A Learning Organisation Approach for Process Improvement in the Service Sector
Richard Messnarz, ISCN, Dublin, Ireland Christine Stöckler, Bernhard Posch, APS, Austria Gonzalo Velasco, Fueva, Spain Gearoid O’Suilleabhain, CIT, Ireland Miklos Biro & Tibor Remszö, Sztaki, Hungary
In Bestregit the principles of process improvement were analyzed and tailored for the use in non-software general service industry, and tried out in three half-governmental institutions in Spain, Austria, and Ireland to improve their service capabilities.
The outcome is a framework for process improvement that could be beneficially applied in the general/public service sector to put a structure in place, with goals, and teamwork based processes, aiming at a learning organization architecture.
The paper describes characteristics of general service organizations, the Bestregit methodology, and presents parts of three case studies from the set of experiments tried out in the different countries.
At the beginning of Bestregit there were two different possible approaches to start with:
Trying to invent an ideal architecture of technology transfer and map each technology transfer unit onto this ideal model. (note: the typical assessment and benchmarking approach)
Trying to create a framework of process improvement steps through which each regional technology transfer unit runs and improves their knowledge multiplication ability.
The group for (a) was so ambitious to plan to establish a new technology transfer principle which could be sold to Brussels.
The group for (b) thought much more on a realistic level because:
A small team like Bestregit with regional representatives from a small subset of regions of Europe could not be in the power to influence the European Union level. Regional politics would create troubles, because even if we could manage 1. above, e.g. a regional Austrian unit cannot agree models with Brussels which influence the Austrian state, they would first have to agree on a state level.
There was an expectation of cultural differences so that work models for the same goal might look different in different regions.
Unlike in areas like software industry, electronics industry, etc. there is no international standard which describes the ideal architecture of innovation transfer organisations. There is the ISO 9000 standard with a guideline 9000-4 for service organisations, but this still is a quite general description.
Figure 1 : The Regional Multiplication Nodes
This formed the reason to follow the approach (b) and focus on an improvement of the dissemination and multiplication ability of regional transfer units, thus increasing the multiplication of EU strategies into the regions of Europe.
The project therefore aimed at a synergy between all involved parties. The Eu will have their information and results better promoted, the regional units increase their capability, ad the SMEs will receive a better service through defined teamwork, interfaces, and infrastructure.
Service orientation as opposed to manufacturing means that direct contact with the customer is not restricted to the specially trained sales and marketing staff, but is the natural duty of the majority of the personnel. By consequent, technical knowledge is necessary but not sufficient. Special emphasis has to be put on human relationship skills especially when dealing with profit oriented enterprises which are keen on the most efficient use of their resources. This issue is directly addressed by the role based team work approach described in the process improvement guidelines.
‘Non-profit’ in our case means that the costs of the organization are covered by public sponsors in addition to private ones, which makes the requirement for both high level and impartial service quality of utmost importance.
The key concept of the approach is the notion of lever. Levers are means used by a firm to increase its resource generating ability, just as a mechanical lever is used for increasing the force applied to an object. The analogy goes even further. Just as a force can be applied in many different ways to the object resulting in a similar displacement, the use of the different levers can increase the resource generating ability of the firm resulting in similar benefits. Finally, the resources of a non-profit organization are used to increase the assets of the firm and to reward employees.
Let us analyse the ways process improvement can provide leverage to a non-profit service organization from the financial, operating, production, marketing, and human behavioural perspectives.
The type of non-profit service organization we are addressing is partly sponsored from public funds which means that there is in fact a public investment whose return can only be accounted for indirectly. This means that the return on investment (ROI) must be realized partly by the public through the intermediary of both the non-profit organization and its client profit oriented organization.
It goes without saying that an exact quantitative return is usually not identifiable in such cases, but a qualitative return statement confirmed by the profit oriented customers and possibly public representatives serves clearly the interests of the non-profit service organization.
We claim that process improvement results in a return definitely making the necessary investment worthwhile only if the addressed organization is fully committed and able to immediately exploit its benefits. Everybody must be aware however that process improvement is not a silver bullet. Commitment and hard work is necessary to obtain the expected results so that the leverages discussed in this section can be taken advantage of.
Process improvement clearly means an increase in fixed costs, which include training, consulting fees, equipment, improvements in office conditions, etc... However, the question is whether the company is really able to use it for decreasing its variable costs. Measuring the variable costs of a non-profit service organization is not a straightforward issue.
If, due to process improvement, the firm is able to deliver the same quantity and better quality of service using less person months than earlier, then it will have the potential to take advantage of operating leverage.
