One of the key reasons companies deploy a BPM suite is to prevent failure. This is a major selling point for many BPM solutions. A key goal of a BPM suite is to enable the deployment of process driven solutions that prevent a deployed process from failing.

But of course, as he points out later, it isn’t always cheaper to prevent failure rather than fix it. ( Not to mention, in some businesses, fixing it is an opportunity to delight the customer. ) This  is the crux of it:  the arguments about failure are talking past each other.  Process Improvement (BPM) should aim to reduce preventable failures of a fairly routine nature.  Data entry errors, for example.  Logical inconsistencies. This isn’t the primary or only goal, but it certainly is one important form of process improvement for many processes out there. But the idea that we should learn from failure isn’t exactly a new one either… Max Pucher’s blog is an excellent example of this concept in the 70′s and 80′s.  The Lean Startup is an excellent example from the startup world.

If you’re familiar with six sigma technique (a fairly mature method that predates my professional career), then you’re likely familiar with the Failure Mode and Effects Analysis (FMEA).  In it, you rate possible or anticipated failures by:

• Severity – how bad will it be if it happens?
• Frequency – how likely or how often is it to happen?
• Detectability – how easy and reliable is the detection of the failure (or pre-detection).

Different remedies apply to the failures depending on their characteristics.  Often this is applied at a pretty tactical level.  But conceptually you can apply it at a macro or management level.  Such aphorisms as “worry about what you can control, not what you can’t” and “prepare for the worst hope for the best” are perhaps simplified examples of this kind of thinking.  Much business advice could be reduced to focusing on what matters and letting go of what doesn’t.  Some failures don’t warrant preventative treatment, and some do.  This isn’t exactly a new idea.

The kind of “preventing failure” behaviors that ACM folks are pushing against are mostly organizational or cultural in nature rather than procedural. It isn’t like BPM proponents are advocating that businesses circle the wagons and just focus on preventing failures.

So in summary -  where you want to play it safe deploy a process solution focused on managing structured processes, if you need agility (and are willing to accept its associated risk) then you should focus on “first fault problem resolution” for your unstructured processes – rather than try to structure them to prevent failure.

This isn’t as easy as it sounds for some businesses.  Let’s talk the First Horizon oil spill disaster in the Gulf of Mexico.  Did they need agility or preventing failure out there on the platform?  And which situation did their decision-making process most resemble?  (Given that individual operators could and would override long-established safety protocol, I think we can infer that they were on the side of more agility vs. more preventative).  Other businesses, and other situations, would have a different profile and tolerance for various kinds of failure.

If you’re going to have agility and learn from failure, don’t forget one other thing.  You need really good leadership.  If you don’t have that, the results of failure might surprise you.

Related posts:

1. Witnessing major process failure in action
2. Risks of ACM Failure in 2011?
3. Sloan Review on Process Improvement

BPM and PI share a common definition of the concept of process—“activities or tasks that produce a specific service or product for customers”—but from this common ground, their interests can go off in separate directions. In the ideal situation, they are synergistic, with an analytic, data-driven PI methodology identifying and building a sound business case for a BPM application while enabling a continuous improvement cycle driven by BPM transaction data. But it’s also possible for the methodologies to ignore each other’s roles or, worse, disparage each other’s value. This article examines the interaction for both synergies and contradictions.

Followed by a quick summary of origins, pinning process improvement’s history as far back as Henry Ford, with modern manifestations in TQM, Six Sigma, Lean, and Operational Excellence.  Whereas BPM’s origins are in IT, with a background in workflow, SOA, enterprise resource planning, and BI.

Its a pretty good read, overall, especially if you aren’t already familiar with BPM.  The conclusion I find especially interesting:

So, why are we not more aware of the successes of a combined PI–BPM approach? Reviewing articles and blogs on the BPM side, there seems to be a developing interest (or at least an awareness) of sharing the process space with PI and an interest in learning how the methodology can add to BPM’s value. This is especially true among BAs who are responsible for understanding process and process design. Discussion of the value of PI training and certification is common. This interest may be a leading indicator of change, but for the present, much of this thinking is lost in the push for software delivery—“It’s out of scope,” or “We have to get this done now; we’ll fix it later.”

