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Not long ago, continuity and stability were the watchwords of corporate operations. Now, with companies facing ever more demanding customers and tougher competition, ongoing operational performance improvement has become a strategic imperative. Executives are constantly trying to wring improved performance from their operations by following yellow-brick roads marked ERP Implementation, Balanced Scorecard, Supply-Chain Integration — or with the names of any of a dozen other popular programs, including today’s favorite, Six Sigma.
But although each of these performance-improvement initiatives can boost operating results, they need to be positioned under a process-management umbrella if they are to be successfully integrated. Otherwise, companies face the risk of program proliferation, of being burdened with a multitude of disconnected improvement efforts. Program proliferation is dangerous: It dissipates resources and creates confusion as people try to understand how each effort relates to the others. It engenders harmful competition among specialists, with each group promoting its program as the most deserving of resources. It also fosters cynicism; employees believe (correctly) that management cannot be serious about so many programs and hence think the company is serious about none.
Companies such as Bombardier, Air Products and Chemicals, Johnson & Johnson and Merck & Co. are avoiding the dangers of program proliferation by integrating their performance-improvement initiatives under the banner of process management. In so doing, they ensure that these efforts complement rather than compete with one another. And they are able to manage their portfolio of initiatives in an organized way. In particular, positioning six sigma under the process-management umbrella ensures that a company benefits from this important tool while avoiding the trap of applying it where it does not fit.
Process management is a structured approach to performance improvement that centers on the disciplined design and careful execution of a company’s end-to-end business processes. Formally, a business process is an organized group of related activities that work together to create a result of value to customers (for example, order fulfillment, product development and post-sales support). The two most important words here are organized and together. All activities in a business process must work together; they must be aligned for the common purpose of serving customer needs. People must operate as a team instead of focusing narrowly on individual tasks and protecting turf.
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1. For a discussion of process management and process enterprises, see M. Hammer, “Beyond Reengineering: How the Process-Centered Organization Is Changing Our Work and Our Lives” (New York: Harper Business, 1996); and M. Hammer and S. Stanton, “How Process Enterprises Really Work,” Harvard Business Review 77 (November–December 1999): 108–118.
2. The challenges of process ownership are explored in M. Hammer, “The Agenda: What Every Business Must Do To Dominate the Decade” (New York: Crown Business, 2001), 137–140.
3. See, for instance, F. Breyfogle III, “Implementing Six Sigma: Smarter Solutions Using Statistical Methods” (New York: Wiley-Interscience, 1999); P. Pande, R. Neuman and R. Cavanagh, “The Six Sigma Way” (New York: McGraw-Hill, 2000); and M. Harry and R. Schroeder, “Six Sigma: The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations” (New York: Currency Doubleday, 2000).
4. Breyfogle, “Implementing Six Sigma,” provides a good summary of the six-sigma tool kit.
5. The first and third examples were obtained through personal communication with the leaders of six sigma at the companies in question; the second example is found in Harry, “Six Sigma,” 250–254.
6.Harry, “Six Sigma,” vii.
7. For instance, see Harry, “Six Sigma,” 175; and Pande, “The Six Sigma Way,” 346.