The Dutch Prison System is Worth a Good Look

Last night, I was watching GPS, Fareed Zakaria’s program on CNN about how over the last 10 years, the number of prisoners in the Netherlands had dropped from 20 thousand down to 10 thousand.  I found the story so fascinating that I tried to do a quick search on Google after the show to try to understand WHY the crime rate in the Netherlands is dropping so fast that they need to close prisons down.

Fareed Zakaria’s Global Public Square on CNN

Fareed mentioned that the prison philosophy is not meant to be retributive but rehabilitative. Yes, the Dutch enforce the law strictly and arrest the law breakers. But there tends to be leniency in the sentencing of those found guilty of crimes. First of all instead of judgements of solely consisting of prison sentences, the courts mete out penalties that are a combination of fines, community service, training, and prison sentences. In addition, most prison sentences do not exceed three months. I even read that in some cases, hospital detention for treatment is a sentencing option. The intention is to attempt to re-integrate the criminal back into society.

This doesn’t mean that the Dutch are never tough. It seems that they draw the line on violent crime, which stands to reason.

Readers from the Philippines (where a brutal “Drug War” that has led to the deaths of thousands is currently being waged) may ask: How do the Dutch treat drug offenders? Dutch law defines drug trafficking, cultivation and production and dealing in and possession of drugs as criminal acts. Possession of more than 5 grams of cannabis will be confiscated but drug use as such does not constitute a crime. Further, the use of drugs is prohibited at schools and on public transport or in situations that involve public order, and especially when the health of young people may be at risk. Persistent offenders who have been found guilty of drug-related crime such as theft and burglary are subject to greater penalties but often also to treatment in care institutions.

Some people may view the Dutch approach to be naïve and “pollyannish”. Yet, you cannot argue with the success that they have achieved over the last decade. Also, has the more hawkish approach that countries like US has taken produced better results? Let me quote from Fareed Zakaria again in a GPS blog post that he made last March 30, 2012 entitled “Incarceration Nation”:

Something caught my eye the other day: Pat Robertson, the high priest of the religious right, had some startling things to say about drugs.

“I really believe we should treat marijuana the way we treat beverage alcohol,” Mr. Robertson said in a recent interview. “I’ve never used marijuana and I don’t intend to, but it’s just one of those things that I think. This war on drugs just hasn’t succeeded.”

The reason Robertson is for legalizing marijuana is that it has created a prison problem in America that is well beyond what most Americans imagine.

“It’s completely out of control,” Mr. Robertson said. “Prisons are being overcrowded with juvenile offenders having to do with drugs. And the penalties – the maximums – some of them could get 10 years for possession of a joint of marijuana. It makes no sense at all.”

It is clear that the Dutch prison system has been effective preventing many first-time offenders from falling into a cycle of crime. It is interesting that a criminal record in the Netherlands is expunged after 5 years for a violation and after 20-30 years for a criminal act. That said, there are also other significant contributing factors such as strict gun control and a highly effective social welfare system.

I do not believe that these factors I have cited can fully explain the phenomenon we are seeing in the Netherlands today. Things are always more complex than they appear at first blush. Nevertheless, the Dutch certainly have a good thing going that is worth the attention from the rest of the world.

(p.s. A further area for thought: Do punitive HR policies produce the desired results in companies? Or should companies employ a more nuanced approach that also considers options for re-integration of offenders of company rules into the desired company culture?)


When fact is deliciously stranger than fiction

Along B. Gonzales Street near Katipunan Avenue, a cafe is daring to be different. Cafe Xocolat boldly offers an alternative to your routine caffeine fix – a bold cup of hot chocolate. It doesn’t harm that they also offer good great meals and dessert at (almost) student prices. Craving for churros con chocolate? Sure, you can find it there! (Dear readers, I failed to take photos when I was there and it might be some time before I can go back and take my snapshots. I will appreciate if you can post your photos in the comments section in the meantime.)

On the wall at the cafe while waiting for my meal, I read a sign:

Great ideas start with completely unrealistic thoughts.

It just so happened that I just read Harvard Business Professor Teresa Amabile’s article entitled “Creativity and the Role of the Leader”. In the article, Prof. Amabile enjoins organizational leaders to “motivate with intellectual challenge” but also to “accept the inevitability and the utility of failure.” The end goal is to encourage the free flow of ideas – continuously and sustainably. Professor Amabile’s insights almost sound like common sense and promoting good ideas across the ranks in the organization should be as easy as banana toffee pie in Xocolat. Except that the great ideas may appear like absolute nonsense at first glance! Especially to leaders so accustomed to the corner office.

So what does a good and enlightened leader (and Xocoholic) do when fact appears stranger than fiction? Step back and enjoy a good cup of hot chocolate and then ask herself what the eminent Professor Amabile will do in the same situation – which, among other things, is to acknowledge that great ideas can come from across organizational rank, social and educational background, ethnicity, and gender.