In contrast, PI practitioners are more or less ignorant of BPM’s capabilities; at best, BPM is thought of as workflow. PI’s origins on the factory floor and its tradition of small, simple, incremental improvements sometimes do not translate easily to a complex back-office or case-management environment. Although basic principles of flow, pull, and stability remain the same, a literal U-shaped work cell may not be the answer; an understanding of its BPM equivalent may be. Disdain for or ignorance of software solutions—even a handoff of requirements—will not produce optimum future-state designs. Knowledge of BPM capabilities should be in the PI practitioner’s toolkit right along side Minitab and kanban cards.

At BP3, we’ve noticed the same opportunity, and the same disconnect – PI practitioners are often ignorant of BPM, or dismissive of any technology-enabled process improvement (despite the fact that they do use their own software tools to help do PI work…). At BP3 we look for opportunities to apply PI to our BPM projects, its almost a free boost to ROI (it requires minimal extra investment and yields better returns).

Related posts:

1. Sloan Review on Process Improvement
2. HBR and Process Improvement Culture
3. The Economy and Process Improvement

The distinction between “old school” and “new wave” process improvement approaches (I’ve called these “high church” and “low church” before) is just continuing to get stronger. 10 years ago, the vast bulk of process improvement activity used to be driven by the “high church” crowd: lots of ceremony, burning of incense, and so on. Scientific improvement efforts driven by highly-qualified specialists are essential in situations where there’s a lot at stake (for example when you’re reengineering an auto manufacturing line: get it wrong and it’s going to cost you a lot to put it right). And don’t get me wrong: there’s definitely a place for this.

This description and the ensuing thoughts reminded me of our early experiences with BPM at Lombardi.  Lance and I (and others at Lombardi) were often running into process improvement experts with a grounding in Six Sigma or Lean (or less often, IDS Scheer, or Enterprise Architecture modeling).  We were sometimes supported by these folks, and sometimes they resisted our approach (and “BPM” in general).  On the whole, there was a lot of resistance, as our approach to process improvement was somewhat heretical.

So Lance (now CEO of BP3), embarked on a journey to get behind the curtain, to understand the vestments of the Six Sigma and process improvement community so that we could better work with these folks.  After going through the first rounds of training at the Green Belt level, he started to get others of us to go through the training as well.  And what we found was that you didn’t have to adopt the religion of Six Sigma to get the value.  The statistical tools are just that :  great tools you can use.  The “high church” trappings are wholly unnecessary but they do create an aura of authority for those who exercise them.  Lance went on to become a certified Master Black Belt, but we continued to apply what we learned from Six Sigma in an eminently practical way.  The point isn’t to be “pure” – the point is to get to value faster.  If statistics can do that for your business, then you use them.  In our mind, if a BPMS can do that for your business, then you use it.  Make the best of the tools at your disposal to get the maximum benefit.

Still, there are those whose self-interest is aligned with keeping the “high church” ceremonies and orthodoxy firmly in place.  The challenge is to keep it in perspective – scientific approaches can inform the “new wave” way of thinking without slowing things down.

One of the ironies now is that some of the newer entrants to the Business Process space now see BPM as the high church (old school) and their own approach as the new wave.

Related posts:

1. Sloan Review on Process Improvement
2. Launching Lean 6/BPM for IT Training!
3. Statistical Significance of Observable Data

1. Stretching – at the beginning, a small team is motivated to succeed, and has support of executives.  A six sigma or process improvement coach helps them navigate some of the harder issues to make sure they stay on target and achieve early success, which causes additional initiatives to be kicked off.
2. Yielding – As the process improvement coach is removed, teams begin to revert back to prior behavior, or lose the ability to get the team objectively past some of the harder sticking points.  Executive attention, and perhaps some of the best team members, has moved to other projects.  Performance starts to retreat, though not necessarily to pre-improvement levels.
3. Failing – the vicious cycle begins “With the improvement expert long gone and no additional training in Six Sigma or other improvement strategies provided by the aerospace company, team members became increasingly discouraged by their failure to build on earlier success. They eventually stopped caring about the improvement project, partly because it wasn’t tied to their performance reviews.”

