Does Modern Technology Impede Modern Management?

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The economy is undergoing accelerating, multidimensional changes, which are the result of the growing demand of customers for easier access to individualized products and services. The speed of those changes, along with their qualitative character and unpredictability, results in the insufficiency of current management principles. (D’Aveni 1994; Płoszajski, 2004) The precise characteristics of new order remain yet unknown, though it is already clear that organisations of this new type will be "slimmed down" to a flat structure, based to a much larger extent on the labour of groups, flexible through assigning rights to line workers, constantly adapting their activities to satisfy the requirements and expectations of their customers. To cope with such unpredictable and accelerating market and technology changes, use should be made of the full dynamism, knowledge and human potential existing in the company. The article shows that the chances of success are only those samples in which the changes, including those resulting from new technologies, are subordinated to the use and development of intellectual capital and dynamism that exists in the organization.

The main problems of large organisations

In small companies, one can hardly speak of any formal procedures or systems of knowledge management, which would accumulate knowledge in communication with the customer and allow for such knowledge to be further implemented. Acquiring and verifying knowledge is in such cases inseparably connected with basic business processes. Not as a standalone system functioning in its own worth, but as part of activities aimed at fulfilling the client's requirements. Why then do large companies, which sometimes introduce very elaborate systems and certificates, constantly repeat the very same mistakes? Why do so many of them function on the basis of outdated, misjudged or simply plain stupid procedures? Why do consultant companies provide us with dozens of pages filled with pointless "wisdom" and justify such behaviour by saying: we must follow our procedures? Some years ago, during the introduction of a work flow system in accordance with ISO in construction company Budimex Poznań (part of Ferrovial Group), detailed procedures and taxonomies covering over 800 possible situations and categories were prepared. The aim of such a system was to standardize all of the company's activities. Despite such a level of minuteness, however, the system failed to anticipate certain situations during the development of various construction projects for various investors. Not only did the system not aid in the labour process, it managed to impede it. In effect, the majority of employees started treating this system as a useless obligation and most of the records in the system turned out to be labelled with the category "other". Practically all of the records had been created after having finished working, when the results of the introduced processes were already known. More often they served as means of manipulation, e.g., by creating post factum justifications for delays and quality difficulties, instead of showing the peculiarities of each project, which could be further used as a source of knowledge when dealing with similar investments. Such hierarchic solutions were in no way connected with the daily workings of the company and failed to provide both support and control of procedures and the distribution of knowledge and experiences gained by completing a project. This example unmasks the three main problems of large organisations:

1. The absence of process functionality

The vertical structure of contemporary organisations was established to improve control over and make better use of work specialisation. At the same time, however, it often fails to realise that satisfying the needs of its customers should form the basis of each company's goals. Boundaries between various organisational units lead to the departmentalisation of the primary process of the client's interest into detached, separate parts. The optimisation, or rather — the sub optimisation of processes within them may lead to the realisation of misunderstood "goals" within particular organisational units, which could turn out to be in conflict with the primary process aimed at satisfying the client. Because of such an approach, the financial department in one of the construction industry companies tried so hard to reach its goal of gaining as much profit by means of investments and other financial appliances that it failed to pay its contractors on time, which in turn led to the suspension of construction works on one of the major contracts!

This problem has been seen for a long time. At present, there are common attempts to solve it through the implementation of process management.

2. The failure to adapt on time to the changes and requirements of customers and the environment

Companies divided into organisational units are incapable of identifying both their possessed knowledge and that gained through contact with customers or the market it. This is unfortunately caused by the management boards’ attempt to control knowledge management as strictly as they would, e.g., control finance management. In effect, instead of knowledge being distributed directly and quickly between process executives, it flows through the hierarchic meanders of the enterprise, getting distorted, slowed down or even completely lost! This results in the company's considerably slower reaction time to the changes in its environment. It leads to repeating the same mistakes, which are usually not considered as such by the management board, and to the repeated labour and financial strain of arriving at solutions which have already been regarded as negative in the eyes of our superiors. It may also result in our overlooking crucial chances for surpassing the competing parties only because certain procedures or formally approved strategies failed to anticipate them and the process executives were not given enough freedom to try to benefit from such chances.

This problem has been noticed only recently. Present attempts at finding a solution are based on implementing knowledge management through a community of practice.

3. The inability of process individualization

Large companies introduce procedures, instructions, internal laws, and obtain ISO certificates providing a complete and iterative set of processes under strict oversight. All this, however, leads not only to the inability to quickly introduce changes, but even to the inability to react to the individual requirements of customers! Each alteration of a strict procedure requires a decision on the part of the management board or at least one of the head directors. And what if the fulfilment of customer needs requires making certain mutually exclusive changes? Detailed procedures and business process models standardizing the actions of an enterprise literally prohibit the adaptation to specific customers' requirements, which is necessary in such fields as construction industry, consulting, shipwright industry, and recently even in finance, commerce, telecommunication, software design etc. (Szelągowski, 2012) Not being able to resolve them within the ongoing processes companies are preparing specific strategies, business units etc. For example this strategy was used by a large Polish textile company named VISTULA. It’s specially created "Made to Measure" program offers "solutions tailored to the individual needs and preferences of our customers... clothes which are tailored to fit like a glove" (Vistula, 2013).

