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Business process design: the new common sense.

A new way of looking at organizations - as a web of commitments designed to produce customer satisfaction - offers untold possibilities for savvy CEOs.

The nature of work and of organizations is changing in profound ways. In this "postmodern" era, not only are new methods and techniques being tried out, but new ways of thinking about organizations and the work process are also being introduced.

One key feature of postmodern organizations is that they understand themselves and their relationship to their customers quite differently. The so-called modern organization that flourished from the 1940s through the 1970s was geared to maximize predictability and control, which were thought to be the ideal end products of science and technology. It was assumed that if properly harnessed, the knowledge produced by science could help companies succeed by most efficiently producing, moving, and improving the items or services they sold until a state of near perfection was attained.

The postmodern organization, however, while certainly continuing to focus on the nature of its products or services and the efficiency of its production process, has one of its eyes firmly glued on the customer, for it is now understood that ultimately customer satisfaction matters most. The highest quality, most efficiently produced, and most widely promoted product will not succeed if it does not tap into customer wants and needs as the customer sees them.

What does this mean for association executives? One clear implication is that those who become adept at entering into effective conversations with their members (customers), competent at listening to their wants and needs, and effective at making more appealing offers and organizing their associations to effectively fulfill those offers will produce satisfied members. And those satisfied members will support their associations and executives financially and in other ways as well.

Another aspect of this new approach to organizational life is that we are moving away from practices and theories in economics and management based on control, hierarchy, and predictability, and toward theories based upon flexible, adaptable, and horizontal management structures. We cannot continue to design products and services en masse.

The idea of Henry Ford's that the customer can have any car he or she wants as long as it's a two-door and black no longer suffices. Today, we must deliver on what the customer or member requests. In a postmodern society, successful organizations are quick on their feet - poised to respond rapidly and creatively to what are now seen as inevitable changes in their environments and shifts in customer desires.

Viewed from this perspective, the "pursuit of quality" and undertaking "business process reengineering" - two current management philosophies - are both praiseworthy notions. After all, who is against quality? But we also ask: Who defines quality? How do we select one business process over another?

In our view, it is most useful if quality is reinterpreted as the customer's declaration of satisfaction, and business process is reinterpreted as the web or network of commitments and actions necessary to produce satisfied customers. This shift of focus onto the creation of satisfied customers and the new understanding of business process as furthering that end are crucial for the executives of contemporary organizations to comprehend.

If quality can be seen as an assessment by the customer that a valued promise has been fulfilled by the organization, then an effective business process is one that allows an organization to more effectively and consistently make and keep commitments that lead to customer satisfaction. Thus, to reengineer a business process is to examine and redesign the network of commitments among the members of the organization to more effectively satisfy customers.

Here is where the association chief executive officer comes in. Poised among the board, the membership, and the executive staff, the association CEO can and should have a pivotal role in articulating and fulfilling the commitments his or her organization makes in an effort to satisfy its customers and stakeholders.

Those who can make clear and bold promises to their members and recurrently fulfill these commitments will build for themselves and their associations trust and power.

A common-sense approach

By common sense, we mean the automatic ways in which we think about the world - the metaphors we use, the explanations we have, and the assumptions we make that are so ingrained and automatic that we don't even recognize that they are assumptions.

A new common sense is one that overturns old assumptions - one that allows for innovations, new products, and new practices. As recently as 10 years ago we all assumed we needed banks for banking, but now we bank with our brokerage firms and buy mutual funds from our banks. We assumed that no one but engineers needed a small personal computer and that certainly no one would need one at home, yet here we are with the information superhighway at our front doors.

Throughout the Industrial Age, the common-sense focus was on the materiel process - making and moving things. Then, in the Information Age the common-sense focus shifted to information processes and the movement of data. While these are both important processes and need to be attended to and improved, they are insufficient ways of looking at the work of an organization. Another overarching layer encompasses both materiel and information processes: business process - the creation of a web of mutually satisfying commitments between suppliers and customers or members.

Business process design is a new approach to understanding organizations that clarifies what may seem to be confusing business situations. It provides a way of duplicating the successes of what might, on casual glance, seem to be rare or unusual skills of a few select companies. Business process design is based on the new common sense that sees organizations as a web of commitments designed to produce customer satisfaction rather than hierarchies of reporting relationships or systems to move materiel and information.

