Process Analysis for Small Businesses (Part 2)
This is the second part of a series on Business Process Analysis for Small Businesses. In the first article we discussed the question, “what problem will this solve for your business?” and the three phased approach that you should take to answer this question. While you can go ahead and implement all kinds of technology before you answer this question, we advise not too. The reason being, is that technology is a tool and until you know the problem you’re trying to solve you won’t really know how technology plays a role in solving the problems you’re business is facing. Instead, we advise that you work on developing a more thorough and complete understanding of your business by analyzing what you do, how you do it and then form a strategy for how to improve it. It is at this final stage that you can truly take advantage of what technology has to offer your business.
Today we are going to take a look at discovering what exactly it is that you do as a business. Now, this may seem a little ridiculous. Surely you know what you do as a business, otherwise how would you even be doing business? Actually, this is a valid criticism, you wouldn’t be able to do business if you don’t have a grasp on what it is you do. The point of this first phase though is to formally document and summarize what you do and the larger your business the more important this becomes. Let’s say you are a sole proprietor or a single member LLC that offers freelancing services to do photography at weddings. You are going to know all the tasks that you do to operate your business. But imagine if your business grows and now you have 10 employees. While this is still a “small business”, suddenly there are many people doing many things to make things work. Do you really know everything that all 10 people do as a part of their contribution toward the success of your business? The chances get more unlikely as your business grows. And so the time to do this work is when your business is small enough that you don’t have to try and extract this information from more than a few people.
First I want to say that it’s not enough to just list what you do. That is a good start but you would be missing out on a lot of value if you just threw it all into a spreadsheet. So I want to discuss what kind of benefits you can gain if you handle the results of this phase in a certain way. Second, there are multiple ways of going about figuring out what you do in your business, commonly called the discovery phase. This does not mean that all methodologies for this are equal. We’ll discuss lessons we’ve learned as we’ve perfected this phase of business process analysis.
As I’ve already said, there are multiple ways of going about this and they can be broken down into two approaches, Top Down and Bottom Up. I have done both and can say with certainty, for a small business, Top Down is the clear winner. Before I get into explaining what these two approaches look like for the Discovery phase of Business Process Analysis for a small business let me define them. “A top down approach starts with the big picture. It breaks down from there into small segments. A bottom-up approach is the piecing together of systems (or in our case tasks) to give ruse to more complex systems (in our case (activities & processes).” , Wikipedia
In terms of discover, bottom up analysis consists of performing a series of workshops to speak to every member of staff within an organization and find out in detail all the tasks that they perform in the job. Then you spend a lot of time trying to organize all of this information into a list of processes that are grouped into functional areas of the business that I call business components. These are then further organized by the teams that should be responsible for managing these business components. As you can imagine, this is a particularly time consuming processes and extremely tedious. One of the benefits of this approach is that you have a deeper understanding of the business from an earlier point of time in the overall three phase processes but this can be a double edge sword because while it’s helpful to have this understanding, the forest can get lost for the trees and it can make it even harder to organize your data into a well structured representation of the organization.
On the other hand, top down analysis consists of assessing the roles and responsibilities of each member of staff in the organization and organizing these into the Business Components that make up the overall functional areas of the organization. As you can imagine, this is a much less intensive approach and leads to a number of other side benefits that you don’t necessarily get with the bottom-up approach namely; a renewed agreement on responsibilities with your staff, and a clear confirmation on the actual reporting structure of your organization.
Maximizing Discovery Results
As a result of doing this discovery work you end up with an understanding of what your organization does and how it is organized in relation to the staff and teams that make up your organization’s structure. You could stop here and you would have accomplished a lot but I have found that by organizing this information into a few work products you can gain a lot of value from just performing this first phase of work.
The first work product I would recommend creating is a single page diagram of your organizations business components organized by teams. An example of this diagram is shown below with sensitive details blurred out. There are a number of value adds you can get from just producing this Business on a page diagram. First, it makes any gaps that might exist in your organizations operational capabilities or organizational structure very apparent. Second, you can use it to answer any number of questions you might have about your organization. For example, you could use it to assess how pervasive a particular risk might be throughout your organization such as single points of failure. By asking whether or not there is more than one person who knows how to do a majority of tasks represented by a particular business component and color coding each business component in a RAG status (Red, Amber, Green) you then get a single page picture regarding how at risk your organization is at being hindered in your operations by not mitigating single points of failure across your organization.
The second work product I would suggest producing is a spreadsheet that contains definitions for each business component. This goes a very long way to aid in communicating the contents of the diagram. Otherwise, you leave what each business component actually is up to the imagination of whomever is looking at and trying to understand your diagram.
This first step in the Business Analysis approach for small businesses answers the question, “what do we do?”. You can gain a lot of knowledge about your business by just performing this phase of analysis and it can help you more successfully communicate various things about your business to your stakeholders. Even things such as gaps in your organization that might need to be filled. If you were to stop with this you would gain a lot but I would recommend not stopping here. In the next article in this series we will discuss phase two which is all about answering the question, “How do we do it?”. Stay tuned for a future blog post.