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Performance Design Lab

Cherie Wilkins Alan Ramias

Performance Design Lab 2012 BBC Conference The Dangers of Prefab Models 2

}  An Overview of Reference Models

}  Some Observations

}  Our Approach to Building a Business Process Architecture


}  Founded by Dr. Geary Rummler (1937-2008)

}  PDL Partners: Alan Ramias, Rick Rummler, Cherie Wilkins

}  Based in Arizona, USA

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Improving Performance - It isn't magic, it's science.

Performance Design Lab The Dangers of Prefab Models 4 2012 BBC Conference

Presenters •  Cherie Wilkins

•  Rummler-Brache Group (1995-1999) •  Performance Design Lab (2000-present)

•  Alan Ramias •  Motorola (1981-’91) •  Rummler-Brache Group (1991-99) •  Performance Design Lab (2005-present)


}  We have been at this “process stuff” for 30+ years

}  We’re known for application and transfer of practical process improvement and management methods and tools

}  We’ve seen and helped organizations achieve dramatic improvements in results

Yet }  Notion of real business process is often

misapplied in organizations }  Caused us to revisit the basic notions in our

2 recent books

5


}  A reference model provides a shortcut to developing an organization’s business process architecture

}  In turn, a BPA can provide a:

◦  Taxonomy for IT systems and documentation ◦  Way to imbed process management/process thinking into

the way the business manages

◦  Means for identifying process improvement priorities

◦  Standard for benchmarking your practices against other companies

2012 BBC Conference The Dangers of Prefab Models 7


}  Functional Frameworks ◦  SCOR

ITIL

}  Enterprise Frameworks ◦  APQC ◦  eTOM

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}  Supply-chain operations reference-model (SCOR) }  developed by the management consulting firm

PRTM, now part of PricewaterhouseCoopers, endorsed by Supply-Chain Council (SCC)

}  supplier's supplier to the customer's customer }  3 levels of process }  The model is based

on 3 major "pillars": ◦  Process modeling ◦  Performance

measurements ◦  Best practices

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}  The Information Technology Infrastructure Library (ITIL)

}  a set of practices for IT service management

}  describes procedures, tasks and checklists for establishing a minimum level of competency.

}  used to demonstrate compliance and to measure improvement.

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}  APQC states uses of the framework as: ◦  Benchmarking ◦  Content management ◦  Business process definition

}  originally envisioned as taxonomy of business processes; common language through which member organizations could benchmark processes.

}  initial design involved APQC and 80+ member organizations

}  Now have industry specific versions

}  5 levels

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}  Enhanced Telecom Operations Map }  defines widely used/accepted standard for business

processes in telecom industry. }  full scope of business processes required by a

service provider ◦  key elements ◦  how they interact

}  4 Levels (0-3)

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13 2012 BBC Conference The Dangers of Prefab Models


} Their Design

} Their Usage


1.  Functionally Bound

2.  Overly Generic

3.  Poor Formatting

4.  Irrelevant to the Business

Design Traps


1.   Functional View of Process

R&D Production/ Operations Mktg Sales

Customer Support

Customer

Market


Functional View of Process

R&D Production/ Operations Mktg Sales

Customer Support

Market

Customer

Performance Design Lab 18

Is Banking? Is Pharmaceutical? Is Utility?


Bank Utility1.1 Define the business concept and long-‐term vision (10014) 1.1 Define the business concept and long-‐term vision (10014)1.2 Develop business strategy (10015) 1.2 Develop business strategy (10015)1.3 Manage strategic initiatives (10016) 1.3 Manage strategic initiatives (10016)2.1 Manage product and service portfolio (10061) 2.1 Manage product and service portfolio (10061)2.2 Develop products and services (10062) 2.2 Develop products and services (10062)3.1 Understand markets, customers and capabilities (10101) 3.1 Understand markets, customers and capabilities (10101)3.2 Develop marketing strategy (10102) 3.2 Develop marketing strategy (10102)3.3 Develop sales strategy (10103) 3.3 Develop sales strategy (10103)3.4 Develop and manage marketing plans (10104) 3.4 Develop and manage marketing plans (10104)3.5 Develop and manage sales plans (10105) 3.5 Develop and manage sales plans (10105)

