by Dr. Ben S. Graham, Jr., President
The Ben Graham Corporation
© Copyright 1996, The Ben Graham Corporation. All rights reserved.
Permission is granted to post, print and distribute this document in its
original PDF format.
The increased use of computers in the workforce has caused changes in the way
work is processed. Some of these changes are improving work processes, but,
unfortunately, many of these changes are achieving only a small portion of their
potential and some are actually resulting in less effective processes. The
resulting products and services are worse rather than better. This session
- What is a process?
- The philosophy and practice of process improvement.
- Best and worst outcomes.
- Bottom-line effectiveness.
What is a Process?
A process is a particular series of actions that accomplish something. It
has a start point and an end point between which various items (materials,
forms, records) are worked on, usually by a number of different people located
in different places and using various equipment. During the process certain
items are changed, thus completing the process.
For instance, a hospital admits a patient by checking records, completing
forms, and performing various tests and briefings. The items worked on include
the patient, perhaps a blood, urine or tissue sample and various forms and
records, some of which are manual and others are electronic. Most of the tasks
involve information which is read, sorted, calculated and written while a few
tasks involve physical work such as mixing chemicals, preparing slides, and so
forth. The tasks are performed by administrative staff, medical staff, nursing
staff, laboratory staff and occasionally by the patient. Various pieces of
equipment are used as the items wend their ways through various locations.
Likewise, a sales office processes a customer's order by checking records,
completing forms and assembling and packaging the products ordered. The items
worked on include the products, the packaging materials and various forms and
records, some of which are manual and others are electronic. Again, most of the
tasks involve information which is read, sorted, calculated and written while a
few tasks actually involve physical work such as lifting, assembling, wrapping,
and so forth. The tasks are performed by office employees including inventory
clerks, credit clerks, order clerks, by warehouse and shipping employees and on
occasion by the customer. And, once again various pieces of equipment are used
as the items wend their ways through the various locations.
And, so it is with other processes. A contract is written, a case is tried in
court, a commercial airliner completes a flight, a new product is developed, a
new employee is hired, a salary review is completed. In every case people using
various pieces of equipment work in various locations on items that wend their
ways through the processes.
The Philosophy and Practice of Process Improvement.
To improve a process we change the tasks. Tasks may be eliminated or
combined. The sequence in which they are performed may be changed. The location
where they are performed or the people doing them may be changed. And, the
method of accomplishing them may be changed, often by changing tools and
equipment. When these changes are well conceived they can produce positive
results in two ways, - better results and lower costs.
Some examples of better results include, patients achieving better health,
students being better educated, court cases settled more justly in less time,
the nation being more secure, products that are stronger, taste better, last
longer, are easier to maintain and so forth. In all of these cases greater value
has been created in the form of quality.
Costs are lowered when less resources are expended. The total cost of labor,
materials, equipment, facilities and energy required to achieve a given result
such as building a car, performing a surgical operation, painting a house,
repairing a telephone line, cooking a meal, etc., are reduced. Because costs are
down (per unit of output) it is possible to drop prices a portion of the drop in
cost and still increase profits or surpluses. This generates more business and
once again more value is created, this time from volume.
Where knowledge and ingenuity are used well, we get both better results and
lower costs. Thus private industry provides better products and services at
lower prices every year (as we have seen in some industries, notably electronics
in recent years) and the government provides better services for lower taxes
every year (as we see less often because of intervening politics that make it
difficult to concentrate on the tasks). There is more available and standard of
living rises. In spite of lower prices, profits grow because costs drop more
than prices. The difference between the amount of the drop in costs and the drop
in prices provides a surplus with which to reward the ingenuity that lowered the
costs and improved the results.
The key that makes all of this work is that we are smart enough to increase
the amount of value that we create, not by working longer hours but by using our
hours more wisely. In a nutshell, we work smarter not harder.
This is a philosophy of winning. When we win there is more for everyone.
Customers get better products and services at lower costs. Stockholders share in
greater profits. Wages go up for both management and employees. And, when this
philosophy is widely practiced across a society, individual earnings are up,
prices are down and standard of living climbs steadily.
The Practice of Process Improvement
To achieve these benefits we do not start by messing around with wages and
prices. Rather we study the work processes that create the value for which these
dollars change hands. And we do this, one process at a time.
Within each process we study the flow of the items (records, forms and
materials that wend their ways through the processes). We pay special attention
to tasks that change these items. We do not focus on the resources that work on
these items (people, machines and software) or on their prices and costs. Later
we will be very interested in the effect of our ideas on our resources and the
dollars, but first we study the flow of the work itself using all the
experience, common sense and ingenuity we can muster with a constant focus on
creating value and reducing waste.
