Solving common business problems: there are no magic recipes
Dmitry Pinaev
General Director of the GC "Modern Technologies of Management"
This article contains the findings of the study “Analysis of the quality of business process management in Russian companies” and is devoted to recommendations for eliminating the most frequently encountered problems. Just want to note that in this article there will be no magic recipes, trainings for which are widely advertised on the Internet today. It will be about the need for meticulous and methodical work on building a business and the need to increase the level of self-awareness of managers.
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At the beginning of 2016, our company summed up the results of a study to assess the quality of design and implementation of business processes in Russian companies using the open service BIZDIAGNOSTICS . Over the past 2 years, 165 companies have been diagnosed on the site, more than 1,300 business processes have been evaluated. As a result, each company received an integral assessment of the quality of management, as well as a list of existing problems. In turn, we analyzed the results and made a comprehensive analysis of the quality of management in Russian companies in the following areas:
Analysis of the data obtained allows us to state that more than half of the business processes of the surveyed companies (59%) are weak, about a third are non-optimal, and only 5% of all business processes are strong (Fig. 1.).
Fig. 1. Evaluation of the quality of business processes in modern Russian companies (base - 165 cases)
Considering that the source of opinions is the personnel of the company, the result suggests that managers and employees of the absolute majority of the companies surveyed are aware of the problems that impede the implementation of various business processes.
Among the most problematic respondents noted the following processes (Fig. 2):
Fig. 2. Assessment of the quality of individual business processes in modern Russian companies (total base - 1300 estimated processes)
Going down below, you can find the most common causes of problems in the course of business processes. Here are examples of some of them collected from different business processes:
In total, the diagnosis of respondents' business models made it possible to find about 200 typical problems.
Next, we tried to find the "root causes" of the problems found. Fortunately, it turned out that the number of root causes, in contrast to the problems, is small. However, the bad news is that managers are struggling, and sometimes completely unable to understand the main ones. Further, in descending order of significance, we will examine each root cause in detail.
This root cause is the undisputed leader among the rest. It lies at the root of 85% of the problems that were identified in the studied companies.
What is technology applied to business? This is a description of the result to be obtained, operations, objects and means of activity, requirements for performers. Why are there no technologies in the company? As a rule, this is due to the banal misunderstanding that a business is a complex socio-technical system. And, like any complex system, a business system must be designed. Designing allows you to get, among many others, two main effects:
In practice, managers often believe that it is enough to define a goal, and then the employees themselves organize and, by virtue of their abilities, come up with the necessary technology. Yes, it happens that it works. But in a limited class of situations: in small companies whose employees have sufficient intelligence and knowledge. The second common misconception is that by “trial and error” the necessary technology will sooner or later develop “itself”. Most often this does not happen, and if it does, the cost of resources “for mistakes” is prohibitively large.
The consequence of the foregoing is that the company should have a cohort of business architects and regular organizational design activities. In practice, the best solution is to approach when a qualified specialist (Director of Organizational Development), who is functionally subordinate to all managers, heads this activity. The main non-trivial idea here is that all managers must be business architects. Or rather, they should have time to occupy such a role. In practice, a vicious circle arises: “To think about the optimization of activities, we do not have time. And in order for time to appear, you need to optimize your activity. ” Only the will of a top manager can break this circle. We will talk about this in the following root cause.
Examples of reasons based on the lack of technology:
After identifying the root cause 1, a reasonable question arises - why the company didn’t set up activities for the development of technology activities (sorry for the tautology)? Why do companies allow themselves to lose money due to inefficiency? The answer is simple - the lack of insight from most top managers about organizational design. A particularly depressing picture has to be observed in the regions. "Impregnation" of the necessary knowledge of heads of the first persons goes, but goes slowly. Plus, many domestic top managers and business owners live "here and now", and often look for tools that should help solve local problems quickly, sometimes without regard for the long-term development of the business, without regard for the interconnection of individual objects in the business system.
