An interview with Mathias Kirchmer, one of the authors of Value – Driven Business Process Management: The Value-Switch for Lasting Competitive Advantage, published by McGraw Hill. Mr. Kirchmer is the managing director for Business Process Management at Accenture, a global management consulting, technology services and outsourcing company.
As Mr. Kirchmer explains in the interview, application of the management discipline “value-driven BPM” can help companies make immediate and lasting improvements. This approach translates strategy into execution via the organization’s business processes. These processes can become real assets that provide competitive advantage. Value-driven BPM makes business processes more adaptable, creating greater agility as companies adjust their strategy in response to the dynamic business environment, and can play an important role in innovation.
InnovationManagement (IM): What is your definition of business process management?
Mathias Kirchmer (MK): First and foremost, business process management, oftentimes referred to as BPM, is a management discipline designed to transfer strategy into people and IT based execution – at pace and with certainty. To further clarify, a management discipline is a set of practices for managing risks and contributing to a key function’s success — a function that can be critical to a company’s ability to achieve its objectives.
A management discipline typically focuses on the big picture and the details, providing a point of view about how a specific area of a company should work. In the end, many management disciplines seek to drive an individual function to maximize its overall contribution to the rest of a business, and it does so in a way that continuously improves.
The problem as we see it is that while BPM is seen as a way to improve a process, BPM as it is often practiced has little to say about how to select which processes to improve, or how to connect process to strategy. That is where Value-Driven Business Process Management comes in.
IM: How can value-driven business process management (BPM) help make innovation a lasting capability in an organization?
MK: Nowadays, many companies, regardless of size or industry, generally need innovation to grow and thrive. Innovating on a long-term, sustained basis, however, can be very difficult. There are really two distinct forms of innovation: Business model innovation and technology innovation. Both are closely related to the notion of business processes, and therefore can be managed using a BPM discipline and approach.
Let’s look at business model innovation first. This typically includes new or modified value propositions, new business processes (especially in the supply chain) and new target customers and markets. A good example is Amazon.com, which while it did not invent the book, it arguably contributed to the popularization of buying books online. Business model innovation is also important within many traditional industries. Many machinery manufacturers are offering more convenient and reliable service processes, while many airlines have simplified the ticketing process to reduce cost and improve service levels. In these cases, business model innovation has typically been enabled through new and better processes – through process innovation.
Technology innovation includes offerings to end customers, process technologies, and enabling technologies. All three generally result in new or adjusted business processes. A new product technology often requires adjustments to manufacturing, supply chain, and sales processes.
Value-Driven BPM can improve the performance of the innovation process by supporting it with an effective management approach. A company can define and manage a process throughout the enterprise, for example, to integrate external research institutions such as universities into its innovation process.
IM: Companies today have a much shorter first mover advantage than they did in decades past. How can BPM help companies more rapidly realize the development of innovations while contributing to more successful product and service launches?
MK: Value-Driven BPM can supply the discipline needed to accelerate the innovation process. Management rigor provided by BPM can help improve the efficiency of the innovation process, which, in turn, can help companies to translate ideas into products and launch them much faster. We have seen examples from the telecommunications industry that show that BPM can accelerate product launches by over 70 percent.
BPM can also help companies improve the quality of the innovation process by systematically incorporating appropriate checks, policies and guidelines. At the same time, BPM can foster process innovation, helping companies invent new processes that move them forward. It can also allow companies to define and model innovative processes in a structured way that can allow a thorough evaluation. The use of process models typically introduces a common language for process innovation. BPM automation engines can then be used to implement the process in a realistic prototype, and the same automation engine can be leveraged to roll the product out.
IM: Can such success with the adoption of value-driven BPM in innovation be enhanced through the use of social media channels?
MK: We see social media as a very powerful tool for expanding the reach of value-driven BPM. People are central to the success of value-driven BPM. Social media can provide a bridge between IT and people, and close the gap between process design and the design of systems to support process.
The ability of the web to socialize business activity inside and between organizations has become a key factor in squeezing more value out of processes and creating entirely new processes. Social media can now be used to support the “Process of Process Management.” This is the way that value-driven BPM can come to life throughout an organization. For instance, social media can help collect process improvement suggestions or evaluate the impact of processes on a company’s strategy.
