For an entrepreneur, one of the biggest challenges is managing business processes. To understand why this is so, you need to think of your startup as a movie; in Emily Johnson‘s words, in companies like this,
“business process management is like directing a movie: a crucial role coordinating all actions to create an extraordinary experience for the audience.”
But what, in practical terms, is business process management? And, most importantly, what are the most innovative strategies that can improve a company’s efficiency and productivity? The answer to these two questions (and many others) can be found in this guide.
Understanding business processes
To succeed in improving your startup’s efficiency and productivity, you must first understand business processes and their importance. Let’s start with the basics: what are business processes?
What are business processes
The definition of business process refers to the set of activities performed within a company that contribute to the transformation of a resource into a product or service to be delivered to the customer and/or that are aimed at achieving a business objective.
A business process, then, in practical terms, is what enables the completion of the project around a product or service and the achievement of the goals set by the company. Through such a process, the company increases the value of the resources in its possession, turning them into useful end products to improve a customer’s satisfaction.
Why it is important to understand business processes
You should know that the concept of business process mapping originated in the manufacturing sector, where raw materials, through a number of different stages, undergo transformations until they become the finished product. Over the years, however, the importance of creating a map of a company’s internal processes has spread to other sectors as well, partly by virtue of the fact that mapping is applicable to any type of operation, in any business environment. But why is it so important?
Understanding business processes and mapping them, creating a visual representation of the entire project, helps you first and foremost ensure that operations run faster and smoother, highlight areas that can be improved, and reduce costs and waste by highlighting the most profitable activities and those, on the other hand, that can be eliminated.
Not surprisingly, business processes can be divided into “value-added” processes (operations that can create value for customers or clients) and “non-value-added” processes (activities that do not involve adding value in a direct way) and into “essential” processes (which it is impossible to give up) and “non-essential” processes (which can be eliminated where necessary).
In addition to what has just been said, however, the visual representation of business processes also has other advantages, such as, for example, clarifying business tasks and goals to all those involved, providing the necessary information to carry out projects in the best possible way. In this way, business process mapping also allows motivating the entire team in the right way and enhancing the work of each employee.
Key roles in process management
For proper and effective management of business processes, it is necessary to identify a number of figures who play key active roles at various stages.
The process manager
The process manager is the figure responsible for planning and supervising all the actors taking part in the activity and all the steps necessary to achieve the set goal.
The operations manager
The operations manager, on the other hand, is the person who directly monitors and manages the business process, personally intervening in case of delays or other problems.
The process worker
There is, then, the so-called process worker: this figure, as fundamental as the others previously mentioned, stands for the worker who actually operates within the various stages that make up the process.
Business processes: types
When we outlined the benefits of business process mapping, we mentioned a classification of business processes, distinguished into “value-added/non-value-added” and “essential/non-essential.” You should know, however, that nowadays it is usual to resort to two other classifications to describe the various types of business processes, namely, Porter’s Value Chain and Anthony’s Pyramid.
Porter’s Chain of Value
The Value Chain is a particular classification illustrated by Michael Porter back in 1985, which divides business processes into “primary” and “secondary,” identifying 9 different types (5 primary and 4 secondary).
The primary business processes, according to Michael Porter, are the activities that target customers outside the company and, specifically, are:
- operations, that is, the activities that actually enable the production of goods or services;
- internal logistics, i.e., activities concerning the management from the outside of a company’s internal flows of goods in the direction of operations;
- external logistics, that is, activities related to the management from within of the flow of goods in the direction of the market;
- services, such as, for example, after-sales customer support;
- marketing and sales.
Secondary business processes, on the other hand, concern the activities aimed at those within the enterprise and aimed at the realization of primary processes. In detail, they are:
- supply;
- human resources;
- structural activities, such as, for example, those in which resources are used for development and research;
- infrastructure activities, such as those related to business planning and accounting.
