APQC Category 12.0

Version 1.0.0 April 2011 1

KNOWLEDGE , IMPROVEMENT, AND CHANGE MANAGEMENT DEFINITIONS AND KEY MEASURES

THE FRAMEWORK FOR PROCESS IMPROVEMENTExperience shows that benchmarkings potential to drive dramatic improvement lies squarely in making out-of-the-box comparisons and searching for insights not typically found within intra-industry paradigms. To enable this type of beneficial benchmarking, the APQC Process Classification FrameworkSM (PCF) serves as a high-level, industry-neutral enterprise model that allows organizations to see their activities from a cross-industry process viewpoint.

Originally created in 1992 by APQC and a group of members, the framework has experienced more than a decade of creative use by hundreds of organizations worldwide. The PCF is supported by APQCs Open Standards Benchmarking research and an advisory council of global industry leaders. The PCF will be continuously enhanced as APQCs Open Standards Benchmarking team further develops definitions, processes, and measures related to process improvement. Please visit APQCs Web site periodically for updates. The PCF is available for organizations of all industries and sizes at no charge by visiting www.apqc.org/pcf.

The PCF enables organizations to understand their inner workings from a horizontal process viewpoint, rather than a vertical functional viewpoint. The PCF does not list all processes within a specific organization, and every process listed in the framework is not present in every organization.

HISTORYThe Process Classification Framework was originally envisioned as a taxonomy of business processes. The initial design involved more than 80 organizations with a strong interest in advancing the use of benchmarking in the United States and worldwide. Since its inception, the PCF has been updated a number of times to reflect changes in the way organizations do business.

In response to feedback from users of the PCF, APQC engaged practitioners, consultants, and academics to develop definitions based on real-world experience with the processes. That collaborative effort

resulted in this document: a listing of processes with definitions and selected key performance indicators. The definitions contained in this document are to be considered in conjunction with the PCF. The content in this document will be updated according to research performed by APQC and subsequent updates to the PCF. This document was created using PCF version 5.2.0.

12.0 Manage Knowledge, Improvement, and Change

2 Permission granted to photocopy for personal use. 2011 APQC

12.0 Knowledge, Improvement, and Change Management Definitions and Key Measures TABLE OF CONTENTS

RIGHTS AND PERMISSIONS

2011 APQC. ALL RIGHTS RESERVED.

APQC encourages the wide distribution, discussion, and use of the PCF for classifying and defining processes. APQC grants permission for use and adaptation of the PCF for internal use. For external use, APQC grants permission for publication, distribution, and use, provided that proper copyright acknowledgment is made to APQC. No modifications to the look or content should be made in external venues.

Please use the following text when reusing the PCF in external print or electronic content.

The PCF was developed by APQC and member companies as an open standard to facilitate improvement through process management and benchmarking regardless of industry, size, or geography. The PCF organizes operating and management processes into 12 enterprise-level categories, including process groups and over 1,500 processes and associated activities. The PCF and its associated measures and benchmarking surveys are available for download and completion at no charge at www.apqc.org.

About APQC

For over 30 years, APQC has been on the leading edge of improving performance and fostering innovation around the world. APQC works with organizations across all industries to find practical, cost-effective solutions to drive productivity and quality improvement. We are a member-based nonprofit currently serving more than 500 organizations in all sectors of business, education, and government.

