Characteristics of organizations with strong process orientation

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Characteristics of Organizations with Strong Process Orientation

Organizations that have exceptionally strong process orientation typically are more centered on collaborative integration of tasks over more rigidly defined organizational structures (Hammer, 2002). These organizations also have a more holistic approach to evaluating the opportunities and risks in their external environments while seeking to optimize internal processes and systems for greater efficiency (Liu, Li, Zhao, 2009). Organizations that have a strong process orientation have a common set of factors which differentiates their financial and operational performance over time. Organizations vary however in their perceptions of the value of process orientation by area of their business and the strategies they will be used to augment and make more efficient (Naslund, 2008). The intent of this analysis will be to evaluate the variations organizations have in their perception of value in process orientation by area of their operations.

Characteristics of Process Orientation

Organizations vary in the importance they place in process management and re-engineering by area, yet all share the objective of gaining financial and operational performance and efficiency gains from pursuing a strong process orientation (Hammer, 2002). This often begins with the development of a process-based model of their businesses, integrating supply chain, logistics, manufacturing and fulfillment. In short the value chain of a business is the catalyst for process orientation and improvement over time. Integral to the value chains of organizations becoming process-centric is also the role of the Chief Information Officer (CIO) in enabling lasting process change with insights into how financial metrics of performance are being influenced by process improvements (Hammer, 2005). This is another common characteristic of organizations with a strong process orientation. They are continually seeking to find the cause and effect in their process-based strategies so they can codify and transform these strategies into proceduralized knowledge the company can use over time. All of these subsequent efforts to understand process improvements' effect on an organization begin with accurate, reliable and trustworthy data and information.

From the strategic use of financial data to see the implications of process modifications made over the long-term and their impacts on financial ratios (Yeung, Selen, Sum, Huo, 2006) to the more tactically-based approach to value stream mapping to define process gains (Lasa, Laburu, Vila, 2008), all organizations who have a strong process orientation quantify performance. As financial measures of performance require months to become evident in financial statement analysis, the tendency on the part of organizations with a strong process orientation is to rely on tactical measures first. Increasingly organizations are using a combination of process improvement methodologies, including lean manufacturing, Six Sigma, and the hybrid of these two concepts, lean Six Sigma (Naslund, 2008).

The aggregate effect of these measures of performance over time leads to the development of models that validate the long-term causality in the data, where the effects of process improvement can be seen from the tactical to the strategic in scope. This is evident in the create of business process-based models (Kim, Won, 2007) and the development of capability-based process maturity models

(Veldman, Klingenberg, 2009) that illustrate the longitudinal effects of process improvements on key business processes over time. The maturity models of organizations are often bimodal in that processes cluster in the low-end of the spectrum of integration and consistency, or in the mid-tiers of integration. Process maturity models are pervasive in academic literature as they define the strategic view of process improvement (Kim, Won, 2007) to the tactical and often highly defined including the quote-to-order process (Veldman, Klingenberg, 2009).

Organizations with a strong process orientation over time and through the analysis of their process strategies, process data, financial and operational results as the basis of analysis begin to define their own process maturity models. The stronger the process orientation, the more defined the process maturity model that organizations' data exhibits over time (Liu, Li, Zhao, 2009). While process maturity models vary in their definition of levels and lexicon, they all share a common trait of the lowest level of process integration typically being ad-hoc and often indicating an organization prior to process definition. There are processes not well defined, integrated or measured for performance. This is the first layer in a maturity model and is often marked by reaction and firefighting over getting actual process integration completed. The second layer of a process maturity model in organization with strong process orientation is marked by internal orchestration and the ability to anticipate information needs over time (Kim, Won, 2007). In larger organizations this is commonplace and often leads to a silo-based approach to managing processes, which has been shown to be very ineffective in getting objectives accomplished (Hammer, 2002). The third layer up on the model is one marked by collaboration both within and outside the organization. This is a level that requires information systems and process integration for process improvement to gain this level of coordination and synchronization. Smaller organizations typically have an exceptional ability to attain this level of performance given their smaller staffs and the reliance on external partnerships for their growth (Kim, Won, 2007). Organizations that have an exceptionally strong process orientation and have attained a level of trust with internal and external departments and divisions attain the highest level of process maturity, which is multitier visibility and collaboration (Liu, Li, Zhao, 2009). This is level of process maturity is marked by the complete integration of IT systems and process integration (Hammer, 2002). It is rare for an entire organization to reach this level of maturity, yet operating divisions of General Electric have (Hammer, 2002).