A couple of weeks ago I participated in a breakfast roundtable in Palo Alto on Social Media and Web 2.0 hosted by Tony Perkins, founder and former editor-in-chief of Red Herring, who now leads AlwaysOn, an interactive online network.
We were in the middle of a very stimulating discussion on social networking and how ideas and technologies coming from the consumer Internet space were beginning to have a big impact in the business world. We got around to talking about business processes and I mentioned that the culture of standards that surrounds the Internet and has enabled the increased integration of the IT infrastructure keeps going up the stack. I observed that with the emergence of Service-Oriented Architectures, Web Services and similar capabilities we can now tackle the standardization and integration of business processes and truly contemplate building globally integrated businesses, industries and economies.
Jeff Nolan, a venture capitalist with SAP in Palo Alto and a participant in the roundtable, mentioned that a typical modern enterprise is comprised of about 1500 business processes and that fewer than a couple of dozen actually impact revenue. These, he indicated, are the ones worth focusing on and differentiating while the rest may very well be standardized. We were then stopped short in our tracks by a comment from Ross Mayfield, who said that the notion of business process was an outdated concept. Ross is CEO and co-founder of Socialtext, a company that provides enterprise social software aimed at improving group productivity. The conversation then veered in a different direction, but after the meeting was over I talked briefly with Ross to find out what he meant by his remark that the idea of business processes was outdated, and we agreed to follow up the discussion.
Ross just posted a very provocative story in his blog titled “The End of Process” in which he elaborates on his remark at the roundtable. His blog posting has also attracted some very interesting comments. I believe I now understand what Ross means. A process can be viewed as the documented description of how a business works, whether written down as the guidelines that the employees of the business are supposed to follow or embedded in the software that implements the process. The problem, Ross says, is that the processes can become calcified and accepted as the rule even when they do not work and make no sense. Workers are all too often given firm guidelines and trained to work only within them, which will trap the organization in a spiral of declining innovation.
Ross writes that John Seely Brown and John Hagel have pointed out that, while 95% of IT investment goes to support business processes, most employees’ time is spent handling the exception to the processes, and that competitive advantage comes from how we innovate in handling those exceptions. He goes on to say that employees are turning in a particularly effective way to social networks to help them become more informed and help them better handle such exceptions. He adds that some businesses are abandoning process altogether and working in flatter, decentralized, more flexible organizations and leveraging the advances taking place around social networking.
I agree with most of what Ross wrote, except for the point that we are seeing the end of processes and leading-edge businesses can dispense with them altogether. In fact, these discussions clarified in my mind the link between two different areas I have been thinking and writing about: business process innovation and social networks. In a recent blog entry on business process innovation, I wrote that "we need to evolve from today's labor-intensive and one-of-a-kind approach to building business solutions, and embrace methodologies based on science and engineering, using sophisticated tools and disciplined processes" and "we need to standardize those processes where differentiation brings little or no incremental value, so as to avoid the huge inefficiencies involved in re-inventing the same process over and over again."
Just as a standards-based Internet has become a platform for innovation in all kinds of areas, a much more standard, integrated, well-engineered business process platform will enable businesses to apply their energies to innovating around those processes and business models that bring true differentiation and value to the business. Social networks are driving collaboration and productivity in the business world, helping employees work better together to handle exceptions to the processes, solve unanticipated problems, and overall, increase innovation in the business.
I actually think Ross's and my positions are not that far from each other because toward the end of his posting he says: "A process is like a standard. It provides a common definition for others to build upon. This is generally a good thing." And later adds: "At best, a process should serve as a reference model. Something that others can reference when completing a task. Something that can be leveraged for innovation, a boundary condition for experimentation at the margin."
The breakfast roundtable and subsequent blog discussions are touching on some very important and profound ideas. An innovative business looks for the proper balance between process – covering those aspects of the business that can be designed, standardized, and increasingly automated – and people – who bring their creativity and adaptability to handle everything else. In a world that keeps getting more and more complicated and is changing faster and faster you need both – but even more, you need the innovation which, when all is said and done, is the truly human element.