A business process model is the way to make your business lean and agile. But what does this mean? It means you don’t make assumptions, but test. Use the metrics and get the figures, and then change what isn’t right and put it back into your model. Being lean is being better at lower cost: effectiveness comes first and then efficiency.
Business Process Model: Using Deming’s PDCA model in improving your business using SPC and statistical process control techniques.
Being agile is changing direction when your process model tells you. – Click to Tweet
How do you do this?
1. Plan, Apply it, Test it and Act on your Results
A business process model was introduced by DR. W. J. Demming in the 1950s. After World War II he helped Japan get back on its industrial feet, and came up with the PDCA model: Plan, Do, Check, Act.
This means you come up with a theory – carry it out, check the results and act to improve it based on these results. Iterate that sequence as often as necessary to get as near to perfection as you can get. That’s how the PDCA process model works.
You might need a number of iterations, or changes to and reruns of the model, to come up with the best way of doing things, but the point is that it works. Demming isn’t a big name in business textbooks for nothing!
You have to measure everything measurable. Metrics are critical to ultimate success, and you must use statistics, or SPC – statistical process control – to get the right information and control over your processes. Separate randomness from controllable parameters, and then control these controllable parameters as finely as you are able to.
Check each parameter change, and then make further changes based on the results until you can improve no more. That is agility: the ability to keep changing rapidly to effect continuous improvement.
2. Continual Measurement
No business process model can work without continually measuring everything you do. Target those factors that affect your business most: costs, sales, margins, profits. Measure every factor that can affect these parameters, and make changes to maximize each of these – other than costs!
A failure to measure on a continuous basis is likely to result in failure of your business.
3. Examine Causes – Not Blame
Find out why failure occurs – do not seek blame, but causes, and reasons that can lead to solutions. There is system known as the 5-whys: ask why five times to find the root cause of why failure occurred. Bottom the problems and find out how to solve them: get to the root causes, not just the symptoms.
Solving these root problems will improve your business.
4. Prepare for Change
Be prepared to make changes when your process model demands it. You start out with one theory or idea of the way things should be done, but the model will rapidly point to a better way. Act on that, and assume that your first hypothesis will be wrong.
As you check and act, each succeeding hypothesis will get closer to where you should be. Never be reluctant to change direction.
5. Large Organizations are no Different
In order to be agile, you must be able to change direction rapidly according to your business process model. A big business can be just as agile as a small business if it separates into a number of parts. Each part of the organization should run its own models and apply the PDCA to its own part of the business.
Encourage this in your business: apply their own hypotheses and test them with multiple iterations, including an increasing number of customers with each iteration of the process model.
Cut those that don’t work – become leaner but more effective and efficient by removing processes shown not to work. Focus on those that do work.
Your major crime would be to focus funding on projects that have not been properly tested and that do not have the agility to change. Set up a business process model for every iteration, and follow these five steps to achieve a lean and an agile business: effective and efficient, but that can easily change direction when the model requires it.