Process Matters

A company is a collection of processes.  In a general sense, the main process in any company is their quote to cash process.  All other processes support the activities needed to quote a price, close the deal, deliver the product or service and then collect the cash.

When a company is small, their processes will not be formal.  They will do what needs to be done to deliver the product or service and collect the cash.  The longer they are in business, the more formal their processes become.

As companies get bigger, they need more and more processes to make sure that their quote to cash process is efficient.

A small product company example –

A company inSouthern Californiaentered the hard disk drive business in the late 80’s.  They needed sales to find prospects and deliver ‘quotes’.  They needed marketing to get out the company name and let the world know about their product.  They needed engineering to design an ‘innovative’ product.  They needed manufacturing to manufacture the product to some quality standard.  They needed a finance department to ship product, generate invoices and collect the cash.  All of these departments needed some kind of process to get the work done.  Early on, I’m sure these processes were ad hoc – ‘we do what we do the way we do it to get the job done’.

This company didn’t manage their processes well.  Their engineering change process brought them down.  They allowed all changes go through without looking at the cost impact.

A large product company example –

As a small product company becomes a big product company, they have new departments and processes.  Think about what might be going on at Apple Computer.  They have to be more concerned about their processes because as they get bigger they must maintain profit margins.  Their shareholders want the stock price to increase year over year.  At some point, you can’t continue to double sales numbers.

Imagine their research and development department – I’m sure they didn’t follow any kind of formal process in the early years, I bet they do today.  Management wouldn’t want them to spend time on an iToaster if there was no market for it.  So, there must be some kind of process they follow to determine which of their new ‘ideas’ to pursue.

The Takeaway…

If you take a process view of your company, I’m sure that you can find ways to become more efficient.  You can either cut costs by shortening cycle times or eliminating a process altogether.  You can increase revenue by increasing the number of widgets manufactured per week. 

When a company is setting one sales mark after another, they tend to not think about how they could be more efficient.  When times are tough, they realize that they should have been looking for efficiencies all along.  Then it could be too late.

Your Thoughts…

Where does your company fit – is it making so much money that process doesn’t matter?

 

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