Well, I feel motivated, how about you? Luckily we are not springs, we’re people, and we can be a bit more creative about avoiding this inglorious “failing” phase than the author imagines.

The article author proposes 4 lessons learned from the many companies they studied for this report:

1. Keep the improvement expert around longer – or share this expert among more than one team to spread the cost – but the recommended term was 2 years, augmented by training managers to pick up these responsibilities.
2. Performance appraisals tied to improvement.
3. Keep teams small (less than 10).
4. Executives need to directly participate in the projects, not just receive reports from someone who has incentive to focus on only the good news.

This isn’t bad advice, it is good advice to start.  But it is insufficient and unlikely to cause organizations to suddenly get higher success rates with process improvement.

What did they miss?  Well, they missed BPM, is what they missed.  One of the reasons BPM is a “killer app” for process improvement is that when you discover the most effective changes to make for your process, you can put them into software, not just into a book of Standard Operating Procedures that your team will quickly forget about.  And your improvements aren’t just things that people on the team learn and practice, nor just things that they pass on to others on adjacent teams – they are things that get encoded into your process.  The software gives you:

• Some resistance to the “yielding” phenomenon described in the study results.
• Accurate measurement over time – no dependence on manual measurement techniques that may degrade as team members lose interest in the stop watch and other manual measurement techniques.
• The ability to “bake in” an improvement and move on to the next thing, rather than get stuck in a high-cost maintenance of the first improvement.
• A “control” baked into the software.  (Six Sigma has standard approach called DMAIC – define, measure, analyze, improve, control… and BPM software directly addresses D, M, and C, and supports the A and I activities…)  So often the “failing” phase is because the organization loses focus.  Software doesn’t lose focus – it just keeps running.

Too often, the proponents of Lean and Six Sigma ignore technology because they view it as an impediment, failing to understand that there is more to technology than MiniTab or SAS/SPSS or Excel.  And if technology allows you to do something at lower cost, such as a process improvement project, or maintaining an improvement over time, then it shouldn’t be dismissed out of hand.  But it is easy to understand why they sometimes see tech as an impediment – deploying software takes time – and during the initial phases of improvement the improvement guys just want to move fast.  My take is – don’t let the tech get in the way, but don’t pretend it can’t dramatically improve the efficiency of your business – in fact, technology, and specifically BPM software, is likely the key to locking in the gains you seek to establish a “new normal” that is a more efficient and effective process.

Related posts:

1. EMC: Role of Process Improvement Methodology in BPM
2. HBR and Process Improvement Culture
3. The Economy and Process Improvement

I recently read Theo Priestley’s post on why Six Sigma doesn’t work in the real world.  In it, he relates a LinkedIn posting from someone attempting to do six sigma analysis on a call center process.  From reading the LinkedIn posting, it is clear that the person posting is not experienced in Six Sigma or other  related process improvement technologies that would be helpful to the cause.  This person is trying to figure out how to get a bell curve from a formula related to rate of defects in the call center process, where a defect is defined as a call response being over 60 seconds.  Theo extrapolates from this that it is an example of why Six Sigma doesn’t work in the real world, and why black belts are not needed (all that is really needed, he says, is a pragmatic approach).  And he quotes a response he advocates:

“…at the end of the day if you produce a bell curve telling me the USL and LSL for my call centre, along with the number of defects per million and a sigma value of 1.727, is this really a useful measure? More to the point, what can I – as a business person – do with it?”

Well, look. The response (quoted) asks the right question – is this a really useful measure, and what can I, as a business person, do with it?  In other words, are you wasting our time trying to figure this out in the first place?

