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1-Page Summary of The Balanced Scorecard
Why Processes Matter
Back in the 1970s, companies were structured vertically and people viewed corporations as vast machines that would run properly if everyone did their job. There was minimal communication between departments and workers didn’t think about how they contributed to the organization’s goals. For example, one aluminum company paid employees according to how many pounds of material they produced, which discouraged them from paying attention to customer needs or special requests. Customers had little choice because there weren’t any viable alternatives for them.
In the 1980s, businesses realized that they could improve their processes by involving employees in improving them. This helped companies save money and raise quality while retaining employees during an era of increased worker mobility. In addition to this realization, firms also recognized that good economic times were no excuse for complacency. They began to fix their broken procedures with a practice called continuous improvement.
The Internet has changed the way businesses work. Businesses can now sell to and buy from customers around the world easily, cheaply, and quickly. Customers expect high standards of quality from products and services they consume. Companies that use technology most efficiently have a competitive advantage over those who don’t. Information efficiency is not just a goal; it’s an essential weapon in your arsenal for success as a business.
Processes and Strategy
Business process management has evolved in four “waves.” The first wave was called total quality management. It involved analyzing and improving business processes by identifying their most efficient practices, using them as models, and applying those practices to all locations of the company. This approach became popular in the mid-1980s when many organizations were trying to improve efficiency through better design. Businesses used to compete on products or services they offered customers; but now that it is possible for businesses to produce and deliver those goods more efficiently than competitors can, companies can use these improvements as a competitive advantage.
Business Process Re-engineering is not about laying people off. Rather, it’s about making drastic changes in the way a company operates so that it can be more efficient and profitable. By integrating processes throughout the company, firms will be able to consistently deliver high quality goods and services at lower costs.
Process-oriented organizational design is a phase in business management. The first phase was to manage each function separately, but this led to problems when the different functions didn’t work together well. A more holistic approach is needed, where all of the functions are considered as part of an integrated whole and how they affect other parts of the organization down the line.
A new form of competition developed in the last wave. This was process-based competition, which is where “process performance is integrated into strategy”. This started when companies realized they could use their new structures to compete more successfully. They saw that they could receive information from their operations and change their strategies to meet organizational goals.
Strategic process management is a six-step approach to managing processes.
Step 1: “Vision and Mission”
A vision statement and a mission statement are very different.
- A vision statement communicates where you are going, what your company will become and what it will be doing in its perfected future state. The vision should be inspiring for everyone to buy into. It shouldn’t require people to jump across the Grand Canyon; rather, it should inspire them to take action and feel urgency about implementing the vision.