Happy ideation!

The Cafe Xocolat Menu

Creativity and the Role of the Leader at Harvard Business Review


Make invisible pathways visible

The Golden State Warriors were already leading by a whopping 25 points in their game against the Dallas Mavericks with less than 3 minutes to go.  Warriors rookie Jordan Bell – like most rookies – doesn’t get too many chances to display his basketball skills but  felt that that was his moment. Bell threw the ball to the backboard, leapt to catch it, and threw a thunderous slam into the ring. The fans cheered loudly and the young players on the team celebrated the stunning display of skill. Some of the older players and coaches shook their heads in disbelief.

Jordan Bell had broken an unwritten rule of the NBA brotherhood.

The Uproar about Bell’s Showboating

While the players were expected to play on until the final buzzer ended the lopsided game, the winning team was also expected not engage in acts that may be seen as taunting, mocking or otherwise disrespecting their opponents. Coach Steve Kerr warned Bell after the game that his act of playing to the crowd would probably cause him (Bell) some grief in future games from other players who felt offended by his grandstanding.

The basketball fraternity is about keeping fans happy

Clearly, the fans loved Bell’s play and the tension between the unwritten rules of the NBA fraternity and the interests of the paying fans cannot be more striking.  The Mavericks Dirk Nowitzki noted though that while “the play was a bit too much”, it is “almost 2018” and acknowledged that the players views are beginning to shift.

Fans in the stand

Happy fans cheering for their favorite showboating rookie

In any case, I can almost hear Jordan Bell protesting to his coach, “… But coach, nobody told me!

This incident reminds me of a principle in business process management, i.e.,  unwritten rules embedded in processes have to be recognized as a possible point of failure that may hinder the achievement of customer goals. The discovery of unwritten rules is thus a prior step to proposing process improvements or indeed, in introducing intelligent automation.

Uncovering unwritten rules

In the course of documenting processes, it is important to uncover implicit workplace norms and behaviors.

When we ask process operators why they perform certain activities  the way that they do, it is not uncommon to get a response that’s something like “Oh, that’s the way that we’ve always done these things!” or “That’s how work gets done around here.” Whenever the underlying rationale for  a habitual practice or behavior is unclear, there is often a forgotten unwritten rule whose use-by date has expired.

Rites of passage

One area worth looking into for unwritten rules are practices (particularly in professional organizations) that appear to unduly saddle new joiners with unreasonable tasks that could otherwise be easily eliminated with either process streamlining or role redesign. Oftentimes these are anachronistic activities that have been retained to serve as nothing more than rites of passage in the organization. A good example is the accounting firm that I joined as a fresh graduate from University. In that firm, one of my first assignments was to deliver confirmation letters to client companies – a task that could have been performed more than twice as efficiently by messengerial companies. That was an initiation rite as much as it was a way to familiarize new staff such as myself back then with the addresses of client companies.

rites of passage

Welcoming a fresh graduate into the organization

The streamlining of initiation-like practices can be more significant than just the elimination of non-value adding process steps. I have been told a story about a brilliant and ambitious young intern who was driven to quit a medical field of specialization that was in great demand because his supervising consultant drove him too hard too often with successive 24-hour hospital shifts. The inability to grow its specialist pool will certainly affect the hospital’s bottom-line over the long term even if it manages to cope and not suffer any immediate loss in revenue. Certainly, the societal costs of not having an adequate number of specialized doctors will be high.

Tone at the top

Another area to look into are the attitudes, values and behaviors being driven from the top. A famous case study that demonstrates the impact of the leader’s long shadow is the downfall of Enron. In the 1990s, Enron had built a reputation around innovation, ambition and financial sophistication. Nevertheless, the unwritten code of conduct that permeated the organization was the top leadership’s drive for success at any cost. This inevitably led to unscrupulous actions and widespread accounting fraud. By 2001, the company was bankrupt and a number of its top leaders were indicted for various criminal offenses.

More recently, we have seen one head of state speak insensitively about race and ethnicity once too often serving as fuel for white supremacist organizations to assert their intolerant views and violent tendencies. In an equally infamous case, we have another head of  state who often casually recounted his personal acts of violence against suspected criminals despite the abolition of the death penalty in the country, in the process giving rise to a perceived carte blanche for law enforcers and vigilantes to murder suspected felons.

The long shadow of the leader subtly (and sometimes not-so-subtly) drives behaviors in a way that documented policies, processes and procedures do not reflect.


In all the different instances that I cite here, process improvement and intelligent automation will only succeed if the process owners and change managers first recognize the impact of an organization’s unwritten rules and implicit norms and behaviors on its roles, activities and practices as well as the other dimensions of the system at work.