3.6 Perform energy trading and related activities (11256)4.1 Plan for and acquire necessary resources (Supply Chain Planning) (10215) 4.1 Plan for and acquire necessary resources (Supply Chain Planning) (10215)4.2 Procure materials and services (10216) 4.2 Procure materials and services (10216)4.3 Produce/Manufacture/Deliver product (10217) 4.3 Produce/Manufacture/Deliver product (10217)4.4 Apply Anti-‐Money Laundering (AML) policy (13953)4.5 Perform Know Your Customer (KYC) activities (13954)4.6 Deliver service to customer (10218) 4.4 Deliver service to customer (10218)4.7 Manage logistics and warehousing (10219) 4.5 Manage logistics and warehousing (10219)

4.6 Operate assets (11264)5.1 Interface with customers (14017)5.2 Manage customer information (14021)5.3 Develop customer care/customer service strategy -‐10378 5.1 Develop customer care/customer service strategy (10378)5.4 Plan and manage customer service operations (10379) 5.2 Plan and manage customer service operations (10379)5.5 Measure and evaluate customer service operations 5.3 Measure and evaluate customer service operations6.1 Develop and manage human resources (HR) planning, policies, and strategies (10409) 6.1 Develop and manage human resources (HR) planning, policies, and strategies (10409)6.2 Recruit, source, and select employees (10410) 6.2 Recruit, source, and select employees (10410)6.3 Develop and counsel employees (10411) 6.3 Develop and counsel employees (10411)6.4 Reward and retain employees (10412) 6.4 Reward and retain employees (10412)6.5 Redeploy and retire employees (10413) 6.5 Re-‐deploy and retire employees (10413)6.6 Manage employee information (10414) 6.6 Manage employee information (10414)7.1 Manage the business of information technology (10563) 7.1 Manage the business of information technology (10563)7.2 Develop and manage IT customer relationships (10564) 7.2 Develop and manage IT customer relationships (10564)7.3 Manage business resiliency and risk (11216) 7.3 Manage business resiliency and risk (11216)7.4 Manage enterprise information (10565) 7.4 Manage enterprise information (10565)7.5 Develop and maintain information technology solutions -‐10566 7.5 Develop and maintain information technology solutions -‐105667.6 Deploy information technology solutions (10567) 7.6 Deploy information technology solutions (10567)7.7 Deliver and support information technology services -‐10568 7.7 Deliver and support information technology services7.8 Manage IT knowledge (10569) 7.8 Manage IT knowledge (10569)8.1 Perform planning and management accounting (10728) 8.1 Perform planning and management accounting (10728)8.2 Perform revenue accounting (10729) 8.2 Perform revenue accounting (10729)8.3 Perform general accounting and reporting (10730) 8.3 Perform general accounting and reporting (10730)8.4 Manage fi xed asset project accounting (10731) 8.4 Manage fi xed asset project accounting (10731)8.5 Process payroll (10732) 8.5 Process payroll (10732)8.6 Process accounts payable and expense reimbursements -‐10733 8.6 Process accounts payable and expense reimbursements -‐107338.7 Manage treasury operations (10734) 8.7 Manage treasury operations (10734)8.8 Manage internal controls (10735) 8.8 Manage internal controls (10735)8.9 Manage taxes (10736) 8.9 Manage taxes (10736)8.10 Manage international funds/consolidation (10737) 8.10 Manage international funds/consolidation (10737)8.11 Perform global trade services (14089)9.1 Design and construct/acquire nonproductive assets -‐10937 9.1 Design and construct/acquire non-‐productive assets (10937)9.2 Maintain nonproductive assets (10938) 9.2 Maintain non-‐productive assets (10938)9.3 Obtain, install and plan maintenance for productive assets (10939) 9.3 Obtain, install and plan maintenance for productive assets9.4 Dispose of productive and nonproductive assets (10940) 9.4 Dispose of productive and non-‐productive assets (10940)9.5 Manage physical risk (11207) 9.5 Manage physical risk (11207)10.1 Determine environmental health and safety impacts -‐11180 10.1 Determine health, safety, and environment impacts (11180)10.2 Develop and execute environmental health and safety program (11181) 10.2 Develop and execute environmental health and safety program (11181)10.3 Train and educate employees (11182) 10.3 Train and educate employees (11182)10.4 Monitor and manage environmental health and safety management program (11183) 10.4 Monitor and manage environmental health and safety management program (11183)10.5 Ensure compliance with regulations (11184) 10.5 Ensure compliance with regulations (11184)10.6 Manage remediation efforts (11185) 10.6 Manage remediation efforts (11185)

