There should always be a reason why certain processes exist in a company and others do not. The justification lies in the business goals the company has set for itself to achieve. When these goals change, the processes have to change as well.
This sounds logical, but it is not intuitive to many companies. Once an elephant has been shaped, it is very hard to move it around with the agility needed to react to certain changes in the environment. Here is a nice visualization:
5 Monkeys & a Ladder Experiment
Read more below on how to avoid this behavior.
There are several important elements when setting up an organization: the main ones are the company’s Mission, Vision, Strategy, and Values [Figure 1]. They are defined by the company’s Top Management, they come in written form, they are widely communicated and adopted, they are regularly monitored, not so often updated, and are the basis for everything else that the company does. (See a video explanation by Erica Olsen here).
Let’s say this rectangle is our company environment. Where Sam is (yes, he has a name ) – this is where we currently are in the development of our organization, determined by e.g. a SWOT analysis.
The Mission statement is aimed at answering the questions of who we are and why we exist as an organization, i.e. the green surrounding line. The Mission statement also provides the needed clarity on how the company serves its stakeholders (customers, employees, investors, etc.). The company’s Mission equates to the company’s overall purpose.
The Vision statement is a declaration of where the company wants to be in the future, what its aspirations are. As the Mission statement provides the company’s purpose, the Vision statement then defines what the company wants to become as a result of its purpose. Sometimes the Vision statement can only be a short tag-line, e.g. the company’s slogan.
Values are the beliefs, in which the organization is emotionally invested. The Values determine the approach the company takes in reaching its Vision, i.e. how it will conduct its business and essentially all of its everyday activities.
Examples of Mission, Vision, Strategy, and Values statements:
• Toyota Global Vision & Guiding Principles
• The Coca-Cola Company
• Whole Foods Market
• Netflix Culture
The Strategy is the plan, which will take us from where we currently are to where we want to be in the future, i.e. to the company’s Vision. There can be a long-term and a short-term Strategy, both of which can comprise of Goals & Objectives.
The company’s Goals & Objectives are the building blocks of the company’s Strategy [Figure 2]. These terms are often used interchangeably, however, I make a difference between them: The Goal is a broad statement of what outcome we want to achieve. The Objective also contains the desired outcome in its definition, however, the Objective is SMART: specific, measurable, actionable, realistic, and time-bound.
The company’s Goals & Objectives are still a pretty high-level statement about how the company’s Strategy, and consequently Vision, will be achieved. They need to be broken down into smaller steps, which will, in turn, be broken down into smaller steps, and so on until a level of granularity is reached, which the teams can practically understand and execute.
Therefore, the company’s Strategy, incl. its Goals and Objectives, is further broken down into the company’s Processes.
Each process definition (and usually description too) starts with a Process Purpose and Process Objectives [Figure 3]. They give a high-level overview of what a process is supposed to achieve, and at the same time provide a detailed view of how the company’s Strategy will be executed.
The main element of a process is the Process Purpose. The Process Purpose is the reason why a process exists, i.e. WHAT the main thing is that a process is trying to achieve. There is a strict correlation between the company’s Strategy and the processes the company has: If a company is in the Automotive industry, for example, one would expect the majority of its processes to be connected to manufacturing cars and car parts or producing software for those cars. Just as like, if a company has a chain of coffee shops, one would expect the majority of its processes to be around producing and/or handling coffee. It will be rather surprising to see an automobile manufacturer having company processes for making the best cup of coffee in town, because this is not the primary way of how the company is doing business. And that is exactly the reason why the Process Purpose must always be aligned with the company’s Strategy – meaning, when the Strategy changes or gets updated (e.g. based on changes in the market environment), all company processes have to be revised too. This is how we avoid the trap presented by the 5 monkeys & a ladder experiment.
The Process Purpose then breaks down into Process Objectives, which – like any other objectives – are also SMART (specific, measurable, actionable, realistic, and time-bound). The Process Objectives explain HOW a process achieves its purpose. The Process Objectives are the items that are measured and controlled to ensure the Process Purpose is indeed achieved.