Are you ready to hire a robot?

SGV hosted the EY Round Table on Intelligent Automation this week. The forum featured the Department of Science and Technology’s perspective on the latest global trends presented by the eminent Dr. Carlos Primo David, Executive Director of the country’s Innovation Council.  There was also a heavy focus on Robotic Process Automation or RPA.

There’s good news and there’s bad news.

The bad news is that the concerns raised during the Round Table demonstrate that most Philippines-based companies have really just started exploring or, at best, beginning to implement their Robotic Process Automation(RPA) initiatives. This at a time when Bloomberg reports that the old boys club of bond jockeys, derivatives traders and stock pickers in Wall Street are already being steadily replaced by robots, oftentimes with components of predictive analytics, machine learning, and natural language processing. Indeed, there’s a growing consensus that intelligent automation (i.e., automation with some artificial intelligence) may be the next game changer in financial services and the presents a viable foot-in-the door for many emerging fintech companies.

Robots Are Coming for These Wall Street Jobs

Nevertheless, amidst the success of a few companies globally, a whole lot more of RPA programs are stillborn.  There has been a lot of hype from technology solutions providers that led to over promises and under delivery. Forrester’s Craig Le Clair notes that the early enthusiasm for RPA has led to ” a tapping of the brakes due to infrastructure, business and operations concerns.” Nonetheless, there have been valuable lessons that first movers are learning from quickly.

The good news is that second movers – like Philippine companies – can also benefit by avoiding the landmines that have recently come to light.

Some limitations of RPA

RPA represents significant, if not revolutionary, process innovation but we need to be aware of its limitations at its core, i.e., without the turbo power of AI. It is easy to be beguiled by the power of AI but when we start off on the journey, it is almost always on projects that require only straightforward RPA minus the bells and whistles.

So what do we need to be aware of on day one?

Robots do not understand data

Robots do not understand the underlying data of a transaction the way that human processors do.   It is indeed useful that in many instances, they do not have to – they only need to understand how to execute the process. (In processing an invoice, a robot will not understand that we have bought party favors for the office Halloween get together – which will bring a smile to the human processor. Or that we bought an automated sorting machine that will replace Manong Jose in the Warehousing Department – which will make the human processor skip a heartbeat. The robot will merely systematically sort each invoice according to its amount and product/service category and route it to the authorized approver.)

This raises a key question that needs to be asked before we apply RPA to a process: Does this process require an understanding of data on top of an understanding of process? If the answer is yes, tread carefully.

The typical way that robots manage to navigate a data-rich or information-rich process context is by substituting the need to understand the data with an (often complex) set of decision rules that will guide its processing sequence. The capability required thus is the ability to build those complex rules and to maintain them over time. This can be a big challenge in a dynamic environment and can have significant implications on the size of the RPA support teams required.

 Robots are only as good as the underlying process

The innovation that RPA brings into process automation is the ability to reach into any given user interface – effectively allowing software to drive software within procedural or rules-based processes. This means, though, that the robot is only as good as the underlying process. It almost always introduces massive efficiency but does not enhance the process in any other way.

Some companies derive a false sense of security, believing that robots do not commit errors. This is true only in the narrow sense that a robot will execute a process perfectly as designed – even if the design is flawed. If points of failure exist in the process today, the points of failure will remain. The likelihood that errors creeping into a process will remain unchecked increases exponentially unless the point of failure can be mitigated.

There is often an inordinate rush to implement RPAs to resolve growing bottlenecks in operations and to relieve delivery teams from their daily stress points. The haste will unfortunately lead to much waste unless an end-to-end process review review precedes the introduction of RPA. This should be strictly adhered to as part of RPA governance.

Robots are not a panacea

While different RPA software offer a variety of functionalities on top of the core robotics capability, all are designed to take on manual, routine, repetitive and high-volume tasks. This creates a tempting proposition of trying to apply RPA to all tedious, manual work. An old adage says that if your only tool is a hammer, you tend to view all your problems like a nail.

The end-to-end process review should provide a better view of the automation that fits the requirements and is another reason why this step should precede a decision to employ RPA. Some of the likely  misapplications of the technology include:

  • Downstream manual processing results from upstream data capture errors: Is it better to use digitization technology upstream instead of RPA downstream?
  • Non-integrated applications in the process: Is there an ESB  that can perform the export, transport and load (ETL) function? Alternatively, do we use an API to connect the systems instead of creating an RPA overlay?
  • Downstream data consolidation and reporting from multiple systems: Do we use desktop automation tools such as Open Span instead of an RPA tool?

Organizing for RPA

There has been much speculation lately that BPO jobs are at risk. The consensus within the IBPAP is that the transition from a human workforce to robots is inevitable for much of the lower value work that we handle, although there is little clarity on the possible timelines. The best time to get started, of course, is now. Mary Beth Jameson of RSM Consulting (RT & Co. in the Philippines) provides some guidance for mid-sized companies seeking to get started with RPA on the right foot.

