Good Process Design

(published on Escape from Averageness® in September 2012;  updated and republished here)

For a quarter century, now going on three decades – since 1996  – we have been mapping business processes, helping clients document, redesign, and improve their business workflow.  Dozens of clients, served over decades;  for sure, in various vertical spaces, but our focus has always been on the homebuilding industry.

In that regard, when it comes to the documentation, analysis, measurement, design and redesign, improvement, and management of operating and business processes, SAI Consulting is the homebuilding industry’s leading expert.  We have done Business Process Improvement and Business Process Reengineering longer, and we have done more of it, than any other consulting firm serving the homebuilding industry.

Early-on, it became very apparent that the majority of enterprises (particularly, homebuilding enterprises) don’t come into BPI or BPR initiatives with a meaningful level of understanding regarding processes, let alone good process design.  So – from the very beginning – we have taken the time to prepare and provide process design guidelines for these engagements.  These process design guidelines are now in their seventh generation, and the revisions to these guidelines reflect the progression of our thinking on the design and management of business processes.

These guidelines reflect, as well, our inclination to incorporate process methodologies and tools that work, without regard to the process religion from which they came.  They also reflect our contention that the unique workflow found in homebuilding – unlike manufacturing and service industries – consists of project portfolio management – i.e., multi-project management – with embedded, supporting, and surrounding processes.

As we initially stated on Escape from Averageness®:  to a certain degree, workflow is workflow, process is process.  There are common principles of process design, and while each set of process guidelines is crafted with the needs of each client in mind, much of good process design tends to transcend industry classifications.

Even within the confines of a specific industry (in this case, homebuilding), specific clients will have specific circumstances and specific requirements;  conceding as much, however, substitute your own terms, definitions, and org structures, and see if these process mapping guidelines don’t make remarkable sense in the workflow world in which your own enterprise has to operate:

  • Start process design and redesign efforts from the desired future state of the process, and bring the current state to it. What does the new process have to be capable of doing?  How must it perform?  What are the prerequisites?  What are the necessary conditions?
  • Set specific performance requirements for the redesigned processes; make the connection between better process operating performance – shorter durations, faster inventory turns, higher productivity, more even-flow, better utilization – and the expected improvement in profitability and economic return.
  • Focus on the outcomes that satisfy homebuyers’ and other stakeholders’ requirements. Focus on outcomes that simplify the process, and eliminate the non-value-added activities – the waste, errors, redundancy, and bureaucracy – that have been built into, or have been allowed to creep into, the process.
  • Processes that are complex require a multitude of simple tasks to operate, but simple, elegant processes require a different approach. To make the new/redesigned process easier to manage, specify more complex tasks – sets of simple tasks previously handed-off between departments and positions – that can be performed by just one person.
  • Processes that are focused on specific product families produce better designs. Avoid one-size-fits-all processes – particularly on value delivery processes.  Those processes will be too complex, and will invariably result in compromised designs.
  • Place the authority and responsibility for decision-making with the teammates who actually perform the work, without imposing the requirement for unnecessary reviews and approvals.
  • Reduce the number of unnecessary reports, files, and documents in the system; standardize the documentation deemed essential (paper and digital).
  • Capture information one timeat its sourcepreserve it, and make it available for all future users – online, real-time, universally accessible.
  • Integrate as much of the management technology as possible, even if you have to build the Enterprise Resource Planning (ERP) application yourself.
  • Solve the root cause of the problem, don’t treat the symptoms. Eliminate the practice of reviewing and correcting errors;  replace it with a problem-solving method that prevents the errors from having occurred in the first place.  When problems do occur, stop the process, fix the problem, and implement counter-measures that will prevent the problem from reoccurring.
  • Build the necessary controls into the front-end of the process.
  • Eliminate process variation and uncertainty. Variation is not the same as waste, it is, in fact, worse;  it is more the result of unevenness, and denotes a lack of stability – the inability to produce a consistent result.

Production processes need stability, and variation causes instability.  Variation is far more damaging to a process than activity that simply does not add value.  If all a homebuilding company does is attack waste (in the form of errors, rework, redundancy, etc.) and fails to directly attack the variation that causes instability, it will have to live with a production system that has some combination of higher-than-necessary work-in-process, longer-than-necessary durations, or excess/unused production capacity.

  • Process design is only part of the battle – the loading and sequencing of work in the process is equally important. Not that it is the least bit desirable or acceptable, but a poorly-designed-but-well-managed process will outperform a well-designed-but-poorly-managed process every time.

Eliminate the disconnected, stop-and-start, hurry-up-and-wait, inventory-intense sequence of production that currently characterizes homebuilding, wherever you find it, and replace it with a system of even-flow production intended to:

  • Recognize the paradox between balanced capacity and balanced production, and treat even-flow production as an outcome, not a mechanism.
  • Maximize the rate of throughput (rate of completions/closings) generated with a planned, finite, and controlled level of inventory and production capacity.
  • Pull starts into the system at the rate of completions, versus pushing starts into the system at some arbitrary, predetermined rate, without regard to the pace of completions, and in disregard to production capacity. Again, the utilization of a production system is measured by the rate of completions that can be generated with a planned, finite, and controlled level of work-in-process.
  • Accept and understand that duration, throughput, and work-in-process have a common DNA; they impact one another in cause-and-effect relationships.
  • Standardize and simplify a process, before attempting to automate it.
  • Let the requirements of processes drive the other components of the operating model (i.e., systems, organizational structure, employee selection, etc.). Move from a vertical, functional organizational structure to a horizontal, team-based approach aligned with process workflow and the creation of value (benefit in excess of cost).
  • Although processes present a standardized approach to workflow that promotes consistency, evenness, and stability, those same processes need to support enterprise models that are adaptable, agile, and responsive.
  • Processes benefit from a systems approach to continuous improvement. The goal is not to improve the performance of the process – the goal is to continuously improve the performance of the overall production system in which it exists.  Expect most improvement in operational performance to come from improving performance on the system’s constraint, the resource with the most demand relative to its capacity.
  • Processes don’t perform work or deliver value – teammates working in the process do. Make the training, the performance measurement, the accountability, and (most importantly) the compensation structure reflect targeted, measurable performance requirements, both operational and financial.

Once again, those of you who know me, know that promoting the capability or expertise of SAI Consulting on Escape from Averageness® is not my intent.  However, offering guidelines is a form of advice, it is different than offering an opinion or viewpoint, and it carries with it a requirement that whoever is offering the advice actually knows what he is talking about.

In that regard, when it comes to the documentation, analysis, measurement, design and redesign, improvement, and management of operating and business processes, SAI Consulting is the homebuilding industry’s leading expert.  We have done it longer, and we have done more of it, than any other consulting firm.

It is our tour de force.

It is the area for which we are most recognized.  Virtually every consulting engagement we have ever accepted or been considered for, in-and-out of homebuilding, has dealt – in some way – with how a client should structure itself around its core-critical business processes.  And – we have provided this same insight and advice to others on hundreds of occasions.

We know what we are talking about.

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