10.7 Develop security strategy (11281)10.8 Develop threat response strategy (11291)10.9 Manage security programs (11294)

11.1 Build investor relationships (11010) 11.1 Build investor relationships (11010)11.2 Manage government and industry relationships (11011) 11.2 Manage government and industry relationships (11011)11.3 Manage relations with board of directors (11012) 11.3 Manage relations with board of directors (11012)11.4 Manage legal and ethical issues (11013) 11.4 Manage legal and ethical issues (11013)11.5 Manage public relations program (11014) 11.5 Manage public relations program (11014)11.6 Provide corporate services to manage external relations (14102)12.1 Create and manage organizational performance strategy (11071) 12.1 Create and manage organizational performance strategy (11071)12.2 Benchmark performance (11072) 12.2 Benchmark performance (11072)12.3 Develop enterprise-‐wide knowledge management (KM) capability (11073) 12.3 Develop enterprise-‐wide knowledge management (KM) capability (11073)12.4 Manage change (11074) 12.4 Manage change (11074)13.1 Establish enterprise risk framework (14115)13.2 Monitor and manage compliance with enterprise risk policies and procedures (14119)13.3 Manage financial risk (14138)13.4 Manage market risk (14155)13.5 Manage operational risk (14161)


}  Looking at all the line items, all levels: }  The Utility specific version differs from the

“generic” version by 1% }  The Banking specific version differs from the

“generic” by 8% }  At level 3 – the process level – The Banking

and Utility have 13 processes that are different (out of 78 processes)

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}  4.3 Produce/Manufacture/Deliver product?

}  How about Banking?


1.1 Define the business concept and long-term vision 1.2 Develop business strategy 1.3 Manage strategic initiatives 2.1 Manage product and service portfolio 2.2 Develop products and services 3.1 Understand markets, customers and capabilities 3.2 Develop marketing strategy 3.3 Develop sales strategy 3.4 Develop and manage marketing plans 3.5 Develop and manage sales plans 4.1 Plan for and acquire necessary resources (Supply Chain Planning) 4.2 Procure materials and services 4.3 Produce/Manufacture/Deliver product 4.4 Apply Anti-Money Laundering (AML) policy 4.5 Perform Know Your Customer (KYC) activities 4.6 Deliver service to customer 4.7 Manage logistics and warehousing 5.1 Interface with customers 5.2 Manage customer information 5.3 Develop customer care/customer service strategy 5.4 Plan and manage customer service operations 5.5 Measure and evaluate customer service operations 6.1 Develop and manage human resources (HR) planning, policies, and strategies 6.2 Recruit, source, and select employees 6.3 Develop and counsel employees

6.4 Reward and retain employees 6.5 Redeploy and retire employees 6.6 Manage employee information 7.1 Manage the business of information technology 7.2 Develop and manage IT customer relationships 7.3 Manage business resiliency and risk 7.4 Manage enterprise information 7.5 Develop and maintain information technology solutions 7.6 Deploy information technology solutions 7.7 Deliver and support information technology services 7.8 Manage IT knowledge 8.1 Perform planning and management accounting 8.2 Perform revenue accounting 8.3 Perform general accounting and reporting 8.4 Manage fixed asset project accounting 8.5 Process payroll 8.6 Process accounts payable and expense reimbursements 8.7 Manage treasury operations 8.8 Manage internal controls 8.9 Manage taxes 8.10 Manage international funds/consolidation 8.11 Perform global trade services 9.1 Design and construct/acquire nonproductive assets 9.2 Maintain nonproductive assets 9.3 Obtain, install and plan maintenance for productive assets 9.4 Dispose of productive and nonproductive assets