Five guidelines to get started by RSM Consulting

In addition to these guidelines, let me add a few more:

  • Getting the most bang for the buck

A process with fully digitized inputs will enable seamless automation and optimize the reduction of manual work. Conversely, if not all the process inputs are digitized beforehand, the upside potential for workforce reduction is limited.

In turn, full digitization requires that the minimum upstream controls should be in place. Otherwise, it represents an enticing invitation to fraudsters to test their mettle.

  • Robots on the loose is dangerous

Forrester Research observes that RPA Management and Governance is typically an afterthought even though it should be a primary concern for the enterprise embarking on automation. The company rightly points out that governance should be anticipating the time when human process knowledge has all but disappeared as this knowledge is programmed into a robot.

  • Managers shouldn’t play the blame game

Managers should avoid the temptation of forcibly squeezing out the targeted FTE saves for any particular automation initiative – in the process making compromised control points more likely. Be mindful not to take the process owners and the transformation team to task in the instances where the original efficiency targets need to give way to more pragmatic and realistic targets. When we view automation as a program, the over and under-achievement of targets will tend to wash out over time.

One of the biggest mistakes you can make is to prescribe RPA as a panacea for an organization’s problems. The solutions that an organization adopts depends as much on the nature of the problem as the existing strengths of the organization.

Is RPA right for you?

Robotic Process Automation 2708x283

I’d be happy to hear your thoughts.

Elegant Simplicity with your System at Work

This is the concluding part of a talk that I gave at the 18th ASPLI Summit at Sugarland Hotel in Bacolod City last September 21, 2017. The topic of the talk is How to be a Champion Leader: Business Success through Best Execution.

Why do process improvements projects fail?

Many process improvement initiatives not so much fail as fail to keep up. That’s because organizations do not stay still and keep moving: new laws and regulations are put in place, our customer’s tastes and needs evolve, and our pesky competitors keep on doing new things. The pace of change is accelerating. Hence, the upsurge in interest in agile process improvement. (On a side note, there is an important distinction between the completion of a project or a sprint and the realization of productivity gains which I make in a previous blog.)

More importantly, the cornerstones of efficiency programs in the past – which are clarity, measurement and accountability – do not yield significant productivity gains the way that they have done in the last few decades. This is because most businesses are not linear value chains anymore.

In today’s networked world, the number of essential organizational connections has multiplied. The need for our teams (as well as external partners) to work together better has never been more important. Thus, some degree of complexity is inevitable. However, the added complexity can often run counter to the need for greater adaptability.

As a further step, we need to systematically filter out the non-essential complicatedness from the essential organizational complexity. Tackling our execution problems requires recognizing the much wider System at Work beyond the narrower set of end-to-end processes.

The car as an analogy for a system at work

In much the same that a car has an engine, a transmission system, an electrical system, a dashboard and so on and so forth, an organization has structural elements or dimensions on top of the set of end-to-end processes.


If the analogy works, can a car expert be a good manager then?

Any envisioned change to a process will have ripple effects on the other organizational dimensions. The Boston Consulting Group has tried to describe the System at Work in terms of eight dimensions. I have a slightly different view of the eight dimensions which I describe in the next chart (viz.: Stewardship; Channels, networks and partnerships; Organization structure; End-to-end processes; Systems, tools and technology; performance management; Roles and interactions, and; Talent management).

The Boston Consulting Group describes the System at Work dimensions in this article Mastering Complexity Through Simplification

Each of the organizational dimensions will have hard aspects or discrete structural elements as well as the soft aspects, addressing capability and behaviors. (Following the analogy of the car, the soft aspects relate to working on having good drivers, navigators and mechanics.)

A Champion Leader is one that can seamlessly bring all the dimensions together and drive and align behaviors of the individuals and teams involved. A Champion Leader understands the power of elegant simplicity in organizational design.

Eliminating complicatedness

Striving for simplicity in the System at Work is a two-step activity:

  1. We begin by understanding the symptoms and root causes of complicatedness (Side note: Many process management experts caution that the true first step in “outside-in” design is having a conversation with the customer. For our purposes, we presume that the customer is well understood and that we are now at the point of organizational streamlining.); then
  2. Finding solutions that address all relevant dimensions – not just process alone – and addressing both the hard and soft aspects of those dimensions.


Finding solutions (the second step) will naturally start with process review in order to anchor the effort on the organization’s value creation activities. Our lean-six sigma teams know how to design the structural elements very well: strive for the least number of steps, the least number of hand-offs across teams, and the least effort by customers to get their product or service, etc..