This problem occurs more intensively with each year. Present attempts at finding solutions are based on a dynamic management of business processes.

Dynamic business process management (dynamic BPM)

In the ISO 9000:2000 standard, the process approach to enterprise management acquired the status of certified and regulated activities. (Gruchman, 2003) This has been caused by the discovery and appreciation of the process-based nature of the company's relationship with its client, who is obviously not interested with the organisational structure, rights and responsibilities within a company. Instead, he is interested in his receiving products and services, fulfilling his needs, or in other words, the value-added created by the supplier. Why then are companies faced with such problems, despite the introduction of process management in accordance with the ISO 9000:2000 standard, further certified with a document? Why is everyone constantly making jokes about procedures and instructions describing literally everything, even the way toilet paper should be used and power plugs inserted into power sockets? Perhaps such a tendency to strictly fulfil all procedures is the source of the problem? The description and "optimisation through standardisation" of every possible process, in accordance with the conviction that "the more procedures, the better", is said to free the company from making risks and the process executives from thinking and responsibility! Such a way of thinking, however, leads to two threats, which may yet prove lethal for companies:

  • Inhibiting innovative behaviours by means of restrictive procedures or business processes introduced by the new standard.
  • Causing the processes to be "mediocre" by means of their models being created to satisfy the common, statistic customer. The statistic customer is, in fact, nobody at all.

Unfortunately, accelerating changes in technology and market competitiveness principles will cause the previously mentioned threats to further impede the benefits of introducing a traditional process management. Because in modern times competition is only "one click away", companies are already faced with the need to adapt the speed of information use and knowledge distribution of primary business processes to the requirements of individual clients. (Salik, 2004)

In the same company, at the same time, the business processes of, e.g., construction investments or ship production should be fulfilled differently each time, depending on the type of project and the needs of a particular client. Because it's impossible to anticipate and simulate each and every type of project and each expectation on the part of the customer, the need arises to dynamically adapt the business process to the individual requirements of each project. In this case process management cannot be limited to a routine, repeated fulfilment of the very same, even positively optimized process. The personalisation of customer requirements calls for the personalisation of the company's business processes. The advantages in innovation and the adaptation speed of small companies over larger, even multinational companies clearly indicates that the key to success resides not in the "most optimal business process", but in the most effectively fulfilled procedures of dynamically reshaping business processes in accordance with the client's needs. Large companies, which undergo financial strain to introduce new methods of management and complex computer systems, find themselves unable to reach the level of flexibility so natural for small, family companies!

To escape this obvious paradox, steps must be taken outside the traditional management of business processes, which are completed by process executives in accordance to standards, and the process board or process leader should measure and make periodical changes to the standard process. Because of the necessity to end the process by the client's deadline, and because of the number of processes managed at the same time, there is no possibility for the process leader to cope with making real-time decisions, analyses and alterations. Large construction industry companies hold 100, 200 or more investments at the same time, consultant companies hold from a couple dozen to a couple hundred projects and expertise’s annually, and law offices a couple hundred as well. It is necessary, as practiced by small companies, to delegate the right to dynamically modify the processes at the time of their completion to the direct process executives. (Balani, 2009; Rouse, 2012; Kemsley, S. 2013; Reed, 2014) Only then will the speed and versatility of performance, characteristic of small companies, be returned to middle-sized companies and even large enterprises. This is a crucial qualitative change of the whole concept of a process-managed organisation, clearly heading towards a learning organization. (Jashapara, 2011; Vines and Hall, 2011; Szelągowski, 2014b) To satisfy the previously mentioned postulates, a dynamic business process management (dynamic BPM) is necessary (Szelągowski, 2004; Stuart, 2011; HandySoft 2012). It is based on the expansion of the traditional (static) process management in accordance with the following three principles:

I. Evolutionary changeability during the realization process

The traditional approach to improving processes by leaders, which consists of process modelling, completion oversight, coming to conclusions and using the accumulated knowledge to improve the process, is too slow and insufficient. What's more, in the instance of being faced with mutually exclusive requirements voiced by clients (investors), it might become apparent that creating a "universal" process acceptable by all customers with whom the company is currently doing business is impossible. Processes must be defined and introduced in a way which enables their realization and activities performed in each step of the process to be supplemented, and even changed by their direct executives (e.g., contract supervisors, project managers etc.). In accordance with the permissions they possessed, and not, as previously, only the leaders’ processes must have the possibility to keep the changes to the objective of the process. They must be able to execute by the process system operations, activities, and even entire elementary processes, not included in the standard. (Gartner, 2009; Szelągowski, 2014a) They should be able to perform limited experiments by performing actions, or even entire fundamental processes, which are not included in the standard process "as of today", as well as to discontinue performing actions or processes which no longer add value (Garvin, 1993). The scope of such possible experimentation should, of course, be limited to such an extent, as not to lead to chaos.

