“One man’s trash is another man’s treasure” is a popular apothegm attributed to a chef and restauranteur, but its wisdom and truth are often highly applicable in business contexts.
Valuing an improvement initiative, or the benefits of one particular way of working versus another, often depends upon one’s role in the organization and his/her business objectives.
Frequently — particularly in today’s matrixed organizations — a natural tension exists between functional teams executing key business processes across the enterprise, and business units managing customer interfaces and delivering significant slices of the firm’s profit & loss statement.
Whereas changing a particular way of working to further standardization may be reasonably expected to improve performance across the enterprise, the impact on specific teams in the business can vary significantly. Implementing an improvement opportunity may be considered well worth the cost in some parts of the organization (treasure) and viewed as a distraction in other business units (trash).
Finding and maintaining the appropriate level of standardization of processes and systems across the enterprise can be an ongoing challenge.
The benefits of standardization are numerous and often include:
- Quality: standardization establishes commonality in processes, procedures and systems driving consistency in how tasks are performed. This consistency enables more predictable and reliable outputs enhancing the overall quality of products or services.
- Knowledge Sharing and Continuous Improvement: standardization provides a baseline for benchmarking and continuous improvement efforts. By comparing common performance measures across standardized processes, organizations can transfer knowledge, share best practices, and identify improvement opportunities.
- Scalability and Flexibility: standardized processes and systems facilitate scalability and adaptability. They provide a foundation that can be more easily replicated and deployed across additional business units or new markets. When new units are added or mergers occur, standardized practices allow for quicker integration and seamless operations.
- Risk Mitigation and Compliance: standardization helps organizations mitigate risks and ensure compliance with regulations and industry standards. By establishing uniform processes and controls, organizations can reduce the likelihood of errors, inconsistencies, and non-compliance. Standardized practices also enhance governance, control, and risk management capabilities.
- Efficient Resource Allocation: standardization enables better resource allocation across business units. It enables identification of areas of over- or under-utilization of resources, allowing organizations to redistribute them effectively. By eliminating redundant or unnecessary activities, organizations can optimize their resource allocation and improve overall efficiency.
- Simplified Training and Onboarding: standardized processes and systems simplify training and onboarding processes for new employees. With consistent practices in place, employees can quickly learn and adapt to the standardized way of operating, reducing the time and effort required for training. This allows for smoother transitions and faster integration of new team members.
While increased standardization has the potential to unlock incremental value, finding the appropriate balance requires considering some important potential caveats:
- Overlooking Specific Needs: differences in processes and/or systems across an organization may be rooted in important differences in requirements. Whereas efficiency and response time may be critically important in one business segment, rigorous development of bespoke products may be important in another. Different contexts, demographics, and user requirements may be overlooked or underserved when attempting to apply standardized solutions universally.
- Reduced Flexibility and Innovation: the increased rigidity that typically accompanies standardization may limit an organization’s ability to adapt to unique situations or accommodate unexpected and evolving requirements. Additionally, enforcing a one-size-fits-all approach may discourage experimentation and development of innovative new ideas.
Finding the optimal level of standardization across enterprises requires a thoughtful and strategic approach. Here are some steps to consider:
- Identify the Objectives: crisply define the objectives of standardization. Understand the specific goals to be achieved through standardization, such as improving efficiency, enhancing customer experience, or ensuring regulatory compliance, and communicate the impacts to stakeholders. This will ensure a clear focus and scope and guide the decision-making process.
- Assess Business Unit Variations: conduct a thorough assessment across the enterprise to understand variations in processes, systems, practices, and requirements. Identify the areas where variations create challenges or inefficiencies and those where customization may be necessary to address unique needs. Recognize that not all aspects of the organization may require the same level of standardization. Allow flexibility and customization in areas where local adaptation is critical, customer requirements vary, or specialized expertise is needed. Find a balance between standardized practices and the need for tailoring to unique business unit needs.
- Evaluate Benefits and Risks: evaluate — and where possible, quantify — the potential benefits and risks associated with standardization. Consider the impact on operational efficiency, cost savings, customer experience, employee morale, and the organization's ability to adapt to changing market conditions. Assess the risks associated with excessive rigidity and the potential loss of flexibility or local adaptability. Prioritize the areas or processes that would benefit the most from standardization. Identify those that have the highest impact on overall organizational performance, customer satisfaction, or risk mitigation. Focus on these priority areas to ensure efficient allocation of resources and minimize disruption to other aspects of the business.
- Involve Stakeholders: solicit input from impacted stakeholders and engage them in the decision-making process. Communicate impacts and expected benefits and understand their concerns regarding standardization. Incorporate their expertise to identify the appropriate level of standardization that balances consistency with the need for flexibility and local adaptation.
- Pilots and Continuous Evaluation: implement standardization initiatives in pilot projects or specific business units. Monitor and gather feedback from employees and customers to assess the effectiveness and impact of standardization efforts. Incorporate the feedback into the refinement of the standardization framework and adjust as necessary. Continuously monitor and evaluate the impact of standardization efforts. Collect feedback, track key performance indicators, and assess the effectiveness of the standardized practices. Make adjustments as needed to optimize outcomes and ensure that the chosen level of standardization aligns with the organization's evolving needs.
- Change Management and Training: implement change management strategies to support employees through the standardization process. Provide training and support to help them understand and adapt to standardized processes or systems. Address any concerns or skill gaps that may arise during the transition.
By following these steps, organizations can find the appropriate level of standardization and avoid the treasure versus trash dichotomy by balancing consistency, efficiency, and adaptability. Furthering a standardization strategy requires considering the unique requirements across the enterprise and striking a balance that maximizes the benefits while allowing the necessary flexibility to thrive in diverse environments.
At IpX, the Institute for Process Excellence, we provide unbiased, third-party guidance and fact-based analysis to your organization’s goals and objectives. We partner with you to provide process standardization, change and configuration management, best practices, and training and certification that meets your business needs. No matter the size, IpX can engage with your project at any stage with flexible fit-for-purpose service options. Contact us to get started.
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