Putting executives in charge of improving cross-functional processes in large organizations is akin to asking them to paddle a boat upstream. The natural forces in the organization will tend to frustrate their every attempt to coordinate activities across functional boundaries.
Nevertheless, companies that live and die on operational excellence — such as Amazon.com, FedEx, Southwest Airlines, and Wal-Mart — must continually improve their key processes. And they need process owners (who may variously be called VP of Customer Experience, SVP of Supply Chain, Chief Engineer, or Value Stream Leader, for instance) to lead these initiatives. So what conditions give process owners the best chance of success?
The problem, as I described in my last post, is that six things militate against success in the role:
The management team's attention shifts to other priorities.
Process owners misunderstand their role.
They are not held accountable for improvements.
They are not senior enough to have the necessary influence.
The organizational structure to accommodate the role is too complex.
Employees are uncomfortable belonging to processes rather than functions.
For process owners to be successful, companies have to address these issues. They can do it in the following ways.
1. Make the role permanent and incorporate it into overall performance management. Appoint process owners not just to address a crisis, but to improve performance on broad customer-defined measures that cut across functions and need sustained attention. Incorporate these measures into the company's "balanced scorecard" or dashboard.
For example, Air Products set up process owners for each of the major steps in its supply chain, including plan, source, make, build, and fulfill. Each process owner has key cross-functional metrics to manage, such as cash-to-cash cycle time, forecast accuracy, and percent of orders received on time to demand.
2. Select process owners with strong leadership skills and develop those skills even further. Choose owners who not only have experience in the process area, but also have charisma, good relations with senior leaders, political savvy, and the ability to persuade. Then explain the role, set expectations, and further train and coach your process owners in process improvement, persuasion, and coaching.
For example, to lead the reengineering of its "customer experience" process, an insurance company selected a vice president who had worked in sales. She had the right personality and credibility for driving high-level cross-functional change — an extensive background in listening to customer needs and influencing the organization to satisfy them. She lacked experience in managing process improvement, so she hired a small consulting team to help her develop those skills.
3. Make the process owner accountable for how well the process performs. Include in the process owner's job description the responsibility not only for process design, but also for taking action when process performance is out of spec or trending out of spec.
A chemical company identified seven key process performance measures for each of its seven "value chains." To improve performance in every measure, the firm assigned a senior leader to close the gap between target and actual. Every month the top management team (which represents all functions) reviews the measures.
4. Give the process owner organizational power. For example give the process owner access to senior leaders, involvement in all major and monthly review meetings, budget control, a powerful title, and a say in rewards and incentives for managers.
For instance, Air Products has a Senior Vice President of Supply Chain to whom the process owners report; he in turn reports to the CEO. Also, process owners control IT budgets. Toyota's chief engineers contribute to the performance appraisals of the engineers on their teams, even though those engineers' primary reporting lines are to their respective functions.
5. Minimize disturbance to the organizational structure. Create process owners outside the formal organization with a very small staff, leave most people in their functional organizations, and clarify the process owner's role with respect to the functions and business units they will work with.
For example, at Toyota, chief engineers direct the efforts of about 10 major functional departments. Only a small support team reports directly to each chief engineer; the rest of the headcount remains in the functions.
6. Help employees get comfortable thinking in terms of end-to-end activities that together generate value to customers. Encourage cross-departmental activities that solve customer problems, and reward cross-departmental teamwork.
In reviewing the progress of its reengineering initiative, an insurance company shifted from traditional town hall meetings organized by department, to cross-departmental meetings led jointly by the leaders of two departments. The meetings trumpeted successes such as a reduction in customer service inquiries, the teamwork for which cut across a half-dozen departments.
Fighting for cross-functional improvement may feel like paddling upstream, but it doesn't have to be quite so daunting. These six initiatives can give leaders the engine and navigational aids they need to prevail against the current. Without them, they won't make it.
Request: What conditions have you seen that make a process owner successful in sustaining cross-functional improvement?