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Business Process Reengineering: Automation Decision Points in Process Reengineering
Business Process Reengineering: Automation Decision Points in Process Reengineering
Business Process Reengineering: Automation Decision Points in Process Reengineering
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Business Process Reengineering: Automation Decision Points in Process Reengineering

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​Business process reengineering (BPR) focuses on redesigning the strategic and value-added processes which transcend the organizational boundaries. It is a cross-functional approach that requires support from almost all the departments of the organization. Business Process Reengineering: Automation Decision Points in Process Reengineering offers a new framework based process reengineering and links it to organization life cycle, process life cycle, and process management. This volume describes the fundamental concepts behind business process reengineering and examines them through case studies, and should appeal to researchers and academics interested in business process reengineering, operations strategy, and organizational restructuring and design.
LanguageEnglish
PublisherSpringer
Release dateDec 16, 2012
ISBN9781461460671
Business Process Reengineering: Automation Decision Points in Process Reengineering

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    Business Process Reengineering - Sanjay Mohapatra

    Sanjay MohapatraManagement for ProfessionalsBusiness Process Reengineering2013Automation Decision Points in Process Reengineering10.1007/978-1-4614-6067-1© Springer Science+Business Media New York 2013

    Management for Professionals

    Sanjay Mohapatra

    Business Process ReengineeringAutomation Decision Points in Process Reengineering

    A309037_1_En_BookFrontmatter_Figa_HTML.png

    Sanjay Mohapatra

    Xavier Institute of Management, Bhubaneswar, Orissa, India

    ISSN 2192-8096e-ISSN 2192-810X

    ISBN 978-1-4614-6066-4e-ISBN 978-1-4614-6067-1

    Springer New York Heidelberg Dordrecht London

    Library of Congress Control Number: 2012954051

    © Springer Science+Business Media New York 2013

    This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. Exempted from this legal reservation are brief excerpts in connection with reviews or scholarly analysis or material supplied specifically for the purpose of being entered and executed on a computer system, for exclusive use by the purchaser of the work. Duplication of this publication or parts thereof is permitted only under the provisions of the Copyright Law of the Publisher’s location, in its current version, and permission for use must always be obtained from Springer. Permissions for use may be obtained through RightsLink at the Copyright Clearance Center. Violations are liable to prosecution under the respective Copyright Law.

    The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use.

    While the advice and information in this book are believed to be true and accurate at the date of publication, neither the authors nor the editors nor the publisher can accept any legal responsibility for any errors or omissions that may be made. The publisher makes no warranty, express or implied, with respect to the material contained herein.

    Printed on acid-free paper

    Springer is part of Springer Science+Business Media (www.springer.com)

    Dedicated to Late Parmananda Mishra

    Late Dr. Sushila Mishra

    Dr. B C Mohapatra

    and

    Mr. H K Mohapatra

    Mrs. K K Mohapatra

    Preface

    Business Process Re-engineering (BPR) is a powerful approach to bring in ­extraordinary improvements in the output of an organization. This is achieved through radical changes in the processes which are keys to the success of the firm. Many organizations have benefited from this approach. In today’s world where the market dynamics change quite often, organizations need to work harder to remain competitive. In a globally competitive market these companies need to improve the outputs from their processes dramatically and at a fast pace. This can happen by automating the re-engineered processes. This helps in sustaining implementation of the re-engineered processes, increasing consistency of the output as well as making processes result oriented and transparent through work flow management.

    With the rapid penetration of Internet, information technology has become all pervasive. From being an enabler of business in the past, it now partners with business strategy to provide direction to the business. Automation using technology has become critical organization asset, source of strategic advantage. Increasingly, success of an organization depends on its ability to gather, produce and disseminate knowledge through a systematic process orients approach will be key to success of business. Using re-engineering approach, processes can be redesigned and streamlined so that roles can be assigned to different processes as owners. Using the work flow method, service-level agreements can be defined for internal and external customers so that effectiveness of different outputs from the process can be measured. Automating the work flows and re-engineered processes can increase consistency of process performance with increase in sustainability in implementing processes so that interpretation of processes across the organization is same. Thus, role of automation for re-engineered processes play a vital role.