9.5 Manage physical risk 10.1 Determine environmental health and safety impacts 10.2 Develop and execute environmental health and safety program 10.3 Train and educate employees 10.4 Monitor and manage environmental health and safety management program 10.5 Ensure compliance with regulations 10.6 Manage remediation efforts 11.1 Build investor relationships 11.2 Manage government and industry relationships 11.3 Manage relations with board of directors 11.4 Manage legal and ethical issues 11.5 Manage public relations program 11.6 Provide corporate services to manage external relations 12.1 Create and manage organizational performance strategy 12.2 Benchmark performance 12.3 Develop enterprise-wide knowledge management (KM) capability 12.4 Manage change 13.1 Establish enterprise risk framework 13.2 Monitor and manage compliance with enterprise risk policies and procedures 13.3 Manage financial risk 13.4 Manage market risk 13.5 Manage operational risk

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Wealth Management Bank BPAC

ore

Cor

eM

anag

emen

tM

anag

emen

t

Business Planning

Ena

blin

gE

nabl

ing

StrategicPlanning

Business Planning

Business PlanningBusiness

PlanningEnabler Planning

Human CapitalFin & Risk Mgmt

Technology

Human CapitalBusiness Planning

EquityNon-Trad

Investment Strategy &

Mgmt

R & CPerformance Managed

New Service/New Vehicle Development

Referrals Mgmt

Marketing

Launched Sold

Securities Selection

Portfolio Management (incl Trading)

Client Acquisiton

Client Services Planning and Management

EB Plan Design Client Investment Planning

Basic Services Delivered

(Compliance)

Consulting Services Delivered

Delivered

Financial & Risk Mgmt Support

Acctg

Reporting

Purchasing

Human Capital Support Technology Support

Comp & Ben Admin

Resource Acquisition

Resource Developmnt Tech Maint

Tech Acquisition & ImplementationRisk

Management


}  Which one helps you understand the essence of the business?

}  Which one would allow you to predict upstream/downstream impacts?

}  Which one would facilitate a troubleshooting conversation?

}  Which one would you use to orient a new employee?

25

Wealth Management Bank BPA

Cor

eC

ore

Man

agem

ent

Man

agem

ent

Business Planning

Ena

blin

gE

nabl

ing

StrategicPlanning

Business Planning

Business PlanningBusiness

PlanningEnabler Planning

Human CapitalFin & Risk Mgmt

Technology

Human CapitalBusiness Planning

EquityNon-Trad

Investment Strategy &

Mgmt

R & CPerformance Managed

New Service/New Vehicle Development

Referrals Mgmt

Marketing

Launched Sold

Securities Selection

Portfolio Management (incl Trading)

Client Acquisiton

Client Services Planning and Management

EB Plan Design Client Investment Planning

Basic Services Delivered

(Compliance)

Consulting Services Delivered

Delivered

Financial & Risk Mgmt Support

Acctg

Reporting

Purchasing

Human Capital Support Technology Support

Comp & Ben Admin

Resource Acquisition

Resource Developmnt Tech Maint

Tech Acquisition & ImplementationRisk

Management


4.   Irrelevant to the Business

Process Architecture


5.  Terminology Wars

6.  Absolutism

7.  Lack of Purpose

Usage Traps


5.   Terminology Wars

Outputs Services Processes

Features Attributes


6.   Absolutism

“Adopt, not adapt!”


7.   Lack of Purpose


1.  Have a defined purpose for the architecture �  Or risk being irrelevant to the business �  Not having a clear yardstick for amount of detail and

focus �  Taking forever to complete it

2.  Adapt any reference model to the specifics of your business, not the other way around �  Do you really want to be like everyone else? �  Shouldn’t your focus be on what makes an

organization different/competitive?



