Measuring the Effects of Process Improvement on Performance
If you don't ask for the return on process improvement in your organization, you will never know what it is. Perhaps a year or two ago, either with some coaching or because you're a born leader, you did all the right things as a sponsor of the process improvement initiative. You fought for the investment budget, you helped set the process improvement goals, and you established the incentive structure. But then you quickly became busy with other, more urgent mattersthe annual budget cycle, perhaps a business development project, or you had to help save a big customerthe daily "emergencies" and operational problems.
You used to meet with your engineering process group (EPG) to get the status on the improvements, but you ended up canceling the last three scheduled meetings to deal with what you perceived to be more important things. You know that somewhere in the hundreds of e-mails in your in-box, there are status and measures from the EPG on the process improvement efforts, but you always have to respond to the notes from the CEO first. But in always dealing with the day-to-day issues and ignoring that big investment in process improvement, you are likely creating for yourself a really big future problem: being passed over for promotion or even losing your job. What happens on the day when your boss suddenly remembers the investment in process improvement and comes to you and says,"Show me the money"? What response will you have? How will you explain why you didn't manage the investment? Will those explanations be accepted by your boss? Don't think about these things then; think about them now. That's what a leader does.
Sometimes, we've been working at something for so long that we lose sight of the"why." I remember a memorable vignette from my job on the Xerox software EPG (SEPG) many years ago. My colleagues and I had been working on improving the defined process (without knowing much about the performed process) for several years. We were in a conference room one day conducting a walk-through of one of our process definition documents when suddenly someone in the group asked,"Would somebody tell me again why we're doing this?" It's funny to me when I think about this now, but it wasn't so funny at the time because none of the rest of us around the table had a very good response to the question.
My lesson learned from the incident is for you to ask yourself every day,"Why am I doing this?" If you can't quickly come up with an answerone that traces your current actions and decisions to the improvement objectives established perhaps quite some time agothen pause what you're doing until you figure it out.
To understand how to measure the effects of process improvement on business performance, go back to the initial reasons for undertaking process improvement. What are the business performance measures you have defined? What areas of improvement did you identify that would address business problems or achieve business objectives? What are the business performance objectives you or others defined?
Let's assume that you accept bodies of work such as the CMMI (Capability Maturity Model Integration), ITIL (Information Technology Infrastructure Library), and the PMBOK (Project Management Book of Knowledge) as collections of best practices. If this is your thinking, then you should also remember and apply one of the primal rules of business: There is a right place, a right time, and an appropriate application for all knowledge, tools, and skills.
In the book Best Practices Are Stupid: 40 Ways to Out-Innovate the Competition, author and consultant Stephen Shapiro gives us a simple and insightful way to think about our business called the innovation targeting matrix (ITM). My extrapolation of Mr. Shapiro's ITM is shown in Table 1. The ITM helps leaders focus on where to emphasize innovation in the organization and essentially explains why it is only in an organization's differentiatiorsthose capabilities that set you apart from your competitionthat you should innovate.
Table 1. Innovation Focus Matrix
Shapiro further makes the case that it is only in the core and support capabilities where best practices are useful. A logical take-away from this line of thought is that the adoption of best practices is not innovating.
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