Process Improvement and Startups

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Ok, I will confess that I am a process improvement fanatic. I suppose it has something to do with my experiences early in my career working in a TQM environment at TSYS, and working with a key customer (AT&T Universal Card Services) to win the Malcolm Baldrige Quality Award. In reality, though, it probably has more to do with my desire to create “well-oiled machines” and tinker with numbers.


So what is process improvement anyway? Well, let’s first consider a definition of a “business process”. Tom Davenport lays it out pretty well:

”a structured, measured set of activities designed to produce a specific output for a particular customer or market. It implies a strong emphasis on how work is done within an organization, in contrast to a product focus’s emphasis on what. A process is thus a specific ordering of work activities across time and space, with a beginning and an end, and clearly defined inputs and outputs: a structure for action. … Taking a process approach implies adopting the customer’s point of view. Processes are the structure by which an organization does what is necessary to produce value for its customers.”


What a mouthful. Accurate, but what a mouthful. The net-net is, processes are a series of tasks and activities that are designed to achieve some desired outcome. The key word that was left out in Davenport’s definition is repeatable. Something can only be considered a process when it is repeatable, otherwise, you just have a project plan.

Some basic examples of processes – the way that your company:

The art of “process improvement” can therefore be generalized as applying some series of additional activities in an effort to improve existing processes. Improving is a relative term, of course, but in general, you are most likely seeking to decrease something (e.g. number of software defects, the time necessary to pay out expenses, etc.) Process improvement can be a huge strategic advantage for a company; however, it can be one of those proverbial roads that lead to nowhere, paved with good intentions and failed initiatives.

Process improvement is generally accompanied by overhead – and overhead is rarely something to get excited about. Conversely, shooting from the hip and hoping that processes get better on their own is not going to be a productive path either. So where does that leave us?

Sometimes it can be hard to do process improvement, when you have no processes at all – or no product. You see this quite often in startups and early-stage companies. Everyone is focused on getting to the next milestone, and improving processes is something you’ll “tackle later.”

But let’s suppose there are some processes in your small company that you want to improve. Trying to implement modern process improvement tools and strategies such as Six Sigma or TQM would equate to overkill in most cases. You’d spend most of your time trying to track and capture data, and not enough time innovating. Creativity is critical to startups – and obviously, you don’t want to introduce anything that is going to stifle creativity. In fact, there was a great article on this in Business Week a few months back – excellent reading. The article is called “3M, A Struggle Between Efficiency and Creativity“, and is a must read if you have an interest in this space. It is a thorough treatment of how Six Sigma was used to make 3M an incredibly efficient company, at the cost of stifling creativity.

So how do you begin to improve your processes, without trying to kill a fly with a sledgehammer? A good alternative for early-stage companies is the concept of the 5-whys, as used by Toyota. Simple, elegant, and completely pragmatic – all of the traits of the modern startup.

Essentially, it is a method of asking questions to arrive at the root cause of a problem. Ultimately, you want to explore the cause/effect relationships that feed into any given process or problem. For example, let’s say that while doing a demo to a key new customer, your software product kept crashing with embarrassing errors, and the customer backed out of the deal. Clearly, this is a problem that needs to be addressed. Instead of breaking out Six Sigma methodologies and trying to improve all of the many things that feed into that software, you simply ask the question “Why?”. it is important to point out that the gut reaction of any salesperson in this scenario would be to blame it on the software (“damn engineers, they keep pushing out buggy code!”). But once you start digging, things can often play out differently.

Obviously, you don’t have to limit yourself to five questions (whys), but you get the idea. Once you arrive at the root of the problem, you can address it with a laser focus. In this case, there would appear to be a broken process around how change requests from customers are factored into the project plan. So instead of running down the hall and throwing inanimate objects at the nearest software engineer, your energy is probably better expended by working with your project management team to ensure that it doesn’t happen again.

Granted, this is an incredibly basic approach to solving problems, but it works. It is time-efficient, and allows you to implement spot solutions to address deficiencies quickly.
Six Sigma and other types of methodologies are cool – especially if you love to crunch numbers. But again, implementing those in a startup is, in my opinion, overkill.

There can be a case, however, for certain processes within a startup to be measured with something like Six Sigma. Especially if the process is an automated one, and something that is at the core of your business. In such cases, it probably makes sense to do more robust data gathering and analysis (viva DMAIC!).

Cheers.

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