3.  Focus on value: ◦  What value does the organization provide? ◦  The architecture should focus on value creation and

delivery

Some Suggested Principles for Avoiding these Traps

Our Approach

33 2012 BBC Conference The Dangers of Prefab Models


Value Creation System

Resources

Any Enterprise

Suppliers

FinancialStakeholders

Customers

Markets

Enterprise/Business


Product/Servic

e Sold

Product/Service

Product/Service

Launched

Product/Service

Delivered

Order EnteredEngineering

Assigned and Scheduled

Job Specification Packet

Developed

Design Reviewed

Job Designed

• Engineering Estimated• Resource Availability Reviewed• Job Assigned and Scheduled• Customer Order Spec communicated• Detailed Job Plan Developed

Product/Service

Process

Engineering Estimated• Customer Order Spec Reviewed• Customer Order Spec Issues Clarified• Complexity Assessed • Required Specialties Noted

“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

Product/Service

Developed & Launched

Product/Service Portfolio Managed

Processing Sub-Systems

Demand for “It”

Developed

Customer Relationship Maintained

Order for “It”

Obtained

DemandDeveloped


Order Obtained

Programs &Applications

Investments

Sub-Process/Task/Sub-Task

Returns

Order for Product/Service

Product/Service

Sold

Businesses

Engineering Assigned and Scheduled Sub-Process

Launched Sold Delivered

Job Designed

Value Chain

LEVEL 1

LEVEL 2

LEVEL 3

LEVEL 4

LEVEL 5+

Job Produced

Order Shipped and Invoiced

Product Supported and

Serviced

• Engineering Hours Estimated

Business and Competitive Environment



Resources

Any Enterprise

Suppliers


Customers

Markets

Enterprise/Business


Product/Servic

e Sold

Product/Service

Product/Service

Launched

Product/Service

Delivered




Developed

Design Reviewed

Job Designed


Product/Service

Process


“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

Product/Service




Demand for “It”

Developed


Order for “It”

Obtained

DemandDeveloped


Order Obtained


Investments


Returns


Product/Service

Sold

Businesses



Job Designed

Value Chain

LEVEL 1

LEVEL 2

LEVEL 3

LEVEL 4

LEVEL 5+

Job Produced



Serviced




Resources

Any Enterprise

Suppliers


Customers

Markets

Enterprise/Business

Product/Service

Investments

Returns


BusinessesValue Chain

LEVEL 1




Resources

Any Enterprise

Suppliers


Customers

Markets

Enterprise/Business


Product/Servic

e Sold

Product/Service

Product/Service

Launched

Product/Service

Delivered




Developed

Design Reviewed

Job Designed


Product/Service

Process


“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

Product/Service




Demand for “It”

Developed


Order for “It”

Obtained

DemandDeveloped


Order Obtained


Investments


Returns


Product/Service

Sold

Businesses



Job Designed

Value Chain

LEVEL 1

LEVEL 2

LEVEL 3

LEVEL 4

LEVEL 5+

Job Produced



Serviced




Product/Servic

e Sold

Product/Service

Product/ServiceLaunched

Product/ServiceDelivered

Product/ServiceSold

LEVEL 2



Resources

Any Enterprise

Suppliers


Customers

Markets

Enterprise/Business


Product/Servic

e Sold

Product/Service

Product/Service

Launched

Product/Service

Delivered




Developed

Design Reviewed

Job Designed


Product/Service

Process


“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

Product/Service




Demand for “It”

Developed


Order for “It”

Obtained

DemandDeveloped


Order Obtained


Investments


Returns


Product/Service

Sold

Businesses



Job Designed

Value Chain

LEVEL 1

LEVEL 2

LEVEL 3

LEVEL 4

LEVEL 5+

Job Produced



Serviced



Job Designed

“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

Product/Service




Demand for “It”

Developed


Order for “It”

Obtained

DemandDeveloped


Order Obtained

Launched Sold DeliveredLEVEL 3

Job Produced



Serviced



Resources

Any Enterprise

Suppliers


Customers

Markets

Enterprise/Business


Product/Servic

e Sold

Product/Service

Product/Service

Launched

Product/Service

Delivered




Developed

Design Reviewed

Job Designed


Product/Service

Process


“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

Product/Service




Demand for “It”

Developed


Order for “It”

Obtained

DemandDeveloped


Order Obtained


Investments


Returns


Product/Service

Sold

Businesses



Job Designed

Value Chain

LEVEL 1

LEVEL 2

LEVEL 3

LEVEL 4

LEVEL 5+

Job Produced



Serviced






Developed

Design Reviewed

Process

Job DesignedLEVEL 4



Resources

Any Enterprise

Suppliers


Customers

Markets

Enterprise/Business


Product/Servic

e Sold

Product/Service

Product/Service

Launched

Product/Service

Delivered




Developed

Design Reviewed

Job Designed


Product/Service

Process


“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

Product/Service




Demand for “It”