This is confirmed by the popularity of trainings and seminars in the spirit of “10 secrets of successful sales”, “5 secrets of success in marketing”, etc. The list can be continued for a long time. We are not against training. We love them. Simply searching for a “magic button” that helps solve business problems in three steps often becomes the usual practice of managers. At the same time, only a few think that the main reason for many problems that they want to solve is the lack of a systematic approach to business development. Again, we return to organizational design as a special type of activity. To activities that the first persons in the business have no right to ignore! (The amendment is in a competitive environment. Where there is no competition, development technologies there are probably not so much in demand).
Also, speaking about organizational design, we would like to note that the respondents to the research noted the following problems when implementing the development strategy of a company:
What category are these problems in? In the "lack of technology" or also in the "lack of the necessary representation of the first person of the company," given that it is usually responsible for developing a strategy? We offer readers to independently answer this question.
Next, consider the remaining rarest three primary causes.
It is obvious that for the implementation of many activities necessary for a long and prosperous existence of the company, including and organizational design activities, budgets needed. Unfortunately, we have no recipes for how to eliminate this root cause for companies that have funds only for the implementation of current operating activities. Only monopolists can allow themselves not to pay attention to development, to the effectiveness of their activities. Although, as we see now in Russia, even monopolists have begun to actively address the issues of the effectiveness of their activities. Therefore, the best development of events in the absence of funds is the sale of the company.
Indeed, there are situations when both the technology is developed and the staff is trained, but the work is not done as it should. For example, respondents noted the following problems associated with lack of control:
This is really a serious problem, and the essence of it is quite unexpected. Technically, the solution to this problem is quite obvious: control methods are introduced at the stage of development of the underlying technology, or the technology itself is structured in such a way as to prevent wrong work.
Methods of monitoring compliance with the requirements of the regulations *
Source: Vladimir Repin, Russian Management Consultant
And the essence of the problem is the corresponding mentality of employees who are not used to and do not understand the need to work according to the rules, as a result of which the company has to remember the need for control, and the most important thing is to spend money on it. This money falls "dead weight" on the cost of products and services, taking away resources for the really necessary activities.
Strangely enough, only one problem that respondents noted may clearly be related to the lack of the necessary means for work - the information system. This problem:
Let us make the assumption that there is a work technology, but the volume of the nomenclature for an order is so large that it is impossible to process them manually. Fortunately, the necessary information systems exist - these are systems that, for example, implement the methodology for planning MRP II resource requirements (today these are all systems belonging to the ERP class). It allows, given the delivery time for each item in a timely manner to create orders to suppliers.
We have completed consideration of the root causes of the problems identified in the study of the quality of business process management. Some of the proposed solutions may look quite unusual. But, unfortunately, miracles do not happen: to build a successful business, you need to be ... a business architect.
Published according to the materials of the “GK Modern management technologies”
General Director of the GC "Modern Technologies of Management"
This article contains the findings of the study “Analysis of the quality of business process management in Russian companies” and is devoted to recommendations for eliminating the most frequently encountered problems. Just want to note that in this article there will be no magic recipes, trainings for which are widely advertised on the Internet today. It will be about the need for meticulous and methodical work on building a business and the need to increase the level of self-awareness of managers.
')
At the beginning of 2016, our company summed up the results of a study to assess the quality of design and implementation of business processes in Russian companies using the open service BIZDIAGNOSTICS . Over the past 2 years, 165 companies have been diagnosed on the site, more than 1,300 business processes have been evaluated. As a result, each company received an integral assessment of the quality of management, as well as a list of existing problems. In turn, we analyzed the results and made a comprehensive analysis of the quality of management in Russian companies in the following areas:
- Evaluation of the state of business processes in Russian companies;
- Quality assessment of individual business processes in Russian companies;
- Identifying the most common causes of poor quality of the flow of business processes.
