Business Process Orientation

The concept of business process orientation (BPO) is based upon the work of Deming (Walton, 1996), Porter (1985), Davenport and Short (1990), Hammer (1993, 1996 and 1999), Grover et al. (1995), and Coombs and Hull (1996). This body of work suggests that firms could enhance their overall performance by adopting a “process view” of the organization. Although many firms have adopted the BPO concept, little to no empirical data existed substantiating its effectiveness in facilitating improved business performance. McCormack (2000) conducted an empirical study to explore the relationship between BPO and enhanced business performance. The research results showed that BPO is critical in reducing conflict and encouraging greater connectedness within an organization, while improving business performance. Moreover, companies with strong measures of BPO showed better overall business performance. The research also showed that high BPO levels within organizations led to a more positive corporate climate, illustrated through better organizational connectedness and less internal conflict. Another empirical study by Kohlbacher (2009) reveals that BPO is positively associated with customer satisfaction, product quality, delivery speed and time-to-market speed.

For a central concept, one that has become something of a Holy Grail for 1990s managers, BPO has remained remarkably hard to pin down. Its champions argue that it is a new approach to management that replaces the rigid hierarchies of the past ("I report to my boss") with structures that are much flatter, more cooperative, more process-oriented ("I report to my customer."). Many of us have had experience with both types of organization and we know intuitively what BPO feels like. Yet, if you're like me, you want a more solid foundation on which to make decisions and recommendations.

Most of the literature on business process orientation has been in the popular press and lacks a research or empirical focus. Although empirical evidence is lacking, several models have emerged during the last few years that have been presented as the high performance, process oriented organization needed in today and tomorrow’s world. Deming, Porter, Davenport, Short, Hammer, Byrne, Imai, Drucker, Rummler-Brache and Melan have all defined what they view as the new model of the organization. According to each model’s proponent, the “building” of this model requires a new approach and a new way of thinking about the organization which will result in dramatic business performance improvements. This “new way of thinking” or “viewing” your organization has been generally described as business process orientation.

Process centering or building an organization with a business process orientation has led to many reported successes. Texas Instruments, Progressive Insurance and American Standard have all been reported, albeit anecdotally, as receiving improved business performance from building a process orientation within an organization (Hammer 1996).

Process orientation, and its relationship to improved cross-functional interaction, was introduced almost fifteen years ago by Michael Porter. He introduced the concept of interoperability across the value chain as a major issue within firms (Porter 1985). W. Edwards Deming also contributed with the “Deming Flow Diagram” depicting the connections across the firm from the customer to the supplier as a process that could be measured and improved like any other process (Walton 1986). Thomas Davenport and James Short (1990) described a process orientation within an organization as a key component in the “New Industrial Engineering: Information Technology and Business Process Redesign.”

Michael Hammer also presented the business process orientation concept as an essential ingredient of a successful “reengineering” effort. Hammer coined this term to describe the development of a customer focused, strategic business process based organization enabled by rethinking the assumptions in a process oriented way and utilizing information technology as a key enabler (Hammer, 1993). Hammer offers reengineering as a strategy to overcome the problematic cross-functional activities that are presenting major performance issues to firms and cites many examples of successes and failures in his series of books and articles. Hallmark and Wal-Mart are often put forward as success stories and IBM and GM as the failures.

Culture is a major theme in the examples cited. A “business process culture” is a culture that is cross-functional, customer oriented along with process and system thinking. This can be expanded by Davenport’s definition of process orientation as consisting of elements of structure, focus, measurement, ownership and customers (Davenport 1993). Davenport also stressed commitment to process improvement that directly benefits the customer and business process information oriented systems as a major component of this culture

Finally, Hammer (Hammer 1993, 1995, 1996, 1999) described “process thinking” as cross-functional and outcome oriented. He also used four categories to describe the components of an organization. These are:

1. Business Processes
2. Jobs and Structures
3. Management and Measurement Systems
4. Values and Beliefs