Once any organization is seen as a series of interlocking work flows, its essential business processes can be described and mapped. The key question becomes: who is promising what and to whom and under what conditions (see sidebar, "Work Flow Transactions")?

Implementing the process

Recent developments in the education department of the National Spa and Pool Institute, Alexandria, Virginia, illustrate how business process design can be put to work. NSPI established the following objectives to improve the processes of the education team:

1. Build a comprehensive list of the current activities and tasks completed by the education team. It was particularly important to build this list to capture the know-how of staff members. This complete inventory provides a mechanism for verifying that all steps in the process have been identified and included in the redesign and produces a greater understanding of the process.

2. Propose a redesign of the education team processes according to the business process (work flow) paradigm and create a map of the redesigned processes. Once processes can be visualized or mapped, we can then see a number of ways to redesign, streamline, or otherwise improve a particular process.

3. Develop an understanding about the nature and magnitude of the process such that we can begin to estimate the staffing requirements and skill sets needed to implement the redesigned process.

The first step was to map the existing business process and work flow of the education department. The exercise produced a fascinating picture. The map allowed the director of education to locate himself in the process and identify for the first time those promises crucial to producing member satisfaction at any loop.

Before we mapped the department according to its web of promises and commitments, the necessary steps, processes, tasks, and activities of the department as well as who did what and where to get it done were virtually a trade secret within the department. While this situation may have had some advantage for the education director, it also had some serious disadvantages.

For one thing, he shouldered considerable responsibility. Everyone depended upon him to do any but the most routine work. If he wasn't around and a glitch occurred, things ground to a halt and he then blamed himself. Secondly, the ability of an employee to step into any role - either as customer or performer within the organization - other than his or her own, or to manage or improve the process, was slim at best.

Reading the maps

The maps quickly pinpointed that the work of the education team had been organized according to related but independent activities. For example, the technical certification program had been organized around the distinct and separate activities required to deliver the program such as writing and distributing articles for marketing, responding to inquiries from prospective students, mailing certification materials, and grading exams.

These activities had been carried out much like an auto assembly line, with each person doing his or her job but rarely looking at how the work he or she did fit into the finished product. Working this way, it was difficult to see the linkage between activities, the way that separate steps in the process needed to be sequenced, or the consequences that either problems or improvements in one step may have had on subsequent steps.

NSPI learned that there was not always a clear understanding of "looping" - where a process that is "upstream" must be reported complete so that a process "downstream" can begin. When a process is not clear, miscommunication can happen. Situations may occur, for example, where

* staff is unclear about exactly what is required to satisfy the customer;

* activities don't get completed on time;

* participants of the process are uncertain as to how to prioritize their work; and

* it is difficult to locate the source of problems and design solutions.

Organizing work into commitment streams or processes, rather than just related activities, emphasizes the inter-relationship between the parts and the whole. In this way the team can clarify the sequencing of events, timing, and dependencies.

Organizing the education team according to the business process (work flow) paradigm enabled the staff to increase effectiveness (quality) and efficiency (reduce cost).

This initiative required defining the parts of the process by asking the following questions:

* Why are we doing this activity?

* For whom?

* Who is responsible?

* What needs to be done - what other work flows do we need to start?

With a map of key business processes in hand, members of the entire staff, not only the education department, saw that they could fill varying roles during the course of a workday as they went from project to project or activity to activity, as long as the key transactions and activities were taking place. This awareness allowed them to redesign the business process and flow in such a way as to keep the education director managing the business process - identifying promises that had to be made, to whom, under what conditions of satisfaction and time line, and helping staff organize themselves so that these activities could take place.

The role of the CEO

On the larger organizational level, with such a map in hand, the organization's CEO can guide an organization through the following three steps, which are crucial for satisfying the customer:

Step 1: Clarify for senior executives as well as the board and members the organization's key business processes and key promises made to members.

Step 2: Locate the executives' and the board's commitments in the web of promises that constitute the organization and develop a process in which there is collective agreement and "ownership" of this view of the organization.

Step 3: Track and report the status of fulfillment of particular business processes to the board and members.

To implement the first step, NSPI generated a report to the board and members entitled "NSPI's Commitments to You." The report was unique in that it not only outlined NSPI's key activities, but it also represented a promise by the CEO to produce certain results. This promise became the basis for an agreement between the board and the CEO as to the conditions of satisfaction for the coming year. Previously, NSPI had simply reported its intentions at the beginning of the year, and measures of accomplishment (activities or tasks completed) at the end of the year, without ever determining what would be conditions of satisfaction for either the board or members.

