Flowchart THIS: Economy, Competition, Expectations, and Innovation

Let me ask you what the most profound difference in people’s lifestyle between 1900 and 2000 is? Many would say that it is technology, healthcare, safety, birthrates or personal freedom.

The correct answer is: THE RATE OF CHANGE! As the rate of change increases, the complexity of the problems that we have to deal with also increases because of the many complex interdependencies that we do not understand or even know about. The more complex these problems turn out to be, the more time we should need to work out a solution and the shorter is the benefit of the solutions we find. That aspect of increasing dynamics is clearly in conflict with the idea of spending much time to analyze as-is and then to-be processes when in the meantime the environment and conditions change unpredictably.

There are five key forces that influence the rate of change: competition, economy, customer expectations, politics, and technology innovation. None of these environmental factors can be controlled or encoded as input parameters into processes or rules sets or foreseen by predictive analysis. Businesses need people who anticipate those changes and can intuitively guide the business to adapt. This human intuitive skill is at the core of knowledge work that deals with unpredictability. Flowchart this!

Those who promote BPM, Lean or Six Sigma or a combination thereof demand however that all business activities must be formed into a hierarchy of process flows to achieve a higher state of manageability. From a planning perspective it seems ideal if businesses would not be complex adaptive and consist of independently acting agents. Businesses that are seen as animated systems in which the management has a brain and employees don’t, can neither be correctly understood nor reasonably well managed, with or without a process management mindset. According to BPM methodology, process unpredictability is caused by lack of analysis, unidentified waste, necessary variations and avoidable exceptions. However, every real-world process is, in principle, unpredictable unless it enforces all human interactions. Imagine we remove all free-will human interactions from claims handling, social benefits, processing, court cases, medical treatment, purchase-to-pay clearing, business-strategy planning, and budgeting. They would completely lose their problem solving capability. Even process governance is unpredictable knowledge work that can’t be defined into process flows.

Knowledge-driven processes are not just unpredictable, but can be chaotic and very sensitive to initial conditions. However, empowering business users to deal with that is not anarchy or poor management. Empowerment is about authority, goals and means. Only complex adaptive social systems can be resilient, self-organized and develop hierarchies that can deal with the increased rate of change.

Social systems can even self-organize with hierarchies of animated entities without explicitly agreed upon purposes – like most natural ecosystems actually do. Where humans meddle with a control mindset things usually go wrong. Ecosystems do find recurring equilibrium points solely based on current capabilities and fit, and still drive each entity in the hierarchy to evolve upward. As much as we dislike hierarchies, they have the immense benefit of local and immediate sensing, with local knowledge enabling immediate response without requiring the whole system to be aware and react to each change. Hierarchy is a cardinal to efficiency. It is however the adaptability that creates the resilience and the self-organization that builds the hierarchies. The self-organization of a business emerges from the capabilities of each entity in the hierarchy supporting the overall purpose of the social system. That is the reason for the success and interest into Social Networking.

While Social communication offers the opportunity for evolutionary emergence, one cannot simply assume that adding that capability to a BPM product or by allowing these communications in a Lean Six Sigma environment that they will improve the results of these approaches. New knowledge is searched and eventually created where the pain point is and ideally by those people who feel the pain and want to avoid it. They have the highest motivation and the closest knowledge of the problem. Knowledge segmentation is a key benefit of hierarchies which do not enforce knowledge from the top-down. Each hierarchy level develops and uses its own knowledge to do its job.

To support of these problem solving activities and emerging business knowledge from user interaction requires the creation of new data, new content, new rules, new goals, new user interfaces and new roles by the business users. Simply adding To-Dos or task lists, enabling message threads, or offering data or content access does not provide ‘actionable knowledge.’ To make new knowledge manageable and accessible, user activities have to be organized in defined process goals, which are derived from global objectives and focused on customer outcomes, with all entities managed by architecture to ensure compatibility to the existing processes and to ensure common understanding between all involved.

Orthodox BPM ignores these emergent properties of a hierarchy: properties of the system that the separate parts do not have (Axelrod & Cohen, 2000). This was also considered by Donella H. Meadows in ‘Thinking in Systems: A Primer’: “Hierarchical systems evolve from the bottom up. The purpose of the upper layers of the hierarchy is to serve the purposes of the lower layers. The original purpose of a hierarchy is always to help it’s originating subsystems do their jobs better. This is something, unfortunately, that both the higher and the lower levels of a greatly articulated hierarchy easily can forget.”

Systems Thinking improves the business strategy by increasing the understanding of complexity (to utilize its adaptive ability) rather than trying to turn the business into a fragile complicated machine whose knowledge is hardcoded into some business processes. Knowledge is not only power, as the adage goes, but it is the difference in knowledge between business and customer that is turned into a profit. The success of a business is directly related to how much of its non-manufacturing work is deemed a) automated, b) process managed work, or c) knowledge work. The more knowledge work is performed the more value the business brings to its customers.

