Dubai, UAE - 09 September, 2007 - When reading Middle Eastern newspapers these days, it is hard to miss the economic boom that the region is experiencing. Hardly a day goes by without a new mega project or other interesting developments being announced. Similar to the growth period in the seventies, high oil prices are an important driver behind the current boom. The similarities end here though, as this time around many more reasons can be identified behind the growth. For example, since "9/11" a significant proportion of local wealth is being invested locally. In addition to that, most countries in the region are actively modernizing and liberalizing their economies and are supporting both local growth and foreign investments. While in the first oil boom, foreign companies were pretty much on their own, this time around they are facing increasingly sophisticated local players in a more and more competitive "playing field" and in a region that is "growing up" fast in an economic sense.
This is why, "simply being there" is not enough these days and as many companies have articulated their overall strategic direction, they are now turning to optimization of their businesses as a basis for economic success. Booz Allen Hamilton has been supporting similar efforts globally for more than 90 years now. A number of lessons have been learned from studies abroad that can also be applied in the Middle East. This is especially important as research indicates that over 50 percent of large transformation projects, incorporating changes to processes are late, over budget, and/or do not achieve their objectives. "However, some businesses have managed to master the challenge and ensure successful optimization of their business processes while building on a sound strategic direction," says Karim Ragab of Booz Allen Hamilton. "The end goal is to always create greater value, which can usually be attained through steady analysis and adequate changes to the corporate operating model. We have made an effort to lay out a general strategy that achieves this."
At Booz Allen Hamilton, our cross industry experience has shown that companies that successfully executed process improvement projects share similar approaches. We have distilled these into eight different principles:
1. Focus on the right levers to create the most value within the organization. Companies should look to their level of process maturity to determine which lever or levers to employ first. By looking at best practices across their industries, companies can determine where they are significantly lagging behind their competition. It is important to view these in light of company strategy to ensure that value creation is done in line with corporate priorities. For instance, a company may be behind best practices in certain areas, but may choose to improve only a bit as this area is not as important or too difficult to change in the local environment. On the other hand, a company may chose to even exceed best practices and strive to be a global leader in other areas.
2. Arrange the process architecture into natural groupings to determine priorities and avoid being overwhelmed. Even the most flexible companies cannot optimize all of their processes at once, even if the management team sees a clear need for this. Many processes within a company fall into natural groupings, based on their organizational alignment and ownership. After finding those natural groupings, companies can use a well-developed business case to set priorities and determine which processes need to be optimized first, depending on how much value they can deliver and what efforts are required to improve them.
3. Select the improvement method that best fits the circumstances without being dogmatic about any one tool. Successful companies are flexible and avoid a dogmatic focus on one methodology. Depending on the degree of change, potential impact, scope, and timeframe of the initiative, they apply various methodologies and determine whether the best approach is to completely transform the process or merely tweak a functioning process.
4. Strike the right balance between standardization and customization by listening to all of the stakeholders' input on processes and technology. Booz Allen Hamilton has developed an approach called "Smart Customization" to balance the various perspectives and identify the amount of customization that different customers truly require. The basis for Smart Customization is to segment the process inputs and outputs (mini-supply chains) based on similarities, and then to design customized processes tailored for the need of individual streams of work. This enables companies to be sophisticated when and where needed but also to be able to utilize standardization to reduce overall business complexity.
5. Organize for sustainability in a way that holds process owners accountable for performance. Typically, and especially in a unique environment like the Middle East, there is no single organizational solution; the optimal model will vary depending on the company's current organizational philosophy, its underlying culture and the available capabilities. Organizational issues do not always need to be addressed immediately though, since they may require fundamental changes that can take a longer time to implement than realizing quick wins on the process side.
6. Get cash back to the business quickly to demonstrate the value of the project. Segment the solution and implement the different parts as soon as possible. This leads to two benefits: returning cash to the business early and testing the solution gradually, which minimizes the risk to the business and ensures buy-in from management and staff for the overall initiative.
7. Make change management central to the entire project to prevent derailment by people issues. Processes do not change unless employees change and employees do not change just because their management wants them to. It is therefore important to communicate well, make the benefits of change clear for everyone and then monitor behavior and address it in the context of a short feedback cycle, with special emphasis on rewarding process adherence and addressing non-compliance at the individual and unit levels.
8. Manage the effort as a program to facilitate a process-driven culture, monitor for success, ensure design equity, and reach the desired result. Many companies find that individual process improvements face additional hurdles if they are not rolled up into a programmatic effort. The "what's next" question needs to be addressed just as well as impacts on other processes or areas inside and outside of the organization. It is therefore important to elevate the improvement initiative to a program level, with adequate funding, visibility, resources and - last but not least - top level sponsorship to ensure the organization's commitment to change is widely understood and followed.
"Companies that wish to transform their businesses into instruments that can win in the increasingly competitive Middle East market place and ultimately produce more value need to develop and use process excellence to their advantage," concludes Karim Ragab of Booz Allen Hamilton. "What we have laid out are basic rules but they can revolutionize the way business is conducted, especially for the ones that apply them first."
Optimizing businesses should also never be seen as a one-off activity. While it is often important to actively drive performance improvement boosts, ultimately the responsibility lies with senior leadership to actively engage and instill a culture of continual process optimization in the form of an ongoing and iterative assessment of the way a company thinks, performs, and derives value - now and into the future.
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About Booz Allen Hamilton
Booz Allen Hamilton has been at the forefront of management consulting for businesses and governments for more than 90 years. Providing consulting services in strategy, operations, organization and change, and information technology, Booz Allen is the one firm that helps clients solve their toughest problems, working by their side to help them achieve their missions. Booz Allen is committed to delivering results that endure. With 19,000 employees on six continents, the firm generates annual sales of $4 billion.
Booz Allen has been recognized as a consultant and an employer of choice. In 2007, for the third consecutive year, Fortune magazine named Booz Allen one of "The 100 Best Companies to Work For," and for the past eight years, Working Mother has ranked the firm among its "100 Best Companies for Working Mothers."
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© Press Release 2007
