere have lost sight of the need for the continuing development and deployment of business process reengineering and improved organizational structures to support new and innovative process improvements.

Business process reengineering is an effective approach for redesigning the way work is done to better support the organization’s mission and reduce costs. Reengineering starts with a high-level assessment of the organization’s mission, strategic goals, and customer needs. Basic questions must be asked, such as:

“Does our mission need to be redefined?
Are our strategic goals aligned with our mission?
Who are our customers?”

An organization may find that it is operating on questionable assumptions, particularly in terms of the wants and needs of its customers. Only after the organization rethinks what it should be doing, does it go on to decide how best to do it.

While keeping in mind the organization’s mission and goals, the reengineering effort must focus on the organization’s business processes – in other words, the steps and procedures that govern how resources are used to create products and services that meet the needs of particular customers or markets. A business process typically can be broken down into specific activities, measured, modeled, and improved. It can also be completely redesigned or eliminated altogether. Reengineering identifies, analyzes, and redesigns an organization’s core business processes with the aim of achieving dramatic improvements in critical performance measures, such as, quality, cost, and delivery

It is important to remember that an organization’s business processes are usually fragmented into sub processes and tasks that are carried out by several specialized functional areas within the organization. Too often, no one is accountable for the overall performance of the entire process. Reengineering maintains that optimizing the performance of sub processes can result in some benefits, but cannot yield dramatic improvements if the process itself is fundamentally inefficient and outmoded. For that reason, reengineering must focus on redesigning the process as a whole in order to achieve the greatest possible benefits to the organization and their customers.

Process improvement efforts that focus on functional or incremental improvement are insufficient to re-invigorating your organization to the levels needed to overcome the effects of the current recession. Re-invigoration will only come by fundamentally rethinking how the organization’s work should be done and implementing the changes necessary to accomplish the mission and goals of the organization

The above model provides a framework for thinking about your organization’s mission and processes. To begin with your mission defines your work processes. These work processes in turn execute management’s decisions which are based on available information. Information availability is enhanced by employing the latest technology to process information which supports management’s decisions. These decisions in turn guide the organization’s works processes in order to accomplish the organizations mission. When evaluating the works process, it is important to remember this model and frame the reengineering process to include these considerations.

Re-invigoration requires that management refocus on how to help the organization accomplish its mission. An effective tool to help this refocus is the SWOT analysis often used by marketing professionals. The approach should be, “considering the current economic situation, what are our strengths and opportunities that we can capitalize on in the short term as well as the long term? It is always best to start out with the positive aspects of analysis in order to generate effective ideas and solutions. One the strengths and opportunities have been identified and processed, you can continue by identifying your organization’s weaknesses and threats.

An effective approach is to use strategic thinking to build a strong business case for change. Too often, management takes a shortcut and decides that their decision is sufficient to evoke change. Unless you build a strong business based case for the change, it will not get the support of all of the stakeholders, especially of middle management. A good model for strategic thinking can be found in the ALERA Group’s program: Strategic Thinking for Operations and Projects. An overview of this approach is shown in the following:

Assessment of the situation
Goals
Strategies
Plan of action
Action taking
Gauging impact

Your organization can continue to struggle through the current recession or it can lift it self up by the bootstraps, the decision is yours. All it requires is a strong desire to change, a realistic plan to accomplish it, and the commitment of upper management to make it happen. The journey of a thousand miles begins with the first step, so get going. If you are unsure how to go about it, get some help. Your success at the end of the year is solely upon your shoulders.

Introduction

Performance Management systems have been around for a very long time. They started off in the early 1920′s as a way of appraising and rating US army officers and have since developed into the comprehensive and integrated processes that we know today. And yet, despite huge investments in time and money, few organisations can honestly say that their performance management process really is effective, in terms of motivating employees and inspiring them towards higher levels of performance. Constant re-engineering (tinkering with?) the process – whether it is about the frequency and timing of reviews, the use of competencies, the type of rating scale, the use of quota distributions, the links to reward or the IT enabling of paper based schemes – has failed to produce the desired results. So what has gone wrong?

