Why Learning Leaders Must Take a Closer Look at Changing Business Processes

When I co-authored my best selling book, Reengineering the Corporation, I argued managers needed to look at their organizations from a “process” perspective.

We defined a business process as “a collection of activities that takes one or more kinds of input and creates an output that is of value to the customer.”

Managers needed to get out of their narrow view of business as a collection of functions and get focused on the processes that touched their customers—like customer service, order fulfillment and product development.

Many companies, at the time, took up the cause of process change. They reduced cycle times and costs while improving quality, and started to engage customers in innovative ways.

The changes were often painful. Jobs changed, people changed, behaviors changed, but many companies became better places to work because of the content of the work.

Today, I believe process change is even more important than when we wrote the reengineering book. What follows is a brief history of process thinking and the challenging questions that learning leaders must now get managers to answer.

In the Beginning

By the 1980’s, companies had become frozen in their complex and overly hierarchical structures. It was taking too long and costing too much to get work done.

New competitors were challenging established businesses with new ways of doing work. Toyota was performing the same processes with dramatically fewer people than Ford—and with better quality.

One of my favorite examples of primitive work was an insurance company that was taking 24 days to issue a standard insurance policy. When we looked inside the company to see what was happening, we saw the work going through 14 different departments. And when we looked at how much real time was required to get the work done, it was 10 minutes!

In the Nineties

Our answer to this kind of cycle time problem was the creation of the “case worker”: a single person who, assisted by technology, could handle all of the work in a matter of minutes.

Managers, at the time, didn’t understand the impact of real “reengineering.” Many of them saw it as just “downsizing,” but it was fundamentally about changing the nature of work.

There was a hard reality, however, that real reengineered processes required fewer, but more highly skilled people, doing more complex work.

Just think of that “case worker” who was doing work formerly done by 14 departments—and probably 30 or 40 people. I could see, even back in the nineties where work was going, and that workers had to be better educated and trained.

The Last Decade

So I wasn’t surprised when, in the last decade, earnest discussions began about the future of work.

-That “case worker” in that primitive insurance company most likely has now been replaced by a fully automated electronic system. Almost all forms of financial services can now be procured electronically.

You can buy insurance, make insurance claims, process all standard bank transactions, get credit scores, secure a mortgage, and—if you’re so daring—have your money invested and managed electronically.

The Future

Finance is the industry that will lead us into the future of full digitization. But with companies like Amazon, Uber, and Airbnb, we're also learning what a fully digitized experience is like in retail, transportation and travel.

What we have yet to fully experience, however, what companies will look like as digitized work becomes increasingly intelligent.

For example, there are thousands of workers who still answer phones to provide “customer service.” Within five years, AI (Artificial Intelligence) applications will be available to answer those phone calls and respond to most customer questions. A real person will still be required to handle certain questions, but those questions will become fewer and fewer.

What Does This Mean for Learning Leaders?

First, I’m not a believer that all human work will go away. History has shown that automation has always created more jobs than it has replaced.

The jobs will just be different and may be in different places. What is clear, however, is that work will demand even more intelligent and skilled workers.

A friend just told me of his visit to a Volkswagen manufacturing plant in Germany. It was a fully automated, robotics intensive plant turning out a completed vehicle about every 17 minutes. My friend could count only 20 “workers” on the factory floor, walking around in white lab coats, carrying digital tablets. The future is here.

So How Will Your Company Change and Adapt

Learning leaders must now confront managers with a set of difficult—maybe profound—questions; and they must help managers find the answers.

• Where will these highly intelligent and skilled workers come from? Can we retrain our current work force or must we rehire? Google is reported to be offering “seven figure” starting compensation packages for people with advanced AI skills.
• How do we lobby our governments—both local and federal—to support educational institutions that will produce these workers? It is already acknowledged that Chinese universities are ahead of US universities in AI based disciplines.
• What will the organization of the future look like? There will be processes still requiring full human capital, processes that are partially assisted by human capital and processes that are fully digitized with highly intelligent technologies. I don’t believe that organizational hierarchies will disappear, but a new form of structure will be required to run companies with a mix of process types.
• Who in the company will be accountable for making decisions about the technologies that will determine the future of the company? And who will implement these decisions? These decisions are too important to leave to the IT organization. We've already seen the debacle with healthcare IT when clinicians failed to get involved and when technologists made decisions that dramatically affected clinicians' work.

Companies are once again at an inflection point that requires very careful thought on the design of processes and technologies—and the people who will run them.

Most companies have failed in the past when they encountered such an inflection point. They usually bought too much technology and became frozen in it. They failed to consider process, structure and skills and behaviors—the human element.

You can avoid the trap of thinking about the future in terms of just technology. “Digitization” is about much more and managers will have to learn to think differently.