Developed


Order for “It”

Obtained

DemandDeveloped


Order Obtained


Investments


Returns


Product/Service

Sold

Businesses



Job Designed

Value Chain

LEVEL 1

LEVEL 2

LEVEL 3

LEVEL 4

LEVEL 5+

Job Produced



Serviced








LEVEL 5+




Resources

Any Enterprise

Suppliers


Customers

Markets

Enterprise/Business


Product/Servic

e Sold

Product/Service

Product/Service

Launched

Product/Service

Delivered




Developed

Design Reviewed

Job Designed


Product/Service

Process


“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

Product/Service




Demand for “It”

Developed


Order for “It”

Obtained

DemandDeveloped


Order Obtained


Investments


Returns


Product/Service

Sold

Businesses



Job Designed

Value Chain

LEVEL 1

LEVEL 2

LEVEL 3

LEVEL 4

LEVEL 5+

Job Produced



Serviced



Organization Level

Process Level

Performer Level

Business Process

Architecture


Business ArchitectureProcessing System Hierarchy

Cross Functional Process Map

IT S

ys

DB

IS

ales

Ops

CS

Cross-Functional Value Chain MapAvailable Sold Delivered

Enab

ling

Cor

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anag

emen

t

Available Sold Delivered

Performance Planned Performance ManagedBusiness Process Architecture Framework

IT Systems

Customer ServiceOpsSales

Cross Functional Role/Responsibility MatrixProcess Step

Super System Map

ResourcesEnvironmental Influences

Shareholders

Market

Competition

xxx

xxx

xxx

Value Chain

ResourcesAny Enterprise

Capital Market

Competition

BUSINESS ENVIRONMENT- Economy - Culture

TechnologyProviders

Suppliers

Labor Market

ResourcesProducts/Services


Customers

Markets

Enterprise/Business Model

Value Chain Product/Servic

e Sold

Product/Service

Product/Service

Launched

Product/Service

Delivered

Opportunities Generated

Opportunities Qualified

Opportunity Developed and

Proposal Requested

Proposal Prepared and

Communicated

•

•

Order Taken and EnteredSale Closed

Order Captured and

Communicated

“It” Order Processed

“It” Shipped/ Delivered/ Installed

“It” Order Filled

“It” Order Closed

“It” Supported“It” Customer Serviced

“It” Ready For Delivery

P/S OrderProcessed

P/S Shipped/Delivered/Installed

P/S Order Filled

P/S Order Closed

P/S SupportedCustomer Serviced

P/SReady For Delivery

• Information Gathered• Needs Identified• Deciders and Users Identified• Constraints Determined• Credibility Established

Product/Service

Process

Information Gathered• Relevant Data Sources Identified• Interviews Scheduled• Interviews Conducted• Conclusions Reached and Recorded

“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

“It” Developed

and Launched

“It” Sunsetted

“It” Enhanced

P/S Developed & Launched

P/S Portfolio Managed

PrimaryProcessing Systems

Demand for “It”

Developed


Order for “It”

Obtained

DemandDeveloped


Order Obtained

Management System


Investments


- Natural Environment- Geo-Political - Regulatory/Legal

Returns

Enabling Processes


Product/Service

Sold

Mtls/Equip

HumanRes.

$

Tech

Management SystemBusinesses

Opportunity Developed and Proposal Requested

Sub-Process Map

B2, Role 1

B2, Role 2

C1, Role 1

C1, Role 2

Activity 2.1

C1, Role 3

Activity 2.2 Activity

2.3 Activity 2.4

Activity 2.5

Activity 2.6

Activity 2.7 Activity

2.10 Activity 2.11

Activity 2.12

Sub-Process A, Activity 2

Activity 2.8

Activity 2.9

Value Creation Hierarchy

Org.