    To compete in an ever-changing business environment, it is essential that the managers have adequate information about the parameters that impact global competitive environment. These changes require efficient, accurate information to flow seamlessly to the managers. With rapid advancement of Internet, extranet and intranet, technology has increased the capabilities of an organization in terms of its reach for information from different geographies. With availability of information through technology from different remote locations, managers can respond to different problems and situations faster and with increased efficiency and capitalize on market opportunities. By using technology-based online analytical engines, business intelligence and knowledge management practices, managers can get better returns on investment from its investment in re-engineered processes. This will help them to retain competitive advantage.

    Mere definition of processes will not be enough. The processes need to be implemented with correct intent and proper alignment of business goals with objectives of the processes. The biggest stumbling block in this alignment is the resistance offered by the practitioners who are quite familiar with the current processes. As the law of inertia implies (Newton’s law of inertia), there will be a challenge for the employees to change the present state of behaviour to a new state of behaviour in the context of new processes. A framework-based scientific approach will help in reducing mistakes while implementing new processes. Chapters 7 and 8 talk about the framework and cases that can help readers understand the nuances of behavioural aspects in change management.

    This book attempts to show decision points where re-engineered processes need to be automated so that a firm can get maximum returns on investment. All the re-engineered processes cannot be automated as it would lead to high investment making the investment a white elephant. Through framework and case studies, the book will guide its readers on how to re-engineer processes and when to automate these processes. The book can be used by students in management schools who are specializing in General Management, Strategic Management, Information System, and Operations Management. The book can be used also by consultants who are in Management Consulting, Technology Consulting and who are playing the role of Business Analysts.

    I hope the readers would like the contents and style of writing and would be happy to receive feedback for further improvement.

    Sanjay Mohapatra

    Acknowledgements

    Sanjay Mohapatra

    The production of any book of this magnitude involves valued contributions from many persons. I would like to thank Amboy Matthew for providing continued editorial support and making this project a reality. His association and patronage has become a motivational factor for me to write and publish with Springer.

    The manuscript has been class tested. It has undergone 2 years of discussions and reviews in the class, and I thank my students who have helped me in reviewing and providing feedback so that I could complete the manuscript. I would like to mention the names of the following students whose efforts shaped the final manuscript: Swavab Sourav Moharana, Priyabrata Das, Rabindra Jena, Purbesh Mahapatra, Hemant Sharma, Anuj Das, Shilpi Sandwar, Bagdevi Panda, Abhijeet Das, Binay Prasanna Jena, Tuktuk, Kanmaani, Anindita Patnaik, Pinakini Mohanty, Ashutosh Didwania, Ashish Kailash Sharma, Rani Jain, Sameer Sawant, Sudip Ghosh, Kanti Prakash Brahma, Sandeep Swain, Suchismita Gupta, and Aurelie Tockqueville.

    Last but not the least, I would like to thank Dr. Bharati (my wife) for helping me in taking decisions at a critical stage of the manuscript.

