Introduction
The level of competition in different industries in which organizations operate today is high and calls for increased competitiveness. In order to improve the competitiveness, firms could engage in different firm activities that may include process improvement.
This may call for analysis of the problem and seeking different ways of solving the issues. In order to improve business processes, an organization needs to have the necessary knowledge and expertise. The business process could be attained through establishment of change such as business process reengineering.
In spite of the good intentions of the changes, there is always resistance to change that could lead to project failure as examined in this paper. In addition, this paper examines reengineering as an example of process improvement in organizations.
History of Process Improvement
Change is a constant element in organizations given the dynamic business environment that firms operate in. Organizations operate in many business environments that are characterised by free entry and exit, increasing competition and technological advancement.
In order for organizations to maintain their competitiveness, they need to embrace change and improve their manufacturing processes, service delivery and operations. Process improvement has occurred in firms over many years.
Over many years, quality improvement in firms was done using regular inspection and changed over time to total quality management and the modern six sigma approach. Process improvement concept was first used by Harrington James in 1991 when he published in his book on process improvement.
The method involves redesigning and reengineering business process in order to improve quality of an organization’s output while gaining a competitive edge at the same time.
Since its introduction, process improvement has been able to be applied in many firms. The application of information technology in the process is a vital ingredient that will revolutionalize the future of process improvement in firms.
Process Improvement in Firms
The improvement of business processes in an organization has not been smooth for most firms. As the management of an organization introduces change in the company, there is always resistance to change with most employees opting to remain with the current processes of the firm.
Reengineering
According to Hammer & Champy (2000, p. 2), process improvement in organization requires reengineering, which is defined as the ability of an organization to disregards all its assumptions and traditional way of doing business and instead developing and adopting a new process centred business organization.
The adopted new process should help an organization improve its performance. In order to achieve the required process reengineering for an organization, an organization needs to adopt a fresh perspective and approach.
In order to acquire change through process reengineering, it is necessary that an organization rethink and establish radical redesigning of its processes in order to generate the required dramatic improvements. The process could be well illustrated in the figure below.
As indicated in the above diagram, Hammer & Champy (2000, p. 3) notes that reengineering requires starting over for an organization. In order for an organization to succeed in the modern environment, there is need for its processes to be fast, of high quality, flexible and of low cost.
The initial phases of organizational change began long time ago with Adam Smith who proposed labour specialization, followed by establishment of infrastructure, the assembly line and hierarchical structure of the firm.
In spite of the importance of these principles, their application in the modern business environment could result in delays, rigidity and high overhead costs in the production process.
The first step of reengineering begins with the focus on the fundamentals of the company. The fundamentals of an organization relate to the main activities of the firm, why they are done the way they are and the tacit rules and assumptions of present activities.
According to Hammer & Champy (2000, p. 4), reengineering concentrates on what ought to be or should be done and ignores what is done.
The radical redesign phase is concerned with the reinvention of the organization. This does not involve making of superficial changes or marginal enhancements to the firm but changes and designs that enhance new features of the organization.
The potential dramatic result is the phase that the firm realizes the outcome of reengineering. According to Piderit (2000), reengineering leads to quantum leaps in the performance of an organization rather than incremental improvements.
Business process orientation involves evolving of the firm around its business processes. The processes undertake inputs in order to generate valuable outputs to the customer. In order for a business process to work, it must produce added value rather than internal activity.
Various organizations could undertake the reengineering process. According to Revilak et al. (2007, p. 56), companies that operate in a competitive industry could undertake reengineering to increase their competitive advantage.
Other sets of companies are those whose management could realize approaching issues along their paths of operation. The third sets of organizations are those that have ambitious management teams that perceive reengineering as a means of achieving market dominance and leadership.
Process improvement of an organization through reengineering is characterised by various features. To begin with, the processes that an organization uses to perform its operations are simplified with the description of jobs being expanded to become multidimensional.
Introduction of change in an organization increases employee autonomy and empowerment with power distance in the organization being reduced. Employees work as teams with group work and cooperation being enhanced.
As the management of the organization adopts a flatter arrangement from a hierarchical structure, professionals within the firm become the key personnel to steer change. Employees are motivated to work for the firm and the measurement for performance of employees moves from activities to outcome of each employee.
The managers no longer act as supervisors but coaches that help employees attain their maximum potential. Lastly, the organization and employees do not focus on pleasing the management but the end user of products and services, the customer (Hammer & Champy 2000, p. 8).