Let’s take the Risk Management process as an example: Its Process Purpose is to successfully manage risks within a given scope. To achieve this purpose, the following Process Objectives are identified:
- The Risk Management scope is established.
- The Risk Management strategy / process / procedure within that scope is established.
- The risks are identified.
- The risks are analyzed.
- The risk treatment actions are identified.
- The risk treatment actions are implemented.
- The risks are monitored.
After which, the Process Objectives are broken down into more steps and explained further in detail, in order to complete the full process definition/description.
If your company has an Employee Performance Management (or Evaluation) system in place, your Personal Objectives are based on the company’s Strategy/processes you execute. All the Strategy/Process Objectives are cascaded down from the highest organizational level to the lowest and, therefore, should be traceable up to the company’s Strategy. Theoretically, the sum of all Personal Objectives in a company will give the sum of all process steps, which in turn will give the company’s Strategy in full. This all constitutes the WHAT part of your Personal Objectives, i.e. the desired company outcomes. In addition, you have to take into account the company’s Values, which will constitute the HOW part, i.e. the desired approach to achieving these outcomes.
Sometimes we have too many details in our process(es) and we need a bigger level of complexity to represent all that. The process then ends up being broken down into several nested levels of documents to ensure everybody in the company understands what needs to be done and how [Figure 4].
The company’s Policies & Guidelines are the internal standards that everyone should follow. Note that they can also be referring to external standards and requirements, which the company must be compliant with for legal, business, or other reasons. Both Policies and Guidelines can be present at any level of the process breakdown structure, depending on their scope. The main difference between the two is that the Guidelines are not mandatory and tend to be somewhat informal. They explain how certain steps can be performed: for example, a guideline for using the company-branded templates. Policies, however, are formal and mandatory. They outline requirements which have to be complied with and also highlight the consequences if those requirements are not being met (e.g. disciplinary actions). Example: the company’s IT Security Policy.
The Quality Management System (QMS) (aka Process Framework, Process Landscaping, Workflow Management System, Product/Service Development Lifecycle, etc.) represents all processes and process interactions inside the company. Note that a QMS can also be designed in a lower organizational level, i.e. have a smaller scope: company unit, cross-functional program, etc. The main goal of the QMS is to establish a controlled environment by enabling the Management to identify dependencies and risks, make informed decisions, and overall optimize its activities and use of resources. Example: QMS (source). More info on QMS here.
The Process is a set of interrelated or interacting activities that use inputs to deliver an intended output. The company’s processes are what the Management plans for, executes, and measures, in order to control the operations of the whole organization. Examples: Project Management, Requirements Management, Configuration Management, SW Development, Incident Management, Problem Management, etc.
Note that there is a difference between Output and Outcome: The Process Output is what the process produces (e.g. documents, SW code, reports), which is then used by the subsequent process(es). The Process Outcome, however, is what the process achieves (e.g. fixing product/service issues, getting more customers, controlling the company’s financials, etc.). We can say that the Process Purpose is the desired Process Outcome, and the Process Objectives are the desired Process Outputs.
The Standard Operating Procedure (SOP) provides the specifics in carrying out an activity, process step, or a whole process. Therefore, the SOPs are typically linked to the processes they detail. Example: the Project Management process consists of the following steps: Initiate, Plan, Execute, Control, Close. An SOP for the Control step can detail how controlling is made (e.g. reporting), how often, in which form (e.g. e-mail, meeting, presentation), who the owner and the audience is, what happens when gaps are found, etc.
If needed, an SOP can be furthered detailed in a Local Work Instruction (LWI). Continuing with the previous example: An Instruction for the Procedure of creating the Project Management report will specify exactly where a person has to go (e.g. which tool), where to click, what to copy-paste, and so on, until the report is ready.
Lastly, the LWIs can contain Scripts, which are the lowest level of detail in the process definition. The Script will say line by line what each party in a process step is supposed to do. Example: a Script in a Call Center may look like this or this.