We follow each of the items that is processed, step by step, and prepare a
chart that shows how the items affect one another. A team of experienced
employees representing different parts of the process then reviews the chart.
Team members can see what happens to the items not only in their own work areas
but also before they receive them and after they are done with them.
Opportunities for improvement become apparent. Large portions of the
processes are often found to be completely unnecessary and can be dispensed
with. Circuitous routing with costly delays is discovered and lends itself to
short cuts and or electronic delivery. Redundancies in processes can be
eliminated by sharing records. Often minor modifications in a part of the
process are discovered that will provide major advantages to the process as a
whole. This approach encourages team members to think together about what is
best for the organization rather than being limited by parochial views of their
own work areas. A process orientation keeps the team's attention on results and
discourages their getting caught up in politics.
Process charts should be prepared at the elemental level (tasks,
transportations and delays). Then the team questions each step as if it were the
only step in the procedure, trying to come up with the best way of doing (or not
doing) that step. The team does not have to worry about unforeseen consequences
in other parts of the process because the chart makes clear the relationships
between the steps and because the team includes experienced people from all
parts of the process.
This simplifies the challenge of improvement enormously. Instead of trying to
juggle all of their changes simultaneously the team works on them one step at a
Common Sense and Ingenuity
When this is done well the team members find themselves naturally giving
free rein to their common sense and ingenuity so that many of the changes they
make have the flavor of, "We've been meaning to do something about that one
of these days". Now, "one of these days" has come and the team
members find themselves doing what they have been thinking they ought to do for
years. The changes appear to belong and shortly after they have been made people
look back on their previous processes as something they would never return to.
Best and Worst Outcomes.
The work is easier and faster, with fewer items requiring fewer steps for
completion. Customers know they are getting more for their money. The changes
have relieved employees of time- consuming and often nonsensical bureaucratic
requirements which they are glad to be shed of. They find they are less rushed
and have more time to give personal attention to transactions that require it.
It is clear that technology is being used to supplement the experience and
judgment of the employees and in spite of dramatic advancements in technology
the process still retains a flavor of common sense.
Processes that should not be done in the first place are automated, using
the most expensive equipment that money can buy. There is no increase in value
created while significant resources are squandered. Customers are treated
impersonally while processes that were previously performed manually in minutes
are replaced by automated processes that take weeks. Processes that included
experienced humans giving personal attention to unique requirements are replaced
by standardized processes based on superficial assumptions that do not allow for
variations. Employees are stretched thin and most of the veteran employees,
whose experience is badly needed to correct these problems, are gone.
When bottom-line effectiveness is pursued in-and-of-itself, it tends to
encourage changes that are temporary. Rather than studying processes step by
step, sweeping changes are imposed that have not been worked through. Staff is
viewed as an expense to be reduced. The staff that survives the cuts find
themselves stretched thin because their work processes have not been
realistically improved. But, for the time being (until the customers leave) the
bottom line looks very good. Executives who are concerned only about the bottom
line during "their watch" pat themselves on the back and vote
themselves huge salaries as rewards for their contribution to the immediate
prosperity. By the time the organization suffers the consequences of their
actions their bank accounts will be very full and it will be "someone
When business does fall off the organization may be unable to take the
detailed actions necessary to correct the situation. More sweeping changes
follow, including further staff cuts and corporate decisions to divest itself of
divisions, product lines, etc. that are unprofitable. (Who knows how profitable
they might have been if their staffs had been enthusiastic and proud.) In this
way the corporation works its way from crash diet to anorexia.
However, when bottom line effectiveness is pursued by process improvement,
creating better results and lower costs per unit, the results are healthy.
Changes are made that have been thought through and when they are put into
practice they work. Staff is treated as a resource rather than an expense.
Rather than being stretched thin they find themselves more relaxed, proud and
enthusiastic, - the masters of their work. And, over time, they will improve the
processes again and again, embracing change rather than dreading it. The people
of the organization have the capacity to do the work well and change it
continuously. This is the complexion of healthy process improvement.
In a way, healthy process improvement is like eating nourishing food and
exercising. Most people know that it is good for them but few do it. But, those
that do get much more out of life. Organizations that practice continuous
process improvement also get much more out of life, - pride in the way they do
their work, a relaxed work climate that stems from being on top of things,
camaraderie with coworkers they respect and trust and prosperity that they have