For example, previously NSPI would report to the board and members:

a. We will provide so many education and training programs.

b. We will develop and introduce new brochures.

With regard to (b), NSPI would now promise: "x" number of brochures used by members, "x" number of brochures reordered, and the amount of nondues income generated annually from brochure sales.

Also, at the beginning of the year we report not only the projected activity but also why we are doing it and measures that will be used to determine success. For example, we reported our intention to

* produce 54 Tech I schools this year with an average number of students per school to exceed "x";

* provide educational text materials and instructor consistency to ensure that average grade scores for all students would exceed 84 percent;

* increase the number of certified students by "x" percent; and

* provide "x" amount of net nondues income from educational activities to the overall organization.

The board, by accepting and agreeing to "NSPI's Commitments to You," fulfilled step 2.

To accomplish step 3, NSPI issues two additional reports each year. One is a progress report to the board, both on the status of that year's promises to it according to the identified measures and on new promises we can now make in the light of these accomplishments.

The second report - we call it our "report card" - goes to the board and members and provides an accounting of where we did not fulfill, did fulfill, or exceeded our promises to them at the beginning of the year for every key process and event in the organization as identified in "NSPI's Commitments to You." This report is our measure for determining organizational satisfaction.

Six constitutive processes

With a closer look at the fundamental processes of organizations, we see new ways of thinking about the role of the association CEO as at the nerve center of these processes.

During the past decade, Fernando Flores and his colleagues at Business Design Associates, Emeryville, California, have developed a theory of organizations that identifies six basic categories of business processes:

* Learning: developing new ways of seeing the world and the capacity to be competitive within a changing world.

* Investment and ownership: establishing a vision and direction for the enterprise, forging strategic alliances, setting investment objectives, and generating capital resources.

* Strategy and configuration: designing strategies and configuring resources for favorably positioning the organization in its industry as well as in its world.

* Development of new offers: listening for new marketplace needs and developing new offers to meet them.

* Operations development: formulating a process that assembles and delivers standard offers that satisfy customers.

* Quality enhancement: maintaining and improving the company's standards for quality and performance.

How do these categories relate to association management? Our view is that the most effective role for the association CEO is to oversee, coordinate, and coach management in formulating what commitments or promises they are making in the six fundamental areas above, both within the association and to its customers: the board and membership. He or she teaches the management team how to follow up on their commitments - in particular, dealing openly and effectively with breakdowns so as to further enhance member trust and satisfaction. The coordinating role of the CEO involves

* helping management determine what offers and promises they can make, and to whom;

* articulating what promises management is currently making, and whether they are realistic;

* listening to both the board and members to determine what promises they are actually hearing; and

* determining whether the board and members assess that the promises they are hearing are being fulfilled, are on their way to being fulfilled, or not.

What skills does such a professional need? These include the ability to

* listen to concerns of members and the board;

* interpret events taking place in the world and their significance for the association and the field;

* assess future possibilities and risk;

* articulate a comprehensive vision of the association's future;

* recommend actions for increasing customer satisfaction;

* build and maintain trust with members and the board;

* separate facts from opinion;

* identify, assess, and interpret the mood of members, the board, and the market;

* make and manage promises;

* coordinate "conversations" to increase their effectiveness; and

* design the information process to support the making of promises that produce satisfaction.

Seen from this perspective, association CEOs have an essential role that is quite different from the "common sense" notion: He or she is not so much a subordinate of the board implementing policies adopted by the board, but rather a professional whose immediate client is the board of directors and whose responsibility is to work with the board to produce satisfaction for members. That satisfaction level ultimately represents the value of the association - for both board and membership - and is the underpinning of the association's wealth and power, and ultimately its survival.

Promise the process

What can CEOs promise stakeholders? They can promise the process. While CEOs cannot, for instance, promise that their associations will get desired legislation passed, they can commit to pursuing an advocacy program, with finite measures, that - when followed in the past - has proven successful (see sidebar, "What the CEO Can Promise"). When you promise the process, you can also promise that the end result will be better than it would have been without it. Why? With an agreed-upon process, you can clarify who is to do what and by when.