    Contents

    1 Business Process Reengineering:​ A Consolidated Approach to Different Models 1

    1.​1 Background 1

    1.​2 Introduction 1

    1.​3 Office Process Reengineering and Change Management 2

    1.​3.​1 Traditional Businesses and Problems 2

    1.​4 History and Development of Business Process Reengineering 4

    1.​5 What Is Business/​Office Process Reengineering?​ 5

    1.​6 Understanding Office/​Business Process Reengineering 6

    1.​6.​1 A Different Approach in the Government 8

    1.​7 The Reengineering Vision 9

    1.​7.​1 Reusable Technology 9

    1.​8 The Principles of Reengineering 10

    1.​8.​1 Process Reengineering Methodologies 11

    1.​8.​2 Selecting Methodology for Process Reengineered RTI 17

    1.​8.​3 Role of Information Technology in BPR 17

    1.​8.​4 Change Management Intervention Models 18

    1.​8.​5 Change Management Process 23

    1.​9 Sponsor Activities and Sponsor Roadmaps 25

    1.​10 Resistance Management 26

    1.​11 Data Collection, Feedback Analysis, and Corrective Action 26

    1.​12 Celebrating and Recognizing Success 26

    1.​13 The Benefits of Reengineering 26

    1.​14 Ensuring Reengineering Success 27

    1.​15 Possible Impediments to Success 28

    1.​16 Business Process Reengineering 30

    1.​17 Principles of Reengineering 31

    1.​18 A Consolidated Framework 31

    1.​19 Pictorial Representation of Different Methodologies 32

    1.​20 Summary 37

    Bibliography 38

    2 The Need for BPR and Its History 39

    2.​1 Executive Summary 39

    2.​2 Objective 40

    2.​3 Introduction 40

    2.​4 TQM, Six Sigma, and PIP:​ The Precursors 40

    2.​4.​1 Total Quality Management 41

    2.​4.​2 Six Sigma 42

    2.​4.​3 Process Improvement Process 43

    2.​5 Business Process Reengineering:​ A New Paradigm 43

    2.​6 Why BPR?​ 45

    2.​6.​1 Two Cases 45

    2.​7 Difference Between PIP and BPR 48

    2.​8 Conclusion 48

    Bibliography 49

    3 Business Process Reengineering:​ Framework and Approach 51

    3.​1 Learning Objective 51

    3.​2 Introduction 51

    3.​3 BPR Framework 52

    3.​4 Develop the Business Vision and Business Objective 53

    3.​5 Choosing the Process to Be Redesigned 53

    3.​5.​1 Human Resource Function 54

    3.​5.​2 Finance and Accounts Function 54

    3.​5.​3 Material Management Function 54

    3.​5.​4 Office Automation and MIS Function 55

    3.​5.​5 Administration Functions 55

    3.​6 Understanding and Measuring the Existing Processes 56

    3.​7 Redesigning the Processes 57

    3.​8 Information as Technology Enabler 57

    3.​9 Prototyping 59

    3.​9.​1 Pilot Test 59

    3.​10 Continuous Improvement 60

    3.​11 Reengineering Methodologies 60

    3.​11.​1 BPR Implementation Approach 1 61

    3.​11.​2 BPR Implementation Approach 2 62

    3.​11.​3 BPR Implementation Approach 3 63

    3.​11.​4 BPR Implementation Approach 4 64

    3.​11.​5 BPR Implementation Approach 5 64

    3.​12 Best Approach 65

    3.​13 Case of Ford Motor Company 65

    3.​14 Conclusion 66

    Bibliography 67

    4 Business Process Management (Process Life Cycle, Process Maturity) 69

    4.​1 Objectives 69

    4.​2 Historical Background 69

    4.​3 Defining Business Process Management 71

    4.​4 Drivers and Triggers for BPM 72

    4.​5 Business Process Modeling 74

    4.​6 Process Management Process 76

    4.​6.​1 The Activities Involved in Process Management Definition 77

    4.​6.​2 Process Implementation Activities 78

    4.​6.​3 Improving Processes Through Change Management 81

    4.​7 Process Life Cycle 82

    4.​7.​1 Process Life Cycle Stages 83

    4.​8 Process Maturity 85

    4.​8.​1 Level 1:​ Initial Organizations 87

    4.​8.​2 Level 2:​ Managed Organizations 88

    4.​8.​3 Level 3:​ Standardized Organizations 88

    4.​8.​4 Level 4:​ Predictable Organizations 89

    4.​8.​5 Level 5:​ Optimizing Organizations 90

    4.​9 Case Study 91

    4.​9.​1 Siemens:​ An example of Achieving/​Implementing Process Maturity 91

    4.​10 Summary 94

    4.​10.​1 The Golden Rules for High Maturity Process Implementation 94

    Bibliography 94

    5 Organization Life Cycle and Its Relationship with Process Reengineering 95

    5.​1 Learning Objectives 95

    5.​2 Introduction 95

    5.​2.​1 Organizational Life Cycle Model 96

    5.​2.​2 Downs Model:​ Motivation Based 96

    5.​2.​3 Lippitt and Schmidt Model:​ Management Concerns 96

    5.​2.​4 Scott Model:​ Strategy and Structure 96

    5.​2.​5 Greiner’s Model:​ Crisis Leading to Transition 97

    5.​2.​6 Torbert’s Model:​ Organizational Mind-Set 97

    5.​2.​7 Lyden:​ Functional Focus 97

    5.​2.​8 Katz and Kahn:​ Organizational Structure 98

    5.​2.​9 Adizes:​ Organizational Activities 98

    5.​2.​10 Kimberly’s Model 98

    5.​3 A Generic Organization Life Cycle Model 99

    5.​3.​1 Stage 1:​ Birth Stage 99

    5.​3.​2 Stage 2:​ Growth Stage 100

    5.​3.​3 Stage 3:​ Maturity Stage 100

    5.​3.​4 Stage 4:​ Decline/​Revitalization Stage 100

    5.​4 Organization Characteristics and Metrics During OLC Stages 101

    5.​4.​1 Organization Characteristics During OLC Stages 101

    5.​4.​2 Organization Metrics and Tools/​Techniques During OLC Stages 102

    5.​4.​3 Action Steps to Be Taken During OLC Stages 103

    5.​4.​4 Effect of Organization Life Cycle on Board of Directors 104

    5.​5 Framework to Determine Organization Evolution:​ S-Curve 104

    5.​5.​1 S-Curve:​ A Framework to Determine Stages of Organizational Evolution 104

    5.​6 Mapping of OLC to Growth in Organisms:​ Principle of Homeokinesis 106

    5.​6.​1 Homeokinesis:​ A Framework to Map Growth in Organization to Growth in Organisms 106

    5.​7 Transition from Stage 3 to Stage 2 of Organization Life Cycle 107

    5.​7.​1 Reasons for the Transition of an Organization from Stage 3 to Stage 2 107

