Corporate Process Change - A Vicious Cycle
Within corporations there are attempts at innovation that move processes within the plane below. The hope is that every change will increase speed to market without affecting risk. However, in reality, for a process of adequate maturity, almost all changes will move along the line pictured below.
Typically a negative symptom of this is a loop of process changes that repeats infinitely and goes something like this:
- Firm is at point A - medium risk and medium speed to market
- Firm finds a reason to consider this speed to market to be too slow (perhaps smaller more risk tolerant competitors are observed)
- Firm moves to point B via an “innovative new process”.
- This works for a while. Deliveries happen sooner and everyone is happy.
- At some point a failure occurs and risk is realized as loss.
- Firm moves to correct the risk issue.
Instead of moving back to point A, which should be the correct and measured responses, most firms move to point C. This results in NEGATIVE PROGRESS.
Over time the firm will move back to A via a series of “innovations”. As turnover occurs and time passes eventually another “innovation” will attempt to move the firm back to B and the cycle continues.
Ways to Avoid the Cycle
- The firm should document processes and process changes. Failed process changes should be rolled back to their prior iteration WITHOUT introducing additional measures immediately.
- The firm should document process history and compare suggested process changes with previous versions before implementation.
- The firm should NOT cease to innovate but should instead ensure that innovations are truly novel before undertaking them.
- The firm should freeze proccesses after a change (both innovation and reversion) to allow time for the process to take hold and succeed.
- The firm should be wary of excessive risk intolerance.
- The firm should be wary of falsly correlating single failures with overall risk assessment changes.
Please understand that I am not claiming that all process changes fall into this trap. This is a behavior that I mostly see in very large older corporations with very mature processes. These processes are more or less optimized for the firm’s situation. There are definitely paths forward to true gains even in mature processes, but most proposed changes will result in the problem I have described.