In any effective process, you also have measures for periodically checking the satisfaction level of all of the participants and yardsticks for measuring the effectiveness of the process itself. Are promises being kept? Are they being kept on time? Is everyone actually working off the same game plan, timetable, and set of expectations as was originally established? If breakdowns in the process occur, they can be located and remedied. Clearly, with this view of business process in mind, one can navigate situations and improve the process in midstream in ways that are not otherwise possible.

The CEO - at the center of developing and monitoring this business process for the organization - is key to building the level of trust that members have in the association and that the board has in management. Trust will inevitably increase when the association announces the commitments it makes to members, reports regularly on the degree of fulfillment of these commitments, and checks to see to what degree members are satisfied. Since trust is a key component of the decision to join an association, the CEO becomes integral to the process of maintaining current members and successfully recruiting new ones.

We began this article by proposing that two key functions of today's CEO are, first, to devote efforts to treating the board and membership as customers for whom the job is to produce satisfaction, and, second, to work with the board and membership to develop and articulate an agreed-upon web of commitments that constitutes the organization's business process geared to providing that satisfaction. This set of actions will build trust throughout the organization and thus enhance its ability to build wealth and power for the association through its capacity to attract new members and capital.

Roger Galvin is chief executive officer of the National Spa & Pool Institute, Alexandria, Virginia. David L. Singer holds a doctorate in clinical psychology and is a professor and director of the Graduate Institute of Professional Psychology at the University of Hartford, West Hartford, Connecticut.

RELATED ARTICLE: HIGHLIGHTS

* Business process design sees organizations as a web or network of commitments designed to produce satisfied customers.

* To reengineer a business process is to examine and redesign the network of commitments among members of the organization to more effectively satisfy customers.

* Chief executive officers can and should have a pivotal role in articulating and fulfilling the commitments their organizations make to satisfy customers.

RELATED ARTICLE: Work Flow Transactions

A business process is made up of a set of related, linked, and recurrent transactions or promises called work flow loops that produce customer satisfaction. Each loop represents an exchange or commitment between two people for work to be done. Every work loop has four key elements:

* Customer. The customer for each work flow is the person with the responsibility for assessing that the work has been completed according to some set of standards. This is not an external customer in the sense of the one who pays the money. There can be several different customers for every work flow process.

* Performer. The performer promises to the customer that the work will be completed according to agreement. He or she may ask others for help - start other loops, in other words but in the end is responsible to the customer for fulfilling the conditions of satisfaction.

* Conditions of satisfaction. The customer specifies the conditions under which work will be complete and the customer will be satisfied.

* Cycle time. This is the time by which the customer requests and the performer agrees for the conditions of satisfaction to be met - the time it takes to complete a work flow loop.

These four elements together form a universal structure for transactions involving work or commerce called the basic action work flow loop. Each loop, again, represents an exchange between two people for work to be done. The customer for the transaction may be a staff person or someone external to the organization - for example, a member or vendor. In its simplest form, the work flow transaction is made up of two parties - the customer and the performer - and four stages:

* Stage 1: preparation - a request is made by the customer.

* Stage 2: agreement - the performer promises to fulfill the request.

* Stage 3: performance - the performer completes the work.

* Stage 4: satisfaction - the customer declares satisfaction.

The movement through all of these stages describes a completed work flow transaction that produces customer satisfaction.

RELATED ARTICLE: What the CEO Can Promise

As the coordinator of the web of promises that makes up effective business process, the successful CEO can promise many things. He or she can

* articulate the promises made by management to members - possibly on the basis of a collaborative process between members and management.

* educate members in effective business process so that they can effectively assess management's progress in each of the six fundamental areas described earlier. As a positive spin-off, they may take this process home to their own organization.

* educate the board about members' concerns and the practices of the current market.

* articulate to members and the board whether promises have been fulfilled, and if not, why not, in management's view.

* listen to whether members are satisfied; determine how they assess that the various promises have been fulfilled, and if they haven't, what their ideas are as to why not.

Of course, to promise and deliver this process, it is essential that the CEO understand the commitments that participants in the process are making to each other. He or she must also be rigorous in both acknowledging the degree to which various parties assess that promises have been kept, and in identifying breakdowns or potential breakdowns in the process and remedying them where possible.
COPYRIGHT 1996 American Society of Association Executives
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1996, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:includes related articles; ensuring customer satisfaction
Author:Singer, David L.
Publication:Association Management
Date:Feb 1, 1996
Words:3884
Previous Article:Business soul.
Next Article:The redevelopment of Polish associations.
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