12.3 Develop enterprise-wide knowledge management (KM) capability _______________________________6

Key Performance Indicators ____________________6

12.3.1 Develop KM strategy ____________________6

12.3.2 Assess knowledge management capabilities __7

12.3.3 Identify and plan KM projects _____________7

12.3.4 Design and launch KM projects ____________7

12.3.5 Manage the KM project life cycle ___________8

12.4 Manage change _______________________________8

Key Performance Indicators ____________________8

12.4.1 Plan for change _________________________8

12.4.2 Design the change ______________________8

12.4.3 Implement change _______________________9

12.4.4 Sustain improvement ____________________9

12.1 Create and manage organizational

performance strategy __________________________ 3

Key Performance Indicators _____________________ 3

12.1.1 Create enterprise measurementsystems model __________________________ 3

12.1.2 Measure process productivity _____________ 3

12.1.3 Measure cost effectiveness _______________ 4

12.1.4 Measure staff efficiency __________________ 4

12.1.5 Measure cycle time ______________________ 4

12.2 Benchmark performance _______________________ 5

Key Performance Indicators _____________________ 5

12.2.1 Conduct performance assessments _________ 5

12.2.2 Develop benchmarking capabilities _________ 5

12.2.3 Conduct process benchmarking ___________ 5

12.2.4 Conduct competitive benchmarking ________ 5

12.2.5 Conduct gap analysis to understand needfor change and degree needed _____________ 6

12.2.6 Establish need for change _________________6


12.1.1 Create enterprise measurement systems model (11075)

The Create enterprise measurement systems model process refers to the development of a high-level measurement system to track performance across the enterprise or in specific functions or business units. In this process, organizations determine which processes to measure, which measures to use, how often to measure, and what the target measurement results should be. Decision makers usually also define which actions will be taken given certain measurement results. This process does not refer to actual measurement activities or consequential actions; it focuses on strategic decisions about how to best measure an organization. Because measures should be revisited and realigned with organizational goals as time passes, this process should repeat on a regular basis as a review.

12.1 Create and manage organizational performance strategy (11071)

Total cost to create and manage organizational performance strategy per $1,000 revenue

Total full-time employees (FTEs) to create and manage organizational performance strategy per $1 billion revenue

12.1.2 Measure process productivity (11076)

The Measure process productivity process includes all activities associated with measuring how productive processes are. This process will vary depending on which activities and business components are being measured. Unlike process 12.1.4 Measure staff efficiency, process 12.1.2 measures outcomes (e.g., how much of X is produced within X time period). A manufacturing process may be measured according to number of units produced per FTE or number of high-quality units produced. A marketing department might be measured on the completion of a target number of campaigns per marketing FTE. Some organizations choose to include measurement analysis in this process. Actions taken based on the measurement typically exist as activities within process group 12.4 Manage change or within the other function-specific categories. (For example, if measures indicate that inventory levels need to be better optimized, the resulting actions would take place under the process 4.5.3 Operate warehousing.)

This process group encompasses those processes required to develop a strategy for monitoring and improving the performance of an organization. Although this process group is related to process group 1.2 Develop business strategy, 12.1 Create and manage organizational performance strategy focuses more on internal performance rather than external or competitive positions in the marketplace. Process group 12.1 centers around measurement, including the creation of measures and the act of measuring itself. This is the measurement of internal performance within a strategy for tracking, streamlining, and improving it.

Activity 1.2.2.6 Develop lean/continuous improvement strategy also relates to these activities but is more typically used when executives are developing a business strategy to enhance external market position. 1.2.2.6 focuses on high-level strategy development, whereas 12.1 encompasses the tactical measurement of internal processes and work force improvement.

The measurement processes in process group 12.1 should align with human capital management processes such as 6.6.5 Develop and Manage Employee Metrics. Process 6.6.5 and other human capital management processes refer to the overall management of employee information and the use of metrics to guide employee development and rewards. Process group 12.1 refers to the collection of the data and the strategies employed to gather it. It does not refer to the day-to-day activities of human capital managers, but instead to the development of strategies and systems that allow human resources to more effectively manage personnel. Process group 12.1 also includes the measurement of machines, entire processes, facility and environmental efficiency, overall cost effectiveness, and other activities not directly related to human performance.

Key Performance Indicators:


( 12.1 Create and manage organizational performance strategy continued )

12.1.3 Measure cost effectiveness (11077)

The Measure cost effectiveness process covers all activities associated with measuring the cost effectiveness of a process. This process will vary depending on which activities and business components are being measured. An organization may want to track its return on investing in activities like marketing campaigns, new equipment, and process redefinition. It may also measure cost per employee or cost per cycle for a given process, function, or business unit. Some organizations choose to include measurement analysis in this process. Actions taken based on the measurement typically exist as activities within process group 12.4 Manage change or within the other function-specific categories. (For example, if measures indicate that inventory levels need to be better optimized to reduce costs, the resulting actions would take place under the process 4.5.3 Operate warehousing.)

