New Superpowers – Emerging Frontiers for Process

This week I have been talking about structural capital–the superpower of today’s organization. And process is one of the most important and least understood in terms of its importance and its sustained value to an organization.

Most internal processes in today’s organizations already have been automated to one degree or other. There are software programs for accounting, enterprise resource management, risk management, human resources management, performance management, and many, many others. That doesn’t mean that this automation is complete. Quite to the contrary, companies at every level still have a multitude of opportunities to standardize, automate and optimize most internal processes in today’s organizations.

And there are also new horizons where automation has only just begun: backward through the supply chain and forward in customer-facing systems. Both of these directions will take companies outside their organizations—in tech terms, outside the firewall that protects internal systems from external threats. The growing importance of relationship capital to the overall success of an organization is driving these moves.

The kinds of reputational disasters that have happened at Nike, Mattel, and Kellogg were ultimately about poor process in these companies and in their suppliers’ companies. The suppliers should have had better quality controls and the multinationals should have had better audit and oversight processes to prevent these problems.

Some of the automation of the supply chain will have to come through cooperative industry efforts. The volume of transactions in the global supply chain has grown from $10 billion a day in the 1970’s to $10 billion a second today. Right now, each company keeps track of its own information flow. In one of the monthly conference calls that Mary hosts for the Intangible Asset Finance Society, Robert Rittereiser of Zhi Verden described his experiences in the 1970’s with the creation of a centralized clearing house on Wall Street when the volume of trades grew too large for the current system to handle. He predicted a similar approach in the future for global trading. 

The other horizon for new automation and processes is forward to the end user or customer. Two sources helped us understand this opportunity. The first was Lean Solutions, written by James P. Womack and Daniel T. Jones. These leaders in lean thinking cut their teeth in process improvement in a manufacturing setting. But in this book, they turn their sights on the customer experience, providing case studies of what it is like for you to get your car repaired, get a doctor’s appointment and buy electronics, among others. Their point is that most corporate improvement efforts have focused on the corporation and its cost structure. Cost and time in corporate processes have been eliminated by pushing them on what they describe as an already-overloaded consumer. The new frontier in their view is the customer’s experience and their cost (in terms of time, frustration and dollars) to do business with you.

The second was a presentation by Irving Wladawsky-Berger at the U.S. National Academies Conference on Intangible Assets in June, 2008 (by the way one of the first U.S. conferences on intangibles). Wladawsky-Berger, who works at IBM and MIT, pointed out that so much of the work in information technology done to date was in the back office, where you are dealing with machines and products (tangibles). Future work will be in market-facing solutions where you are dealing with people and services (intangibles)—a much more complex and dynamic task. Solutions here will include decision management, social networking and collaborative innovation.

Keep working to optimize your existing processes but don’t forget these important frontiers forward to your customers and backward to your suppliers.

Adapted from Intangible Capital: Putting Knowledge to Work in the 21st Century Organization by Mary Adams and Michael Oleksak.