Principles of Business

Why worry about business processes? What is

new? How might organizations perform

better? Many organizations are adopting the

idea that their organization is made up of a set

of business processes rather than a set of

functional activities. The reason for this move

is simple to appreciate. In a functionallybased

origination the focus is upwards (see

Figure 1). The customers, though, are for the

most part served by activities in processes

which run through the hierarchy.

However, many organizations are changing

their view of the way they structure and

manage themselves, to focus on business

processes rather than business functions.

They may be encouraged in this view by

having undertaken a business process reengineering

(BPR) project or they may be

using the European Foundation of Quality

Management (EFQM) assessment framework.

The latter identifies nine elements for

excellence: "enablers?which give capability,

i.e. leadership; people management; resources;

policy and strategy; and processes. These

enablers influence performance measured by

business results, customer satisfaction,

employee satisfaction and impact of society. So

identification of business processes as a key

enabler starts the change in thinking about the

way in which managers set the direction for

their organization, provide products and/or

services and support these operational activities.

Also, by using the EFQM framework,

organizations can assess their capability at

managing their business processes. Many are

not good at this and far worse at managing the

other enablers in the framework. Anecdotal

evidence from judges for the European Quality

Award indicates that organizations lag in their

development of business processes. They may

identify a discrete process, but fail to look at an

integrated set of processes.

Moving from a functional organization to

one which is business process-based is not

without problems. It challenges the status

quo. The power base of senior managers has

been in functions. The career path of individuals

has been through functions. Abandoning

this structure challenges the way organizations

work. Mitel Telecom has senior managers

who were previously functional heads

dictating to subordinates and who now find

they are facilitators. David O'Brien, the CEO

of National & Provincial Building Society in

the early 1990s, regarded managers as

48

Managing Service Quality

Volume 6 ?Number 6 ?1996 ?pp. 48?2

?MCB University Press ?ISSN 0960-4529

Colin Armistead

The author

Colin Armistead is Professor of Operations Strategy and

Management and Head of the Strategy, Operations and

Decision Making Department in the Business School at

Bournemouth University. He also holds the Royal Mail

Chair of Business Performance Improvement.

Abstract

Looks at the problems organizations face in moving from a

functionally-based structure to one that is business

process-based. Notes the drivers that demand change,

such as the need for simultaneous improvement of customer

focus, responsiveness and lead time and cost

reductions. Based on research, presents and discusses in

detail ten principles for managing business processes.

Cautions that success in managing by process is not

guaranteed and requires experimentation, but claims that

large pay-offs can be achieved over time.

Illuminate

Principles of business

process management

coaches. Process management is about teams

rather than individuals. But why should organizations

change? Is it a fad? There are real

drivers which demand change. These are

customer focus, responsiveness, reduction in

lead times and reducing costs; and moreover,

improving these factors simultaneously.

In this article I am presenting a set of principles

for