Connecting Improvement with Business Objectives: Objective-Driven Process Improvement
Improving efficiency, reducing the cost of non-quality and optimizing product strategies are goals in practically all companies in order to stay competitive, to continuously improve business and to survive in a fast changing environment. It is thus crucial for most companies to simultaneously improve project management, product development and engineering processes. However, the integration of these activities often falls back due to methodology wilderness, lack of vision or organizational misalignment. In order to effectively improve, the own situation must be known. This article shows how to set up and drive a process improvement program based upon explicit business objectives and how to deliver tangible value. Despite an increasing body of knowledge with improvement frameworks such as Capability Model Integration (CMMI) or Six Sigma, many organizations still struggle in practice. This article goes beyond such method frameworks and looks to setting improvement objectives. Objective-driven process improvement (ODPI) underlines the need to start with clear business objectives. From those a specific and tailored approach towards achieving engineering excellence is derived. The E4-measurement (establish, extract, evaluate, execute) process is applied to instrument and drive objective-driven process improvement and show how to measure throughout an improvement project. Improving productivity and efficiency is selected as a hands-on example how to practically implement objective-driven process improvement.
Objective-Driven Process Improvement
Today, software is a major asset for many companies. In industrial and consumer sectors it is increasingly software that defines the value of products. For instance value generation in automotive already depends with over 50% from innovative software-driven technologies. Not surprisingly engineering investments are heavily spent for software development of applications and products. In our fast changing world, a company will only succeed if it continually challenges and optimizes its own engineering performance. At the same time engineering of technical products is currently undergoing a dramatic change. Ever more complex systems with high quality must be developed at decreasing cost and shortened time to market. Competition is growing and the entry barriers to established markets are diminishing. The result is more competitors claiming that they can achieve better performance than established companies can. An increasing number of companies are aware of these challenges and are pro-actively looking at ways to improve efficiency and productivity of their development processes.
Development processes along the product life cycle determine how things are doneend to end. They provide guidance to those who do and focus on what to do. Guidance means understanding and ensures repeatability. Focus means achieving targets both effectively and efficiently, without overheads, frictions and rework. Good processes are as lean and agile as possible, while still ensuring visibility, accountability and commitment to results. Insufficient processes reduce business opportunities and performance due to not keeping commitments and delivering below expectations. Processes must be usable by and useful to both practitioners and managers. They must integrate seamlessly, and they must not disturb or create overheads.
Process improvement will fail if we do not consider these basic requirements. By focusing on the essence of the processes, integrating processes elements with each other and providing complete tools solutions, organizations can tailor processes to meet specific needs and allow localized and problem- or skill-specific software practices, while still ensuring that the basic objectives of the organization are achieved.
To continuously improve and thus stay ahead of competition organizations need to change in a deterministic and results-oriented way. If you do not know where you are and where you want to go, change will never lead to improvement. Looking towards improved process maturity will help in setting up an improvement trail.
The concept of process maturity is not new. Many of the established quality models in manufacturing use the same concept. This was summarized by Philip Crosby in his bestselling book Quality is Free in 1979 . He found from his broad experiences as a senior manager in different industries that business success depends on quality. With practical insight and many concrete case studies he could empirically link process performance to quality. His credo was stated as "Quality is measured by the cost of quality which is the expense of nonconformancethe cost of doing things wrong."
However, over half of all process improvement programs fail. Why is that? It is for two reasons, namely:
- Lack of systematic change management
- Insufficient management support
Both observations have one common denominator. Many improvement activities have insufficient objectives and for that reason no motivation to change and no possibility to follow through the implementation of changes. Projects without clear goals will miss their goals clearly, as Tom Gilb once stated.
We have introduced the concept of objective-driven process improvement (ODPI) in order to focus processesand their improvementon the objectives they must achieve . Processes are a means to an end and need to be lean, pragmatic, efficient and effectiveor they will ultimately fail, despite all push one can imagine.
Objective-driven improvement is a goal-oriented improvement approach towards measurable and sustainable performance improvement. It has several components that distinguish ODPI from the more traditional approach with a focus on certification and therefore insufficient buy-in from stakeholders:
- Focus on concrete business needs
- Incremental deliveries of tangible progress
- Broadening scope of the improvement project from engineering to a product and customer perspective
- Usage of improvement frameworks as support for methodology and best practices, but not as an end in itself
Figure 1. Objective-Driven Process Improvement: Seven Steps to Success
Process improvement frameworks such as the Capability Model Integration (CMMI) offer the benefit to improve on a determined path, to benchmark with other companies and to apply worldwide supplier audits or comparisons on a standardized scale. Combined with ODPI they provide the "tools" to implement changes, while ODPI ensures to stay on track and to deliver the right results in due time. Figure 1 shows the basic steps in objective-driven process improvement, starting from business objectives and ending with sustainable results being delivered. There are seven steps to emphasize:
- Create urgency.
Derive concrete change needs from the organization’s business goals. The status quo must appear more dangerous than the journey to the new state. Employees and management must feel the pressure resulting from business needs.
- Ensure sponsorship.
Sustainable changes start at the top and then grow top-down. Change needs to be pushed by senior management. "You need to be the change that you want to see in the world."
- Establish vision for action.
Establish a compelling vision. The change vision must energize employees towards being part of the change. Ensure a sound methodology and the right actions. You have just one shot.
- Create room to change.
Change needs resources and competences. Organize change as a project with small energetic team. Provide budget and ensure expert support. Agree project targets, responsibilities, milestones and deliverablestuned to business goals. Rigorously manage the change project. Monitor performance, looking to usage and use, pre and post change. Manage risks.
- Consistently communicate.
Mobilize stakeholder support. Vision, content, progress and results must be consistently communicated. Use different communication channels. Do not confuse leadership and democracy. Engrain change into management behaviors. "Walk the talk."
- Deliver tangible results fast.
Change where there is a pressing need. Fast and sustainable results create trust. Set up the transformation in incremental steps to periodically deliver tangible value. Monitor the implementation and institutionalization of the change with few measurements, such as use and usage.
- Capitalize on changes.
Success motivates more changes. Show how new ways of working actually deliver better results. Anchor new behaviors within your organizational culture. Consolidate achieved results by updating organizational templates, such as budgeting. Ensure that changes are engrained to culture and periodically re-assessed. Results are sustainable only when they are delivered without management pressure.
Productivity improvement needs several related steps that are carefully implemented. There is no silver bullet, despite all the promises by tools vendors and others. Broad experience in engineering and product life-cycle management helps in selecting the right actions with most value in a certain environment. Clear objectives, an objective-driven improvement program and excellent change management are keys in introducing such changes.♦
Some parts of the article appeared first in Ebert, C., and R. Dumke: Software Measurement . Copyrights: Springer, Heidelberg, New York, 2007. Used with permission. We recommend reading respective portions of that book as an extension of the quantitative concepts mentioned in this article.
 Crosby, Philip. Quality is Free. New American Library, New York (1979).
 Ebert, C., and R. Dumke. Software Measurement. Springer, ISBN 978-3-540-71648-8, Heidelberg, New York (2007).
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