Analysis of the data obtained allows us to state that more than half of the business processes of the surveyed companies (59%) are weak, about a third are non-optimal, and only 5% of all business processes are strong (Fig. 1.).
Fig. 1. Evaluation of the quality of business processes in modern Russian companies (base - 165 cases)
Considering that the source of opinions is the personnel of the company, the result suggests that managers and employees of the absolute majority of the companies surveyed are aware of the problems that impede the implementation of various business processes.
Among the most problematic respondents noted the following processes (Fig. 2):
Fig. 2. Assessment of the quality of individual business processes in modern Russian companies (total base - 1300 estimated processes)
Going down below, you can find the most common causes of problems in the course of business processes. Here are examples of some of them collected from different business processes:
- orders for resources are not always placed with suppliers in advance, due to which there are late deliveries;
- lack of regular monitoring of the competitive environment;
- customer satisfaction information is not regularly collected and analyzed;
- the existing cost management system does not allow to avoid unnecessary costs and creates a shortage of resources.
In total, the diagnosis of respondents' business models made it possible to find about 200 typical problems.
Next, we tried to find the "root causes" of the problems found. Fortunately, it turned out that the number of root causes, in contrast to the problems, is small. However, the bad news is that managers are struggling, and sometimes completely unable to understand the main ones. Further, in descending order of significance, we will examine each root cause in detail.
Root cause 1. The company lacks the technology to carry out the necessary activities.
This root cause is the undisputed leader among the rest. It lies at the root of 85% of the problems that were identified in the studied companies.
What is technology applied to business? This is a description of the result to be obtained, operations, objects and means of activity, requirements for performers. Why are there no technologies in the company? As a rule, this is due to the banal misunderstanding that a business is a complex socio-technical system. And, like any complex system, a business system must be designed. Designing allows you to get, among many others, two main effects:
- To reduce, in some cases dramatically, errors in the work of the company.
- To find "white" spots on the map of the activities of the company. These are the types of activities that should be carried out, but for some reason, so far no one has thought about it.
In practice, managers often believe that it is enough to define a goal, and then the employees themselves organize and, by virtue of their abilities, come up with the necessary technology. Yes, it happens that it works. But in a limited class of situations: in small companies whose employees have sufficient intelligence and knowledge. The second common misconception is that by “trial and error” the necessary technology will sooner or later develop “itself”. Most often this does not happen, and if it does, the cost of resources “for mistakes” is prohibitively large.
The consequence of the foregoing is that the company should have a cohort of business architects and regular organizational design activities. In practice, the best solution is to approach when a qualified specialist (Director of Organizational Development), who is functionally subordinate to all managers, heads this activity. The main non-trivial idea here is that all managers must be business architects. Or rather, they should have time to occupy such a role. In practice, a vicious circle arises: “To think about the optimization of activities, we do not have time. And in order for time to appear, you need to optimize your activity. ” Only the will of a top manager can break this circle. We will talk about this in the following root cause.
Examples of reasons based on the lack of technology:
- orders for resources are not always placed with suppliers in advance, due to which there are late deliveries;
- There are no quantitative, clearly measurable criteria that measure customer satisfaction.
- attracted staff does not meet the requirements of the company in terms of competence and cost
- the existing cost management system does not allow avoiding unnecessary costs and creates a shortage of resources;
Root cause 2. Lack of understanding about organizational design at the company's first person
After identifying the root cause 1, a reasonable question arises - why the company didn’t set up activities for the development of technology activities (sorry for the tautology)? Why do companies allow themselves to lose money due to inefficiency? The answer is simple - the lack of insight from most top managers about organizational design. A particularly depressing picture has to be observed in the regions. "Impregnation" of the necessary knowledge of heads of the first persons goes, but goes slowly. Plus, many domestic top managers and business owners live "here and now", and often look for tools that should help solve local problems quickly, sometimes without regard for the long-term development of the business, without regard for the interconnection of individual objects in the business system.