The graph of the unit costs in function of the cumulative quantity of service provided or product produced is called the experience or learning curve which is exponentially decreasing. Its existence is essentially due to economies of scale, learning, improvements, and reuse.
Learning, the accumulation of experiences and the management of their steady reuse is clearly one of the primary objectives of process improvement and it is in the primary focus of the BESTREGIT methodology.
Quality and process improvement are part of a differentiation strategy in which the company delivers and is perceived to deliver a superior product or service. Taking advantage of this marketing leverage towards the public and its customers is clearly the interest of a non-profit service organization.
The exploitation of human leverage is particularly important in service organizations since they are directly dependent on the enthusiasm of their employees. This issue is largely addressed by the BESTREGIT methodology.
The methodology works in the following major phases :
Start and First Investment of Resources Analysis of Current Situation
Goal Analysis Teamwork Analysis
Selection of Experiment Initiation of Experiment Experiment Performance
The methodology itself helps general service organizations to
Figure 2 : The Building Blocks of the Methodology
Figure 3 : The Learning Framework of the Methodology
From a people point of view (as mentioned before people are the most important resource in service organisations) the following levels of learning are run through:
Level 0 : Initiation (see Figure 3)
At the start:
Our processes are that complex that we do not believe that they can be modelled and shared ? It is just the skills of some heroes fighting for innovation transfer success.
Later: A continuous restart to work on further needs.
Level 1 : Awareness (see Figure 3)
A goal analysis helps to put a structure (with goals) in place for the organisation and makes a common understanding possible.
At this level the visions, goals, and structures can be shared and understood. It is the first time that the hero culture changes into a team with a shared vision. Please note that through a structure (documented and understandable for all) all can contribute and share the goals from that point onwards.
Level 2 : A Team View (see Figure 3)
An information flow and process analysis helps to identify team roles, information flows, work results, and required resources for different work scenarios in the organisation.
At this level people who work in a team start to separate responsibilities, make information flows clear, and agree on work results. This leads to defined team-work structures for different business cases of the service enterprise.
From that point onwards people know their roles, know how to work in a team and how to exchange information to jointly reach a certain service goal.
This level usually ends with an enthusiastic feeling of the people involved. But ….
Level 3 : The Level of Criticism/Feedback (see Figure 3)
No learning environment works without criticism and feedback loops to further build on the goals and the team-work scenarios.
An experiment and try-out shows if the models and goals are right or have to be adapted. This has to be based on measurement of data (objective evaluation).
This usually leads first to a pessimistic phase (after the enthusiastic one) until people realise that the continuous industrial change will always require adaptation and further refinement of the models and goals.
Level 4 : A Change Driven Learning Organisation (see Figure 3)
People understand that change is a natural requirement and that change can be managed (avoiding level 0) as long as there is a structure in place which allows to share goals, work processes, and knowledge.
Change is not a single-person activity it is a change of the shared goal, vision and work force of the entire team following an adapted structure for the organization into the future.
Below you only find a short list of lessons learned per step
Step 1 : Installation of a Process Improvement Manager (Team)
You can see that a mission is right if (in spite of the rapidly changing requirements) it had to be changed only every 4-5 years.
Business Field Goals. This is a goal that is important to be achieved to satisfy the mission. To reach such a business field goal it is required to create a work force whose task it is to perform projects which contribute to the achievement of that business goal. Such goals usually are defined in cooperation between the director and the department heads (managers) of the organization.
A goal for a certain business field is right if (in spite of the rapidly changing requirements) it had to be changed only every 2-3 years.
Work Specific Goals. This is the most concrete level of a goal. Work specific goals contribute to the achievement of business field goals. Here concrete work performance indicators can be measured and conclusions are made if the project was successful or not.
Such goals usually are defined in cooperation between the department heads (managers) and project leaders of the organisation.
A goal for a certain project is right if it clearly contributes to the business field goal and if it is short term (maximum 1.5 years) and can be measured to have an objective basis to decide about success, failure, and required adaptations.
Goal Tree. A goal tree defines an architecture in which the mission, the business field goals, and the work specific goals are represented. A goal tree (in its ideal structure) should provide forward and backward trace-ability. Forward trace-ability means that it is clear which business fields belong to the mission, and which work specific goals contribute to which business field goal. Backward trace-ability means that quantitative performance indicators are used for measuring the achievement of the work specific goals, and that these indicators help to evaluate a business field indicator, which in turn can be used to measure the mission’s success. Backward trace-ability builds the feedback loop into the goal structure, and usually it requires data collection and evaluation.
