When Should you Focus on Process Improvement?

Somebody asked me that recently and I had difficulty answering that question. My view is that you should continually focus on improvement. If you do, then you will minimize the amount of waste in your business.

However, that doesn't help someone who wants to start. There are good times and bad times to start. I'll focus here on good times to start. Once you have it working, it is much easier to maintain.

The good times are when there are major changes in your business. The timing is the same whether you are in a service business or manufacturing.

Typically, when you start a business, you develop solutions to meet your customers needs. The product or service varies depending on what the customer asks for. In your search for customers, you try to be flexible and provide it. This type of business is classified as a custom business. You deliver custom solutions based on your customer's needs. Your business processes are often customized as well.

As your business grows, you find that most of your customers are asking for very similar solutions, so you recognize that you can be much more efficient, perhaps more effective and deliver a better quality service or product, if you standardize. You look at ways to standardize the solutions that you provide. If you standardize your services or products, you also need to standardize your business processes to support it. If not, your business will become more complex and you will waste resources. This business is delivering standard products to a niche market.

The next stage is the mass market. Here there is not only a standard product, but also a very large market. In order to produce in these volumes you need not only standized business processes, but efficient ones as well. Mass market products are usually much cheaper. The business processes that support them must also be much more efficient.

When products are widely available, there is seldom enough market to justify a large number of players. onsolidation is the result. With consolidation, comes mergers. When two or more companies merge, there is significant upheaval. The business processes are different, the software used by the companies is different and often the company culture is very different. Attempts to merge without a review of business processes can be fatal.

To answer the question of when should you focus on your business processes, we look at the changes in the business model. There are three critical situations:

• When you move from custom to standard products.
• When you move from standard to mass market.
• When you enter a merger or joint venture.

Each of these is a critical stage. In general, I have found that growth beyond about 15 people makes it difficult for any manager to keep everything in his head. He needs good business processes which provide him with the information that he needs to manage his business. Good processes require software that support the process.