IM: How can BPM support process innovation both within and outside of an organization?
MK: Ideally, an innovation process helps a company identify and evaluate promising new ideas, select the ones with the greatest potential business benefits, bring those ideas to market, and measure their success.
Consumer goods or retail companies can use BPM to understand their customers better and come up with customer-centric innovation approaches. A home improvement company could, for example, describe the “bathroom remodeling” process from a consumer point of view, from the initial idea, through the decision to move forward and the completion of the remodeling. The resulting process models help identify which products and services to offer and bundle to provide a comprehensive solution. This solution can then be tested using a process model describing the new process from the customer point of view.
The process of process management also can foster collaboration within and across the organization. It can allow companies to establish the kind of robust governance that is critical to successful process innovation.
IM: Agility and transparency are two of the key values of BPM. How can BPM help to boost both the agility and transparency of the innovation process, thereby enabling competitive advantage?
MK: As a management discipline, value-driven BPM is designed to support a stable innovation process that delivers the desired results. BPM can increase agility by allowing companies to simulate alternative scenarios, while enhancing compliance with regulatory and other standards by making procedures accessible in a process repository.
In value-driven BPM, the process of process management often supports innovation through its entire lifecycle. Many organizations define innovation as an end-to-end process, from the discovery of ideas, through go-to-market strategies and success measurement. Using the process of process management, companies can leverage model-based design, evaluate innovation process cycle times and costs, discover bottlenecks and identify company-specific metrics.
BPM can also foster increased transparency. For example, companies can use BPM to define processes or service products in the form of process models. This can allow the use of a structured design process — also known as service engineering — that can help verify whether important aspects of the service have been forgotten. Common language can support strong communication within the organization and companies can gain the transparency required to make faster decisions and change ideas readily.
IM: How can the integration of BPM in innovation further a company’s objective of achieving high performance?
MK: The transparency generated by BPM can help companies increase the quality of their innovation processes, for example by supporting idea generation and discovery through creative software tools and social media. BPM can boost efficiency by using workflow for idea management, with companies using workflow engines to route ideas and facilitate approvals. In a manufacturing environment, BPM can help simulate processes to identify bottlenecks, which can lead to cycle time improvements. Value-driven BPM and the process of process management can lead to the collection and storage of such engineering processes in a well-classified and readily accessible repository.
People are another important aspect of integration. Through BPM, companies can integrate people within the organization all along the integration process, defining how each can make the most valuable contribution.
IM: Many traditional organizations have used BPM only on a project basis to manage incremental improvement efforts. How is this different than what leading companies do today to leverage BPM to drive innovation?
MK: Many leading companies are now developing the kind of lasting BPM capabilities that can help them deliver business value on an ongoing basis. We see leading companies using the process of process management to leverage BPM methods and tools such as workflow engines and process monitoring systems, and to establish process governance as well as roles and responsibilities. They typically monitor key performance indicators and gain insight into how ideas flow through the innovation process. In these organizations, BPM typically becomes part of the innovation process, enabling process innovation. This can be especially important for services companies such as banks, insurers, telecommunications providers and retailers, whose “products” are really process innovations that can be accelerated through BPM.
With innovation so central to many organizations’ long-term health and viability, the use of BPM to improve returns on innovation investments can provide a major boost to a company’s pursuit of growth and high performance.
About Dr. Mathias Kirchmer
Dr. Mathias Kirchmer is Executive Director for Business Process Management (BPM) at Accenture. He leads the Global BPM-Lifecycle Practice, as well as the program for the development of Accenture’s Business Process Reference Models across industries and functional areas. His special field of expertise is to establish BPM capabilities that deliver both, immediate benefits as well as durable competitive advantage.
Before joining Accenture, Dr. Kirchmer had been for 18 years with IDS Scheer, a leading provider of business process excellence solutions, known for its BPM Software, the ARIS Platform. He was member of the Extended Executive Board, including roles as CEO Americas, Japan, and Chief Innovation and Marketing Officer. During his professional career Dr. Kirchmer has developed deep knowledge in approaches, methods, tools and software for the design, implementation, execution and controlling of business processes. He has applied this know how in companies of various sizes and industries around the world.