Benchmarking can be considered as using the knowledge and the experience of others to improve the enterprise. A Benchmarking study should not be considered as a collection of metrics alone. It is really a mechanism to map where your enterprise stand vis-à-vis others and how can you aim to achieve the performance that other have achieved or exceed what is available as the best. Looking below the surface, one can see that Benchmarking is a search for ideas that are working in processes that are similar to the process to be improved. However, these processes may be embedded in a different system; hence the characteristics of that system should also be included in the benchmarking study. Further, since the objective is to search for successful ideas, it can potentially reduce to a quick-fix short-term innovation, that may improve a process – but may harm the overall system in the long term.
Crafitti (http://www.crafitti.com) has combined the analytical and logical dimensions of thinking that has served the businesses for so long with three relatively dormant thinking dimensions called – Value Thinking, Inventive Thinking and Systems Thinking. This new framework is called Analytical Logical Value Inventive and Systems Thinking (ALVIS).
Analytical Logical Value Inventive and Systems Thinking (ALVIS) – Crafitti’s Framework for Innovation
Value thinking focuses on maximizing value of a system which also can be considered as designing a system which is least wasteful of resources – as described in Toyota Production System, Value engineering and Lean Thinking. Systems Thinking expands the focus from immediate problem, system or scenario to a holistic view of the system and its positioning in the overall scheme of things. This helps us to think about the system in terms of its relationships, dependencies and complexities with respect to super-system and sub-system and with respect to past and future. Finally, Inventive Thinking and the associated methodologies help us to create or invent solutions or design alternative futures that usually will not be simple extrapolation of known knowledge in the industry. Inventive thinking brings best solutions from across industries using the Theory of Inventive Problem Solving (TRIZ). Thus Analytical Logical Value Inventive and Systems (ALVIS) thinking is a framework for innovation across the spectrum of innovation needs of an enterprise.
Process Benchmarking using ALVIS
We start with a hypothesis that no process is independent. All processes are part of a dynamic and usually an evolving system or system of systems. Hence isolating a process and benchmarking it independently may not give us an optimal view and hence will lead to lessons and solutions that not only can be inefficient but may actually harm the system in the long run. We have following overall steps in the Process Benchmarking process:
Step 1: Actors Departments Applications Processes Technology (ADAPT) analysis of the overall system using Dependency Structure Matrix (DSM). Relative quantification of dependencies of the process on various elements – Actors, Departments, Applications, Processes and Technology is obtained. This also gives us a view of Process/System Complexity using an analytical method of System Complexity Estimator (SCE).
Step 2: Definition and understanding of end-customer Value for each process, sub-process, sub-system or overall system is created. This feeds into an overall stakeholder’s analysis – as multiple stakeholders of the process may have a sub-optimal view of the value to the customer. Creating a common operating picture through consensus building is the main objective of this step. We use the Analytic Hierarchy Process (AHP) to understand stakeholder’s key value parameters.
Step 3: Value Stream Mapping (VSM) of the key process and sub-processes gives an overall view of how much is the efficiency of the process and information spaghetti (entropy or disorder). Process Efficiency (PE) is defined as ratio of value adding time in a process to the total turnaround time. A PE of 80% or above is considered excellent. In the knowledge work, for example, software bug-fixing value streams we have found PE to be around 30% -35%. Just imagine, if we can unlock the efficiency and make value streams even 60% efficient, the productivity of the system can double.
Step 4: To define and describe an ideal process which is least complex in terms of its dependencies on other system elements (ADAPT) and is viewed with the same lens by all stakeholders and which has highest process efficiency. This is the second level of ideality. The ultimate ideal process is the one which does only the value adding activities, doesn’t harm the system in anyway, consumes no resources and takes ZERO time. The ideal process is the ultimate benchmark for ALVIS.
Step 5: How others are doing it? Identify key competitors/enterprises who are doing it better/differently. This is done through open information available about other companies or published by the companies in public. A survey questionnaire is designed and executed in other companies and with their customers to gain key business intelligence about similar process and experience.
Step 6: Ideate on solving problems identified during ADAPT, Stakeholders analysis, VSM and ideality definition. Here we use TRIZ tools of key contradictions and inventive principles, laws of system evolution and Lean method of elimination of Non-value adding (NVA) steps in the process.
Step 7: A final report on the benchmarking study and ideas for improvement is submitted and a presentation made to the stakeholders with specific recommendations. Action plan of redesigning the process along with the changes in the associated system, system of systems and organization structure is also provided.