But here’s the rub.  A good Six Sigma practitioner would not need to post to linkedIn (hardly the font of six sigma knowledge in the first place) to ask how to plot a bell curve to show USL and LSL.  So the poster hardly represents the “failure of Six Sigma in the real world”.  And a good six sigma practitioner could tell the respondent quite nicely:

If we can plot the response times of your call center, we can understand whether the process is “in control” or not – by which we mean, is it predictable and does it vary in a “normal” way from the median behavior.  If it *is* in control, then we can endeavor to improve the process by decreasing overall response time if too great a percentage of responses are exceeding your 60s window.  However, if your process is *not* under control, then this means that there are one or more special cause conditions causing the process to be more volatile. Therefore your first effort has to be on stabilization before you effectively focus on ratcheting down the long-term variation (i.e. drop the average of the process down as a whole).

Not that Six Sigma is the only tool available.  Lean has several tools that are well suited for call-center style efficiencies, and so does 5s (the Japanese concepts of organizing the workplace to keep things consistent and orderly in order to keep the process consistent as well) and keep in mind just like BPM, Six Sigma is continuously evolving with new tools and techniques and while the statistics is certainly an important part it’s not the alpha-omega that many who haven’t learned Six Sigma believe it to be; certainly not the Six Sigma of the 1980′s.

My problem with the post:  using one example of someone struggling with the concept of Six Sigma, to challenge the whole notion of using Six Sigma – a bit like challenging the concept of a 100-meter dash after watching me run it, instead of Carl Lewis – at least look at how experts apply the techniques!  Six Sigma is not a religion (or at least it doesn’t have to be!)- it is simply a set of tools that can be used to pragmatically improve your process by focusing on unemotional data rather than exposition based on anecdotes.  Not all the tools are even statistical, which was a surprise to me when I first studied material at the green belt level -but even those tools are very practical process improvement tools.  The biggest problem with Six Sigma in the past has been the C in the DMAIC moniker (Define, Measure, Analyze, Improve, Control).  BPM really helps address C by putting the controls in software (call center software can help with this as well), and it helps with the M by helping measure the process even when no Six Sigma blackbelts are paying attention.  This makes it a lot easier for them to drop in, interpret the data, and devise new improvements based on the data, rather than spending so much time collecting hand measurements.

Here’s a great post by Jason Cohen (of Smart Bear software) that illustrates that humans are terrible at making gut decisions that can be disproved with statistics, and how to help yourself avoid sample size errors at least when dealing with A/B tests (as in, which is better, A or B?).  Better yet, it has a cute video of Hammy the Hamster to assist.  It cuts to the point about how much data you need to get a reasonable sample size to draw conclusions, and I think it makes clear why data sets of less than 10 are just generally problematic.  Um, also, there are formulas involved, so if you don’t put much faith in mathematics, Mr. Cohen’s article may not be much comfort to you, but I promise the math required to evaluate your sample size will be easy to do!

In my view, the real problem with applying Six Sigma is usually people.  Turns out it takes skill and  judgment to apply Six Sigma tools in a way that helps the business answer questions the business cares about.  This isn’t that much different than the kind of challenge one confronts getting a business to adopt BPM, or a software package.  Let’s not condemn a whole professional practice with proven successes just because we have one example of someone who doesn’t understand how to apply it (or even 10 examples of such people).

Related posts:

1. Making Decisions with Data
2. Data Warehouse… Process Warehouse?
3. Sloan Review on Process Improvement

This class is in partnership with SixSigma.us, the nations premier training and education company for Six Sigma certification. Their customers include Kaiser-Permanente, Pepsi, AOL, Nokia, BankOne, Motorola, GE, Johnson & Johnson, and many others.

This is a 4 day class that will provide practical hands-on experience in integrating Lean Six Sigma and BPM with IT. Most if not all other Six Sigma for IT training that is on the market is only a day or two long and incredibly high level. We are bringing a true practioner’s course to market and one that doesn’t necessitate that the student already be Lean Six Sigma knowledgeable.

The agenda looks like this:

As you can see from these modules, this course aims to provide not only the education content but also various activities where you will put this knowledge to use and be able to go home to immediately begin receiving value from the week spent in the training.

You can get more information and register for the class here.

First class is in Dallas, Texas, Dec 8-12th. Hope to see you there!

