Where Have All the Process Owners Gone? Brad Power (Harvard Business Blog)

Posted on April 14, 2011 by

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Where Have All the Process Owners Gone?

by Brad Power

When organizations set about improving the way they work, the natural tendency is for them to do it within functions. They don’t necessarily improve processes that cross functions — and processes must often be redesigned this way to improve the customer experience.

Process gurus such as Michael HammerJim ChampyGeary Rummler, and Alan Brache have long maintained that companies must appoint process owners to ensure that processes are improved across functions. For 20 years, they have extolled the virtues of this role, filled by someone whose job is to make sure their organization doesn’t revert to optimizing just within departments. Yet I see few organizations that have process owners. Why?

It can’t be for lack of clear direction. The gurus have written detailed descriptions of how companies should establish the process owners, process councils, and other pieces of a formal process governance structure to manage their six to 10 core, cross-functional processes. The process owners are supposed to be highly placed, respected, and connected to make things happen. Their responsibilities include:

  • Acting as the “voice of the customer” by understanding customers’ total experience with a company, from the moment they learn about it to the moment they end the relationship.
  • Monitoring process key performance indicators (KPIs) and keeping top executives apprised of how processes are performing.
  • Making sure the company’s key processes are delivering competitive advantage, or if not, that the right fixes are on the way.

Air Products, Nokia, and Shell, among others, followed this advice and created top-level process owners. They also built a process governance structure that was an organizational overlay on their functional and product structures. These companies kept top-management attention on critical processes and KPIs. And they succeeded wildly. Air Products, for example, tripled corporate productivity (hard profit-and-loss benefits) from 2003 to 2006, and boosted operating return on net assets from 9.5% to 12.5% from 2004 to 2007.

The executives I know at these companies today believe that having process owners provides them a significant competitive advantage. They also believe that companies without them are forced to settle for lower customer satisfaction no matter how well they improve efficiency within functions or departments.

Other companies established process owners but over time reverted to functional management. Why didn’t process owners stick at these organizations?

1. Attention shifted: The effort to install process owners started out with top management support and attention, but then more urgent issues arose, or senior leadership changed. Most employees viewed it as just another management fad, sat back and waited for top management to move on to the next strategic initiative. When C-suite executives shifted their attention, the process owner roles were disbanded.

2. Roles were misunderstood: Process owners were appointed, but they never clearly understood what they should do. There were few role models and little time for training. Some companies chose as process owner functional executives who had the largest overlap with the process. Success in the function did not always translate to success in the new role; sometimes an authoritative style that worked there was ineffective across boundaries, where an ability to influence is often key.

3. Accountability was lacking: Companies didn’t hold their process owners accountable for improvements in process performance. Many companies appointed process owners to design processes as part of a new system implementation such as enterprise resource planning (ERP). However, after the system was installed, the process owners vacated their jobs because the company didn’t see them as being responsible for process execution. Nobody was left to care about process performance after the system went live.

4. The role had little influence: Some companies appointed process owners at middle management levels. They could not have enough influence on the organization’s mindset and culture, and they fell by the wayside. When tradeoffs had to be made, solid departmental reporting relationships trumped dotted process relationships. The wishes of a functional head such as CFO, CMO, or company President won out over a Process Owner of Order-to-Cash.

5. The organizational structure was too complex: Most large companies already have complex organizational structures, with product groups battling geographic leaders fighting functional heads in a three-way competition. Other companies have all that and then heap a customer segmentation structure onto the org chart too. Putting a process overlay on top of an already-complex structure can be too much for people to cope with. As a result, when advised to add a process dimension to their structure, many organizations say “no” to keep things simpler.

6. Employees were uncomfortable: Most employees are more comfortable in a traditional functional organization. End-to-end process management disrupts their accustomed relationships and identity. (How many times have you heard “I’m a finance person” or “I’m a marketer”?) If employees don’t want to change, they have power. When one company instituted process owners, customer satisfaction went up, but employee satisfaction went down. A new leader came in to massage the bruised feelings and flipped the org chart back again to a functional structure.
For organizations that are serious about achieving and sustaining cross-functional process improvement, I recommend establishing process owners. But I also tell them they must address the issues I mention above to have a chance at being successful. If they can’t meet these conditions, organizations should not try a half-way approach.

I’ll talk about the ways to set up process owners and other organizational mechanisms for sustained cross-functional improvement in my next blog post.

Request: Have you seen process owners or other organizational structures that sustain cross-functional process improvement? Why do you think so few companies have process owners?
Brad Power (bradfordpower@gmail.com) is a consultant and researcher in process innovation. His current research is on sustaining attention to process management — making improvement and adaptation a habit (even fun?). He is currently conducting research with the Lean Enterprise Institute.

 

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