Business process hierarchy and operating models

Here are three charts that I have stolen from Paul Harmon’s blog at BP Trends.   Paul I have not asked permission, but if you object, I will take them out and just refer people to your site.   So please go to Paul’s site to find out more.  In fact you need to go to Paul’s site to see the charts properly because they are a bit blurred here.

The first chart is about the levels of processes that exist in an organisation.   It is such a simple chart, but powerful for its simplicity.

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As Paul points out, process work often starts at level 4 or level 5 (you may not be able to see, but level 6 is activities within level 5 processes).   Starting at this level makes it hard to see the connection to higher levels.  “The key thing is that we begin with a top-level overview, not a specific, low level process.  Starting at the bottom can work if you are trying to improve or automate a specific set of low level activities, but if you start there, its very hard to work upwards to tie the specific low-level process to the goals and KPIs  of the organization.”  So Paul likes to start with the high level picture and work down.

This brings us to Chart 2: the high level picture that Paul might use with a senior executive.  For me, this is a high level operating model.

Slide1

What I then like is Chart 3.  Paul likes to take each value chain and do an operating model sketch of this value chain with the stakeholders on the chart.  I am particularly keen about the benefit of listing all the stakeholders.  I am slightly less enthusiastic about the specifics of Paul’s chart, but the idea is right.  It would be more useful if he had kept the same example going throughout all three charts.  But they are still good charts.  As Paul explains “For each major stakeholder-value chain relationship we define, we go on to define the process that supports that stakeholder.  We also define what the stakeholder expects from the value chain.  These expectations, in tern, translate into measures that we will use to evaluate the value chain, and to later evaluate the effectiveness of any changes we make.  Management values ROI on capital.  Customers value quality of product and good service, while employees value career opportunities, and so forth.”

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About andrew campbell

Ashridge Strategic Management Centre Focus on strategy and organisation Currently working on group-level functions and group-level strategy
This entry was posted in Design tools, Lean, Op Excellence and Op Model, Levels of design, Value chain and tagged , , , , , , . Bookmark the permalink.

3 Responses to Business process hierarchy and operating models

  1. Peter Murchland says:

    Andrew
    I don’t think Chart 3 is the way to go. For a defined product / service offering, there is a clear value chain which transforms inputs to the designated output. The output may lead to different outcomes / value for varying stakeholders but it is the result of the production of the output, not the result of different value chains. Treating each stakeholder and associated value / outcomes as separate will compromise the establishment of an integrated approach to delivery of the target outputs.
    This is about understanding the range of stakeholders and stakeholder outcomes associated with the target output and the value chain which generates it.

    • andrew campbell says:

      I have thought quite a bit about this Peter and I understand your point. However, there are benefits in thinking about the employee value chain or the supplier value chain in terms of the benefits that these stakeholders are getting and what activities are required for them to get the benefits. For example, career path planning is an important activity for employee benefits, but it may not be that important for generating outputs for customers. I recognise, of course, that the employee is only needed because of the desire to create some output for a customer .. so I do understand your desire to place customers as the primary stakeholder and to design the value chain for them. But I have also found it useful to do value chains for the other stakeholders and then check that they are all aligned.

  2. Peter Murchland says:

    Andrew
    Let’s dig a little deeper – are these value chains? Please note that my reaction was to a diagram which showed no connection between each of the “manage” functions – my concern being around integration, balance and coherence.
    I agree that we need to explore the value proposition for each stakeholder. I have spoken in other forums of the need to balance the customer value proposition, owner/shareholder value proposition and employee value proposition, as three of the most important elements for many enterprises.
    In the work that I am currently doing in relation to the HR function for a client, one element of our considerations have been around the employee lifecycle, and how the client engages with the employee from prospective employee through to past employee. But I am not sure that this is quite a value chain – but I am open to being convinced!

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