Come Together (Right Now) to Improve Your Process Advantage

Dec. 14, 2011
Only one-third of the executives polled said their companies take an enterprise-wide approach to managing critical processes. Put another way -- only a third of companies actually work on a thing that doubles their chance of crushing the competition.

Competition has intensified. The economy has essentially stopped growing, so the main way to achieve the financial goals you've set is to take market share from your competitors -- which, incidentally, are coming for your customers, too.

You need to do something a little counterintuitive -- countercultural, even. You need to take advice from John Lennon, who wasn't exactly known as a company man, but was sage in this instance.

At times like these, do as Lennon suggested and "come together."

In a flat economy, one of the few things a company can do to support its differentiation is strengthen those internal processes where it has an advantage. This is because unlike other aspects of business, processes are not easily replicated. Competitors copy products, but products don't create competitive advantage. Process, however, is a moat, a defensible competitive position.

The majority of process-based advantages span multiple departments. For example, R&D doesn't bring new products to market by itself --- it relies on marketing, product management, and numerous other disciplines.

Not surprisingly, a recent study indicates that businesses which take a cross-departmental approach to managing critical processes are twice as likely to exceed the performance of their competition.

What is surprising is that only one-third of the executives polled said their companies actually take an enterprise-wide approach to managing these critical processes. Put another way -- only a third of companies actually work on a thing that doubles their chance of crushing the competition.

And what was downright shocking were the number of executives who understood the value of improving critical processes, but hadn't yet put in place the capabilities to achieve it.

Consider these takeaways from the study which was conducted by Accenture working with AMR Research (recently acquired by Gartner, Inc.), and surveyed 178 executives from a cross-section of multi-billion dollar companies around the globe:

  • A little means a lot: Executives overwhelmingly believe if they could excel or achieve process excellence in critical areas, they could meet their financial goals. On average, executives said they would require only a 10% improvement in these processes to differentiate their overall performance from the competition.
  • A little lasts a long time: If they could improve key processes, executives suggested it would be well worth the investment. In fact, about one-third said they could sustain competitive advantage for more than two years if they could execute their critical process at a high level.

If this survey is any indication, a majority of companies are leaving their bases for competitive advantage extremely vulnerable in the present economy.

Suffice it to say, the time is now for business leaders to initiate change. In an environment that is becoming more dynamic by the day, achieving process excellence is not just a competitive advantage -- it's a competitive imperative.

But what is it?

Process improvement starts with an end-to-end review of the processes. Here are a few ways companies can start managing critical processes at the right scope:

  • Start at the top, and make cross-departmental incentives consistent: Without senior direction, each segment of the business is left to justify improvements and measure benefits on its own. Leadership should ensure that all functions have a seat at the table, and that goals rely on everyone's execution. For example, a life sciences company with an expiring patent on a critical drug needed a process change to reduce the cost of production. This major mindset change was driven to consensus by executive teams. Rewards for overall business performance - instead of for "silo" performance - strongly influenced the outcome.
  • Make your intent clear, in public: Cross-functional groups are groups with inherently mis-aligned objectives. They publicly (within the company, that is) need to understand the overarching business objectives and the value of broad representation. For example, a mobile broadband provider wanted to improve the speed and efficiency of its technology rollouts in a multitude of different markets. With this clear goal in mind, representatives came together in a workshop that aligned extremely diverse disciplines, from leasing land, through logistics to those who actually built transmission towers. They succeeded, though, because they were all oriented toward the same goal.
  • Prepare leaders to relinquish some control: Cross-collaboration can often result in a shifting or sharing responsibilities individually, which some leaders view as a threat. But surrendering some control in the name of efficiency is critical to maintaining a process-based advantage. Take the case of a leading oil company that as a result of growth through acquisition was struggling to manage a host of legacy and inherited business processes -- many of them designed to different standards in an industry where compliance is a major concern. By putting health, safety and environmental governance on one platform, the company re-enabled its capacity for expansion going forward.

The marketplace is speeding up, and companies must have a commensurate urgency about taking a systemic view of things. Without top-line growth, the key to winning the hearts and minds of customers is capitalizing on process advantage. For those businesses -- and only those businesses -- that come together across disciplines to strengthen their key processes, everything can work out.


Matt Reilly is the managing director of the North America region for Management Consulting at Accenture, a global management consulting, technology services and outsourcing company.

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