The Prevailing View of Organisations

The traditional view of organisations has for years been fundamentally mechanistic and designed to eliminate uncertainty and unpredictability. This failure to view organisations and their environment as a holistic and integrated system and to recognise that chaos / uncertainty needs to be embraced if a new order is to arise, lies at the heart of the problem and explains why, when faced with unprecedented and unpredictable demands from an increasingly diverse set of stakeholders, organisations fail to successfully effect change (70% of change programmes are judged to have failed). This rigid adherence to a mechanistic frame of reference has led us to develop processes and procedures that are designed to reduce – and deny the existence of – uncertainty.

The Importance of Social Defences

Unfortunately this approach denies the fact that individuals, when faced with uncertainty and loss of control, experience anxiety and when people become anxious they deploy ‘social defence mechanisms’ to protect themselves from embarrassment, fear or harm. Social defences are the result of deep rooted psychological factors designed to protect the individual and as such are unconscious processes of which the individual is frequently unaware. Consequently, when anxiety rears its head ‘rational processes’ are frequently overtaken by ‘irrational behaviours’ created by individuals in order to ‘defend’ themselves. As the world of work becomes more complex and roles become more demanding and diffuse, the psychological strain of anxiety increases, particularly where individuals are increasingly expected to be accountable for the consequences of their decisions and judgments. Consequently individuals are increasingly failing to embrace the totality of their role, retreating from boundaries and circumstances that they perceive as potentially threatening (eg dealing with performance issues within a team).

Organisational Defensive Rituals

These individual ‘social defences’ have over time become ritualised into ‘organisational defences’. Most employees share the same fears and anxieties and hence the organisation constructs a set of defensive walls (policies, procedures, cultural norms) that they can all live behind safely. This has led to a covert collusion to maintain these ‘rituals’. Examples include: a propensity to focus on changing roles and structure when initiating change, the mechanistic nature of ‘process re-engineering’, the stubborn adherence to bureaucratic procedures and mindsets, the persistence of pay for performance schemes that repeatedly drive the ‘wrong’ behaviours. Performance management processes are therefore a manifestation of organisational defences in action and despite the stated intent of ‘improving performance’ the process really exists to protect individuals (both managers and employees) from the anxiety and fear that results from having to ‘manage performance’. As such, these processes can never contribute to sustained performance improvements unless we fundamentally rethink the way we view organisations and how to engage and inspire people.

The Role of Measurement

It is a well-established fact that ‘you can’t manage what you can’t measure’. It is also clear that the act of measurement influences the behaviour of the individual or system being measured. Consequently the way we set measures, what we decide to measure and how we go about the process of measurement has a huge impact on the outcomes that result (think about pay for performance schemes). And given our desire to ‘quantify’ wherever possible and to control and reduce uncertainty, most of the metrics organisations adopt are imposed, rigid and concerned with compliance. A key question therefore is: ‘If we aspire to create an organisation that is agile, adaptable, that behaves with integrity and which engages employees and inspires them to give of their best, to what extent do the ways in which we currently measure and manage performance help or hinder us in this quest?’

An Alternative Approach

In order to overcome these defensive rituals we need to adopt a fundamentally different approach to organisational design, the way we define roles and work and the way we manage performance.

1. Inspire Meaning. Managers need to create an inspiring picture that creates meaning for the employee and helps them ‘connect emotionally’ with the bigger picture. All human beings crave a sense of purpose and a desire to ‘be part of something worthwhile’, particularly in this day and age, and employees who find their work meaningful are more motivated and engaged. It is therefore not sufficient to simply set the strategic context and establish objectives – we need to connect at an emotional as well as at an intellectual level with our people.

2. Replace Rules with Principles and Values. Whilst some rules are obviously necessary to support organisational endeavor, organisations by and large have gone overboard and created bureaucratic monsters that inhibit creativity and stifle initiative. It is far more liberating to focus instead on the guiding principles and values that will enable the vision to be realised, that we wish to see governing the way the organisation operates and which determine the types of relationship that exist, with both internal and external stakeholders. These principles and values need to replace ‘rules’ and become the yardstick against which we make judgments and help us to assess whether or not the decisions we take, the processes we design and the structures we adopt are truly supporting the cause of the organisation and making it more agile and adaptable. By providing a continual basis for challenge, they also help us avoid repeating the mistakes of the past and establish new, powerful cultural norms.

