Sangeeta Shah Bharadwaj

Business Processes

Case : MEDCAREWhy do you think the same patient may have three

different experiences at three different time?

Experience 1: silo functioning and objectives of departments more important, every department has to generate revenue for them selves, no process design for such patients

Experience 2: Processes (Services) are designed keeping in mind the customers ( Is this core process for the hospital?)

Experience 3: A Critical process, designed keeping in mind service need

Case : Soft Service IncWho is correct?

What is the reason for this type of scenario?

What is the reason?

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Organization structure is functional, hence important to functional goals

Is it customer focused?Is it responsive to environment?

What is a Functional Approach?

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Organization structureCHARACTERISTICS：

consolidates human knowledge and skills with respect to specific activities in order to provide depth of expertise

Engineering Marketing Manufacturing

CEO

FunctionalGrouping

Strengths and Weaknesses ofFunctional Organization Structure?STRENGTHSAllows economies of scale within

departmentsEnables in-depth knowledge and skill

developmentBetter accomplishment of functional

goals

WEAKNESSESbetter departmental performance but

may be sub optimal organization performance

Results in poor coordination among departments

Slow response time to environmental changes

Can you suggest another Org structure???Matrix

Matrix Structure

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ProductManager A

ProductManager B

ProductManager C

ProductManager D

Directorof ProductOperations

DesignVice

President

MfgVice

President

MarketingVice

PresidentController

ProcurementManager

President

Dual-Authority Structure in a Matrix Organization

Strengths and Weaknesses ofMatrix Organization Structure?STRENGTHSProduct/ Service/project centric and

hence customer centric but does it align with organization strategy?

Flexible sharing of human resourcesMore responsive to changes in the

environmentWEAKNESSESdual authority, which can be frustrating

and confusing Mangers require better interpersonal

skillsGreater effort are required to maintain

the power balance

Can you suggest another Org structure???Process related?

Horizontal Structure

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Team3

Team2

Team1

TopManagement

Team

Team3

Team2

Team1

Customer

Customer

ProcessOwner

ProcessOwner

Testing Product Planning

Research Market

Analysis

New Product Development Process

Distrib. Material

Flow Purchasing Analysis

Procurement and Logistics Process

Horizontal Structure

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The horizontal structure organizes employees around core processes by bringing together people who work on a common process so they can easily communicate and coordinate their efforts.

Horizontal Structure

13

STRENGTHS:Complete focus on organization goal ,

alignment with organization strategy and optimizing the same

focus on teamwork and collaboration

More responsive to environment.

Horizontal Structure

14

WEAKNESSES:Process centricity is good but difficult

to implement

Requires changes in culture, job design, management philosophy, and information and reward systems

Does Process Organization Structure exist?

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??Rather we talk about process centric /

driven organizationsOrganizations are trying/ wanting to

be process centric

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Why is there a need???

Competitive environment demands customer centricity

Need is to be responsive to fast changing environment

reduces the risk of sub optimization of organization goals

Porter talking about the Business Value chain Management Gurus talking about core processes

and support processesOutsourcing of support processesERP implementations enhancing the process view

Case MEDCARE—Revisit How will you design/ incorporate process

orientation in HospitalsWhat are the challenges? Multiple stake holders, departmentsEnd-to end view required and very complex

Understanding of horizontal view of the organization

Hence identification of the value chain is needed

Process Orientation In HospitalsOne approach Clinical PathwaysClinical pathways are standardized,

evidence-based multidisciplinary management plans, which identify an appropriate sequence of clinical interventions, timeframes, milestones and expected outcomes for a homogenous patient group

Second approach is

A second manner to achieve process oriented thinking is to consider the needs of the patient as the basis of the creation of a new organizational structure. ‘service line’, which contains multiple services and

disciplines, will have to be optimally organized and integrated with reference to the real needs of the patient

In a process-based organization design, these service-lines are organised in a separate division which are profit centers and where pay for performance is the rule

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THE BUSINESS VALUE CHAIN of the organization and what is the

relationship with processes

A generic hierarchy of processes

Value chain

Business Process/ Also core process Business Process

Process Process

Sub Process

Sub Process

ActivityActivity

Sub process

Process

Business Process / Core

process

Value chainThe largest process we talk about is the value chain

The value chain has one or more core processes which embody critical corporate expertise and produce products and services that are delivered to the customer

Processes are

independent of formal organizational structures

crossing functions or departments

involving people with different expertise and roles

Customer centric and Responsive to changes in Environment.

Process DefinitionA process is defined as a specific ordering of work activities across time and place with a beginning, an end, and clearly identified inputs and outputs: a structure for action (Davenport, 1993).

A sub division of value chain

Business Process DefinitionA Business process is coordinated and standardized flow of activities performed by people or machinery , which can traverse functional or departmental boundaries to achieve business objectives that create value for internal or external customers .

The Challenge Remains?However, formal organizational structures can strongly influence the process driven approach and

effectiveness of processes

Need for Business Process Management Strategies

And need to implement process driven organization along with existing organization structure

Case : Soft Service IncHow will you apply process approach for an

organization having functional structure?

Approaches to achieve Process Driven enterprises with the existing

organization structure

Fundamental shift in ControlResistance to this approach as people do not give up

power if they still have the responsibilityIs it right to advocate Vice president Order to Cash

or procure to payRather have senior group of empowered process

professionals to provide leadership and specific direction

What would be scope and size of this new organization entity ?A process PMO , which is staffed by business

professionals whose full-time job is to drive the Processes

organization toward process optimizationFew processes to start withBut requires Top management commitment

What if organizations would have to struggle to introduce a formal and empowered Process PMO or full-fledged Process Centric Departments or simply they are not able to implement the same?

Approaches to achieve Process Driven enterprises with the existing

organization structure

Have Process Steering Committee consists of senior executives from each of the major business functions in the organization

who meet on a periodic basis to review proposed initiatives and monitor ongoing activities

This is not a full-time job, but rather an extension of existing line responsibility

Issues with Process Steering CommitteesConsensus driven which often can lead to analysis-paralysis and lengthy delays before adoption of specific proposals

Leaders busy with own professional commitments

no operational entity chartered with monitoring adherence to stated policy

May pass on task to IT DepartmentBut to be understood that Process driven approach is transformation and not an enablement as done thru IT

Approaches to achieve Process Driven enterprises with the existing

organization structure

identifying metrics that run the gamut of end-to-end processes

Are not function oriented metricsAligning metrics across the value chain can be an excellent way to identify shortcomings in the process

And then improve upon them

Applications of Structural Design

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Structural Alignment：Finding the right balance between vertical control and horizontal coordination is an important design decision.

Vertical → Control → efficiency and Stability

Horizontal → Coordination → Learning

Innovation

Flexibility

Applications of Structural Design

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Horizontal

Structure

DominantStructuralApproach

Horizontal:• Coordination• Learning• Innovation• Flexibility

Vertical:• Control• Efficiency• Stability• Reliability

MatrixStructu

re

FunctionalStructure