12.1.4 Measure staff efficiency (11078)

The Measure staff efficiency process covers all activities associated with measuring how efficiently employees perform. This process will vary depending on which activities and business components are being measured. This process often focuses on measuring activities performed manually or compares manual completion with completion aided by automation. These measures can help determine where automation could increase efficiency or identify differences between the efficiency of one employee or group and another. This process could also include an evaluation of the quality of work, which could potentially reduce or increase the amount of automation or review included in the process.

This process, unlike process 12.1.2 Measure process productivity, does not measure outputs of a process. Instead, it measures the agility and speed of the activities that lead to a final product. Some organizations choose to include measurement analysis in this process. Actions taken based on the measurement typically exist as activities within process group 12.4 Manage change or within the other function-specific categories. (For example, if measures indicate that the invoicing cycle is too long or has redundant steps, the resulting actions would take place within process 8.2.2 Invoice customer.)

12.1.5 Measure cycle time (11079)

The Measure cycle time process includes all activities associated with measuring how long it takes to perform certain processes or cycles of action. This process will vary depending on which activities and business components are being measured. Organizations typically include the measurement of cycles like customer response time, invoicing, or order-to-cash under this process. Some organizations choose to include measurement analysis in this process. Actions taken based on the measurement typically exist as activities within process group 12.4 Manage change or within the other function-specific categories. (For example, if measures indicate that the invoicing cycle is taking too long or is inconsistent, the resulting actions would take place within process 8.2.2 Invoice customer.)


12.2.1 Conduct performance assessments (11083)

In order to benchmark, an organization must first examine its own performance. The Conduct performance assessments process includes activities related to measuring, researching, and recording the performance of people, processes, mechanisms, or other areas of the business that the organization wants to benchmark or track. Usually, these assessments are performed on a regular cycle to monitor long-term performance. But this can also refer to an in-depth pre-benchmarking exercise to look at specific process that might not be regularly assessed.

Total cost to benchmark performance per $1,000 revenue Total FTEs to benchmark performance per $1 billion revenue

12.2 Benchmark performance (11072)

Process group 12.2 Benchmark performance encompasses all the processes required to compare organizational performance internally or externally with other organizations. Some organizations run benchmarking through a central group or department. In other cases, benchmarking takes place as part of a specific project or within a particular department that sees the need to compare its performance with other departments or organizations.


12.2.2 Develop benchmarking capabilities (11084)

The Develop benchmarking capabilities process refers to tasks associated with increasing an organizations ability to compare its performance internally or externally or maintain benchmarking relationships with other organizations. This can include training staff in benchmarking, developing technological solutions or other materials to aid benchmarking efforts, or consulting with external entities to gain knowledge or tools to help benchmark.

12.2.3 Conduct process benchmarking (11085)

The Conduct process benchmarking process includes the activities required to benchmark a given process. This process differs from 12.2.4 Conduct competitive benchmarking in that it focuses on more qualitative measures of performance in the marketplace rather than strict process performance. Competitive benchmarking is concerned with the organizations position and perception in the marketplace relative to peers. Process benchmarking concentrates on improving internal behaviors and outcomes to perform more efficiently or with higher levels of quality. Changes made as a result of process benchmarking may ultimately affect the competitive factors at play in process 12.2.4, but process 12.2.3 focuses on internal improvement through comparison with either internal departments or other organizations and how they perform similar processes. During this process, an organization determines which departments or organizations to benchmark performance against and which specific metrics and activities to concentrate on. It will also actually measure and execute the comparison during this process.

12.2.4 Conduct competitive benchmarking (11086)

The Conduct competitive benchmarking process includes the activities required to benchmark an organizations market position, competitive position, external image, customer perception, or other organizational characteristic. This process differs from 12.2.3 Conduct process benchmarking in that competitive benchmarking addresses the attributes or perceptions of an organization rather than physical or generally quantifiable performance. Competitive benchmarking tends to focus on more qualitative elements of the organization and marketplace factors. During this process, an organization will determine which departments or organizations to benchmark performance against and which specific metrics and activities to concentrate on. It will also actually measure and execute the comparison during this process.