3. Foster Individual Identity by Focussing on Strengths. People who feel good about themselves are much more likely to produce the discretionary effort and initiative that many organisations are striving to unleash. So why do we persist in undermining individual self esteem by focussing on ‘weaknesses’ that need to be remedied? People become demoralised and de-motivated in these circumstances, whereas when we focus on the unique abilities that individuals have and seek ways to harness these abilities in a way that connects the individual to the higher purpose of the organisation, people feel a strong sense of self worth and desire to contribute.

4. Replace ‘Command and Control’ with ‘Empowerment and Trust’. Individual performance cannot be ‘managed from above’ – at least not to any meaningful degree or for any significant period of time. Sustained high performance only exists where individuals feel real ownership with the outcomes, have an appropriate level of delegated authority, are provided with the necessary support and are trusted to use their judgement. The role of the manager is therefore not to try and secure compliance through micro managing individuals and teams, but to create an enabling environment that encourages people to self manage.

5. Replace ‘Measurement for Control’ with ‘Feedback for Learning’. Our mechanistic view of organisations and people has led us to indulge in a frenzy of over-measurement in order to minimise uncertainty and impose control. But all too often this has led to confusion and failure to ‘do the right things’ as a result. Rigid, imposed measures that focus on ‘task compliance’ are of little help when faced with the need to energise people to respond creatively and rapidly to ever changing demands and challenges. Instead individuals and teams need to participate in agreeing the measures and measurement processes that are most appropriate to them and which will help facilitate the individual and collective learning necessary to grow capability and foster organisational agility.

6. Replace ‘Structure and Process’ with ‘Relationships and Conversations’. Real work gets done as a result of the relationships that people develop with each other, both internally and externally, often despite the structures, processes and systems that we implement rather than because of them. Managers therefore need to reduce their reliance and dependence on formal mechanisms to get things done and instead concentrate on fostering constructive relationships and meaningful conversations between people. Managers need to behave with authenticity and integrity, demonstrate empathy and create a climate where open and honest conversations become the norm and which enables individuals to realise their potential and be inspired to give of their best.

The key differences between the ‘performance management and performance enablement’ are summarised below:

Performance Management vs Performance Enablement Strategy and objectives vs Vision and purpose Rules and procedures vs Principles and values Remedying individual ‘weaknesses’ vs Building on unique ‘strengths’ Command and control vs Trust and Empowerment Measurement for control vs Feedback for learning Structure and process vs Relationships and conversations

Conclusion

This ‘new’ approach to ‘enabling’, as opposed to ‘managing’ performance, disposes with the organisational defensive rituals of process, documentation and structure. Instead it postulates an alternative approach that is more fluid and dynamic and as such is more in keeping with the realities of organisational life and the psychology of individual behaviour. The challenge for organisations is therefore twofold – are they prepared to abandon the ‘traditional’ approach, which is ‘safe’ but does not work, and are they prepared to invest in building the capability of managers to be able to operate effectively in this new, emerging world of relationships and conversations? And if the answer to both questions is ‘no’, is organisational death’ an inevitable consequence?

When applying the reengineering principles, there are several rudimentary considerations to be made in such an extensive project. Each of them is initiated by an appropriate analysis of the stage the current relevant business is in.

Identifying the core business objective and the main reason for being of the organization is a crucial step in providing the fundamental direction for the overall reengineering program. Every process in existence within the company should contribute something towards the targets and objectives, directly or indirectly.

Key component of the project is identification of its customer focus. This should definitely be included in each piece of the process improvement analysis. Be aware that this may intersect with other business goals; however the customer objective will have to be identified on an individual basis and has to be factored in once redesigning any of the processes. If customer satisfaction is missing, the core strategies at which the entire program is focusing will in all likelihood be insignificant.

The organization must decide beforehand which results they want to achieve and how they will determine if these have been accomplished. It is advisable to define any of these objectives as SMART: Specific, Measurable, Achievable, Realistic and Timely. Goals can be checked against previous performance (which is internal), and/or external benchmarks which show how the company is performing in relation to colleague organizations.