Process improvement

Process improvements need to be continuous in adaptive organizations and as such potentially exhausting for our people unless the organization’s behaviors and culture allow for such dynamism and adaptation, essentially equipping our people with the ability to make things happen. This means that the organizational DNA should incorporate the following behaviors and capabilities, among others:

  1. Quickness to address the obvious things;
  2. Never waiting for someone else to give permission to fix the problem;
  3. Belief that there is a better way; and
  4. Recognizing when the changes you’ve introduced do not work (This is important if, like Elon Musk, you intend to fail early and often.)

Organizations sometimes attempt to shape the behavioral aspects of process improvement with re-organization (coming up with faddish organizational units such as squads, crews, troops or tribes) as a way to detach from the old way of doing things. Introducing process change that will end up adding more boxes to the organization chart has a way of adding complicatedness whenever the change entails more matrices, more KPIs, and more reports.

It is not uncommon for companies to fail to perform the commensurate review of the other organizational dimensions. When this happens, there is a risk that the process simplification may result in System at Work sub-optimization. Let’s touch briefly on two of the other dimensions to better appreciate their the connectivity with process:

  1. Roles

We need to assess whether the process improvement allows a manager or supervisor to delegate down without commensurately increasing the burden of reporting (on the part of the subordinate) and supervision (on the part of the manager) and adding to the number of rules in place.


The more the manager can delegate, the more responsive the process becomes and the less likely will more process changes be required in the foreseeable future.

The optimal level of delegation increases the total quantity of power and allows organizations to be more adaptive to constantly changing competitive circumstances. Hence, the buzz word empowerment. Empowerment energizes our teams.

  1. Organization structure

Earlier I mentioned that process change that adds boxes to the organization chart is far from ideal. Beyond that, we want to encourage cooperation and team work across functional teams involved in any given process, say between the Accounts Payable Team and the Finance Team, between Product Planning and Sales, between the Logistics Team and the Stores. There are analogies to the Insurance business too, say, between Underwriting and Sales and Marketing or between Claims and the Legal Department.

We need to examine whether the lateral relations between teams encourage give and take. If not, do we:

  1. Change the reporting lines of the teams involved?
  2. Do we create consistent if not shared performance metrics for the team heads involved?
  3. Over and above the metrics, is there a steering committee that meets periodically that evaluates the quality of cooperation across teams?
  4. Do we need to put a job rotation program between the two teams?

This does not mean making people get along by merely going along. Encouraging group think is the exact opposite of what we want.

There is a soft side we need to address which is equipping managers and teams with the emotional stamina to accommodate a great diversity in views in order to arrive at an effective and pragmatic consensus. Emphatic and sometimes brutal critiques may be necessary but should not affect motivation and trust within the organization.

As a final word to guide our System at Work improvements, let me paraphrase a quote from the artist Keith Yamashita: Champion Leaders edit for importance, meaning and simplicity.

Who is a Champion Leader?

To sum up, let us ask that question again: Who is a champion leader?

He is the leader that can cultivate a champion system at work, one that allows the best practices to be replicated in all the relevant corners of the organization:

  1. He encourages his organization to surrender to the best ideas and find a home for these ideas within their teams. Champion leaders move the organization to band together and implement that new and better way.

Talk the walk

  1. We say that a leader with integrity walks to talk, right? On top of that a champion leader talks the walk.

Karl Weick’s words, “Walking is the means to find things worth talking about” is another way of saying that experimentation (and sometimes failing) is the only way to discover and innovate. This means that the Champion Leader does not penalize failure because he understands that fine line between failure and mistakes. Rather he encourages his people to talk about their experience in order to learn from it.

Which is not to say that he is not tough when he needs to be: He is quick to penalize when people refuse to help or fail to ask for help when they need it.

  1. Traditional continuous improvement techniques do not address the issues of resiliency and sustainability – champion leaders provide the missing elements which are a sense of purpose, fulfillment and positive relationships.

Champion leaders recognize that the antidote to complexity is the simplicity achieved through vastly better coordination – and in the process creating a whole organization that is worth more than the sum of its parts.

As a final word: is this message meant only for CEOs like Elon Musk? I don’t believe so. In your own teams, there will always be unnecessary complexity that needs to be eliminated, a need for connection and collaboration with other parts of the organization, a need to empower your team members.

On the note, happy journeys on the road to simplification!

What Can We Learn from Elon Musk and Tesla?

This is the first of two parts of a talk that I gave at the 18th ASPLI Summit at Sugarland Hotel in Bacolod City last September 21, 2017. The topic of the talk is How to be a Champion Leader: Business Success through Best Execution.

Whenever I tackle issues on strategy formulation and business process performance management with clients in the course of my consulting engagements, the importance of leadership inevitably arises. Understandably, when the term “Champion Leader” is mentioned (to mean a leader that can engage employees and excite customers) the conversation would always gravitate towards Steve Jobs and how he has led Apple. Today, I’d like to focus on another leader who may not (yet) be as well-known as Steve Jobs but whose work I believe will have a profound impact on humanity in the decades to come.