Anthony’s Pyramid
Robert Newton Anthony‘s Pyramid is another classification that divides business processes according to the objectives for which they are designed and the time frame in which they are carried out. The types of processes identified by Anthony are 3 and, in order (from the top of the pyramid to its base) are:
- directional processes, that is, activities that involve strategic functions (such as planning) and are carried out in the medium and long term;
- the control processes, which are necessary for the achievement of the goal;
- operational processes (such as production and sales), which involve short-term implementation.
Business processes mapping
The reason for mapping your startup’s business processes should be clear to you by now, but you also need to know how, specifically, to do this particular task.
The first aspect to consider in this regard is that there is no single methodology for mapping business processes in order to optimize them. What is important is the objective, i.e., being able to illustrate with symbols, graphs and/or geometric shapes the entire business process and the resources involved in it, so as to have a clear and defined overview and then be able to intervene to optimize the process, improving some specific aspects or automating and standardizing some particular procedures.
Whatever specific methodology is chosen, it is possible to identify some basic stages of mapping.
Basic steps for effective mapping
The first fundamental step in proper and effective business process mapping is to identify the objective. In practical terms, you need to find the answer to the question: what do I want to achieve by mapping this process of my startup?
The second phase is brainstorming: build the working team and brainstorm with the different team members to get as much detailed information about the process to be mapped.
There is a third key step and it is generally referred to as “elements and timing“- in this step you must identify all the elements that help define the process and any points of contact with other business processes.
The fourth stage of mapping is sequence: you have to order the various activities and tasks sequentially.
In the fifth phase, symbols make their entrance, useful for describing the business process as it actually is (and, mind you, not as you would like it to be). Geometric symbols and lines serve to uniquely describe the various elements: ovals, for example, represent the beginning and end of a process while rectangles indicate the activities to be performed.
Once the preliminary map is constructed, it is time for analysis, which must consider inefficiencies and inconsistencies, both operationally and communicatively.
Analysis is followed by monitoring: at this stage you need to make the changes you think are necessary and test them so that they can eventually be made permanent.
The last key step in effective business process mapping is finalization: looking at the final map, consider whether to automate or standardize certain activities.
Use of digitization and automation
As just pointed out, business process mapping allows you to understand what activities you can automate or standardize and, as a result, also gives you the guidance you need to choose the best management software(s) for your startup.
Software of this type allows you to reduce errors due to human action, speed up time and keep track of workflows, tasks and deadlines, thus ensuring benefits on other future business processes as well.
Process measurement with KPIs
Mapping business processes is useless if you do not measure your startup’s performance. Measurement, of course, must be done based on precise performance indicators or business KPIs and tracking systems. But how to choose them? The next few lines will serve to shed light on this very issue.
Establish performance indicators
Performance indicators, as just mentioned, are used to monitor the performance of various business processes and, based on this, correct any errors and better plan future activities.
On a general level, KPIs should be accessible, certain and easy to interpret, as well as monitored on a short-term cadence. To avoid conflicts in interpretation, moreover, it would be best to entrust their monitoring to a precise figure.
That said, to properly establish performance indicators you must also (and especially) refer to your startup’s precise characteristics, key variables and critical factors or areas.
Business process optimization
Business process optimization is another key step, ideally closing the circle of mapping. If the latter has been done in the right way, in fact, it is easy to identify critical issues and remedy them.
Identification of critical issues and implementation of solutions
To understand how to improve your startup’s efficiency and productivity through proper management of business processes, you may need some concrete examples of critical issues that might emerge from their mapping.
A frequent problem is a conflict of roles in the management of an activity: the solution to this is to reassign tasks according to everyone’s precise skills.
Another possible inefficiency is the approval processes, which, often, are too slow and complex: the remedy, in this case, is to understand which steps are unnecessary, as they bring no value, and eliminate them.
Speaking of solutions, you should know that there are two ways to implement them: you could try to improve your startup slowly and gradually, methodically analyzing the different phases and activities of your business, or you could opt for an approach called “leapfrogging,” which involves implementing quick and radical changes, completely rethinking the business.
Needless to say, the first approach of the two just mentioned is the least risky. Whatever your choice, however, remember that the process of improving your business must be continuous.The final piece of advice for you is not to limit yourself to sporadic and impromptu interventions in business process management.
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