Guidelines: Target-Organization
Assessment
Topics
The main purpose of collecting information is to develop an understanding of
the problems and potentials of the existing business and its environment.
To understand where the problems are, the needs of the customers, the
experiences of the employees, the intentions of the owners as well as the market
trends often need to be understood. There are a number of ways to collect this
kind of information.
Depending on the character of the project, one, several or all of the
following tasks can performed:
- Assess the business strategy to align the vision and the strategy.
- Benchmark against other organizations to develop goals, objectives and
innovative ideas.
- Understand the customer?s demands to involve your customers in the
business-modeling effort.
- Understand the existing business to analyze what the problems are.
- Measure the performance of the existing business to establish a
starting point.
- Study new technologies to build a good understanding of state-of-the-art
solutions, generally as well as within your own business area in order to
find profitable process designs.
Information collection is best done in small groups, so divide the activities
among members of the business-modeling team.
If the current business processes are not well understood, you may need to
describe the current organization in parallel (see Workflow
Detail: Describe Current Business).
If business modeling is done to reengineer and existing organization, a
business? management team should be responsible for formulating a directive,
or enabling it to be formulated. Management is also responsible for
communicating the need for business modeling to both the people in the
business-modeling team, and to all employees of the organization. It is vital
that management does this if the business-modeling project is to succeed.
A company's business idea identifies the products and services the company
wants to offer and the markets where this should take place. A business strategy
defines the principles for how this should be accomplished and which the
long-term goals should be.
The business strategy must of course be in line with the way the business
works. The strategy must embody the business' long-term goals, and align the
business use
cases with those goals. As [DVP93] points out, "Strategy and
process objectives must reinforce one another and echo similar themes."
A good business use case follows the direction of the strategy; a good strategy
enables good business use cases. It is especially important that you base your
business modeling work on a strategy that is fully communicated and accepted
throughout the business. A well communicated, well-understood strategy
simplifies the business-modeling work. On this basis, the business-modeling team can arrive at a good design and explain its
motivation. [DVP93] develops a number of criteria for a good strategy
applicable to business modeling:
- A strategy should not be based solely on financial goals. In general,
employees tend not to perceive financial goals as being sufficiently
concrete, because it is not apparent to them how they can attain the goals
- A strategy should be formulated so its effects can be measured. A change
in lead time is measurable, as is customer satisfaction, and so on.
- A strategy should focus on a limited and realistic business idea.
- A strategy should inspire, not force, employees at every level to create a
business that realizes the desired goals.
Benchmarking is an technique to analyze information about, and exchange
knowledge with, other businesses. Benchmarking is designed to help you:
- Know how other businesses perform.
- Base your new goals on the goals of comparable businesses.
- Validate that your own use-case goals surpass those of your competitors.
- Learn innovations from other businesses.
Benchmark businesses that:
- Have a good reputation.
- Give thorough customer satisfaction.
- Yield high-quality results.
- Are recognized leaders in the field.
- Are interested in benchmarking.
Benchmarking is often performed as a joint activity with another business,
with which you share information. Because it can often be difficult to find
competitors that want to benchmark, try approaching companies that operate in
completely different business areas. Look for analogous activities in the other
businesses?this often reveals innovative ideas about how to work.
Benchmark metrics?about the business itself and about the resulting
products and services of interest. Relevant metrics are often a combination of
time, cost and quality. You should also benchmark innovations, to get ideas on
how you can achieve your new goals. For example, by looking for similarities, a
software company can probably learn a lot about project management from a
construction company.
There are several ways to gather information about other businesses:
- Visit them.
- Have telephone discussions with their executives and consultants.
- Consult publications.
- Study the published case studies, which often can be found in academic
publications.
It is important that you contact the benchmarked businesses. Do not trust
everything you read; some facts may have been omitted from a published report.
You may even find that the happy ending described in a report never happened.
You measure the existing business by measuring its business use
cases. To do this, first define metrics for the business use cases, then measure
the business use cases. Selecting metrics and measures for a business use case
is key to understanding the business use case. As [HAR91]
put it:
"If you cannot measure it, you cannot control it. If you cannot control it,
you cannot manage it. If you cannot manage it, you cannot improve it. It is as
simple as that."
You can measure the business by observing it from the outside (external
metrics), or by measuring activities inside the business (internal metrics).
External metrics relates to business use cases and usability, while internal metrics
concerns to the realization of business use cases.
Metrics can also be classified as either objective or subjective:
- Objective metrics record the performance of the business. For example, the
time it takes to perform an activity, the cost to produce something, or the
number of errors in a product.
- Subjective metrics record people?s opinions. For example, how customers
rate their satisfaction on a scale from 1 to 5, or if they would recommend
the product to a friend.
