This post is the first of a series aimed to give a general overview on processes and how they have affected the way we look at how organizations achieve their goals. The text is somewhat academic in nature but I still encourage you to read it. Understanding the basics and (theoretical) concepts is always helpful when it comes to practically dealing with specific challenges.
The series is based on a paper I wrote during my time at university in 1999/2000. (For those who don’t know, I read business management and not computer science or some kind of engineering.) While the paper itself was done purely out of interest for the subject and not for any course, it was triggered by a seminar for which I had to look at processes in the context of the Balanced Scorecard (BSC). I then added a few more things and made it a separate text. So here we go …
The process-oriented approach became mainstream in management theory in the 1990s. This was a move away from a mainly functional view that had been the predominant paradigm for many decades. A functional touch can largely still be found when you look at the orgchart: Purchasing, marketing, HR, etc. are all functions and will probably be around for quite some time. But instead of focusing on those functions, nowadays people realize that cooperation across the board is necessary to deliver something useful for the customer.
The old, functional approach with its clear separation of responsibilities was, in a way, a consequence of the work done by Frederic W. Taylor on scientific management. This mainly focused on improving efficiency by splitting up work in many discrete steps. First steps towards a more process-oriented way of doing things came from these areas:
- Activity-based costing
- Computer science and organizational modelling
- Business process re-engineering
There were a few points that triggered this re-thinking which I would like to mention here.
- A functional approach severely limits the organization’s capabilities to be customer-driven (see above)
- A process-oriented organization increases flexibility
- Processes, or more precisely the thoughts required to define them, greatly improve the understanding of complex commercial activities
- Overhead costs need better distribution
As with so many things, this re-thinking was mostly triggered by difficult economic circumstances.
Part 2 will give a definition of what a process actually is.