Change in organizations can be in different forms. Incremental or first order changes are minor changes that alter small aspects of the firm while leaving the general business environment the same. Transformational or strategic changes in organizations aim at changing the entire business framework of a firm.
Change Management Process
In order to apply the required change, an organization needs to identify the problem it is facing in order to find and develop the best solution to the problems. According to Brown & Kusiak (2007), lack of proper diagnosis of the problem could lead to implementation of the wrong process in the organization.
The outcome could worsen performance rather than improve the performance of the organization. The problem identification process involves various steps as outlined below.
Problem Identification
Organizations face many issues some of which are complex while others are simple. The identification of problems of the firm needs to be followed by prioritizing the issues so that the company can make decision on which issues to be solved first.
Symptoms: the establishing of the issues affecting the organization needs to be followed by diagnosing the features or symptoms of the problem. The symptoms of the problems of the firm should be distinguished from the causes of the problem.
According to Brown & Kusiak (2007), business analysts usually hear many issues affecting the firm and they give many solutions. It is important that the firm does not ignore any solution given. However, the solution provided should be argued out with the management of an organization in order to establish its effectiveness (Boeker 1997, p. 155).
Alternatives: after serious analysis of a given situation in an organization and hearing possible solutions from a business analyst, it is important that the organization develops alternatives for its problems.
The approaches that could solve the problem of an organization could come with different consequences and costs that make it necessary for the management to discuss each alternative exclusively.
After discussion of each alternative, it is important that the management makes a decision regarding the best solution to fix its issues. The decision should be based on the best approach that solves the problem affecting the firm while leaving it with the least negative effects.
The decision made should be followed by implementation and follow up of the effectiveness of the approach. According to Brown & Kusiak (2007), follow up is important for organization to ensure that the approach follows the set guidelines and that it has no side effects.
In the process of solving an issue affecting an organization and effecting change in the firm, firms do use various methods. Some approaches include cause effect approach and business process reengineering.
Unsuccessful Process Improvement
Not all initiatives of change in firms end up being successful. Some processes end up failing. According to Pardo del Val & MartÃnez (n.d. p, 3), the failure of change management process for firms is due to the resistance to change within the organization.
He further notes that resistance to change in the firm introduces unanticipated delays and many costs in the process of change that the management must now consider in the entire process. In spite of the resistance to change as a cause of failure to change, it has been hailed as a source of important information that could help an organization transform its business framework.
The sources of resistance to change are many and while some show up during early stages of planning, others show up in the later stages of implementing the planned changes. As noted by Boeker (1997, p. 153), early sources of resistance could be due to distorted perception of change and misinterpretation of the change to be introduced.
The organization could also fail to look ahead in future. Other causes could be denial to introduced changes, perpetuation of ideas and making of implicit assumptions. Ford, Ford & D’amelo (2008, p. 5) note that communication barriers in addition to organizational silence could also casus misunderstanding within an organization thereby leading to resistance to change.
There is another source of resistance to change. This is noted by some researchers as lack of motivation for change within the firm especially for employees of the organization.
The low motivation could be due to low costs, cannibalization costs, cross subsidy comforts and past failures that hinder progress. Lorenzo (2000) argues that resistance to change could also be caused by different interests between employees and the management of an organization. For instance, employees could be for proposed changes while the management could be against change.
Pardo del Val & MartÃnez (n.d. p, 367) posits that the third set of resistance to change causes inadequate creative responses. Lack of creativity in an organization could be caused by complexity of the business environment and fast changes that do not allow for environmental scan, reactive mindset that could result to resignation and inadequate strategic vision for the firm.
The implementation phase of change is a vital stage that requires total concentration in an organization. However, there is resistance to change during implementation.
The resistance could also be caused by various sources such as a poor implementation climate in the organization that is brought about by different organizational values and culture. Others are departmental politics and incommensurable beliefs or disagreements.
The last set of causes to resistance to change includes inaction of leadership in firm, routines that are embedded in the firm and collective action problems in the organization.
Successful Reengineering Process: Ford Motor Corporation
Ford Motor Corporation applied the process analysis and problem solving in the 1980s by examining its employee accounts of about 500 employees.
After a careful examination of the accounts payables, it was revealed that the company took much of the time in the department to track down discrepancies between orders that were purchased, shipping receipts and invoices. The realization of the problem led to a rethink of possible solutions and reengineering was the only viable solution. The company took various steps as explained below.
