Process management as hinge between plan and reality

Written by Paul Vervoort and André van Hofwegen

Strategy setting is a popular topic in board rooms and a fertile source for research, education and opinion. Organisations spend a lot of time and money on it, at the same time there is a lot of research showing that execution often goes differently and results are severely disappointing. Strategy Execution is thus trickier than thought. As Chartered Controller and Management Consultants, we want to understand why and contribute to improving the effectiveness of Strategy Execution of organisations. Here, we share our insights and experiences on this in a series of articles.

In the previous article, I characterised Strategy Execution as a balancing act between change and performance. The second article posed the question: how executable is this strategy actually and what demands can we place on it? This third article is about the importance of process management in strategy execution.

Process management as key to successful strategy execution

Introduction: The strategic urgency of process management

In an increasingly fast-changing world, it is more important than ever for organisations not only to have a good strategy, but also to actually execute it. Strategy execution is the difference between a nice plan on paper and real results in practice. In practice, we see that many strategic plans fail in execution. They often lack the right tools and consistency in daily practice: concrete plans, good structure in organisation, processes and projects, good management information and desirable behaviour.

This is not a new insight. The gap between strategy and execution has been pointed out in both practice and literature for years. Research by Harvard Business Review, Gartner and Kaplan & Norton, among others, shows that 70 to 90% of organisations do not successfully execute their strategic plans¹. Paul Vervoort and colleagues at Improven emphasise in their articles and white papers that the return on investment in effective strategy execution is often greater than formulating a new strategy every time².

Process management is the engine that ensures that strategy is implemented in a structured way in day-to-day, ongoing operations and delivers measurable results. Organisations that have their processes in place are better able to realise their strategy, respond faster to change and improve continuously. In this article, we show how process management contributes to successful strategy execution and to an organisation's alignment, agility and learning capability.

Process management as a lever for alignment, agility and learning capacity

Paul Vervoort describes in his article "Strategy execution: a balance between change and performance" that alignment, agility and learning capability are three critical success factors for strategy execution³.

Alignment: everyone working towards the same goal

Alignment means that all parts of the organisation - from management to shop floor - are focused on the same goals. Without alignment, insularity arises: departments work alongside each other, priorities are unclear and energy is lost in internal discussions. Process management ensures alignment by standardising processes, making responsibilities clear and ensuring a clear link between strategy and daily practice. For example, by working with clear KPIs and dashboards, everyone knows where the organisation wants to go and what his or her contribution to it is. Good process management forges structure in organisation, processes and information into a harmonious whole.

Agility: quick and controlled response to change

The environment in which organisations operate is changing rapidly. Customers are more demanding, technology develops rapidly and competitors never stand still, supply chains can suddenly stagnate and laws and regulations can change rapidly Agility - the ability to respond quickly and effectively to changes - is therefore an absolute prerequisite for success. Good process management is necessary for agility. By organising processes flexibly and evaluating them regularly, organisations can switch quickly when the situation demands it. It is also important that people have sufficient authority to act as they see fit, and that they are sufficiently informed about external developments.

This view is supported by the work of consulting firm Turner, which concludes in its research on strategy execution and innovation that organisations that develop process management as a core competence can improve, innovate and innovate⁴ faster. Also in The taste of perfection emphasises that continuous improvement and the pursuit of perfection are only possible if processes are agile and adaptable⁵.

Learning capability: continuous improvement as second nature

Successful organisations are learning organisations. They see mistakes as opportunities to learn and are constantly improving. Process management provides the structure for this. Monitoring, measuring and evaluating processes provides insight into what is going well and what could be improved. Methods such as PDCA (Plan-Do-Check-Act), Kaizen and Lean enable continuous small improvements to be made. This learning capability ensures that organisations not only perform well today, but are also ready for tomorrow's challenges.

Summary

Process management is thus not an end in itself, but a lever for the three success factors of strategy execution: alignment, agility and learning capacity. It is the connecting link between strategy and practice, between plans and do⁶.

Practical translation: from model to daily practice

Short-cycle improvement: PDCA, Kaizen and Lean

Continuous improvement is not a project, but a way of working that is shaped by the PDCA cycle (Plan-Do-Check-Act). . By constantly planning, implementing, checking and adjusting small improvements, a culture is created in which learning and improving is a matter of course. Kaizen - the pursuit of continuous improvement - ties in seamlessly with this. Lean methodologies help to eliminate waste and set up processes as efficiently as possible. This ties in with the philosophy from The taste of perfection: "A mix of methods and techniques provides the right ingredients and courses you need for your meal at a particular time or occasion."⁵

Ownership and multidisciplinary teams

Process management only works if there is clear ownership. Every process must have an owner who is responsible for the functioning and improvement of the process. In addition, working in multidisciplinary teams is essential. Bringing people from different departments together creates a better understanding of the whole process, and bottlenecks are identified and resolved⁹ more quickly.

In this respect, the importance of end-to-end thinking cannot be overemphasised. Many organisations are still organised in departments or silos, fragmenting processes. This leads to inefficiency, errors and frustration among employees and customers alike. Managing processes end-to-end - i.e. across departments and functions - creates consistency and makes it possible to be truly customer-centric⁷.

Management information and KPIs

Good management information is indispensable for effective process management. Working with clear, measurable KPIs makes it possible to monitor performance, adjust and celebrate successes. Here, it is important that process-specific KPIs express how these processes contribute to the realisation of the organisation's strategic KPIs. For example: the KPIs lead time and percentage "error-free delivery" of a parcel delivery process contribute to the strategic KPIs "customer satisfaction" and "revenue growth".

Culture and leadership

In conclusion, process management requires a culture of openness, cooperation and trust. Leadership is crucial in this. Managers must set a good example, celebrate successes, make mistakes open for discussion and encourage employees to contribute to improvements. Employees must on the one hand be enthused to contribute fully to the realisation of the organisation's goals, and on the other hand also have a clear understanding of the limits they must observe in doing so. Without the right behaviour and culture, process management remains a paper tiger⁷.