For each process the involved vendors will have to be known. In order to be effectively controlled instead of the mere typical, it is recommended to apply simplicity within an organization and to have a single person or group be responsible for every process. Simplicity also applies to defining to what a success is and what a failure is. This ties into the SMART principle discussed earlier. In that way, improvements can be implemented pro actively and failure or success can be measured precisely for each step in the entire project.

Any type of organization will be able to benefit from this intra group analysis of the day by day activities of doing business and how this contributes to the long-term strategy. Obviously for any private – commercial – for profit organization which main reason of existence is to be competitive in the market and outsmart its competitors, BPR can be extremely worth while doing in becoming as efficient as possible within the markets they have a presence, and achieving to lower costs and to maximize revenue and more importantly net income, in comparison to its direct rival companies. And even though this is not always recognized or understood, the very same methods and techniques can be applied to any other type of organization like a government department, or for that matter any nonprofit administration.

In the last downturn in the early 2000′s, re-engineering was all the rage. One of the books that defined re-engineering was Michael Hammer’s The Agenda: What Every Business Must Do to Dominate the Decade. It is actually quite a good book (contact me if you would like a Cliff Notes version of the book). Nevertheless, two years later in 2003 – 2004 as the economy began to pick up speed, the book and re-engineering in general came in for criticism as corporations were ill-prepared for growth and changing customer expectations. Companies had focused too much on re-engineering in the previous few years.

As Mark Twain said: “History never repeats itself, it only rhymes.”

Today, there is a disturbing rhyme with companies focused on internal cost-cutting and efficiency initiatives. A recent survey of businesses ranked business priorities in 2010 as follows:

Business Priorities 2010

1. Improving business processes

2. Cutting costs

3. Increasing the use of analytics

4. Improving enterprise effectiveness

5. Attracting new customers

6. Managing change initiatives

7. Innovation in products and services creation

8. More effective targeting

9. Consolidating business operations

10. Growing customer relationships

As you know, only the top few priorities will get the attention and energy that is needed to succeed. Please note that I do not believe that improving business processes and cutting costs are unimportant; each and every initiative and/or program related to these priorities has merit. However, the energy spent pursuing these programs crowds out and exhausts people and companies without solving the most important issue facing the company.

Focus and Prioritize on the Most Important

What is the most important issue facing most businesses today? Please raise your hand if your business is on relatively stable footing and finding more customers and getting more customers is not the most important single issue that you are facing. Hands? Hands? Anyone? Bueller?

Yes, in today’s “New Normal”, for most financially stable companies, the single biggest issue they are facing is to increase sales, find new customers, and re-ignite growth.

Why then, are companies focused internally? I immediately can think of three reasons:

The company just recovered from a near – death experience and is not going to let that happen again
The leadership of the company comes from the operations and/or finance and that is what they know – cut costs and improve efficiency. “To a hammer, everything looks like a…”
The company has multiple initiatives (read: 10 – 20) and some include sales and they are sure that they can get them all done.

What To Do?

A recent contact of mine reminded me of a quote from Winston Churchill. “It is not enough that we do our best; sometimes we have to do what is required.”

Today, it is required to focus the time and effort of your company on the single most important issue – re-charging growth by servicing your current customers and developing new customers, products, and markets. All other initiatives and priorities need to be subservient to that most important issue.

“No!!! You cannot do it all!!!” Doing it all means too many priorities which means no priorities which leads to initiative over-kill, bureaucracy, waste and slow corporate death.

So, kill kill kill all the useful, important and reasonable initiatives that have nothing to do with re-charging growth. Instead, focus the company on the 1 – 3 initiatives that will help you win with current and new customers.

David Shedd has ten years of success as President of an up to $200M group of autonomous companies and business units ranging in size from $8M – $90M. Overall, David has led 19 different companies in manufacturing, project management, services, and distribution, nationwide and in Quebec, Canada serving numerous industries, including telecommunications, infrastructure, building materials, environmental, utilities, government, and alternative energy. David has further experience in the automotive, space and defense, and information systems industries.