The Three Essential Process Layers Meetup (9/6)Highlights and Q&A

Agenda

I. The Three Essential Process Layers■ The Three Layer Model■ 1 - The Physical Layer: The Workflow (Enabling Technology): ■ 2 - The Process Layer: The Business Process■ 3 - The Value Layer: The Value Chain■ Process Improvement and the Three Layers■ Summary

II. Q&A■ How do you explain value chain based process improvement to project

sponsors interested in changing workflow solutions?■ Does this model apply to all industries and different business types?■ Do you have to go through every layer for every type of project?

The Three Essential Process Layers Meetup Highlights

Understanding the conceptual layers of any process to support process improvement work

The Three Layer Model

● Workflow is the only layer that is

physical and can be observed -

therefore all analysis of these layers

begins at that level.

● These layers enable one another:

workflow enables a business process,

which in turn enables a value chain.

Every process contains these three layers: workflow, business process, and value chain. Understanding these layers is critical for well-structured process analysis/improvement.

Workflow (Enabling Technology): The Physical Layer

The “workflow” is the observable combination of people and technology,

performing tasks in order to create a good or service (e.g. using a hammer and

nails to attach two boards).

This is the only layer that actually “exists” in the sense that it can be

observed. All must start at this layer, because it represents the actual

manifestation of whatever the producer had planned for a particular process.

A business process is a collection of related, structured activities or tasks that

transform a specific set of input(s) into a specific set of output(s) for a particular

customer(s) (e.g. “we attach two boards to create a piece of a wooden boat for the

boat builders”). This is often visualized as a flowchart or a sequence of activities.

Business Process:The Process Layer

● Workflow (Layer 1) is what enables a Business Process (Layer 2) to exist in the

real world.

● A workflow system is what companies use to organize how they will execute

a business process.

● Any good workflow will be informed by a well-thought-out business process.

Business Process:The Process Layer

Value is what customers pay for, and the value chain describes the minimum

changes required to a base input to create a final output that is marketable to

consumers (e.g. what we are doing to create value for a potential customer).

Anything within a process or workflow system that is not part of the value chain

is considered a type of “business waste”.

Value Chain:The Value Layer

A business process is what companies use to specify how they will execute a

value chain.

For example:

- value chain: if we can turn two pieces of wood into a single piece, it will create

a necessary part for wooden boats which we can sell (value) to boat builders.

- business process: to somehow attach (process) these two pieces to make a

single item.

Any good business process will be informed by a well-thought-out value chain.

It’s important to remember that, without a value chain, there is nothing being

produced that the consumer will pay for. A process like this won’t be funded for

very long!

Value Chain:The Value Layer

Process Improvement and the Three Layers Any sustainable, effective process improvement initiative must proceed through the three layers in the same order to ensure success (see below). Many projects try to skip stages or take alternate paths (marked in the diagram below with red ‘X’s) - this ultimately results with less successful or accurate outcomes.

Process Improvement and the Three Layers In following this framework, working through the previous slide’s diagram in order, a typical process improvement cycle would follow these steps:

1) Understand the as-is (current) workflow by observation2) Understand the intended as-is business process by capturing and

visualizing the as-is workflow in a structured way 3) Understand the value chain by understanding the value being produced

in the as-is business process4) Design the to-be (optimized) business process as informed by the

value chain in order to remove waste, increase benefits, and reduce cost5) Design the workflow configuration to enable the to-be process6) Structure a project to address the gaps in capabilities between the

as-is and to-be workflows7) Execute the project and enjoy the benefits!!

Summary• All processes have three layers that define them: the workflow,

business process, and value chain layers

• Understanding each layer and how they fit together is important to understanding what business process work is and requires

• The layers have a directional relationship, in that workflow is enabled by business process, which is enabled by a value chain. The workflow layer is the only layer which can be observed in the physical world

• Process improvement work must flow through the layers in a particular way in order to have consistently high quality, successful outcomes

Q&AAnswering questions from the Meetup

How do you explain the need for value chain-based process improvement to project sponsors interested primarily in change at the workflow level?

If you are explaining things correctly at the value chain level, you will be more able to do so with quantifiable benefits and costs.

● Often, people are interested in changing the workflow (since this is the most visible part of the process) without understanding the business process or value chain layers. If you let projects proceed this way, there is a high probability that the project or workflow change can be completed, but will result in no additional value creation, and ultimately a loss for the sponsor.

● When discussing value chain-based projects or process improvement, it is not as much an act of “explaining” as much as presenting projected increases and decreases in terms of costs or benefits, as it pertains to the customer.

● Hopefully, when presented with well-defined numbers, even executive sponsors will see the expected return of whatever workflow solution they originally requested versus your recommendations and act accordingly.

Does this model apply to all industries and different business types?

Yes!

Whether the firm is producing widgets on a factory line or offering intangible services, this model addresses the fundamental construction of all processes.

The job of a good process engineer is to relate these concepts to any business context in order to identify the value drivers that a process is intended to create. The reason for this is that value is simply what customers pay for. Every for-profit business in any industry or category is built and sustained from a value chain; otherwise, the client wouldn’t pay for the product and the company wouldn’t exist!

Do you have to go through every layer for every type of project?

Yes! and no…

Every project or process change will have to go through the different layers in the order described; however, not necessarily all at the same time or as part of the same initiative.

An example of this is found in some process-mature organizations, where the business processes are well kept, and one would not have to start at the workflow layer to work towards the value chain.

Ultimately, other corporate functions should be aware of processes (operations) and value propositions (marketing) in a tightly run firm. If other piece are already well known or available you may not need to go through every step of the framework from the beginning for every single initiative separately - although the order of the steps remains the same.

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