II. Processes are considered completed only after having been documented.

Should leaders introduce changes to the standard process, the speed of knowledge transfer in the organisation would be significantly lowered. Such changes are usually introduced with a considerable delay. E.g., the procedures and processes of ISO 9000:2000 are audited and altered annually, perhaps biannually. In the case of an organisation with a large number of running processes this could lead to mishandling opportunities or to the repeating the same mistakes over again. Implementing the dynamic BPM at the same time, without the possibility of real-time control could lead to a loss of control and increasing chaos (slackness) in the organisation. Therefore, dynamic BPM must be introduced in such a way that the definition of a process will be the same as the course of a process in an executive IT system and completing a process will be the same as attesting completion. Only then will it be possible to compare the definition of a process ("standard process as of today") with its completion. And only then, through the analysis of such a comparison will it be possible to gain real-time information about all innovations introduced by process executives and their effects. (Aalst and Dustdar, 2012; Process Mining Manifesto, 2012)

III. Complexity and continuity

The introduction of process management should include those processes, which describe at least the most basic functions of the company. There is no reason for an improvement to describe only one organisational unit or one elemental process, e.g., canvassing or production. The introduction of dynamic BPM should encompass the whole primary process, as well as the suppliers and contract manufacturers who, e.g., work in one organisation network. The aim is not to minimize the costs or the work time of each contract manufacturer of even the company which is the primary executive. Instead, the aim is to minimize both the final costs and supply levels, as well as the full time needed for completion. (Hammer, 1999) Nowadays, as Drucker anticipated, Polish construction industry companies are observed to abandon monitoring the cost of their own activities in favour of motoring the costs of the whole investment process, of which even the general executives are but one link of a larger chain. (Drucker, 2000)

Companies introducing dynamic business process management combine their primary, daily functions with the ability to create and verify innovative solutions on a large scale. Because executives are entitled to dynamically alter processes, the whole enterprise management system opens itself to creative initiatives of a significant percentage of employees without running the risk of chaos, which would otherwise prevail if not for such controlled changes to the principles of the company's functioning. Moreover, the possibility to oversee the effects of introducing changes enables new solutions and practices which help to arrive at the best results to be instantly introduced into the company's shared knowledge. This is a genuine, daily improvement and adaptation of business processes in accordance with the knowledge of a large number of employees and verified by the customer. As previously mentioned, such an evaluation is as practical and objective as possible. Dynamic process management enables a genuine, practical use of labour management where such labour is really performed. In other words, provided that process executives are in possession of genuine knowledge forming the basis of the company's intellectual capital, dynamic business process management enables this capital to properly function. (Reed, 2014)

The opportunities provided by dynamic business process management enable the employees to contribute daily to their company's shared knowledge by means of finding new solutions and bringing them to light. It should be noted, however, that knowledge is created and verified in the process of the company's basic activities, and not in some external, detached system. Therefore, there's no risk of its incoherence or incompleteness caused by its detachment from genuine activities. The ability to constantly create and verify knowledge, combined with the ability to freely search for solutions (a controlled state of experimentations), is the company's most essential means of retaining their ability to both change and react to changes.

Conclusion

The individualisation of customer requirements results in the necessity of individualising the company's business processes. It also means the company must accept and accomplish three different approaches to business process changes at the same time: optimisation, adaptation and individualisation. As shown in the first part of the article, traditional process management is faced with significant problems in the instance of unpredictable changes. Management boards, directorates, supervisors and process leaders, when faced with the current speed of changes, are having troubles to cope with changes in adaptation. Having taken the necessity of process individualisation into account, waiting for a term, a month or even a week to hear decisions regarding a current contract could hardly be considered a respectable solution! Which investor or bank client would wish to wait even an hour for changes of procedure enabling further handling of an investment or the creation of a personalised savings plan? (Jennings and Haughton, 2002) Corporate boards have no traditional means of management under the conditions of process individualisation.

Exactly 10 years ago in Warsaw School of Economic, author of this article prepared the concept dynamic business process management (dynamic BPM) (Szelągowski, 2004). In retrospect the main benefit of introducing dynamic business process management is the restoration of speed and agility of large companies, which is necessary to function and compete in ever-changing market situations. By commissioning genuine labour decisions and responsibilities to process executives without running the risk of losing control over current processes, dynamic BPM facilitates for daily knowledge management in large companies.


References

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Comments

Andrew Spanyi
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posted 4 years 8 weeks ago

In this article, Marek

In this article, Marek Szelągowski proposes that customers are increasingly demanding easier access to individualized and customized products and services. He then argues that the application of dynamic business process management can be instrumental in restoring speed and agility in dealing with process change within large companies. While several of the examples are from the author's experience in Poland, the key concepts may apply more broadly, especially in Europe. Readers who wish to learn more about Szelągowski's view on the concept of "dynamic business process management" are invited to examine the blog references cited in the article.

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