Example
Metrics used to measure the Airport Check-In business use
case:
External, objective metrics
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External, subjective metrics
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Internal, objective metrics
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Total time from the
passenger?s arrival at the airport to boarding. |
Customer-perceived
punctuality. |
Total time to get a bag
from the check-in desk to a plane. |
Number of lost bags. |
- Customer-perceived quality of baggage handling.
- Customer perceived quality of staff reception at the check-in desk.
|
Total time to fuel a plane. |
Note that there are many things that cannot be measured easily, such as:
- Effect of training and education.
- Employee enthusiasm and motivation.
- Ability to invent new products.
- Ability to adapt to a changing environment.
A good combination of metrics usually includes objective and subjective
metrics.
The objective metrics should be a combination of time, cost and quality
metrics. In our experience, a focus on the optimization of a business use case?s time
parameters (such as lead time) usually results in automatic improvements in both
cost and quality parameters.
The subjective metrics should focus on customer satisfaction. When you define
subjective metrics, remember that what counts is how the customer perceives the
performance of the business. Subjective metrics should measure the performance
of the business as perceived from the outside.
Avoid internal metrics?use them only if they are clearly derived from
external ones.
As you define the metrics for a use case, ask yourself:
- Can they be measured? If not, remove them or change them.
- Do they measure each use case from the perspectives of time, cost and
quality?
- Do they emphasize the outside perceptions of the business?
Measure the business use cases in the current target organization according to the metrics you
have defined. Be sure to collect the measurements from the people in the
business that really knows the answers.
Later, you will compare these collected values with the values of the
modified business use cases. For example, if shorter lead time is an objective for a new
business use case, be sure you can verify that this objective has been satisfied.
There are several ways to analyze the existing business; the following
subsections describe the most essential:
"Walk through" each kind of customer?s "lifecycle," to
see how he interacts with the business. Start with the customer?s first
contact with the business. Does the customer interact with many different people
in the business? Does the customer have to wait for answers, deliveries, and so
on?
"Walk through" each use-case workflow and classify each activity as
value adding (VA) or non-value adding (NVA). A VA activity increases the value
of the final product, from the customer?s perspective; an NVA activity does
not. Examples of NVA are reviews, writing reports, moving information or
resources within the business. Each NVA activity is a candidate for removal or
minimization. Analyze each NVA activity to identify the real reason why it is
being performed.
If time is critical you can analyze how time is spent in each business use case. For
each activity note the total time and the waiting time. Analyze each activity to
see if time can be reduced.
If cost is critical you can analyze the cost of each business use case. Note the cost
of each activity. The cost is often directly related to the amount of work that
is spent on the activity.
On the basis of the values used to measure the existing business use cases, together
with the benchmark metrics, you can identify the business use case?s problems and
limitations.
To understand the problems you find, you probably need to talk to the people
involved in the business use cases under investigation. The aim is to gain insight into
the problems and to elicit suggestions for improvements. If you have succeeded
in motivating the employees to do the business-modeling work, they will
respond by contributing valuable information and creative ideas.
Investigate the possibility of making short-term rationalization
improvements to the existing business use case. Short-term improvements show the
employees that progress is being made early in the business-modeling work,
which helps keep them motivated. Short-term improvements must be easy to
implement and produce the results quickly. The staff can regard even small
changes to the daily routine as very positive. In addition, by understanding the
simple things that can improve the existing business, you will be better able to
evaluate the more radical rationalization suggestions.
Determine the existing business tools, with respect to both software and
hardware. Describe how business tools optimizes the work, and discuss both the advantages and
disadvantages of their use.
Investigate if greater effectiveness can be achieved by expanding or
modifying the parts of the business use cases that are implemented using
business tools. Be aware that old information systems can
render an organization permanently hierarchical. Sometimes it is simply
impossible to engineer a business without constructing a completely new
information systems. At the same time, it is important to realize that it
might be impossible to throw out, in one step, a system in which the business
has invested a great deal of money.
Make an inventory of knowledge and special skills areas. This is important in
order to understand the additional skills that will be required by the personnel
of the new business. Look at the roles key personnel play in the existing
business and determine how to spread this knowledge, possibly dividing the work
tasks among several people. All businesses have key people?individuals who
drive development or have unique knowledge about the business? products. But
it is dangerous to be too dependent on a few individuals. The business cannot in
any way guarantee the availability of these people in the capacity required?if
they fall ill or leave the business, it could be a catastrophe.
Try to determine the requirements for future changes in the business use case that
might arise from the environment. This can result in changes in the existing
business use
cases, but may also show that the business must be able to offer completely new
business
use cases, whose requirements have not previously been envisaged. A competitive
situation may require this; either because competitors are already offering
certain services that customers are now demanding, or because the business has
identified a new way of increasing its competitiveness. In the first case, it
means launching something that is seen as being at least as good as the
competitor?s product. In the second case, the business is in a much better
position, being one step ahead of the competition.
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