Just getting older or wiser too? Tracking process change maturity

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Listen to the original podcast here: Older, wiser and a few grey hairs…what happens are process excellence matures?

Please note: this transcript has been edited for readability.

PEX Network: What do you mean when you talk about process maturity levels?

Derek Miers: Process maturity or maturity levels was a concept that was initially driven by the US Department of Defense trying to look at the quality of their suppliers. They came up with the CMM, or Capability Maturity Model. This was a way of thinking about the quality of a software supplier, primarily, which was where it first came from.

Typically, all maturity models are based on this. Every consulting house worth their salt will come up with another model, but, really, what they are based on is this primary five-layer model.

Level One is basically that there is no organisation; it’s pretty much chaos. The results that you get back are unpredictable at best and the experiences that a customer might have are very poor.

Level Two is that you may have a way of doing it in London or a way of doing it in Rome, a way of doing it in Frankfurt, and they’re under basic management control. You know how you do things, but there’s no standardization across the business.

Level Three is that standardization across the business; you’ve actually understood how you did it in London, Rome and Frankfurt; you’ve decided what is the best way of doing things and you’ve tried to standardize that.

So, if you think about it, with Level One the focus is almost on the individual; they have their way of doing it. Level Two the focus is on the departmental or business unit level - the local geography. Level Three is starting to look pan-organisationally and there are big challenges there.

Level Four is subtly different. At level 4 you go back to a departmental business unit level, but you’re running the business by the metrics. You really are looking at the way in which you do things, and evaluating at that business unit geography level whether you have the variations that you need. Indeed, you start to embellish things to make things appropriate for the geography of that business unit. But it’s all about running the business by the numbers. It’s not that you don’t do metrics earlier on; it’s just that by this time it becomes so sophisticated that that’s how you think.

Level Five is the sort of Nirvana state where everything is continually optimized. The maturity levels that we’re talking about here are a journey that typically lasts anything from five to 40 years, depending on the size of the organization. I remember talking to the chief scientist for GE and he said, I’ve been on this journey for 30, 40 years and it’s always on that Level Three, going on Level Four type journey. To be honest, there are very few organizations that you could say are on that journey Level Four, going on five.

PEX Network: It really sounds like it’s almost moving from adolescence and the chaos of adolescence into a more responsible adulthood with mortgages and everything else to pay.

Derek Miers: Yes. Think of it like this: you become so good at understanding how you do things, how you get things done, and the benefits that are derived from that. But it means that as an organization you can "turn on a dime" and reconfigure your processes as you need to because you understand how your processes work. The culture of the organization becomes familiar with handling that sort of change.

Whether we talk about Six Sigma or Lean or TQM or other methodologies, they’re all trying to drive you towards increasing that maturity over time. As your maturity increases, your costs come down and your ability to predict the outcome improves.

For instance, at Level Three, let’s say you had a thousand cases that you look. That could be a thousand cases of making parts, handling claims, etc. They’ll appear like a bell curve if you look at them statistically and your target will be in the middle. At Level Two, you might have had a target, but you hardly ever meet it. At Level One, you probably don’t have a target. At Level Four, you have a target and your bell curve is getting tighter and tighter and tighter around that target because you understand exactly what you’re doing and you’re looking for those variations.

PEX Network: So what got you interested in researching maturity levels?

Derek Miers: The implications of understanding your maturity is almost like self-awareness at a personal level. Once you understand your own foibles and problems, you’re able to fix them. In a way, it gives you a map of where you are and the sorts of things that you need to do in order to move your organization forward.

These transitions, particularly transitions Two through Three and Three through Four, have massive implications for an organization. They’re just so fundamental about how the organization works, how it makes decisions, how it treats governance, how it approaches its strategy, how it thinks about serving its customers, or external stakeholders for a public company.

You hear a lot of people say "we’re on a journey". What’s the journey about? Well, the journey is really about driving your maturity forward. Why are you interested in doing that? Because that’s how you deliver better results and how you deliver better outcomes for your customers.

So understanding how you make those transitions - understanding where you are on that journey, understanding the sorts of things that are going to get you to the next level - is very interesting.

For example, when we did the survey in 2011 we had 325 respondents that completed the maturity element of the survey and answered the other questions. That’s actually a lot of data; 325 change program that we’re talking about here. There were lots of different sizes of organisations across different industries but what I was able to do then was to segment those change programs by the maturity transitions that they were on and then look at what their drivers were, what their primary goals were.

It’s no surprise that at low levels of maturity, it’s all about reducing costs. But, actually, when it goes to a Level Two, going on Three, suddenly it becomes all about the customer. Level Three going on Four, it’s all about the customer and value.

But the real "aha" moment that I got from that survey probably occurred to me six months later, which is that to actually get out of that low level of maturity you have to start focusing on the customer. Unless you focus on the customer, you’re not going to learn what the customer really wants.

Once you focusing on the customer, you’re going to learn things that maybe you do that they don’t value, so you stop doing it – ka-ching! - you save money, which is great. But as you start understanding what the customer really wants, you start really thinking about your value proposition that you take to them. Presto, you’re actually working on the value innovation that goes on at that Level Three, going on Four, maturity level. At that point it’s no longer about cost reduction or that reductionist philosophy of ultimate efficiency.

The way I have of saying it almost is like: think about why you go to work. Do you go to work for the ultimate sterile efficiency of the organization you work for? No, you don’t. You go to work, and the job that you do is based on the value that you deliver into your customers and your stakeholders primarily.

When you start thinking about this maturity transition, it’s about how you engage people, how you build the change program, how you structure it, the sort of expectations you have of it and everything starts to change.