- The management began by establishing an online database mainly for the purchase orders whereby all orders issued by buyers were recorded in the database.
- Goods were received at the dock while there was an individual to check in the database. The match of the shipment and what is in the database led to the reception of the goods and vice versa. This eliminated possibilities of any discrepancies between orders that were made and what is received.
- Once the shipment is received, the database is updated immediately to reflect the change. In addition, a check was generated automatically and issued to the vendor in time.
The process improvement applied by Ford Motor Corporation was a success. This is because the head count people in the purchasing department reduced drastically from 500 to 125 employees with efficiency in time management being improved dramatically.
According to Piderit (2000, p. 785), the reengineering process as applied at Ford Motor Corporation is a lesson to be emulated by many firms wishing to reengineer their processes. The changes that the company implemented could not have been achieved without the aid of the modern information technology.
The process reengineering reflects old processes that have undergone new wrinkles. Another lesson learnt is that reengineering depends on a large scale on information technology. Planning the reengineering process in advance cannot work since what is experienced in the course of the process changes the reengineering plan.
Innovation for Organizational Growth
Knowledge is an important aspect in every organization. An organization is made of human resources that end up being of great importance since they are involved in the productivity of the products of the organization.
The human resources could either be skilled, semi skilled or non-skilled. Skilled employees comprise of employees that and endowed with specific knowledge in a given field or sector in the firm such as management, information technology and manufacturing among many others.
Semi skilled employees do posses little knowledge in specific fields. However, they extent of know how is limited. Lastly, non skilled employees do not posses any form of knowledge or expertise in any field in the organization. Most of non skilled employees are usually employed by firms as casuals or non-permanent staff of the firm.
Skilled employees are important in an organization. It is important that an organization derives the best ways to manage its knowledgeable employees in order to motivate them and improve their performance and the performance of the organization.
Knowledge is important for an organization because it helps an organization undertake research and development that is highly needed for innovation to take place. According to Hansen & Birkinshaw (2007, p. 122), knowledge management should be customized for a given set of tasks within an organization.
Innovation and value added in the output of a firm is as a result of application of knowledge in order to improve, change or develop a specific task and activities (McDermott, 1999). Therefore, innovation could be termed as the primary purpose of knowledge in an organization.
In spite of its importance, innovation could be a complex idea that involves uncertainty and political activities. It might involve people with different experiences and teamwork or group work that is extended over long periods of time.
In addition, it requires combination of different knowledge endowments within an organization in order to produce expected results in the form of new products or services produced by a firm. As noted by Hansen & Birkinshaw (2007, p. 125), innovation does not only occur through research and development, but also through mainstream work activities within an organization.
Innovation is characterised by invention, diffusion and implementation. Therefore, it more than just coming up with a good idea, but is more of putting the ideas into practical use within the organization. The creation of new knowledge and ideas is an important aspect of innovation.
However, they must be accompanied by bringing the ideas and knowledge into widespread use and applying them to solve issues affecting the organization. There is also product and process innovation that is vital for the success of an organization.
Product innovation involves the application of new knowledge to the development of tangible products of an organization. On the contrary, process innovation involves the application of new knowledge and ideas to the establishment of new processes within the firm. All these are innovations that utilize knowledge at different levels (Nemeth 1997, p. 63).
Based on the above description of innovation, knowledge and knowledge management should be linked to innovation. The innovation process involves different steps that range from formation of an agenda through establishment of a routine to the manufacture of a new product or process.
In every step of innovation, there is an emphasis of different aspects of knowledge and management of knowledge.
Therefore, it can be concluded that knowledge cannot be separated from innovation as it necessitates the innovative ability of the firm. The firm should always struggle to motivate and maintain its knowledgeable employees in order to maintain its innovative ability and competitiveness in the market.
Conclusion
Problems analysis and problems solving in an organization is an important aspect of every organization. The modern business environment is dynamic and full of many challenges that organizations needs to develop different mechanisms of solving their issues.
The process of solving a problem involves first identifying the issue affecting the corporation and determining possible ways of solving the issues. Out of the many alternatives, the management could choose one. Process improvement and reengineering is one of the many methods of solving issues affecting the firm.
The reengineering process is vital since it helps an organization develop new processes and frameworks of the firm.
One of the successful reengineering was conducted by Ford Motors in the 1980s in which it introduced new process of recording purchases thereby ending up cutting down its costs dramatically. Reengineering process could be accompanied by knowledge and innovation.
List of References
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