Related posts:

1. BPMN Training, Bruce Silver Style
2. Bruce Silver: Process Mapping Training for Blueworks Live #bwlive
3. Lean-Agile for your BPM Delivery

Kalvin discussed the power of Lean Six Sigma as a method to deal with the very thing that causes great angst in companies and that is the waste (aka Muda) and defects mentioned above. He moves on to bring light to the fact that these particular approaches may have been born from the world of manufacturing but absolutely are applicable and more importantly effective in transactional or service based businesses. This is a fact, and expanded or integrated into a company who views business process management as a true discipline then you have a truly remarkable organization who can retain and grow customers as if they were born to do it.  However, it does require “translating” some of the standard Lean Six examples out of the manufacturing world and understanding their analogs in the transactional and services world.

I will take what Kalvin was alluding to in his post and give an example from a financial services perspective of the things we do everyday that create waste and defects in our processes – and the key here is to be able to identify these things so that they can be managed. Let’s do this from ”The 7 Deadly Wastes” from Lean Six Sigma to examine this closer, in no particular order (although ‘Overproduction’ is considered the worst waste in Lean). I will go ahead and make it 8 and add rework as I believe it is very insidious but not officially declared in the initial 7 wastes-

1. Rework: Anytime you see a loop in a process, that is probably rework. Think of touching the same thing over and over again. For example, an invoice is sent to a member or group customer and the bill is wrong. Requests are made to change coverages, drop dependents, etc. The clock starts ticking for that request to be fulfilled. If the request cannot be fulfilled in time, the next bill will generate and it will be wrong again. rinse. repeat.  Customer satisfaction declines, and administrative costs go up.

2. Defects: An enrollment form with missing information or incorrect information; a bad requirement for that new claims handling system; a bad or “dirty” invoice from the rework example above, forms or applications with unclear instructions or usability. Defects are pretty easy to understand although I have heard businesses tell me “we don’t have defects, we have exceptions”. Whatever you want to call it is ok by me, but exceptions and defects both cost the business money.

3. Inventory: A backlog of policy change requests, a queue of contracts, or claims unprocessed, callers on hold, piles of forms and the like. Financial Services companies have a ton of “inventory”, just not in the way people normally think of it.  But it can have the same negative effects: clogging a process and creating or exposing bottlenecks in a hurry.

4. Waiting: Waiting for an approval on a claim, an expense reimbursement, an underwriting decision, 1/24 hour batching of data. Waiting promotes the clogging of processes, can create defects and cause rework.  When expensive specialists are waiting for a response or for work to hit their queue, the company is letting money walk out the door.

5. Processing: Or Overprocessing more specifically, such as an inordinate amount of approval steps to pay a claim or making sure a document is imaged and re-imaged over and over again. Basically doing more work than is absolutely necessary to delight the customer.

6. Motion: Constantly switching between screens and applications to get the policy change made, having to go out and find an archived image/document in the DMS or on a network share, keystrokes and clumsy navigation of systems. Running over to the printer constantly to get those TPS reports (couldn’t resist the last example, Office Space fans).

7. Transportation: Similar to rework and examples could be having to get physical signatures from across the campus, delivering and picking up paperwork from all over the place, delivering reports, etc.

8. Overproduction: Lean considers this the worst waste because it can often be the root cause of many other wastes listed and if you think about it we see this all the time. 100 reports when really 3-5 would do the trick, constant emailing, a requirements specification 300+ pages deep for a small to medium software project, print-outs of everything going to everyone, flooding queues with tasks just spit out from that batch processing which in turn causes the backlog to grow or at a minimum not shrink.

It all comes down to delivering goods and services to customers how they want it, when they want it, and at a price they want to pay. If any company, not just financial services, are not managing their business via a process view then it will be those companies who will not keep customers. Applying Lean Six can identify the causes of waste and defects, and then can help remedy the waste/defects with prescriptive solutions (perhaps more on the prescriptive side in a future post!). This comes down to pure physics and physics cannot be wished away. Manage the processes or they will manage you as the saying goes.

Related posts:

1. Questioning BPM for Financial Services in Current Economy
2. “It Just Confirms I’m as Smart as I Thought I Was” part 2
3. Financial Results in BPM