8 Steps To Process Development

Process development is both top down and bottom’s up

Leadership, planning, and process.  Those are the three most important things to a successful business.  Of course, the product/service must meet a real market need at a reasonable price, but in my opinion that is the easy part.  Most businesses that do not meet a real market need fail quickly.  But to grow effectively for the long term a company needs effective leadership, planning and process.

To some extent all of them happen within every company.  There are appointed leaders, whether they are truly leaders or not.  Someone is telling someone what should be done somewhere within your company, and I guess those directions collectively can be considered a plan.  And whether you like process definition or not, every business has processes occurring from the time they incorporate until the time they close their door.

The question is whether these things are effective in their current form?  In most cases, the answer is “who knows?”.  These are aspects of a business typically not even thought about in the daily course of operation.  Yet any business that has succeeded for the long term will tell you how integral all three are to their success. More importantly, they can tell you how they manage all three.

My new book, “Mitch’s Framework to Business Development/Control the Chaos of Entrepreneurship”, provides a rich set of reasons these things are important.  It also provides the framework for defining all your processes.  This blog is about how you can implement process development, no matter what stage of business you are in right now.  It is never too soon to start process development, and if you are in revenue it is something that needs to get done ASAP.

Step 1: Define what processes you have

From the top down in every department/segment of a business there are things happening every day.  Bills are being paid, services are being performed, product is being made and/or delivered.  Someone who works for you is going to HR about an issue, or you need to hire someone new for an open position.  A customer is complaining or is providing praise.  Your sales and marketing teams are spending money trying to bring in sales.  You have staff meetings, goal setting, performance reviews.  Regulators and competition are making changes that impact you.  I can go on and on.  All of these things should be defined with a process that is documented, tested, and periodically reviewed for effectiveness.

Some of these processes are much more critical to your immediate needs and/or problems.  Yet over the long term they are all important pieces of your customer loyalty plan.  Any glitches can cause you problems with end-customers that could have devastating impacts to your business.

The first step in process development is making a list of all the processes that you have already defined, whether loosely or formally through documentation.  Many times, HR policies are already well defined in an employee handbook, for example.  Your bank may have instituted processes on you regarding monthly reporting (if you have a loan), or banking in general.  Often you have implemented 3rd party software systems that define certain processes.  List them, list them all.

Step 2: Define what processes you need

Step 1 can be a quick exercise or quite lengthy depending on many factors.  Steps 2 through 5 require a team approach.  The more people who are involved in the company, from top to bottom, the better.  Step 2 requires an in-depth analysis of your business.  Even if you are a start-up this thought process is required to succeed and the earlier you get started, the better off you will be as you develop your business.

Step 2 starts with an analysis of each function within your business.  What does that function have to accomplish for your company to succeed?  If it is finance, paying bills on time so collectors are not beating on you all the time is an important process.  At the same time, being able to collect funds from your clients is even more important.  Having cash flow issues could have a direct impact on your client and customer loyalty.  Assuming people will always pay on time and never try to defraud you is a recipe for disaster.  How do ensure these things happen in a timely accurate manner?

If it is operations, what happens in your warehouse could impact the experience your client gets from you if something gets delayed.  Who is making sure everything is in stock and gets out of the warehouse efficiently?  How is that being done?  These type of daily actions within your business are all processes.  List them, list them all.

Next the team must look at the interactions between functions.  Sales needs to notify people a sale has been made. Someone needs to notify manufacturing to build something.  Manufacturing needs to let the warehouse know something needs to be stored, and someone needs to let the warehouse know that product needs to be shipped.  Finance needs to know to invoice the client, and sales needs to know which clients are not paying in a timely manner.  How does customer service interact to solve a client’s problem?  These interactions are all processes. List them, list them all.

Finally, interactions between your employees and your customers are all processes.  From how people are greeted when they enter your doors, to the way people are dealt with on the phone (do they have to go through one of those annoying interactive voice response systems to talk to a real person?).  These are some of your most dicey processes and the better they are defined the better you can assure repetitive positive experiences for your clients.  That is how you develop loyal customers.  So, list them, and list them all!

Step 3: Determine what is working well and what is not 

What is required here is honesty and openness, along with a willingness from leadership to listen and adapt.  It starts by asking people, employees first but if necessary, clients too.  If, for example your finance chief says they are having trouble collecting from clients on time, there is a process that needs to be improved.  If clients are complaining about something regularly, there probably are multiple processes that are not working well.  Remember, whether you have defined a process formally or not, they are in action around you 24 hours/day, 365 days per year.  If they are not efficient, they could be killing your business.

