The need for individualized business process solutions.
Classic methods of business management are no longer sufficient, because:
- The pace of technological change is much faster now than before and technologies are no longer utilized in unchanging conditions;
- Products are no longer standardized and sold without taking the clients’ needs into account.
1. Product individualization
New rules of management must meet the challenges of rapid changes in both technologies and business environments, and, most of all, the clients’ individual expectations and growing demands. Companies are forced to raise the appeal of their offer not only by means of cutting costs and raising efficiency, but also by means of product individualization, better service and diversification, with the aim of reaching their new target: the individual client market.
Today’s newest technologies already enable the mass production of cheap, individualized products (mass customizing). Cars, computers, business suits, custom‒built CPUs, sound recordings, and even personalized medicinal drugs or biotechnological and genetic engineering specimens are built and created on the clients’ demand and according to their specifications. The following testimonial proves that even cheap convenience goods are starting to adapt the individual client market model: “Several years ago an advertisement for the company Custom Foot from Westport, Connecticut caught my attention and I paid a visit to their shoe salon, where I selected a custom color and design for my pair of shoes. My feet were then scanned and the order was placed electronically to a production line in Italy. After two weeks I received a package with custom‒tailored shoes which fit like gloves, which I wear to this day. The whole thing cost me as little as the price of mid‒range shoes in a normal store.”
Custom Foot continues to learn from their clients and thus wins their customers’ favor and their readiness to purchase more expensive shoes from them instead of standard shoes from their competitors. Product individualization is of central importance in new business model, which has transformed the “economies of scale” concept into a concept which would be perhaps best termed as “economies of diversification.”
2. Client relations individualization
At present not only products, but also clients should not be treated as “statistically average” and anonymous. As the above‒mentioned Custom Foot example has shown, it is essential for companies to deliver individualized products directly to clients, regardless of their location. Furthermore, each client requires an individual approach, which is realized through discounts and loyalty programs, as well as by means of storing information on the client’s past preferences and purchases.
These new expectations appeared recently as a result of the interaction between the clients’ needs on the one hand and technological changes combined with the globalization of companies on the other. A self‒perpetuating mechanism of sorts has been created, in which one technological solution to customer requirements has revealed or suggested the existence of newer, even more farther‒reaching possibilities, which in turn have led to newer customer requirements, etc.
Companies competing for the client are thus forced to make active use of new technologies, or rather, make use of knowledge on how to apply such new technologies, in order to fulfill their operational and strategic goals, as well as to create and maintain their competitive advantage, or at least undermine or cancel out their competitors’ advantage. New IT technologies both enable and force companies to adapt and execute strategies which increasingly enhance the process of creating value, strategies whose originators and participants are the clients themselves. Therefore, in order to gain competitive advantage, companies must approach each client individually.
3. Business process individualization
As demonstrated above, modern businesses are either mass producing goods and services tailored to their clients’ particular needs or will have to learn how to mass produce such goods and services in the near future. At the same time, business processes in these companies pertaining to e.g. construction projects, ship construction, online sales, or health diagnostics, have to be carried out with different means in accordance with the clients’ (investors, purchasers, recipients, or patients) specific requirements.
Because it is impossible to predict and model all potential projects and all of the different clients’ potential requirements, a need arises for the dynamic adaptation of business processes to the individual conditions of each particular production case. In consequence, the individualization of investors’ (or, more generally, clients’) needs requires in turn the individualization of business processes in an enterprise. For obvious reasons, managing a business process which adds value for the client cannot be limited to the routine repetition of one process, even if that process is the best in terms of optimization and execution. Since the clients’ expectations, habits, and capabilities are different and often conflicting, success is achieved not with the aid of a single “optimal business process”, but rather, through a skillfully executed process of dynamically shaping other business processes according to the clients’ individual needs.
Simultaneously, because business processes form a closed system, changes to one particular section might lead to unexpected changes in other sections, which means that limits should be placed on permissions for introducing changes.
Furthermore, results of such “limited experimentation” should be monitored on an ongoing basis. This potential process instability is acceptable thanks to advancements in IT technologies. We can now abandon total control and computability in favor of innovative and flexible processes.
This change requires businesses to accept and put into practice not two, but three different approaches to modifying business processes on an ongoing basis:
- Process optimization, with regard to changes of evolutionary nature, which usually concern quantity or speed. Such changes can be predicted with ease and have a clear direction.
- Process adaptation, with regard to changes, which are most often of qualitative and revolutionary nature. Such changes usually cannot be predicted and are the result of emergent jumps in technology or business environments. In this case, businesses are usually faced with the need of introducing a change or a set of changes to general processes on the level of the entire business.
- Process individualization, which is usually unpredictable in nature and combines adaptive changes with the necessity of taking into account the requirements (as well as the limitations) of particular clients. Such adaptive changes usually require making immediate, comprehensive changes to existing business processes in order to align them with the clients’ needs.
In order to benefit from these enhancements, businesses should relocate work management to places in which their work is actually performed and where one can find actual, practical knowledge on its execution. It’s no coincidence that it is in Jenning’s and Haughton’s book on speed as the deciding asset of an organization of the future that we find the following explanation: “In order to be able to make quick and good decisions, they should be made as close to the place of actual operation as possible.”
In consequence, a business which permits active experimentation opens itself up to certain risks. However, in doing so, it also avoids the risk of slowing down the process of adapting to the market and customer needs, which stems from being unable to make quick decisions, or worse, analysis paralysis.
Grounding the adaptation and individualization of business processes (or, in more general terms, innovation) in actual activities prevents businesses from having to perform in‒depth analyses of new ideas and products with no track record of practical application. “The fact that you can put a dozen inexperienced people into a room and conduct a brainstorming session that produces exciting new ideas shows how little relative importance ideas themselves actually have,” wrote Theodore Lewis in his article “Creativity is not Enough,” which was published in the Harvard Business Review in 1963. Choosing to adapt business process individualization solves this problem, because:
- Ideas come from a wide variety of practitioners with specific competences and rights;
- Each idea is immediately tested with regards to its potential implementation and its effects in terms of affecting the performance indicators of the processes that it concerns.