Management processes–everything from how a company manages risk to how it gets supplies for factories to how it manages and develops people–are some of the primary ways that global companies impose order and consistency on a diverse set of global operations. Companies believe that processes can help share knowledge across divisions and regions. Likewise, seamless delivery and service processes can be central to meeting customer expectations.
In a world where the pace of competition is increasing faster than ever, best-in-class processes can create competitive advantages when it comes to innovation and risk management. However, researches have shown that companies are particularly poor at managing processes. Often there are just too many processes. Worst, executives often do not know where to begin.
The Pitfalls of Organizations
Global organizations are particularly poor at managing processes. Processes are considered one of the 3 weakest aspects of organizations and strengthening them is crucial.
Based on a McKinsey survey of executives, executives do not know what their processes are. Inasmuch as there are just too many processes, these processes do not reflect new customer needs. In fact, there exists a resistance to change that can be damaging to an organization.
Organizations have to understand that processes can go wrong on a global scale and it can bring in a lot of challenges to an organization.
The 3 Core Challenges to Global Organizations
Organizations are faced with 3 core challenges when dealing with processes and transforming them to a global scale.
- A Plethora of Processes. When there are a plethora of processes, there are just too many processes and too little value. This happens when executives are unable to differentiate between processes that are essential to creating global value and those that are inessential but offer benefits if these are consistent. Executives also fail to differentiate between processes that are crucial to customers or those that create value and those that do not. A plethora of processes is also created when the operation is in various locations or as a result of M&A activity.
- Overstandardization. How do you know that overstandardization exists? It is when processes are so rigid that they are slow to respond to new growth. As a result, there is a dramatic decrease in local responsiveness. This core challenge often arises because there is just too much concern about maximizing control and reducing risk.
- Resistance to Change. This is the third core challenge faced when change is introduced and there is resistance. Resistance to change often occurs when there is difficulty in changing customer-facing processes until the organization is faced with customer backlash. Executives often fail to understand customers’ preference for standard global service. The thinking is often directed towards country-specific variations which are not often what customers like.
Overcoming the 3 core challenges can be done. Organizations just need to take on a 3-phase approach that will ensure that all global processes are enabling performance. These are Prioritize, Optimize, and Implement. A 3-phase approach is an effective tool towards approaching Global Process Optimization in a strategic manner where value is maximized at minimal cost and complexity.
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