To those that have not heard about Elon Musk, allow me to give a brief introduction.

15 Things You Didn’t Know About Elon Musk by Alux.Com

Musk was a co-founder of a company that later became PayPal and lately famously launched SpaceX, a commercial outer space transport company that builds rocket ships that can land vertically – just like in the sci-fi movies!

Musk is also the Chairman of SolarCity and the CEO and Chief Technology Architect of Tesla, the most prominent maker of one hundred per cent electric cars.

The Champion Leader fails early and often

Just a few years back, Elon Musk’s record with his companies would arguably be the exact opposite of what we expect from a good, successful leader. Tesla alone had seen multiple near-fatal setbacks:

  1. Tesla had been bankrupt for a couple of times and needed to recapitalize each time.
  2. Elon drove his people very hard and his startup factory had a dismal safety record.
  3. Tesla employees complained about long hours, stress, pain and injury.
  4. A Tesla driver was killed in a crash during a public beta of the car’s autopilot system.
  5. In a candid moment of realization, Musk remarked that in light of the competition with giants, an “auto company must be the dumbest thing you can possibly start”.

The many failures of Elon Musk in one infographic

Yet today Tesla is considered an industry leader with a market capitalization that is higher than either General Motors or Ford. The company has since started a 3rd shift (to the relief of its workforce) and today its safety record is 32% better than the industry average. Musk continues to drive his employees hard and makes no excuses about it but at the same time has publicly committed to find a more humanistic approach.

We can describe Elon as a Champion Leader not only because of the grand ideas he conceives, the loftiest goals he sets from those ideas, the resoluteness and intensity in his pursuit of those goals but also in tapping talent to accomplish those goals. The quote from Elon on this slide conveys his enduring belief in the ability of people and explains why he drives his people hard.


How do you choose?

Perhaps Elon Musk’s most striking attribute of Champion Leadership is that even though he failed early and failed often, he used the failures to identify and address his own blind spots and to make meaningful improvements.

Elegant simplicity

Let me spend a moment on Tesla X, one of the car models currently under production by Tesla.

Tesla X

Simple, isn’t it?

Tesla vehicles are often described as the future of automobile. This is due to the abiding conviction to replace the gasoline powered car because it is obsolete as it is bad for the environment and society. In the past, the skeptics have dismissed the electric car as being underpowered as a consequence of the emphasis on green technology. Not anymore. The Tesla X can go from 0 to 60 miles per hour in 2.9 seconds.

Tesla Model S P100D Ludicrous vs Lamborghini Huracan 1/4 Mile Drag Racing Battle YouTube video (check out which car wins at 1:36)

Just like with Steve Jobs and Apple, Tesla is committed to elegant simplicity in its design. Why is a Tesla car a model of elegant simplicity? It has 10% of the moving parts of the internal combustion engine and in that sense, far simpler:

  1. Its simplicity enables it to be more efficient, durable and reliable. As production techniques improve, it is foreseeable to have cars that will last 40 years.
  2. More of a car’s systems and resources can be devoted to safety leading to a 90% reduction in insurance costs.

Analogy between cars and companies

An organization can be likened to a car. An organization also has many “moving parts” in order for it to travel from its present position to its envisioned future.

And just like an internal combustion car, many of our organizations have become very complicated:

  1. This may be the result of geographical expansion – the addition of stores and offices in order to better serve both our existing and potential customers;
  2. This may arise from adding more product lines; or
  3. This may be because of changes we make in the way we run our business – basically tinkering with the engine while it is running:
    1. In response to new laws and regulations;
    2. The need to improve operations for better control or more efficient execution;
    3. A desire to match the efforts of our competitors; or otherwise;
    4. React to market shifts that portend potential disruption.

It’s (getting) complicated ….

We all understand from our experiences how complicatedness hinders office productivity. Complicatedness often leads to a work environment that leaves employees disengaged and unmotivated:

  1. Workers need to spend time learning to navigate through a twisty work system and carry on through that system each and every day;
  2. Decisions are slow and there are endless meetings to attend; and
  3. Managers tend to micromanage to get things moving through the complicated state of affairs – but this only makes matters worse.

Is this familiar?

When Business Excellence Teams Fail

We have process improvement teams composed of six sigma, lean and TQM experts, all properly certified and minted. They can make our work simpler and more efficient:

  1. … but not all the time
  2. … and sometimes not for very long.

By one estimate, as many as 70% of process improvement projects fail. As a result, organizations tend to focus on the manner by which we execute those process improvement projects. The knee-jerk reaction of many impatient business executives is to blame the process improvement teams and prescribe the adoption of agile methods. Agile is seen as a panacea: just jump right in and quickly create “solutions”. But does this really address the root cause of why process improvement projects fail?