Step 2: Identification of the Mission, Business Field Goals, and Project Goals
Lessons Learned
While in Bestregit the three organizations got funding to model all work scenarios, in a real business case this approach would not be applicable. Business and service demands lead to
Therefore
Work Scenario. Each organization consists of a set of work scenarios. E.g. Customer handling, service delivery, workshop organization, etc. A work scenario is therefore a description of the best way to conduct a certain business case in the organization.
Work scenarios in Betregit are described with two complementary views:
Role Models. Role centered models base on roles which are played by individuals. One person can play many roles as well as many persons could play just one role. Roles exchange information and work results. This information flow between the roles forms the role model.
Work Flow Models. Work flow models consist of a network of work steps. Work steps produce results that can be used by other work steps. Each work step requires resources (e.g. a certain effort, tools to be used, etc.).
Bestregit uses an integration of both these views:
First role models are analysed and designed. Secondly the role models are transformed into work-flow views. Thirdly, both models are integrated so that a work scenario according to Bestregit can be defined as follows:
A Work Scenario According to Bestregit. People are assigned to roles, roles are assigned to activities, activities are part of a network of work-steps, activities produce results, and roles use resources to perform the activities. These relationships are then defined for a certain business case of the organization to have a description of the best way to perform the business case.
Step 4: Identify the Roles and Design a Role Model
Lessons Learned:
Step 5 can result in the identification of a number of inconsistencies, such as
Step 6: Identify the Results Produced by the Work-Steps
After performing the previous steps 1 – 5 the organization is understood as a defined network of work steps, performed by roles, with a number of results to be produced in a team. However, so far the results are just a graphical element in a work-flow chart or the name of an arrow in a role model.
The question is "how can we evaluate if a work-flow model or a role model is right"? Here the Bestregit methodology takes into account different perspectives:
Quality. The degree to which a system, component, process, or service meets customer or user needs or expectations. [IEEE-Software Engineering Standards]
Customer´s Quality Perception. A customer would not look into how the processes were used to develop a service or product, he would just evaluate the quality of the delivery. (how his/her expectations are met).
Manager’s Quality Perception. A manager who coordinates work and delivers products or services to a customer evaluates the quality of his work on how well structured his work processes are to ensure that he can deliver quality to customers.
Bestregit’s Perception of Quality. Quality of an end product / service (on which the customer perception bases) is the sum of the quality of the intermediate results of the work steps in the work flow (what the manager can review and control).
Therefore the Bestregit methodology assumes that
Measurement. The activity of assigning numbers using a defined counting or evaluation process (a metric) on the characteristics of a product or activities.
Experiment. An experiment is a practical try-out of the previously established models and results. It must be based on a feedback mechanism that allows to measure the impact of the experiment at the start and after performance of it. Both measures are then used to make conclusions about success/failure of the experiment and required refinements.
An experiment is the first step to create a learning/feedback loop around ideal models established by the managers’ quality perceptions.
Three types of experiments were tried out in Bestregit –
Deviations, problems, and improvement wishes are documented throughout the experiment controlled by the process improvement manager.
This includes
The Bestregit methodology analyzed all required ingredients to build a computer supported work environment (Intranet) in the steps 4 to 6.
Figure 4 : Intranet Work Environment Using Bestregit Like Results
The assumption is that if you try out a Bestregit role model in staff training and integration that the time to be integrated and effective for organisations decreases. The staff integration time is reflected by the effort of the person which introduces the person to the environment. The less additional effort is needed to become a new effective employee, the smoother the integration works. This tutoring effort can be used as an indicator.
Step 9: Select and Prioritise Experiments
Step 10: Measure (Define, Collect, Evaluate Data)
Step 11: Learn and Disseminate
Here we describe some example results from the field test organisations. Each field test report is prepared as a case study and comprises about 60 pages. Thus we only can extract small parts for this paper.
The Spanish filed test partner is a non for making profit organisation created by the Valladolid Chamber of Commerce and Valladolid University in 1986 in order to link interests coming from both institutions.
They have a large background in the management of Regional, National and European projects. They are mainly specialised in Training and Human Resources Projects, and in Innovation projects and Technology Transfer.
Figure 5 : The Spanish Partner Structure and Identified Work scenarios
Figure 6 : The Spanish Partner Top level Goals
Figure 7a : Goals and Measurements
Figure 7b : A Small Part A of the The R&D Management Role Model
The experiment focussed on the design, development and implementation of a documentation system, which allows everybody to manage information/documentation of the rest of colleagues from the same department without having problems to find any document.
To measure, in quantitative and qualitative way, all improvements made through the comparison between the current and future situation.
Figure 8 : A Small Part B of the The R&D Management Role Model
The Bestregit analysis results included all ingredients to build such a system
Results:
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