( 12.2 Benchmark performance continued )

12.2.5 Conduct gap analysis to understand need for change and degree needed (11087)

In the Conduct gap analysis to understand need for change and degree needed process, the organization examines its performance against that of the benchmarked organizations or entities. It notes the differences between organizational performance and that of the benchmarked standard and studies those differences to identify what specific changes need to be made. The organization determines how much its performance needs to change to meet expectations and help the organization reach its strategic goals.

12.3 Develop enterprise-wide knowledge management (KM) capability (11073)

This process group comprises processes associated with knowledge flow within an organization (e.g., create, identify, collect, review, share, access, and use knowledge). At its heart, knowledge is information in action. Knowledge management (KM) is a systematic process that enables information and knowledge to grow, flow, and create value. The KM discipline is about connecting people to the information and expertise they need to achieve business results. Various approaches can be used to support this goal, including content management, communities of practice, transfer of best practices, lessons learned, expertise location, virtual collaboration, and social computing.

The specific KM approaches that an organization pursues are determined by the business problems it wants to address. For example, if an organization is seeing similar mistakes repeated across business units, it may implement a lessons learned process so that employees can learn what has and hasnt worked in other parts of the business. Similarly, an organization that is concerned about knowledge loss due to retirement may consider interviewing senior-level employees who are nearing retirement and making their expertise accessible through documents or videos.

Although technology plays a role in KM, it is critical to implement technology as part of a larger, systematic change initiative. The introduction of new tools will not change behavior unless people understand when, how, and why to share knowledge and are incentivized to do so.


Total cost of knowledge management per employee Total number of participants in KM approaches per knowledge

management FTE

Number of FTEs for the KM program per $1,000 revenue Number of unique participants as a percentage of total

potential participants

12.2.6 Establish need for change (11088)

The Establish need for change process includes all the activities involved in reporting the benchmarking results and formulating a list or report of the organizational processes, characteristics, mindsets, activities, or technologies that need to change. The final outcomes of this process will typically lead the organization to continue on to process group 12.4 Manage change, where the determined changes are actually implemented.

12.3.1 Develop KM strategy (11095)

The Develop KM strategy process includes activities related to establishing an enterprise KM program. A KM program is an organization-wide effort to standardize and excel in KM. The first set of activities relates to logistics such as governance, roles, and funding. An organization with a clear business case for KM is in a better position to select an appropriate governance model. For example, a program focused on expertise location might need ties to the HR function, whereas a program focused on content management might be better housed in the IT function. Funding is also impacted by the business case, but most organizations use a combination of corporate and business-unit funding for KM.

The second set of activities relates to linking KM to business objectives and managing KM-related change. Again, the specific tactics involved will depend on the business problems that KM is intended to solve, as well as the current culture and its receptiveness to KM. Note that processes 12.3.1 and 12.3.4 both contain activities related to technology needs, training, communication, and change management. The difference is that the activities in the Develop KM strategy process relate to the KM program as a whole, as opposed to specific KM approaches.


12.3.2 Assess knowledge management capabilities (11096)

Before improving how it manages knowledge, an organization must evaluate its current KM processes and practices. The Assess knowledge management capabilities process includes activities for determining exactly where an organization stands on the KM learning curve, pinpointing gaps, and identifying KM approaches and tactics that will have meaningful impact on strategic objectives. For organizations that struggle with this process, frameworks like APQCs KM Capability Assessment Tool provide standard structures for measuring KM maturity and identifying performance gaps.


12.3.3 Identify and plan KM projects (11097)

The activities in this process involve taking the analysis performed in process 12.3.2 Assess knowledge management capabilities and applying it to make targeted improvements in the way an organization handles its collective knowledge. Once an organization selects the areas of the business it wants to focus on, it must lay out a comprehensive plan: What KM approaches should it implement? What is the audience, and what special efforts will be required to encourage engagement and participation? How much funding is needed, where will it come from, and how will success be measured? Articulating answers to these questions early in the process will ensure that the KM initiative remains focused and positioned to effect positive change.