In the second part of this series, we will tackle how to really improve the chances of succeeding with your process improvement projects.

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Journey towards P2P performance management (minus the bumps)

This is the final installment of my posts on the Functional Fast Track session that I conducted at the 21st Annual North American Shared Services and Outsourcing Week entitled Digitizing the P2P Process to Create Process Intelligence and Better Customer Experience

March 8, 2017, Lowes Royal Pacific, Orlando, Florida

Defining Your P2P Process for Automation

We will now look into the design of KPIs and the overarching process performance measurement system (PPMS).

P2P process tracking

An 8-step project implementation methodology

While I present a typical eight-step project methodology here, there are different but equally suitable ways of setting up. I’m sure that many of us have been involved in process transformation projects before and will be familiar with these alternatives.

Also while I have some detailed diagrams here, I will not expound too much on the methodology. Instead, I will comment on those steps that are often overlooked but are important digitization goal posts.

Process mapping

The most logical starting point is process mapping. The process map is a consensus between the process owner and his stakeholders about the current state of the P2P process. Using this common understanding, the manual process may then be mirrored in the proposed automated workflow. Remember also that processes are rarely static and are almost never organized neatly. Process mapping is a preparatory step that ensures that we do not miss shifting process conditions as well as important but less obvious process tasks. A good illustration might be how an organization manages internally when orders are split apart by a supplier due to delivery bottlenecks. In this example, the original process may not have been designed for such split deliveries but the contingency happens often enough for internal practices to have evolved just to accommodate these.

P2P process mapping

Step 1: Process mapping

Process mapping can uncover instances of execution failure that hold back overall process performance. For instance, different processors may not handle invoices in the prescribed and standard manner increasing the likelihood of duplicate payments happening. Once these potentially troublesome process failures are known, we can then institute regular monitoring and define the events to trigger remedial action.

As we mirror the original manual process in the automated workflow, we should safeguard that no control point is overlooked. This is not so straightforward when process steps are compressed, re-arranged or (in the course of enabling system options for various users) the original simple linear process now becomes layered. A case in point is where the technology allows different invoicing and payment channels to be accessible to vendors, which leads to a risk of duplicate payments that did not exist in the original manual process.

Agree Priorities

The next step involves objective-setting and prioritization. The diagram below gives a few examples of possible priorities.

P2P prioritization

Step 2: Objective-setting and prioritization


Setting the baseline

The diagram below lists down some questions to help set the performance tracking baseline. As part of our stock-taking, we need to diagnose our current performance measurement.

Baseline PPMS

Step 3: Establishing the baseline performance measurements

We need to be aware of the different types of performance measurement issues that may exist currently under one of five categories:

  1. We can have issues that relate to data collection and calculation;
  2. A second issue type involves prescribing the right measuring stick, meaning to say proper definition.For instance, we can be measuring % spend with key suppliers/ total spend – in this measure, are key suppliers the ones with long-term supply contracts, are they the suppliers of a predetermined set strategic commodities and services, or are they those with at least US$ 50 thousand spend over the last six months?

    Performance Fails

    Common types of issues in performance measurement

  3. The third item relates to unclear targets or standards.
  4. The fourth issue type is the lack of corrective action when the standards are not met.
  5. The last category pertains to creeping accumulation in the number of scorecard metrics with the passage of time. Compounding this, it is not uncommon to fail to drop the measures that have become irrelevant over time. Lastly as processes and roles evolve, a metric can somehow end up being reported to the wrong person. Given these, it is not hard to lose sight of what the whole body of measurements is supposed to signify.

In searching for the best internal benchmarks, we need to be mindful of the different dimensions to observe for performance variations. The diagram below presents an example where commodity clusters, locations and business and functional units are relevant dimensions.


Sample definition of performance dimensions for a P2P process where activities are performed by a procurement team, a finance team and an outsourced service provider


Develop performance indicators

Develop PIs

Step 4: Develop performance indicators

Knowing our performance measurement issues and which performance indicators need to be modified, improved or changed, we can now look at identifying alternative metrics that would better capture P2P process performance status.

KPI types

The 3 categories of performance indicators

Each distinct measurement will typically fall under one of three categories of efficiency effectiveness and compliance measures. Taken together the mix of should paint a picture not only of how well procurement execution is working, but also how well the component businesses are being satisfied and how well the sourcing strategy is being achieved.

KPI selection

After the list of possible performance indicators are identified, the attributes of those indicators need to be defined (e.g., purpose of metric, method of calculation, frequency of measurement, etc.). Next, we need to agree the KPI selection criteria, and trim down the performance indicators into the preferred list of organizational KPIs.