Process

Job/Performer


Tool: Business Process Framework

}  The Process View of the Business – Depicts Level 3 }  The reference point for defining the “processes” of the

business }  A comprehensive depiction of the work associated with a

business or business unit }  There are 3 categories of processes

Launched Sold

Con

tribu

ting

Pro

cess

es

Valu

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reat

ion

Pro

cess

es

Man

agem

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Pro

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es

Delivered


Value Creation Processes }  Based on the concept of value chain it represents an end-to-end

view of how value is produced }  Organized around the “Value Creation System” which consists of 3

essential value creation sub-systems }  “Value” is defined as work that is recognized as adding value in the

eyes of the external customer; it is not an indicator of process importance

Launched Sold

Con

tribu

ting

Pro

cess

es

Valu

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reat

ion

Pro

cess

es

Man

agem

ent

Pro

cess

es

Delivered


“Product/Service” Launched

“Product/Service” Sold

“Product/Service” Delivered

1. Finding or inventinga Product/Service/ Offering that will satisfy a customer need.

2. Enhancing existingproduct throughredesign, re-pricing or repositioning.

3. “Sun setting” or discontinuing productsthat are no longer viable.

1. “Demand Developed”Creating demand for the P/S/O, usually done by Marketing. Output is usually a “lead”.

2. “Customer Committed”Frequently requires a sales organizationto convert “interest”into a commitmentto purchase.

3. “Relationship Maintained”Enhancement and maintenance of the customer relationship.

1. Processing the Order, from “Order entered” to “payment received” and “warranty administered”. If a Product: Making and Delivering If a Service Customizing and Delivering

2. May also include installation and support.

Value Creation Categories


}  Should be adapted to an organization’s reality

}  Is meant to be a tool, not a straitjacket that chokes off discussion

}  Is generic only at the highest levels—becomes more specific as one goes down the levels of process

The Value Creation System…


An Example of Adaptation “Policy”

Research “Policy”

Formulation “Policy”

Execution 1..

1. “ 1.


An Example of Adaptation

Launch Delivered

Sold Delivered Launched

Sold


Management Processes }  The Management processes exist to provide direction to Value

Creation and Contributing processes }  These include all facets of performance planning and management:

corporate, business, country, function and process

Launched Sold

Con

tribu

ting

Pro

cess

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Valu

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reat

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Pro

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es

Man

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Pro

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Delivered


Contributing Processes }  Contributing processes exist to provide value for the business, but not the

business’ customers. }  Each Contributing process is actually a “sub-system” of processes }  Each sub-system contains 3-8 related processes which together operate as a

system of work organized to achieve one or more business valued milestones }  Defining the processes in a contributing sub-system in the absence of agreed

milestones is ineffective and undermines the value of taking a process perspective.

Launched Sold

Con

tribu

ting

Pro

cess

es

Valu

e C

reat

ion

Pro

cess

es

Man

agem

ent

Pro

cess

es

Delivered


Sale

s Un

der-

writ

ing

Clie

nt

Serv

ices

Le

gal

50

Activity Activity Activity


Activity

Activity Activity

Activity

Activity Activity

The “Underwriting Process”?

Many functional managers erroneously view their swimlane as a process, leading to sub-optimal output.


Process = all of the work to get to the outcome

Contract

Activity Functional Group

Customer Acquisition Sales Pricing Parameters Definition

Underwriting

RFP/RFI Response Sales Contracts Review Legal Pricing Review Underwriting Set-up Sale Client Services Finalize Sale Sales


Sale

s Un

der-

writ

ing

Clie

nt

Serv

ices

Le

gal

52



Activity

Activity Activity

Activity

Activity Activity

Value Outcomes are most effective way to define processes •  Performance-based definition (vs. preference-based) •  Optimizes the organization‘s ability to create value

Outcome: Contract


Sale

s Un

der-

writ

ing

Clie

nt

Serv

ices

Le

gal

53



Activity

Activity Activity

Activity

Activity Activity

Value Milestones define the boundaries of sub-processes. •  The delineation of sub-processes allows accountability for components

