What is most important in corporate performance management? Is it sales or financial performance? The answer is neither! Sales and financial performance are like rearview mirrors in an automobile that show you where you have been. Process excellence is like the set of automobile headlights that shows where you are headed. In companies where sales performance or financial performance is bad, quite often process performance is the root cause of failures, and the reverse is true also. If sales performance or financial performance is very good, often you can trace this success back to process excellence. In this article, I will outline 10 ways process excellence impacts corporate performance management (CPM).Process excellence can be as simple as efficiency and effectiveness in processes. To quote the late management guru Peter F. Drucker, "Efficiency is doing things right; effectiveness is doing the right things." In a service process such as a help desk, for example, process efficiency may be a measurement of how long it took for someone to resolve the issue from the time a trouble ticket was opened. Process effectiveness would be how well the problem was solved and/or customer satisfaction measurements. While outlining the 10 ways process excellence impacts CPM, you can clearly see the role of process efficiency and effectiveness measurements.
1. Innovation Processes. Innovation and creativity in companies are considered to be spontaneous and not subject to the process approach. Nothing could be farther from the truth. Organizations that have harnessed their employees' creativity and innovation quite often have very clearly articulated formal processes or well-understood informal ones. Methodologies such as the Phase Gate Methodology take many ideas from research and development (R&D) through a brainstorming stage to product development to manufacturing and provide formal process frameworks for innovation and new product development. Here the efficiency measures would be how many new ideas flowed from R&D to successful product development and how fast? Effectiveness measures would be how successful these were at satisfying the sales and financial performance goals of the company. The Apple iPod is an excellent example of how a single product could shift the sales and financial performance of the company. Innovation processes in a company address the question, what happens if an employee or a group of employees has a new idea for a product or a service? Is there a formal way for these creative ideas to be considered, analyzed and good ones tried out? Innovation processes are the key determinant of future CPM. They establish far in advance what the sales and financial performance of a company is going to be. (See Figure 1.)
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