Define data collection and processing

The next step is essentially translating the process design and process measurement plan into a set of business requirements: In this phase we define things like:

  • the channels or portals by which transaction data can be received; and
  • the volume, velocity, timing and variety of data expected to pass through each channel.

As we consider switching on application functionalities, we may need to add detail to the business requirements. This can be simple things like defining units of measurement – like choosing between pounds or kilograms, for instance – as part of setting data input quality standards for a user channel.

Design Reporting and Visualization

Design reporting

Step 6: Designing the reports and visualization tools

After we have spelled out the application routines, we next design our reports. Our toolkit to create visibility will include dashboards, mashups, alerting, and predictions. For today, we will just lightly touch on the KPI dashboard.

The purpose of a dashboard is to provide all the relevant information quickly and concisely presented in a clear and intuitive view.


This is how a dashboard might be designed to look

If you are using an ERP system with a built in dashboard like Oracle’s WorkCenter, make the most of it. Built in dashboards offer attractive graphics designed to give a snapshot of the operations – but this functionality is often either switched off or scaled back. Do not reinvent the wheel by straightaway developing your own dashboard.

This completes a very quick walkthrough of the performance tracking design process. As a final note on this, allow me to highlight that performance tracking design is often drawn out and complex and, as such, always requires attention to structure and methodology.

Some things to remember

I will end with some practical tips that can smooth the progress of your digitization journey.


Remember these tips!

People need training

The P2P staff and perhaps even the key suppliers will need training. Without this, the program is doomed to under-deliver: Processors will fail to take advantage of the full functionalities of the tool. Formal training is best augmented by the formation of communities of practice across the implementation locations in order that forum participants can share best practices as these practices begin to emerge.

Another reason the digitization project may under-deliver is when staff are unable to respond to the alerts and absorb the information surge in the new reports. With greater procurement and accounts payable efficiency, the mix of skills required for P2P roles changes with more time being spent on dispute resolution and other analytical tasks. To the extent that the automation results in the elimination of transactional jobs, the residual organization will need training to improve the ability to tackle diverse tasks in a wider job scope.

Process intelligence allows us to discern evolving customer demand patterns, change course accordingly and reduce unwanted inventory. Our P2P staff and our key suppliers will need to be proficient within a supply chain model that leans more towards a “pull” rather than a “push” strategy. Preparatory learning is again necessary.

New process, new controls

Segregation of duties is a focus area when the automation initiative results in a much leaner organization. One issue that’s easy to overlook is how the intended segregation is bypassed through password sharing when staff go on leave. On the plus side, process supervision improves tremendously with greater visibility, allowing such capabilities as capacity planning and productivity benchmarking as part of regular operations management.

Productivity j-curve

Time and again, we have seen the post-implementation disappointment, if not panic, when realized productivity gains from an automation project undershoot committed efficiency targets. A common enough response is to attempt to wring out the original FTE saves from the project by whatever means. By force fitting the project results to the original targets, however, we may be compromising process controls.

My view is that the agile or scrum framework for these projects only guarantees the early completion of the automation project but does not necessarily translate to the early realization of productivity targets. Productivity follows a j-curve. It is not reasonable to expect staff to immediately move up the learning curve in their transformed and enriched roles. Even managers need time to get used to drawing upon the enhanced process visibility to better orchestrate the activities of their teams.

One final note on undershooting project targets: One common experience we have in the smaller Asian locations of multinational companies is that the global or regional system implementation fails to incorporate requirements peculiar to the local businesses, say, the capture of GST or VAT information required by the tax authorities. Fortunately, the shared services centers in India and the Philippines offer the capability to perform the residual manual work, allowing the smaller locations to achieve some of the benefits of accessing digitized information.


Let me conclude my presentation with a few takeaways.

A well implemented digitization project always yields solid efficiency. But more important than this, digitization enables many reporting and analytics tools. This, in turn, leads to empowerment of P2P process owners with their ability for timely interpretation of information and prompt fine-tuning of operations.

Process Intelligence derives directly from how well you select and define your KPIs: You can analyze, compare, trend, correlate information, and draw conclusions based on what you intended to observe and highlight in the first place. You know that your process intelligence is effective when performance indicators track in real-time how well the P2P process contributes to the organization’s objectives.

Armed with process intelligence, it is now up to our P2P process owners to not just manage capacity, exercise control, and achieve process stability and sustainability but also to progress towards an agile, flexible and customer demand driven procurement model.


Credits and thanks to Ms. Iris Celeste Brem whose Master Thesis entitled KEEPING TRACK OF THE PERFORMANCE OF THE PURCHASE-TO-PAY PROCESS OF PHILIPS LIGHTING (December 2015) described in great detail the 8-step project methodology used for this presentation and a couple of fantastic insights shared here as well.