    5.​8 Mapping of Process Life Cycle with Organization Life Cycle 108

    5.​8.​1 Process Life Cycle 108

    5.​8.​2 Mapping of Process Life Cycle with Organization Life Cycle 109

    5.​9 Organization Life Cycle for Nonprofit Organizations 110

    5.​9.​1 Overview of Nonprofit Organization Life Cycle 110

    5.​9.​2 Characteristics of Nonprofit Organization Life Cycle 110

    5.​10 Case Study:​ Computer Sciences Corporation 112

    5.​10.​1 Stage 1:​ Birth 112

    5.​10.​2 Stage 2:​ Growth 112

    5.​10.​3 Stage 3:​ Maturity 113

    5.​10.​4 Stage 4:​ Decline/​Revitalization 113

    5.​11 Summary 114

    6 Business Process Modelling 117

    6.​1 Learning Objective 117

    6.​2 Why Do We Need Business Processes?​ 118

    6.​3 Business Process Modelling 118

    6.​3.​1 BPM Background 118

    6.​3.​2 Process Modelling Requirements 119

    6.​3.​3 Step-by-Step Procedure for BPM 120

    6.​4 Service-Oriented Architecture 121

    6.​5 Simulation and Optimization 121

    6.​5.​1 Process Modelling Standards 121

    6.​6 Business Process Modelling Steps 124

    6.​7 Business Process 124

    6.​7.​1 Connections 124

    6.​7.​2 Assessing Reengineering 126

    6.​8 Assessment Issues 129

    6.​8.​1 Has the Organization Changed Its VMG (Vision, Mission, Goals)?​ 129

    6.​8.​2 Is the New Process Delivering Desired Results?​ 131

    6.​9 Workflow Modelling 131

    6.​9.​1 My Definition of Workflow 131

    6.​9.​2 The Key Benefits of Workflow 131

    6.​10 Types of Business Process Submodel 137

    6.​10.​1 Private (Internal) Business Processes 137

    6.​10.​2 Abstract (Public) Processes 138

    6.​10.​3 Collaboration (Global) Processes 138

    6.​10.​4 Weaknesses of the Business Process Models 138

    6.​11 Case 139

    6.​11.​1 Steps 139

    6.​12 Workflow Management and BPM:​ Difference 140

    6.​13 ROI 141

    6.​13.​1 Reducing Costs 142

    6.​13.​2 Competitive Advantage 142

    6.​13.​3 Calculating ROI 142

    6.​13.​4 Common ROI Pitfalls 143

    6.​14 Case Study 143

    6.​15 Business Framework Versus Model 145

    6.​16 Summary 147

    Bibliography 147

    7 People Issues with BPR and Change Management 149

    7.​1 Objectives 149

    7.​2 Introduction 149

    7.​3 What Is Change Management?​ 150

    7.​4 Importance of Change Management and People in BPR 151

    7.​5 Major People-Related Issues in BPR 152

    7.​6 Change Management Frameworks 153

    7.​7 McKinsey’s 7S Framework:​ Analysis Phase 154

    7.​8 Change Management Heat Map 155

    7.​9 End-to-End Change Management Framework 156

    7.​10 Best Practices in Managing Change During a BPR Exercise 157

    7.​11 Case Study:​ SAP HR/​Payroll Implementation at Toyota Australia 158

    7.​11.​1 Challenges 159

    7.​11.​2 Change Management Process 159

    7.​11.​3 Outcomes 160

    7.​12 Summary 160

    Bibliography 161

    8 Change Management Approach in Implementing BPR 163

