Value creation is generated within the framework of the company’s business/operational processes in which people perform. Value can be defined as “a profitable quality output delivered on-time”. But the inseparable value-link is people performing the process activities – therefore, creating business value requires improving the capabilities of both.
There are three constructs of the people/process dynamic that determine the success in creating value:
- Is the process design optimized? Process activities (steps) must be appropriately sequenced and free of bottlenecks and redundancies to ensure continuous flow. Each process step must add meaningful value to the final output or it should be dropped. While this seems self evident, many companies only focus on the people aspect of performance and less on the actual process. Remove any process hurdles impeding performance!
- Do people execute the process effectively? Clarify the roles and responsibilities of each process step. Performers must know the “triggers” to perform, what specific value-add they are to conduct, quality to attain, and the cycle-time they have to deliver their output to the next step in the process. Align people’s roles and responsibilities to their overall performance evaluation to ensure continuous focus.
- Are measures applied to control process performance? Value can be measured by establishing basic metrics to monitor people and process capabilities. At a minimum include measures on Quality, Efficiency (cost), Cycle-time and Timelines (delivery). Such data provides the “insight” on how well the process is designed and how effective is the execution in achieving the output’s true goal, creating value.
Value Creation is a function of people performing business process activities, to ensure success:
- Design optimal processes
- Execute processes through clear roles and responsibilities
- Control process performance and value through metric data