BPM Journal

I am taking the title from Peter Drucker’s 2002 book “Managing In the Next Society“. Why would I be reading a 2002 book now? Well, I am probably only starting to understand Peter Drucker’s predictions now. His foresight into the Next Society is only now starting to hit home with me. The Next Society is almost here and I start to recognise the signs. So what is it all about and how does it apply to business process and performance management?

The book is divided into four sections and covers his views on:

• The Information Society;
• Business Opportunities;
• The Changing World Economy; and
• The Next Society.

Drucker sees the Next Society different to the New Economy. (More on that in a later post) To him the Next Society is a knowledge society. “Knowledge will be its key resource, and knowledge workers will be the dominant group in its workforce”. The main characteristics of this Next Society will be :

• Borderlessness, because knowledge travels even more effortlessly than money. (I think the information freedom that the Internet brought accelerated this trend);
• Upward mobility, available to everyone through easily acquired formal education (I think that informal education through the Internet may have surpassed the formal mediums); and
• The potential for failure as well as success. The fact that you can acquire the knowledge doesn’t automatically leads to successful outcomes, according to Drucker.

He also states that IT is an enabler that helps information spread near instantly and makes it accessible to anyone. This now results in organisations that need to be globally competitive while still operating in local markets. Just think of the local bookstore that needs to compete with the prices on Amazon.

So how does this Next Society impact our organisation’s competitive advantage? What has it got to do with my business processes and how they work in my organisation? According to Drucker the success and survival of every business will depend on the performance of its knowledge workforce. He makes an observation that it is impossible, according to the law of statistics, for any but the “smallest” organisation to have “better people” and the only way an organisation can excel in this knowledge economy is to manage its knowledge workers for greater productivity. So how is that different to the “old economy”?

Well, what made the traditional workforce productive was the system. The factory style, assembly-line “system” was popularised by Taylor and followed by Henry Ford and Demming. The system embodied the knowledge, or the knowledge was “built into the system”. It is the reason why McDonalds can run a fast-food restaurant with a bunch of fifteen year olds. Drucker’s view is that the system is productive because it enables individual workers to perform without much knowledge and skill. According to him, greater skill on the side of an individual worker is a threat to co-workers and the entire system. It is also the way that we design and implement business processes today. We automate “the system” and leave little or no room for workers to deviate from this. It enforces repeatable, consistent and measureable output. But we leave no room for individual contribution.

In knowledge-based organisations it is the individual worker’s productivity that makes the system productive. In a traditional workforce the worker serves the system and in a knowledge workforce the system must serve the worker, according to Drucker. This means that we have to change the productivity tools that we use for the Next Society. It means that the way we designed, implemented, automated and measured organisational processes must change. Processes can’t be as prescriptive and restrictive as what we’ve done in the past. It needs to support the productivity objectives of a knowledge worker and it needs to be dynamic and flexible while providing the necessary organisational control.

Drucker remarks that it would be difficult to overstate the importance of focussing on knowledge workers’ productivity. “For the critical feature of a knowledge workforce is that knowledge workers are not ‘labour,’ they are capital”. There is a shift from labour as a cost to a view of ROI on “labour capital”. Drucker calls it the Productivity of Capital.

The move to the Next Society is here. We have seen the borderlessness of information, the upward mobility of knowledge workers and the way process work changed. Knowledge workers need Next Society tools to support their productiveness. They are not bound to the constraints of an assembly line, either physically or in their contribution to the processes. They require IT enabled productivity support tools that allow them to work anytime, anyplace. The key to Competitive Advantage lies in enabling the Next Society to work in a way that will give a positive ROI on our knowledge capital.

The LinkedIn BPM groups is a good place to find topics to blog on. I just look for those with lots of comments and it sparks ideas. This question had more the 62 comments added in a few days and I thought I’d add my few cents. I also decided to post my comment to this blog as these groups don’t have open access. The question was : “Why do you think BPM could not take off like ERP or CRM?”. Here was my reply.

Well I’d like to rephrase it for myself to “Why do I think BPM cloud take off like ERP and CRM”. It also pre-supposes that CRM has taken off (which is a different debate).

I believe BPM will take off but not in the form or shape that we understand or think off today. I wrote a blog post on my BPMJournal blog titled “On Evolution, Darwin and BPPM” and no, BPPM is not a spelling mistake, it stands for Business Process and Performance Management. In the post I discuss the Richard Koch’s theory on “Evolution by Natural Selection” and how it applies to business process management and the “Progress from Order to Chaos”.

In summary (and I suggest that you read the post if you want to understand the context) it states that there is variation (we breed new adapted species), then selection (only a few make it in the new conditions), then more variation based on those that survive, the selection and so on. Being successful or “surviving” is based on fitting the “conditions of life”.

ERP systems in particular didn’t just arrive overnight. It evolved into the technology based systems that we see today through the same natural selection process. It is interesting if you trace the history of the double entry accounting system that a transactional ERP system is fundamentally based on.