    8.​1 Objective 163

    8.​2 Background 163

    8.​3 BPR Implementation 164

    8.​3.​1 Initiate Strategic Change 165

    8.​3.​2 Current Process Diagnosis 166

    8.​3.​3 Process Redesign 167

    8.​3.​4 Plan the Implementation and Go Live 168

    8.​3.​5 Monitor Process and Feedback 170

    8.​3.​6 The Iron Triangle 172

    8.​3.​7 Managing Change 173

    8.​3.​8 Managing the Change:​ People Focus 182

    8.​3.​9 A BPR Case Study 187

    8.​4 Summary 189

    Bibliography 190

    9 BPR and Malcolm Baldrige National Quality Program 191

    9.​1 Objectives of the Report 191

    9.​2 Background Review 191

    9.​2.​1 What Is MBNQA?​ 192

    9.​3 To Improve National Competitiveness Through B Case Study 192

    9.​3.​1 Why Use MBNQA as a Performance Management Program?​ 193

    9.​3.​2 Brief Overview of the Criteria 195

    9.​4 Baldrige National Quality Program 197

    9.​4.​1 Self-Assessment Process 197

    9.​4.​2 Feedback and Improvement Process 198

    9.​4.​3 Core Values and Concept 199

    9.​5 Future Outlook:​ Alignment of TQM and Balance Scorecard:​ An Integrated Overview 210

    9.​6 Case Study:​ A Conclusive End 211

    9.​6.​1 Motorola 211

    Bibliography 212

    10 BPR and Automation 213

    10.​1 Learning Objectives 213

    10.​2 Introduction 213

    10.​3 Business Process Reengineering 214

    10.​3.​1 Recommendations for BPR 214

    10.​3.​2 Business Process Automation 214

    10.​4 Considerations for Automation 217

    10.​5 Prioritization for Automation 217

    10.​6 Conclusion 218

    10.​7 Summary 219

    Bibliography 219

    11 TQM and BPR 221

    11.​1 A Brief History 221

    11.​2 Definition 221

    11.​3 Critical Success Factors 222

    11.​4 BPR Methodology 223

    11.​5 Total Quality Management 227

    11.​5.​1 Introduction 227

    11.​5.​2 Origins of TQM 227

    11.​5.​3 TQM Principles 228

    11.​5.​4 Deming’s Approach 229

    11.​6 Making TQM Work 230

    11.​7 Implementing TQM 231

    11.​8 BPR and TQM 232

    11.​9 Quality Function Deployment 234

    11.​9.​1 QFDs and the Voice of Clients 234

    11.​9.​2 The Quality Focus 235

    11.​9.​3 Methodology Used 236

    11.​10 Conclusion 238

    Bibliography 238

    12 Case Study:​ AEGON Religare 239

    12.​1 Introduction 239

    12.​2 Objective 240

    12.​3 Challenges 240

    12.​4 Solution 241

    12.​4.​1 Lead Management System 241

    12.​4.​2 Case Management System 242

    12.​4.​3 Sales Management System 243

    12.​4.​4 Agency Portal System 244

    12.​4.​5 Incidence Management System 244

    12.​5 Business Benefits 245

    12.​6 Summary 247

    Bibliography 247

    Glossary249

    Index253

    Sanjay MohapatraManagement for ProfessionalsBusiness Process Reengineering2013Automation Decision Points in Process Reengineering10.1007/978-1-4614-6067-1_1© Springer Science+Business Media New York 2013

