Using Process Management Systems in Organizations

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Using Process Management Systems in Organizations
FREDDY VILLAVICENCIO, Business Consultant, Venezuela

Entrepreneurial Activities, Peter Principle and Business Documentation.

Entrepreneurial activity or new business initiative are development seeds for most countries worldwide. More importantly, more than 70% of any country´s labor is hired by entrepreneurial activity. Unfortunately, most new business firms will not last longer than 5 years.
Business schools around the world have understood this important fact and encourage their students to research and document successful experiences in order to build a database available for entrepreneurs and to increase their probability of success. Equally important are the documentations of hypothesis, conjectures or essays about why startups fail within 5 years.

The Peter Principle or principle of incompetence states that the selection of a candidate to be promoted to a higher level is based on the candidates' performance in their current role, rather than evaluating the skills already developed to perform properly the intended role. Based on this fact, employees will continue to be promoted until they reach their level of incompetence. That is the point when they can not longer perform properly. 3 different stages can be derived from the above principle: new employee, growth and incompetence level (failure).
If we making an analogy with the evolution of entrepreneurial activities we can also determine 3 different modes in order to give a reference to entrepreneurs and enable them to be aware where the business initiative is at based on sales progression. These 3 modes are:
  1. STARTUP MODE: starts when the business initiative is formally registered as an enterprise and covers equipment commissioning, installation, qualification and validation, production and six months in a row showing production, sales and incomes (profits are not a “must” into this stage).
  2. GROWTH MODE: starts after the first month achieving break even. Then business results must show at least 3 quarters in a row an inter quarter sales rate growth or a positive trend when plotting nine consecutive month of sales results.
  3. FLATLINER MODE: can be identified when sales progression´s plot shows more than three quarters of inter quarter sales rate under historical average or a flat trend when plotting six month of sales results. It is sort of risky to stay too long in this mode, flatlining means business initiative is losing competiveness. Process reengineering must be enabled to get back into growth mode as soon as possible.
Process Management Systems (PMS) introduces a new way to build, preserve and share both knowledge and information. Traditionally business documentation was satisfied with the well-known fat and not readable Procedure's Manuals like Standard Operational Procedures (SOP´s), Current Best Approaches (CBA´s) or Quality Assurance Procedures (QAP´s) and more recently Quality Manuals which is considered the quality system´s backbone.
Procedure's Manuals nicely fit in departmental structures where strategical and managerial information are considered classified and are not shared throughout the organization. They are focused on describing activities executed into a single department and have the risk to not consider the links that allow organization to work as a whole and as an integrated unit.
Modern administrations use Process Management Systems to treat organization´s knowledge and information, giving them a deeper and diversified usage. New techniques as strategical planning, S & OP, risk analysis, marketing strategies to modify markets trends, continuous improvement methodologies, and statistical process control force organizations to create structures that facilitate employees to gather, preserve, retrieve and correlate information at all levels.

Nowadays, the organizational information in PMS-es can be divided in 3 different groups:
  • STRATEGICAL DOCUMENTATION: Groups and describes the information, objectives, structure and resource planning approved by owners or top management to materialize organizational vision into determined timeframe.
    Rules the plan to make the business initiative financially feasible and sustainable at the same time. Links strategic planning with internal processes.
  • MANAGERIAL DOCUMENTATION: Groups and describes the data, goals, guidelines, projects and responsibilities to help managers efficiently lead and plans the production and commercialization chain.
    Rules the way to make production and sales perform properly, showing a consistent and positive trend quarterly as budgeted. Includes key process indicators such as efficiency, productivity, inventory cycles, product quality, process improvement, others.
  • OPERATIONAL DOCUMENTATION: Groups and describes data sources, transitions, role descriptions, leading zones and optimal product mix planning to help staff crew lead and supervise production & sales teams.
    Rules the way to make individuals more productive performing daily activities on both production and sales. Includes operational routines, chart boards, production schedules, sales visit pre scheduled and other methods to keep team members envisioned and empowered and growing as leader at same time.
Having this amount of diversified and interlinked data, information and knowledge to be documented leaves traditional procedures manuals obsolete. As a matter of fact, the world wide reference for management systems documentation (the ISO 9001:2015 standard) has no documented procedures as a requirement.
It does not mean management systems might run without documentation at all, but organizations must define a way to satisfy the requirements and demonstrate system effectiveness by the documentary platform chosen or built.
The infographic work intend to help entrepreneurs to identify where their business initiative is positioned based on sales performance and interpret the steps to be taken in order to get into growth mode. Remaining too long into Startup or Flatliner mode could mean the business initiative is not gaining or losing competitiveness.

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