of the end-to-end process to managed at an appropriate level

Value Outcome: Contract

VM

VM


Launched

Asset Developed

Sold

PatientsPayers

Val

ue C

reat

ion

Delivered

Pla

n &

Man

age

Con

tribu

ting

Exploratory Development Full Development and Launch Readiness

Pre-Clinical Phase 1and Phase 2a

Phase 2b

Toxicology Supports

Human Testing

Success in Humans

Validated Safety, Efficacy, &

Commercial Value Prep for Commercial Launch

Phase 3 Development Regulatory

Filing and Approval

Long Range Performance

Planned- Enterprise

-Portfolio- Region/Country

Subsidiary- Function

Near Term Performance

Planned- Enterprise



Performance Managed- Enterprise



Human Capital Managed CapabilitiesAcquired/Developed,

Improved and Sustained

Value Recognized

and ManagedHuman Capital Acquired and

Placed

Human Capital Developed

Human Capital Supported and

Secure Performance Compliance

Requirements Implemented

Cost Accounting Maintained

Reports Prepared and Distributed

CapableHuman

ResourcesPerformance

Results toPlan

Financialand Risk

Information

Develop-mentPlans

Support and SecurityRequirements

External Resource Supply

Managed

Performance Improvements Identified and Implemented

Stakeholder Expectations

Managed

Shareholder Relations

Public Relations

Resources

OrganizationPerformanceInformation

Acquired Capabilities Available

Assets Acquired

Strategic ProductPortfolio In Place

Procured Made Delivered

Service Delivered/

Patient Supported

Assets Licensed Out

Products Marketed·∙ Publication

strategy·∙ Physician support

Prescribers

Products Sold

Awareness

StrategicFocus

Asset & Companion Diagnostics Launched

Customer Relationships

and Commitments in

Place

Customer and Enterprise

Commitments Fulfilled

Asset Lifecycle Managed

Focus Area Lifecycle Managed

Strategic Disease Plans

Established

- IP considered

Strategic Disease Plans Executed and

Managed

Safe, Effective and Profitable

Assets in Place

Well Formed Understanding of

Focus Area Science and

Dynamics

TreatmentIndicator Needs

Materials, Service, and Supplies Purchased

Vendors Qualified and Managed

CorrectiveActions

Discovery and Target Program Managed

Discovery

Asset Definition

Viable Asset

Discovery Executed Potential

Target Worthy of Investment

Lead Series

PatientsRegulators

Payers

Market Relationships

Managed

Prescribers

Differentiated, Approved, Safe, Effective Asset &

Indication(s) Available to Patients

MarketedProduct

MaintainedProduct

Sunsetted

Product and Capability to

Sell and Deliver Removed from

Market

Continued demonstration

of safety, efficacy and profitability

PerformanceData

Indicators Acquired

Effective Treatment

Indicators In Place

Differentiated, Approved Asset & Indication(s) and Access to Market

Asset Launched

Prescribed

Prescription Filled and in

use

Operating Plans and Budget

Supply & Support

Market

Supply & Support

Market

Material

Market

Supply & Support

Market

Human Capital

Available

Favorable Stakeholder Perception

Financial and Risk

Valuations Available

Capital/Cash Value and Liquidity

Optimized

Capabilities Available

Externally Sourced

Resources Available

Target Identification

LeadDiscovery

Selected Asset

LeadOptimization

Approved Label

Approved and Viable Asset, Capability to

Sell and Delliver

TreatmentIndicators

TreatmentIndicator Needs

Progress Data

AssetAcquisition

Strategy

Priorities and BoundariesAsset Performance Data

Companion Diagnostics Developed

External Assets

Available

(External Science Interface) Platforms Acquired

TargetProgramDirection

Acquired assets to be further developed

or launched

Commercial Readiness and Market

Access

Demonstrated Compelling Benefit/Risk

External Innovation Available

Lead Asset Identification

Effective Pharmaco

Diagnostics In Place

Companion Diagnostics Launched

Partners and Alliances Managed

Aligned, Effective and Reliable Partnership/

Alliance In PlaceWork Environments Available

Work Environment Needs Defined

Work Environments Supported and

Secure

Facilities & Tech

Resources

Work Environments Developed/

Acquired

Secure, Reliable and Safe

Infrastructure and Environments

Available

Environment Needs

Understood

Environments In Place

Environments Productive


}  Defining an organization’s business process architecture should be: ◦  A value-based approach ◦  Should have a defined purpose

}  Reference models: ◦  Can be useful tools for defining a business process

architecture, but… �  Should be used as intended—as a reference, not a

straitjacket �  Must be adapted to an organization’s realities


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