While the obvious starting point is to identify all the processes that are not working based on perceived problems that are existing, resist the pull to stop there and move to Step 4 or Step 5.  Some things may be critically important, and they may need to be moved to Step 5 immediately.  That does not mean Step 3 has been completed and it is time to move on.  All processes should be analyzed because even those that currently have acceptable outcomes may have room for improvement or may need to be altered as other processes are implemented/changed.

Step 4: Prioritize process development

As noted above, some things you find will have a critical need to be developed and/or corrected.  For those, the priority is obvious so you should skip to Step 5 to start the formal development of those processes as soon as possible.  Once you have more than a few process development needs, however, prioritizing them is going to be required.  If you are large enough to be able to tackle multiple requirements simultaneously, great, even then things should be prioritized because your staff has other tasks to accomplish every day, too.

How you prioritize things is critical.  Obviously, problems hurting any form of customer loyalty should be tackled first and prioritized the highest.  However, not everything is equal.  Some processes can be developed/corrected quickly, others will take time allowing other priorities to be squeezed in.  Many things may have equal priorities for completion.  The key is to have agreement on priorities and then utilize a planning tool (Excel spreadsheets work well) to keep track of the development/progress of required changes.  In that manner you can develop a time-line chart to move forward most efficiently with process development.

Step 5: Chart what needs to be done

This could be the most difficult, most fun, and is the most important step to process development.  Input from the lowest level of your organization is highly recommended.  You do not need fancy charting software; we often use sticky notes on walls in various rooms.  The key is to develop a flow of each process by a) defining each step of the process with its own step (box?); b) defining what outputs are required for each step and how those will be accomplished (this may require splitting steps into multiple boxes); ; c) defining which step each of those outputs goes to next; and d) defining what inputs the step requires in order to provide the required outputs (including who those inputs come from).  This enables you to define the required interactions between steps.

Each process itself starts with inputs from another process and provides outputs to another process.  These interactions must also be analyzed so that processes are not developed in the dark and cause problems by assuming they are getting inputs different from what they are being provided and that their outputs are indeed what is required.

Once you have the flow charts developed you can move on to Step 6.

Step 6: Determine what should be done next

If you are working on a process that already exists, you must identify the steps, inputs and outputs that currently exist and those that may need to be developed/implemented.  If you are starting from scratch each change that needs to be implemented must be analyzed and outlined (documented).  This analysis often results in slight changes to the developed flow charts.  All functions involved with a process need to be brought together during this process to ensure cohesion.

 Step 7: Plan for change and implement it

If Steps 1-6 have taken place, in most cases you are going to have a whole lot of new things to accomplish and implement.  They need to be documented (see Step 8), and people need to be assigned tasks to complete change in a timely and efficient manner.  That requires a plan.  Yes, a plan for process change.  It has tasks, names of responsible people, dates to complete things, and a place for notes.  It needs to show dependencies (what tasks need to be done before certain others can even start), and t needs to be a live documented plan that is reviewed on a regular basis.

Without such a plan, process development will be a back thought to be dealt with when the fires are all put out.  Yet my bet is that 90% of those fires require your attention, or are even occurring, due to the lack of process.  It is a vicious cycle and why I believe the sooner a business starts developing their most critical processes the better! Take note start-ups.  Lean Start-up will not work without a business structure to support customer loyalty.

Step 8: Review and Re-engineer 

While the output of Step 7 is an implemented process that has been well vetted and defined, that really is not the end of process development.  Putting metrics in place to measure each process should be part of the development process.  Using those metrics to constantly watch things so you know when process efficiency is starting to fade is also critical to process development.  No matter how tediously you conducted Steps 1-7 there is a chance something was missed, or an assumption was made that is not panning out.  Regular metric measurement will enable you to find these flaws and correct them as early as possible.

That still is not the end of process development.  For every process, no matter how well defined, has the potential to be made better in the future.  Perhaps new inventions or other developments occur, like regulatory changes.  Part of your process development process must include re-engineering.  What does that mean?  First and foremost, it means empowering your employees at all levels to think outside the box for ways to do things better.  They must also be empowered to speak up when they see problems.  It also means nothing is sacred.  There is no “that’s the way we have always done it” mentality.  Instead there is a “how can we do this better?  Cheaper?  With higher quality?” mentality.  Finally, it means making changes to processes as required and having a process for process development that includes periodic reviews of all processes within your business.

Your task this month?  Think about your current level of process development and what steps you need to take next.

Reach out, we can help.

Mitchell Bolnick – The Excel Consulting Group