12.3.4 Design and launch KM projects (11098)

This process involves implementing the blueprint created during process 12.3.3 Identify and plan KM projects. Most of the activities relate to the logistics of implementing a new tactic or approach: What process changes are needed? Who is responsible for what, and where does ultimate accountability lie? What new tools must be deployed, and how will the IT infrastructure be impacted? And finally, what steps can the organization take to motivate employees to embrace the new processes and tools? Often, organizations will test new KM approaches with a pilot group and then use feedback to fine-tune the tools and processes before the broader enterprise rollout.

Key Performance Indicators:Communities of Practice

Transfer of Best Practices/Lessons Learned

Number of KM FTEs per total KM investment Number of KM FTEs per cost of KM capability

Annual maturity assessment of KM capability

Total cost of communities of practice Total cost of communities of practice per community

participant

Number of communities of practice Community of practice participation Number of participants per community of practice event

Total cost of best practices transfer processes Total cost of after-action reviews Total cost of lessons learned processes

Total cost of expertise locator systems Total cost of content management systems Total cost of virtual collaboration

( 12.3 Develop enterprise-wide KM capability continued )


( 12.3 Develop enterprise-wide KM capability continued )

12.3.5 Manage the KM project life cycle (11099)

The Manage the KM project life cycle process includes activities related to the ongoing maintenance of the KM program. Sometimes, organizations roll out KM tools and approaches with a big splash only to see rates drop once the initial energy dissipates. If an organization wants employees to integrate KM activities into their daily work, it must demonstrate a consistent, ongoing commitment to KM. This involves evaluating the KM approaches on at least an annual basis, analyzing the data to determine whats working and what isnt, and making strategic adjustments to ensure that KM remains aligned with the organizations business goals.

12.4 Manage change (11074)

This process group includes all processes involved in implementing and facilitating major changes throughout an organization or in a selected unit, department, division, etc. The needed changes are typically identified in process groups 12.1 Create and manage organizational performance strategy, 12.2 Benchmark performance, or 1.3 Manage strategic initiatives. Process group 12.4 Manage change deals with the activities necessary to plan, develop, implement, and monitor those changes. These are often project-related processes for activities that may have a set start and end date. However, activities in process 12.4.4 Sustain improvement may continue periodically well into the future. In some organizations, monitoring and sustaining improvement takes place within the other process categories specific to the area of the business where the change occurred, and those organizations track change-related processes in those appropriate categories.


Total cost to create change management strategy per $1,000 revenue

Total FTEs to create change management strategy per $1 billion revenue

12.4.1 Plan for change (11134)

The Plan for change process involves all processes, from selecting the methodology for implementation to identifying stakeholders, resources, and preliminary measures. It also includes the identification of any barriers to the change and the formation of the team who will implement the change. Although the change methodology is selected in this process, the change itself is not extensively designed until process 12.4.2 Design the change. 12.4.1 is a planning and foundation-laying process.

12.4.2 Design the change (11135)

During the Design the change process, the change team aligns the change with other activities already in place or planned for the organization. It develops specific training and implementation plans, including communication schedules, new role assignments, and budgets.


12.4.3 Implement change (11136)

In the Implement change process, organizations embed the new processes, systems, or other changes into the business. During this process, training is administered; stakeholders are consulted; and new documents, policies, processes, and technologies go into effect. Processes to continuously measure the change also begin, but measurement activities are typically tracked within the processes under process group 12.1 Create and manage organizational performance strategy.

12.4.4 Sustain improvement (11137)

The Sustain improvement process encompasses the tracking of changes made to the business and the general monitoring and maintenance of performance related to the change. This process includes post-improvement project activities, like debriefings where lessons learned during the change are shared and recorded. These processes may be revisited regularly to monitor performance, but these regular processes may eventually be tracked as part of continuous organizational processes under process group 12.1 Create and manage organizational performance strategy.

( 12.4 Manage change continued )

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APQC Category 12.0