Column 2 by Sandy Kemsley

The second keynote speaker of the day is Bruce Williams of Savvi International, author of Six Sigma for Dummies (and the accompanying workbook) and Lean for Dummies, speaking on What BPM Means to Business Innovation. Funny, at last year’s Gartner BPM summit, everything was about Six Sigma; this year, this is the first time that I’ve heard it mentioned.

He points out one view of BPM, that it’s just a faster, better treadmill, but we’re still doing the same old things. BPM is more than that: not just operational efficiencies and defect reductions, but measurements and activity monitoring, process controls, and integration between systems and services. Furthermore, he goes on to say that the biggest value from BPM is in business innovation, not process improvement: the introduction of something new and useful and the process by which it is brought to life.

But why is innovation important? Why not just milk the cash cows? The answer is pretty obvious, although ignored by many traditional organizations: the lifecycle of every product or service eventually comes to an end, often because someone else introduces a disruptive product or service to the marketplace that obsolesces the old way of doing things. As James Morse of the Harvard Business Review said many years ago (a quote that I have referred to many times), “the only sustainable competitive advantage comes from out-innovating your competition.” Ultimately, innovation trumps optimization.

Williams continues on with a lot of stuff about why the innovation cycle looks like it does, but there’s really nothing new here: this is just the classic stuff for why products or services pass their peak: fatigue, customer demands, market redirections, competitive pressures, technological changes, globalization effects, organizational changes, demographic shifts, regulatory constraints, economic effects, supply drifts and many other factors. He does point out, however, that most US firms have no program in place for fostering innovation, and don’t even have a clear idea of how to become more innovative. Tom Davenport did a study last year that showed that companies are focussing primarily on product innovation, and mostly ignoring things like business model innovation, or even business process innovation; Williams added some things that didn’t even make the list, like innovation in accounting practices or risk management.

He went through some of the different dimensions of innovation — reactive versus proactive; incremental/sustaining versus radical/disruptive; formal versus informal — and looked at how these dimensions mapped onto some specific cases. When he referred to Americans as the kings of innovation, however, it made me doubt his world view overall and left me with a bit of a bad taste: it came across as ethnocentric flag-waving that has no place at a business conference. I recognize that Americans lead innovation in a number of areas, but there are many other countries in the world that are leaders in their own areas of innovation. He’s also under the deluded notion that everyone wants what Americans have, driving SUVs full of consumer goods back to their monster homes in the suburbs, and laughingly pointed out a survey that he had done that concluded that if everyone in the world lived like he did, we’d need over 7 planets worth of resources to accommodate them. Yikes.

At the end of it all, although he had a pithy quote about how BPM is the grand unification theory for business (which is apparently trademarked?!), Williams had very little to say about BPM, but a lot to say about innovation: one of the prime motivators for why you might be considering BPM.

After Sinur and Melenovsky’s welcome, Simon Hayward gave a great opening keynote yesterday, “Living in a process-centric world”. To quote the session description on the agenda:

Process is now gaining importance as an organizing concept for dealing with change at all levels. We live in a world of processes, becoming conscious of those processes and taking control of them can be the key to personal and corporate effectiveness.

As one attendee mentioned later, everything sounds more intelligent when it’s said with a British accent, and I have to admit to having a soft spot for anyone that says process with an “oh” rather than an “aw”. However, Hayward had some good content for us as well.

He started with the question of why we’re all thinking about process now, and linked it back to the fact that leaders in the industry became that way in part because of their focus on process — especially processes that touch their trading partners and customers. There are challenges around maintaining control over and having visibility into outsourced processes, as well as determining intellectual property rights in cases where the process itself may be a competitive differentiator.

Along the way, he floated the notion that agility (the ability to react to unexpected change) is becoming as, or more, important than innovation, and as I mentioned in a previous post, I interpret this to mean that reacting to market forces can actually be considered innovation if it’s done in the right way.

Another key point was compliance = explicit process management (taken from their 2005 Planning Guidance for Compliance report), which shows how process forms an integral part of compliance. I created a course on compliance for a customer last year, and process was a surprisingly large part of it: I found that if you can’t understand, control and report on your processes, you’re going to have a hard time getting compliant and proving it.

Then something came up for the second time that morning: Six Sigma. It appears that Gartner is making a strong link between Six Sigma and BPM at this conference (and likely in other research of theirs), although I found the Mikel Harry keynote this morning out of place, somehow, especially when he appeared to be using Six Sigma as a “brand” of sorts and distancing himself from the original statistical meaning. BPM certainly helps to provide a “closed loop” environment for Six Sigma’s Define, Measure, Analyze, Improve, Control (DMAIC) continuous process improvement cycle through the inclusion of process analytics and simulation, but I think that it’s a bit dangerous to downplay the statistical significance and rigor of Six Sigma to somehow make it friendly to the BPM crowd. Hayward later showed a graph of overlaid hype cycles that showed BPM as the current incarnation of trends that start with quality (process improvement) and migrate through process reengineering to BPM. I don’t disagree, but that doesn’t mean that BPM is the next “version” of Six Sigma somehow.

Getting back to Hayward’s talk, he had a good list of the IT disciplines needed for a process-centric environment, with a necessary focus on impact analysis and selective regression testing: if we’re putting all that emphasis on agility, we’d better be able to understand the ripple effects of changes and be able to test scenarios before deploying them. He talked about how to assess both IT and business for their current state of process centricity, and showed a chart of how to approach the various scenarios:

I like the “Reflect” quadrant, where the business is ready and IT isn’t: that’s when the business needs to do some serious prioritization due to the limited capacity of IT, or find some other ways to do things.

He finished up with a list of great recommendations including having less respect for silos and getting rid of baronial hostility that really point to one of the key issues in a process-centric organization: process is part of the infrastructure, not just embedded in some departmental systems.