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The Definitive Guide to Process Innovation
Customer obsession is critical
In the age of the customer, businesses must be customer-obsessed to thrive or even just survive.
Process professionals increasingly need to focus their attention on the activities that drive business success in the modern economy: winning, serving and retaining customers.
But the familiar process improvement methodologies that have served organizations well for decades in manufacturing and back-office functions to fix a broken process weren’t built for the pace of change in the customer-obsessed business world. They’re coming up short for driving customer-centric improvements and innovations, because they’re:
- Too slow: Customers expect to see changes right now, not next year
- Too cautious: When businesses need to have the confidence to experiment
- Too backward-looking: Based on lengthy analysis of the status quo, rather than starting with the end goal in mind
- Too inward-looking: Working ‘inside out’ from what the business thinks it needs, instead of ‘outside in’ from what the customer really wants
Lean Six Sigma, for example, is great for making incremental improvements to find the best possible reliability, efficiency and quality in existing processes. Where there’s a high degree of certainty, because existing processes and requirements are understood, such methods make perfect sense.
But, by definition, innovation is less certain. The true impact of something completely new is difficult to predict. And you probably can’t measure what doesn’t yet exist. With so many unknowns, a more experimental method is needed so hypotheses can be quickly tested and adjusted to strip back layers of uncertainty.
The pace of innovation required for customer obsession means product and service innovations can’t be launched after being tested to destruction – it simply takes too long. In the age of the customer, it’s vital to use methods such as Lean Startup to take some risks, test your hypotheses and learn from your mistakes as early as possible. These mistakes and missteps needn’t be costly. In fact, they can be invaluable, enabling you to refine your ideas and use iterative design to quickly get to a solution that meets customer needs more effectively.
Similarly, while waterfall development methods will eventually result in a finished solution, it’s a lengthy and rigid process that doesn’t allow for quick fixes if a broken process is discovered, pivots, or even complete U-turns. Agile methodologies enable solutions to be developed much faster through rapid iterations, offering the flexibility to iron out the creases along the way, or even to start over again without losing a lot of time or budget.
In the customer-obsessed enterprise, two sets of methods need to live side by side. On one hand, the techniques that support rigorous, meticulously planned continuous improvements. And on the other, the methods that enable fast, experimental innovation, where the end-state is uncertain. Process professionals can then call on the right method for the right project, depending on the specific business circumstances and the type of broken process that’s being fixed – or invented.
“Your organization must be okay with risk – and the screw-ups, missteps and waste that inevitably accompany it. The problem, of course, is that an organization steeped in the lore of Lean and Six Sigma naturally views them as sins to stamp out.”
Professor Edward D. Hess, Darden School of Business, University of Virginia
Digital challenges need digital solutions
In a world of constant digital disruption, more agile methods of improving and creating processes are needed to cope with significant new challenges:
- Competition is fiercer than ever, and business disruption is the new normal: ‘Born digital’ competitors entering the fray, uprooting business models and refusing to follow the received wisdom of established industries
- Customers expect to do business on their terms: Modern customers want (and expect) to interact with organizations through digital and mobile channels
- The old ways of engaging customers are no longer fit for purpose: The business needs the tools to interact more effectively with digital customers across a growing number of channels
These digital challenges demand digital process innovation, not just process improvement. But traditional methods of exhaustive analysis and requirements gathering, followed by months of building, testing and configuring, don’t lend themselves to rapid innovation.
Supporting customer-centric process innovation
Improving and innovating processes to win, serve and retain customers requires a different set of skills and techniques that shift thinking away from business systems and toward customers’ needs and sentiments.
Rapid innovation can’t be achieved through old methods of comprehensive process analysis. It’s far more effective to form a hypothesis and then put it to the test, which is where three new methodologies can help.
- Design Thinking. Using Design Thinking techniques that bring customers into the design process at the very beginning, allows process professionals to formulate a hypothesis based on the real needs of real customers. These techniques also provide an opportunity to define provable metrics on which the hypothesis will be judged.
- Lean Startup. To innovate like a startup you need to think like a startup. Once a hypothesis has been found it needs to be tested. Lean Startup methods are based on quickly creating a minimum viable product (MVP) that can be tested on customers without the huge spend and risk of developing a full solution.
- Agile development. Unlike the traditional waterfall model, Agile development enables you to use the data and lessons learned from testing the hypothesis and respond to the results quickly. By iterating the MVP through Agile sprints and testing each iteration, it can be refined into a full-featured solution in a fraction of the time.
“Requirements-itis” — inflammation or bloating of the requirements — is a disease that causes poor choices, unacceptable delays, and failed projects.”
Duncan Jones, VP & Principal Analyst, Forrester
The power of experimentation
This test-and-learn approach is essential for improvement and innovation in customer-centric processes. Any hypothesis must be validated and adapted to ensure it leads to a solution that delights customers.
Combining Design Thinking, Lean Startup and Agile development methods allows process professionals to do something new: experiment.
It’s the ability to experiment that’s critical to improving customer-facing processes, when urgency and innovation are called for. And because customer sentiment is very hard to predict, experimentation enables changes to be tested to understand what customers think and how they respond.
Where requirements gathering and analysis are likely to slow you down, experiments enable you to:
- Test and learn, using a real product or service with real customers – to gain provable metrics
- Fail fast and fail cheap – sometimes learning quickly what doesn’t work can have significant business value
- Start from the customer’s point of view and deliver the improvements and innovations they actually want
- Back your hunches and put a hypothesis to the test with much less cost and risk to the business
But even for those process professionals using Design Thinking and Lean Startup techniques, there’s still a Process Execution Gap that must be bridged. There’s still an IT queue, and customer-centric digital innovations still have to wait their turn.
“Redesigning business processes for improved customer experience requires a new set of tools and methodologies. BPM teams will need to upgrade their skills to include design-thinking techniques such as customer journey mapping, persona design, and lean startup practices.
When it comes to experimentation, traditional technology management funding models aren’t applicable. These models tend to be risk-averse and struggle to put a price tag on money saved as a result of learning what doesn’t work”
Clay Richardson, Chief Excelerator, Digital Fast Forward
But even for those process professionals using Design Thinking and Lean Startup techniques, there’s still a Process Execution Gap that must be bridged. There’s still an IT queue, and customer-centric digital innovations still have to wait their turn. This is compounded by the fact that, in many organizations, there’s no appetite (or IT resources) for taking risks on bold new ideas that may or may not work.
The process innovation options
So what can you do to get process innovations off the ground?
You could wait for internal developer time to become available. But without being able to test and prove the business value of the proposed solution, your project may not gain budgetary approval. After all, 86% of CIOs complain of insufficient people and skills for digital transformation.
If IT services are outsourced, you could hand development over to your service provider. But change requests or contract negotiations are likely to add considerable delay, and inhibit experimentation.
You could rely on investments in traditional BPM suites to build your new solution. But complex BPM technology is expensive and it requires specialist developers who are in short supply.
What you don’t want is to have process owners spin up an array of SaaS tools to achieve a quick fix, which is what often happens when frustrated business people try to find workarounds. There’s too much risk, too many integration headaches, and costs soon start to get out of control.
Just imagine if you didn’t have to wait for IT resources to fix a broken process or to be assigned to your process innovation project. If only there was a platform that could beat the IT queues and help you build the solution yourself…