Are some "Best Practices" better than others? Interview with Frederic Ponsignon, University of Exeter Business School
A plethora of approaches to improving and optimizing processes has sought to improve quality, consistency, and efficiency within business operations. Total Quality Management, Six Sigma, Lean, Kaizen, Business Process Reengineering, Business Process Management, Outsourcing – these are just a few of the structured approaches that companies have used to tackle the complexities and challenges of business today.
But are some of these approaches better than others? And do any of them really work?
A group of researchers at the University of Exeter Business School in the United Kingdom has been tackling just these questions. In a study conducted earlier this year, the researchers looked at common best practices of process redesign such as "removing non-value added activity" and "business process outsourcing" in order to identify which ones could be applied and which ones were of dubious value.
In this PEX Network interview, Frederic Ponsignon, one of the chief researchers behind the study, describes what the research was looking for and what it discovered.
PEX Network: If I could sum up your research in one sentence it would be you were looking at whether best practices really were best practices. What got you interested in the idea?
Frederic Ponsignon: There are many stories and anecdotes of world-class organizations that have been very successful in carrying out process redesign initiatives. Based on those success stories, popular books by Hammer, Champy and the likes have identified an extensive set of best practices of process redesign.
These best practices have since been successfully applied across a wide range of organizations and industries.
What we don’t know so well, however, is whether some best practices are truly universally-applicable to all business operations. Also, a list of individual best practices offers limited guidance for redesigning the operational processes that deliver products and services.
Process redesign typically involves using several best practices simultaneously. We wanted to find out the combinations of redesign practices that work best to achieve operational excellence in particular organizational contexts.
PEX Network: How did you analyze those so-called "best practices of process redesign"?
Frederic Ponsignon: Firstly, we looked to determine the most successful individual best practices. Secondly, we aimed to identify and articulate suitable process redesign strategies. A redesign strategy specifies the configuration of best practices that are to be used in priority and the ones that are to be avoided in order to realize the objectives of the redesign effort.
To do this, we looked for a wide range of experts who had embraced best practices in the redesign of their operations. Our study included 16 popular best practices including ‘outsource’, ‘automate’, ‘manage exceptions’, ‘divide tasks’, and ‘reduce customer contact’ for instance.
We designed a sorting exercise – a Q-sort - that required the practitioners to rank order these 16 practices based on their perceptions of relative success in improving operational performance in their organizations. The best practices were positioned on a grid with a fixed distribution, between -3 (least successful) and +3 (most successful).
We then grouped together respondents who had similar combinations of responses by correlating completed grids with one another. Four archetypes representing the shared viewpoints of four unique groups of respondents were extracted from the dataset. In addition to the statistical sorting we also had access to the open-ended comments provided by respondents in relation to the best practices ranked as very unsuccessful and very successful.
PEX Network: I understand you found that some principles were more widely applicable than others. What did your research discover?
Frederic Ponsignon: On the whole, we found that there is not one single way of going about redesigning operational processes. But more specifically, we identified two best practices that are foundational and universal. We also discovered four distinct strategies of process redesign.
Firstly, our results show that the best practices of removing non-value adding (NVA) tasks and re-sequencing tasks are generally applicable to improve all operational processes. These best practices were largely consensual across our respondents. The data also suggest that they are used sequentially as the foundation of process redesign programs.
An organization embarking on a process improvement journey needs to identify and eliminate NVA tasks from the process first, and then proceed to optimize the ordering of the remaining tasks. These principles sound obvious – effective methods always do.
Secondly, we identified what we would consider four different strategies of process redesign: "employee-focused", "cost-focused," "hybrid" and "workstream-focused.
In other words, there are at least four different ways to achieve operational excellence through process redesign. Each strategy consists of a certain configuration of best practices.
Broadly speaking, the "employee-focused" strategy requires redesigning processes for increased flexibility and the execution of a high variety of tasks. It relies on empowering employees and maintaining regular touchpoints with the customer.
The "cost-focused" strategy is all about achieving efficiency gains through process automation and the use of specialists.
The "hybrid" strategy looks to simultaneously maximize efficiency and offer high levels of customer service by breaking down the end-to-end process into distinct front and back-office parts.
Finally, the "workstream-focused" strategy adapts the operational system to the situation at hand through managing exceptions and establishing separate processes for normal and exceptional customer orders.
PEX Network: One thing I think is interesting us that two of these four strategies seem to be diametrically opposed. I wouldn’t think it’s possible to have both empowered, generalist employees and also rigid, specialist employees. How does that work?
Frederic Ponsignon: To be precise, we identified two strategies that rely on highly contrasting best practices, namely the "employee-focused" and the "cost-focused". What we are saying is that organizations can adopt a rigid, Fordian type, approach to process redesign or a more fluid process configuration, and that either strategy can be entirely legitimate and successful.
We do not say that both approaches are "universal"; rather we point out that practitioners need to determine what strategy is most appropriate given their specific requirements and objectives. For instance, empowering employees is highly applicable in situations where developing close customer relationships is essential and where the employee needs decision-making authority to evaluate whether and how a unique value proposition can be created and delivered. On the other hand, a rigid approach is best for dealing with customers with homogeneous requirements and engaged in a transactional relationship. Interestingly enough, the "hybrid" strategy combines and mixes best practices from these two opposed approaches.
PEX Network: Another thing that I thought was interesting was that Outsourcing was widely seen as unsuccessful by respondents to your survey. In fact I think in your report you observed too that it's interesting and puzzling given how popular business process outsourcing has been over the last few decades. Your report said that while you found some evidence that outsourcing generates cost savings, you found considerably more evidence that challenged the appropriateness of outsourcing. Why do you say that?
Frederic Ponsignon: Our findings suggest that managers should approach outsourcing with caution, especially in the case of customer-facing processes. In particular, outsourcing front-office processes (e.g. call centre) carries the risk of losing touch with the customer.
Letting a third party manage customers seems to be counter-intuitive, especially as more and more organizations claim to be "customer-centric". We also found that cultural barriers and problems can heavily impede the success of outsourcing. Our recommendation is for practitioners to carefully assess the trade-offs associated with outsourcing. Potential financial returns need to be considered along with cultural and customer-proximity issues, which can significantly affect performance in the longer term.
PEX Network: Finally, what implications do you think your research has on process improvement as it's widely practiced within companies?
Frederic Ponsignon: We feel that our results can be useful for companies that are about to embark on a process redesign journey and face a strategic choice in determining how they want to achieve operational excellence. It can be difficult and challenging to navigate through the wide range of best practices to redesign operational processes.
Actually, previous research has shown that practitioners tend to fall back on a small set of popular best practices because of a lack of evidence-based guidance. By articulating specific and distinct redesign strategies, our research can help managers select the most appropriate set of best practices to deliver the required improvements in operational performance.
Overall, our findings clearly suggest that process redesign is best approached through the application of one of four strategies along with two foundational best practices. First of all, our recommendations are that regardless of process characteristics, product or service orientation, and business and organisational contexts, new redesign projects should concentrate on identifying and eliminating the non-value adding tasks from the process. Next, managers should address process optimisation based on the most natural sequence of execution of the remaining tasks.
Furthermore, we have identified and articulated four distinct process redesign strategies and managers should be consistent about which one they adopt. Each of the four strategies can potentially be implemented with equal success to redesign any operational system. The choice of the strategy to adopt is ultimately dependent on the current requirements and priorities of a particular organization.