PEX Network: One question I had, of course, is around the whole cost reduction. A lot of organisations do seem to start there, but do you think that given your research and the fact that more mature organizations tend to focus on the customer, that maybe it would make more sense for companies just to miss that cost reduction stage and leap into focusing on the customer first?

Derek Miers: No, you can’t do that; you can’t bypass a maturity level. To get from Level One, you want to get to Level Three, maybe that’s your target. But, I’m sorry, you just have to go through Level Two.

I found myself recently speaking at a conference for a major oil company in front of an audience of Lean, Six Sigma and quality and safety oriented people inside the organization coming together. There were 150-odd people in each location – one in the US and one in Europe. To give an example I suggested there about how to get people to share best practice, let’s think about an oil rig. You’ve got a shift changeover on an oil rig. How do you do that in the most effective way, the safest way, and the way that is going to give you the least problems?

Well, you might come up with a standard definition, but are you going to get to impose that on every oil rig? The reaction is normally: oh, no, but we’re different. But why are you different? Well, because we’re different from that oil rig over there. We’re in the same oilfield, but they’re different from us.

It’s that almost tribal instinct of how we do things.

You can’t just drive a bus through that and suddenly go to one standard way of doing shift changeover for all oil industry platforms. They’re all different even though there are lots of common elements.

So how do you get people to come up with that standard way of doing things in that Level Three-type aspiration that we just talked about? Well, you need to bring them together and challenge them to design it rather than just telling them: "here’s the answer, go apply it". Because then they’ll just quietly dig their hills in find the changes really difficult..

But if, on the other hand, you engage them and get them to design that set of outcomes for themselves, then it becomes theirs - not yours - it’s theirs.

PEX Network: It sounds interesting, because it almost sounds like the process maturity itself is a process that you have to follow and it sounds like it’s really about the people and engaging them.

Derek Miers: Absolutely, because otherwise everyone says, oh, change is really hard. Yes, change is really hard if you don’t bother to engage people first.

I found myself yesterday talking to one of the world’s largest retailers. They were talking about how they build a shared service operation across the world. Their initial question was, what technologies do we need to support shared services?

My answer is that it doesn’t really matter. The technology is not the hard part; the hard part is actually getting the people to want to change. What’s that old joke: how many change management consultants does it take to change a light-bulb? The answer is one, but their light-bulb has got to want to change!

That’s almost where it’s at, because it’s about building that engagement instead of mandating change. Instead, engage people to build the change program. The long road is actually the shortcut.

PEX Network: You’re launching a new survey with us to get an update to the previous study that you did back in 2011. What are you hoping to find out this time?

Derek Miers: It’s like all these things – you never quite know until you ask the questions. One of the things that we’re expecting to find is that we now live in the Age of the Customer. Most of these change programs are oriented around building better outcomes for customers, ultimately. That may be in the form of lower costs by doing things faster or cheaper or you can do things more predictably.

Think about it like this – when you interact with your bank do you care how they’re organized? Really, what you care about is the outcome that they deliver to you. Do you care how sterile and efficient they are? Not really. You care about the outcomes that you get.

I found myself recently having to cancel a bank account, for instance, and I had two accounts with this organisation: one was a current account and one was a savings account. So I had to talk to the Current Account people and the Savings Account people. They just couldn’t get their heads around the fact that I didn’t want to talk to multiple departments to shut down different accounts within the same bank. I don’t care that they’ve got a Savings Department and a Current Account Department. I care about the outcome.

So what we’re looking for in this research is the link to the way in which change programs are becoming more oriented towards customer experience and delivery of better outcomes. I think that we’re going to find that as the maturity levels go up so does the preponderance of using different techniques to try and drive that.

Here, I suppose, I’m talking about persona design; service blueprinting; design thinking, which is a way of experimenting and thinking about the outcome, and working backwards; all those sorts of things I’m expecting to find. I hope I’m not prejudicing this survey by talking about that at this point, but I hope people taking the survey will answer it honestly. We’re only going to treat the data in aggregate, anyway.

We’re looking at the evidence of, really, what’s going on here, and, also, to debunk that myth that we so often hear that 70%, 80%, or 90% of change programs or transformation initiatives fail. I think that’s rubbish.

Very few projects or programs ultimately fail; it depends on your definition of failure and success. It may fail to deliver the cost-cutting benefits that were sought, because, mostly, they were naive in terms of the way in which they were constructed in the first place.

Very often you find that those change programs are delivering good benefits but maybe not the ones that were initially expected. I’m hoping to find evidence that helps us debunk that myth, because we just don’t see it. What we see is people failing to do things right or maybe they could have done it better – maybe they could have got there quicker or faster - but they don’t ultimately fail.

For instance, one of the world’s largest insurance organizations; they went through a transformation program globally within the US operations, which was where I had good data for. They were expecting to drive down costs by 30% and to drive top-line growth by 10% to 15%. They failed to cut their costs by 30%; they only cut them by 15%. But they drove revenue, new sales, by 32% in the same time. Now, which would you rather: cut your costs by another 15% - a reductionist philosophy - or add to the top-line growth by 32%? I think if we looked at the profitability of the organisation during that period, you would find that it had become far more profitable as a result of adding to revenue growth than by cutting costs.

Don’t miss your chance to take part in Forrester’s Business Process change survey 2013! In return for filling out the survey, you’ll getnot only a personalized copy of the report benchmarking your answers against others in your industry, but also receive a selected Forrester Research paper of your choice (from a list of options). The survey closes September 13^th. Take the survey here!

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