    1. Business Process Reengineering: A Consolidated Approach to Different Models

    Sanjay Mohapatra¹ 

    (1)

    Xavier Institute of Management, Bhubaneswar, Orissa, India

    Abstract

    The beginning of the concept of business process reengineering dates back to at least a decade ago when the realization of the success of the synergy between process focus and just-in-time techniques employed by Japanese organizations (especially in the manufacturing sector) was recognized and appreciated. This kind of an approach reduced work-in-progress, improved the rate of workflow, and thus affected lead times as well, which reduced by giving better customer service. During this time, the concept of Quality Circles came into being which held the separate work cells responsible for their work rather than departments. Thus due to such decentralized quality control, better customer service could be provided as well as multiskilled work could be performed. This reduced costs as well as made the quality control tasks dynamic and dealing with customer satisfaction easier as, instead of knowing the customer’s discomfort at the end, it could be identified early and requisite action could be taken.

    1.1 Background

    The beginning of the concept of business process reengineering dates back to at least a decade ago when the realization of the success of the synergy between process focus and just-in-time techniques employed by Japanese organizations ­(especially in the manufacturing sector) was recognized and appreciated. This kind of an approach reduced work-in-progress, improved the rate of workflow, and thus affected lead times as well, which reduced by giving better customer service. During this time, the concept of Quality Circles came into being which held the separate work cells responsible for their work rather than departments. Thus due to such decentralized quality control, better customer service could be provided as well as multiskilled work could be performed. This reduced costs as well as made the quality control tasks dynamic and dealing with customer satisfaction easier as, instead of knowing the customer’s discomfort at the end, it could be identified early and requisite action could be taken.

    1.2 Introduction

    In today’s world, three Cs have become very important for organizations: customer, competition, and change. Business process reengineering (BPR) is a kind of solution based on the latter. Reengineering refers to the fundamental rethinking and radical redesign of business processes to achieve rapid improvements, keeping in mind performance, cost, quality, responsiveness, and service. A business process is a series of steps which if implemented lead to a product or service. Through these business processes, organizations endeavor to add value for the customers, both internal and external. But the plot is lost when individual departments think only about their own department’s efficiency and not the process efficiency as a whole. Process mapping is an important tool which suggests a methodology for identifying the current As-Is processes and can be used to provide To-Be processes after ­reengineering the product and service business enterprise functions. But the choice of processes to be reengineered is made based on the following criteria: dysfunction, identifying the processes that are functioning the worst; importance, identifying the most critical and influential processes on the basis of customer satisfaction; and feasibility, identifying the processes that are most likely to be reengineered successfully.

    1.3 Office Process Reengineering and Change Management

    1.3.1 Traditional Businesses and Problems

    1.3.1.1 Traditional Businesses

    Traditionally, businesses are divided into divisions and/or departments. Each division is responsible for certain product lines, services, or other sets of responsibilities, for example an insurance company may have different divisions for each product. These divisions could be divided into departments, which are responsible for key functions in the division. Within these departments, different tasks can be identified, which are performed by certain employees.

    This concept was built for almost two centuries on the principles of Adam Smith’s insight about fragmenting work into its component tasks. In itself, the idea is simple, being that several highly specialized workers performing single elementary tasks would produce more efficiently than the same number of generalists each engaged in performing the whole work.

    1.3.1.2 The Problem Traditional Businesses Experience

    The result of the Adam Smith-module is that you divide employees into small compartments. You teach them to do their portion of the work, and only their portion, very well, while nobody explains to them the objective of the process and where their small portions fit into the process. This results in bad customer service, mainly due to two reasons discussed below.

    1.

    Many organizations are not customer focused

    They provide products/services to customers, but not solutions to their problems. Besides the fact that companies are not customer focused with regard to products, many companies are also not customer focused with regard to customer service. Michael Hammer describes the reason for this as being employees’ lack of knowledge with regard to processes. Every employee is only interested in his/her part of the responsibility, which includes individual tasks. Nobody is interested in the process, which will ensure customers are satisfied at the end of the day.

    Another reason why an organization is not customer focused is that processes tend to be fragmented among each of a dozen business units and departments.

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