Microsoft founder Bill Gates has suggested that in an inefficient organization more technology amplifies inefficiency. That may be correct in some large, poorly managed bureaucracies like Microsoft. Great technology can also amplify the creative ability in people. I propose from my own executive experience that only creativity enables a business to innovate its processes through self-organization from within. Organizations do not fall from the sky as effective and they are not only efficient when hordes of consultants optimize them by squeezing the organization dry like a lemon. I propose the best businesses are those where the innovative powers come from within and from the bottom of the hierarchy – from its people! It is the executive’s job to empower that creativity and guide it by objectives and not by flowcharts. Its the executive who must understand the difference between hierarchy and bureaucracy!

8 Comments on “Flowchart THIS: Economy, Competition, Expectations, and Innovation

  1. I agree with your bottom-up idea and that management’s job is to empower creativity and to guide it. I also think this can absolutely be done through social BPM and within a framework that gives the organization a structure for their vocabulary and taxonomy.

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    • Chris, one more thing. Bottom-up ermerging hierarchies are not my idea. They were invented by nature … and observed by people much more clever than me.

      It is just our human arrogance that makes us think we can do it better. Thanks again. Max

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  2. Chris, what I see from Social being tacked onto orthodox BPMS today I wonder how that would happen with all the complexity and bureaucracy needed ….
    Thanks for reading and commenting. Max

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  3. Decisions how to work can be quickly made in small working groups. Hierarchies are neccessary if decissions have to be done for larger groups. In this case the groups are sending delegated persons into the next hierarchie level to discuss and vote for decisions. The decisions are leading to rules.
    Its now interesting to see systems supporting the decission process for voting for rules and how to describe such rules for using them in a loosely coupled environment fitting the apativeness.
    Where can I read about this theory becoming praxis?

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    • Martin, thanks for reading and commenting.

      I take a different viewpoint on hierarchies and so do other (much more profound) system thinkers. While the hierarchy can be used to make decisions for larger groups that is the principle purpose of a bureaucracy and not hierarchy. The systems concept of a hierarchy is not about decisions but about specialization. It is not meant that upper hiearchy functions make decisions for lower ones in principle. Specialization can have that effect that one function in the hierarchy is specially equipped to perform a function that influences other hierarchy functions. That is quite the norm.

      Further one has to say that decisions – and expecially human ones – are not encodable into rules. Humans use intangibles to decide and therefore they weigh it emotionally and not rationally, mostly because all the information is uncertain. There is a large school of thought in the arena of ‘decision-making under uncertainty’ and hierarchical rule voting has to my knowledge no part in that. Encoding decisions that then take precedence for a large group of people, completely ignoring their individual needs and values, into rules is the worst kind of bureaucracy we can have.

      In an adaptive process environment the principle benefit is not the rule encoding but empowering each function in the hierarchy to decide independently while making the information transparent and use it for knowledge and auditing. If decisions can be make transparent there is actually no need to enforce processes to avoid wrong decisions. If there is a regulation that has to be followed then it should be encoded into a rule. But then there won’t be any voting. User generated rules can be voted on by performers or customers.

      All our installations of Papyrus use our User-Trained Agent (more or less intensely) which uses past decision patterns to make recommendations. These are not easily encoded into rules. When users accept the recommendation it strengthens the probability weighting, or if not it reduces the confidence level of the recommendation. This is a kind of voting if you want, but it does not influence the rule creation.

      We also provide a user perceived value voting option, where several (no more than five!) aspects of a process element are judged. All authorized people can participate in the voting. This voting does not judge rules but only outcomes, ease-of-use, cost, and more …

      It helps the process owners and other performers to judge which variants of the process elements are the best.

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  4. Pingback: Some further food for thought… #BPM #Process « musings

  5. We were recently asked by the regulator to introduce Pharmacy Benefit Management within a very short period of time. The timelines were close to impractical. With no one having prior experience or expertise, we had no choiice but to bring in Consultants and define the processes beforehand in a structured manner and then roll it down the hierarchy. While you have surely raised a valid argument, the reverse of that still has its place. For example, after PBM is established within and staff gain more exposure, your social bottom-up approach can, for sure, be the best way to get work done as per objectives.

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    • Sanooj, thanks for reading and commenting. Much appreciated. You will notice in other posts from me that I do exempt regulatory requirements from the evolutionary approach to process creation and adaptation. Therefore you are right. If the process is given by external powers, what else can you do than implement them as such with flows and strict rules. That is however a clear indication that the concept of Adaptive Processes and as such also ACM must include the capability to define orthodox structured processes next to adaptive ones. Indeed, one process may contain both types of processes or processes may change from being strictly defined to more adaptive or vice-versa. Therefore a business needs a single process environment and not multiple ones. Thanks again, max

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