In 1494 Frater Luca Bartolomes Pacioli, friend of Leonardo da Vinci, published his fifth book, Summa de Arithmetica, Geometria, Proportioni et Proportionalita (Everything About Arithmetic, Geometry and Proportion). It was written as a digest and guide to existing mathematical knowledge, and bookkeeping was only one of five topics covered. The Summa’s 36 short chapters on bookkeeping, entitled De Computis et Scripturis (Of Reckonings and Writings) were added “in order that the subjects of the most gracious Duke of Urbino may have complete instructions in the conduct of business,” and to “give the trader without delay information as to his assets and liabilities.” He acknowledged in his book that thirty-six years before him Benedetto Cotrugli wrote Delia Mercatura et del Mercante Perfetto (Of Trading and the Perfect Trader), which included a brief chapter which described many of the features of double entry.

The point I am making is that ERPs evolved over an extended period of time and will continue to change in future. ERPs didn’t start selling that well in 1500 or 1700 or 1900. I remember large Kalamazoo hand written “accounting systems” in my dad’s offices in the late ’60s, early ’70s. Today we wouldn’t contemplate starting his type of business without at least the standard modules of a manufacturing ERP. We just won’t be competitive and survive. I think the shortcomings of ERP have spawned the “next generation” and growing emergence of BPMS systems. But is all part of the evolutionary process.

BPM systems are evolving in a similar way to address ad-hoc, dynamic process requirements. The emergence of systems like Facebook disrupts the behaviour of people that use ERP, CRM and BPM systems and will change the face (no pun intended) of business systems forever. I’ve always held the view that future ERP systems will be based on a type of “BPMish” tool and I think that SOA, BPM, ERP, BI etc. are all converging to new ways of using technology to get better at getting work done. This is in the end the main objective. It will not look the same as what we know right now. It will be better adapted.

I think it is too early to say that BPM won’t take off like ERP and CRM systems. That is, if you see BPM as the technology component and not the management science. I think it can and will take off, maybe just not in the form that we see it in now. It is all based on how well it is suited to the “conditions of life”

 

Double entry system source: http://www.canhamrogers.com/HDEB.htm

Gartner’s Janelle Hill recently commented that “By 2013, dynamic BPM will be an imperative for companies seeking process efficiencies in increasingly chaotic environments”. Max Pucher proposes a definition for Adaptive Processes and Peter Fingar (who I regard as one of the “real” thought leaders) support Keith Harrison-Broninski’s Human Interaction Management concept in his Work 2.0 article (highly recommended reading). Keith Swenson, VP of R&D at Fujitsu America Inc., did an excellent interview with Jean-Jacques Dubray whose publications I’ve been following from my early BPM days. In the interview Keith gets Jean-Jacques view on “Does unpredictable work exist?” and whether you agree with Jean-Jacques that no process is unpredictable, there is certainly a renewed interest in the seemingly chaotic way we work and how to manage it better.

One of the comments on the interview states that “… to start a journey, a path must be chosen. All you need is a map, maybe even a compass will do”. It continues that the point is that the end path is not always known ahead of time. This is certainly true for a large component of the work that we (knowledge workers) do on a day to day basis. Our work has changed from the factory style, sequential and pre-determined workflow, to dynamic event based process “reactions” based on the contextual knowledge that we have for the activity that we need to address. This is quite a long explanation. Let me simplify with an example.

Suppose we receive an email from a client that want to change a purchase order from a 1 000 widgets to 10 000 widgets. Their initial order was wrong as someone left the last digit off. They still want it on the same delivery date. Suddenly there are a number of things that need to happen in your process. Our hard-coded predefined process requires that the sales person completes an “order variation” request that will be loaded in the ERP system. It may now move the delivery date out due the large variation because the MRP planning module and it may also moved to pending status as the customer credit limit is exceeded and needs to the adjusted. This is where the sales person generally revert back to email and collaboration as the structured dependency of the process limits his or her ability to “manage the process effectively”. The credit change process is manually escalated early on while the Operations Manager is called/emailed and briefed on the possible change and impact on inventory and production planning. Existing process controls are bypassed and process actions are dynamically routed and escalated based on the information that we gather at each step. We may find that credit approval requires additional information and possible collateral from the customer and we “know that we are about to receive a number of additional orders from the client as our account manager informed us that the customer landed a big contract”. Do you see the complexity in the process? It is not in the actual execution of each task, it is in deciding on a course of action based on information that we gather in the context of the process or as it emerges. It is not the activities but the combination and permutations of when and how we need to execute them. The above example is a simple one but one that most organisations would address collaboratively if they had to do it right now.

We generally model the suggested or “happy path” but this is not to say that it is the only effective way of doing work. Sometimes (most of the time) we need controlled process activities that we can sequence as the process requirements “emerges”. That is an Adaptive Process. It adapts itself in each specific transactional instance. We still do the same work, but we done necessarily do it in the same way every time. We still have specific process activities that are compulsory in every process, like credit approval, but we sequence it based the dynamics of the business. This is true “process management”.

The above example demonstrates the challenges that we face with models that are based on sequential workflow style routing and I’ll be posting on follow up posts on some ideas and suggestions around dynamic models.