This is confirmed by the popularity of trainings and seminars in the spirit of “10 secrets of successful sales”, “5 secrets of success in marketing”, etc. The list can be continued for a long time. We are not against training. We love them. Simply searching for a “magic button” that helps solve business problems in three steps often becomes the usual practice of managers. At the same time, only a few think that the main reason for many problems that they want to solve is the lack of a systematic approach to business development. Again, we return to organizational design as a special type of activity. To activities that the first persons in the business have no right to ignore! (The amendment is in a competitive environment. Where there is no competition, development technologies there are probably not so much in demand).
Also, speaking about organizational design, we would like to note that the respondents to the research noted the following problems when implementing the development strategy of a company:
- lack of regular monitoring of the competitive environment;
- an irregular analysis of changes and trends in various industries, which would allow a clear orientation in the market situation, finding new stable and promising markets;
- an irregular analysis of the legislative and regulatory framework, which would eliminate all risks associated with legal changes;
- the lack of regular independent employee reviews of existing markets for suppliers of goods and services, which would allow access to the most profitable offers;
- an irregular analysis of the demographic, social and cultural changes that are taking place, the lack of consideration of appropriate forecasts when developing long-term plans and programs.
What category are these problems in? In the "lack of technology" or also in the "lack of the necessary representation of the first person of the company," given that it is usually responsible for developing a strategy? We offer readers to independently answer this question.
Next, consider the remaining rarest three primary causes.
Root cause 3. No funds
It is obvious that for the implementation of many activities necessary for a long and prosperous existence of the company, including and organizational design activities, budgets needed. Unfortunately, we have no recipes for how to eliminate this root cause for companies that have funds only for the implementation of current operating activities. Only monopolists can allow themselves not to pay attention to development, to the effectiveness of their activities. Although, as we see now in Russia, even monopolists have begun to actively address the issues of the effectiveness of their activities. Therefore, the best development of events in the absence of funds is the sale of the company.
Root cause 4. No control
Indeed, there are situations when both the technology is developed and the staff is trained, but the work is not done as it should. For example, respondents noted the following problems associated with lack of control:
- the launch of technological equipment in operation is not always carried out after all the necessary procedures for adjustment and testing;
- installation and adjustment of process equipment is carried out without taking into account the requirements of the documentation for this equipment;
- the implementation of shift tasks is not reflected in management accounting promptly and in a timely manner.
This is really a serious problem, and the essence of it is quite unexpected. Technically, the solution to this problem is quite obvious: control methods are introduced at the stage of development of the underlying technology, or the technology itself is structured in such a way as to prevent wrong work.
Methods of monitoring compliance with the requirements of the regulations *
- Self control
- Control by supervisor
- Monitoring by indicators
- Internal audit
- "Hard" automation
- Control integrated into the process
Source: Vladimir Repin, Russian Management Consultant
And the essence of the problem is the corresponding mentality of employees who are not used to and do not understand the need to work according to the rules, as a result of which the company has to remember the need for control, and the most important thing is to spend money on it. This money falls "dead weight" on the cost of products and services, taking away resources for the really necessary activities.
Root cause 5. No information system
Strangely enough, only one problem that respondents noted may clearly be related to the lack of the necessary means for work - the information system. This problem:
- orders for resources are not always placed with suppliers in advance, due to which there are late deliveries
Let us make the assumption that there is a work technology, but the volume of the nomenclature for an order is so large that it is impossible to process them manually. Fortunately, the necessary information systems exist - these are systems that, for example, implement the methodology for planning MRP II resource requirements (today these are all systems belonging to the ERP class). It allows, given the delivery time for each item in a timely manner to create orders to suppliers.
Conclusion
We have completed consideration of the root causes of the problems identified in the study of the quality of business process management. Some of the proposed solutions may look quite unusual. But, unfortunately, miracles do not happen: to build a successful business, you need to be ... a business architect.
Published according to the materials of the “GK Modern management technologies”
Source: https://habr.com/ru/post/303668/
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