Process Improvement For New Business Owners13th July 2020
If you’ve just bought a new business, you probably want to make your own mark on it, but in any case the change in ownership is perfect timing to review how things are done in your business and decide whether they are lean and fit for the future, or whether they are more of a relic of how things were done when the business was started, or last changed ownership.
If you’re merging a business with an existing one then there is an even more pressing need to review processes — if you don’t find a way to harmonise how the same tasks are done between both businesses then you haven’t really merged, you’ve just got 2 businesses.
So what do you achieve by improving processes, and the systems that support them?
There are 4 key drivers for process improvement. Not all of them may be applicable to every process in every business, but at least one should resonate for any part of your company. It’s also important to notice that the systems are secondary to the processes. A process should exist to fulfil an objective that your business needs to meet. And the computer system should exist solely to support the process. If you have processes that are driven by a system “needing” something, but you don’t understand why your business needs that information then that should also be a red flag that you need to do a review.
Poorly designed and out of date processes are a major (in most cases the major) driver of cost in your business. Every process in the business probably made absolute sense when it was conceived, to the person who conceived it. But technology moves on, customer expectations change, and bluntly, not everyone who designs a business process actually knows how to design an efficient process or fully understands the objectives of the process and how it supports the company. Even the best designed processes may not stand the test of time but humans are creative and will find ways to modify and adapt the process to fit changes. Over and over again. Until the process each member of your team is doing may or may not resemble either the original, or what the others are doing.
This tends to lead to bottlenecks where a small number of “key people” have a lot of knowledge in their heads, and often guard this jealously — afraid that if they share this then their importance and power will be diminished. This is the start of your people expending energy fighting each other rather than the competition. It happens in virtually every business, and it is always a destructive force that ultimately creates a need for things to be done twice (or more), different ways to solve the same problem and inconsistent customer service.
If you see signs of this in your business, it’s probably time to get back to basics and examine what the objective is and then think about how to best achieve this — from a customer’s perspective.
It’s not just the costs that you might need to reduce. Poor process and poorly organised information also bring risks for your business. These might be fairly simple risks, like the risk of forgetting to invoice a customer and thus collect income. Not exactly great, but not the worst risk you could be running… what if your business includes the potential to cause injury to a customer because processes have not been followed properly?
And even if that’s not the case, if you operate anywhere in UK or EU then you need to be sure that your information is up to date, accurate, complete and not excessive (and note that I say information rather than data, because this applies to paper records as well as computer-based ones) otherwise you could fall foul of GDPR. Failing to comply with GDPR brings fines of the size that will simply kills many businesses — up to €20 million or 4% of global annual turnover, whichever is the greater. So unless you think your business could take that hit you should seriously consider how well you could comply with a request from a customer to disclose all the personal information you have on them. Then you should consider whether you are certain that you would be 100% happy with them seeing everything that your staff have written about them. If you’re not sure, then you probably have a data risk you need to deal with.
If all this sounds like it’s just an exercise in managing downsides then there’s good news too. Better processes will likely mean that you are able to offer a higher quality and/or faster service to your customers, possibly at a lower cost.
Alright, you may not be able to hit all three of these but you should see at least one of them improve by having a clean up on processes and systems and typically business will see two of the three improve. Often this happens very quickly (maybe not as soon as the new processes are employed, because let’s be realistic, people will take time to learn the new way of doing things so some reduced speed and maybe teething problems are likely to occur)
The final driver for better processes is predictability. A predictable business offering a predictable customer experience at a predictable price might sound a little boring, but in reality it’s the best thing you could achieve. Customers will feel confident to repeat and recommend the business, secure in the knowledge that their friends will receive the good experience they did, they can predict the price before buying (and no-one likes hidden costs!) and if you’re going to be looking for investment or borrowing money then a predictable business is going to massively increase your chances of securing this compared to an unpredictable one, because an unpredictable business is a gamble, not an investment.
Be clear what you want to achieve — not what you want to do
If you start by trying to describe what you want to do then you’re pre-judging the answer. An if you do that, then why even ask the question?
Instead consider what the outcome needs to be. Do this from a customer perspective, because a customer doesn’t need to care about how you deliver the goods or service — simply that you do it, do it consistently well and at an appropriate price
Alright I’m Convinced! So, How Do I Do This?
The very first thing you need to do is to get your stakeholders bought in with what you’re about to do. These include the people who jealously guard their specialist knowledge. In fact they are the most important people to bring into the review — you need to get them aligned with what you’re going to achieve so that their specialist knowledge can be leveraged to do it. Otherwise they will be major blockers to actual implementation of things, popping up at the end to tell you why it won’t work, or revealing some key detail that has been overlooked. Engaging this group is hard — you need to help them transition for doers to owners and reassure them that they will not be diminished as a result of sharing their knowledge. Indeed, done right they will gain from it, with new skills and knowledge
Map The Process
The next thing you should do is to map the existing process. Not the one written down in any manuals you may have. The one your people actually do. All of the ones they do, including the strange variations that have evolved over time. Once you do this you will immediately see some inconsistencies, wasted effort and missed opportunities. But resist the temptation to dive right in and just fix those!
To simply you need to step back… look again at what the process is there to achieve. Break the achievement of that goal into high level steps.
Now look at each of those high-level steps and think about what needs to happen. Probably at this point you’ll see several steps (maybe several competing versions of steps) in your current process. For each of these ask yourself whether it is absolutely required (and why). Remove as many steps as possible so that you are left with the minimum number. If there are two or more ways of doing something challenge whether both are truly complete, which is objectively least work for the same result. If you really can’t answer this with a desktop exercise then run a controlled trial of each, at this micro scale. Then pick the one that is best.
But this will only get you so far… you can’t build the best car in the world simply by taking the best of each part and hoping they fit together — they won’t!
You need to step back up to the high-level process and see if the parts truly integrate. If they do not then you need to make some adjustments to them so that they do. That might mean making one or more parts slightly less efficient, but in so doing you will make the overall process more effective, plus you will understand why.
By this rigorous decomposition, refactoring, recomposition and review process you will ensure that firstly every part of a process is working well, then that the sum of the parts properly makes the best possible whole. It might feel tedious but skipping these steps is likely to leave you with a process which is akin to doing the wrong thing, but faster.
Digitise and automate, but only where it makes sense. Once you have a new process you should seek to automate any truly repeatable parts. But do this while considering the least expensive way to achieve this.
For a large, slowly changing business, that might well mean adding robotic process automation or bespoke software. But for a small business it might be as simple as building some Excel macros to automate a calculation
The vital step many businesses miss is to make sure their people understand why these changes are being made. Training should be about more than just what is changing and how to follow the new process. It should enable everyone to understand why the process is as it is, and how that’s essential to the goals of the business. Without that mistakes, modifications and omissions will creep in. With it, your people will be empowered to make well understood and properly designed changes which align to the business objects, when they are needed
No business exists in a static state — monitor the changes you’ve made. Measure the impact and make sure it keeps delivering. When it stops, when the landscape changes or when new opportunities or threats emerge… rinse and repeat!