Tuesday 15 February 2022

Project Process Design Principles

Have you ever been to parties in the company of strangers? When we need to start a conversation, we most often ask the standard question: "What do you do?"

It is not surprising that we get a standard answer: "I am a lawyer", "I am a dentist" or "I am a writer".

Well, okay, now we know what your profession or occupation is called, but still, what do you do day in and day out, what exactly are you doing? What branch of law do you specialize in? How do you find clients and decide who you should work with and who you shouldn't? 

How do you study their cases, how do you collect the necessary documents? 


What arguments do you find when arguing with lawyers representing the other party? How do you prepare for the trial? How do you look for witnesses, how do you behave during the trial? How do you find grounds for appeal if a judge does not rule in your favor? And finally, how much do you get for your services and how do you calculate their cost? The answers to these, as well as many other questions, explain what you do. The answer to the question of how you perform the duties of a lawyer is a description of the process.

Of course, the person who started a conversation with you at a party is unlikely to want to know all these details. However, you yourself are unlikely to be able to tell him all this information on the fly. But we almost guarantee that if you think carefully, you can quickly find a way to better perform actions that have been performed according to the usual pattern for many years. And if from this moment you really start working in a new way, it means that you will become a more successful lawyer, your clients will win more often in court, perhaps your earnings will grow, as well as the demand for your services. In other words, it will be a new, improved lawyer's work process.

We often ask senior executives what their business is. In response, they tend to describe their products or services and explain how they are better than competitors' products or services. If we keep asking, they pull out annual financial reports, promotional brochures, and sometimes even staffing lists. "That's what our company is doing," we hear. Sorry, but that's not true.

Yes, now we have understood what product is produced in the enterprise, who is subordinate to whom, how well things are going financially, but we still do not know what the company does.

If you think about it, you can come to an unexpected conclusion: we do not know what we are doing. We do what we do, most often because "we've always done it that way." Few people seriously ask the question: "Is this really the best way?"

Before raising a business or improving the work of the company, it is necessary to clearly define what exactly it does. It's even more important that all of your employees understand this. Most of them know only their responsibilities. Employees can perform them well or not so well, but it is on this small area of work that all their thoughts and concerns are concentrated. They see only a small part of what the company does. Your task is to give them a complete picture, to explain what their role is in achieving the overall goal or, even better, how they contribute to the desired result. 


That's why we devoted the first chapter of the book to process design. Once you understand what the organization is doing, you can think of better ways to build a process and get out of the "we do this because we've always done it" trap. New processes that are perfectly aligned with each other and cover all the activities of the organization from start to finish will be your greatest, perhaps even the most important advantage. They will allow you to do the work faster, better and cheaper. But when we say "faster, better and cheaper", we always mean: faster, better and cheaper than your competitors. You get a huge advantage over companies that are looking to win over your customers. If done correctly, new processes will have a decisive impact on business performance. 


You will see with all clarity how things are going in the company, what are the causes and prerequisites of certain events, who is responsible for each aspect of the work and what results should be at the output. 


A process-oriented company better perceives any new trends in the industry. Process design is an art and science to work efficiently. And — believe it or not — it's one of the most amazing and creative pursuits in the business world.

We wrote this book to tell you how to use a process approach to bring a company to a new level of efficiency. You will find many examples of its successful implementation in enterprises. And to begin with, let's see how one insurance company called Progressive Insurance, having developed new processes, changed the rules of the game in the insurance market, after which it broke out of the ranks of laggards and became one of the leaders in its industry.

Today, Progressive Insurance, headquartered in Mayfield Village, Ohio, is the third largest insurance company in the United States. Its annual revenue in 2008 was nearly $13 billion, up from $1 billion in 1991, a huge jump. The average increase in profitability per year was 17%.


 It looks impressive, especially when you consider that there are rarely any changes in the auto insurance industry. This is an industry with a century of history, which for a long time developed at a rather slow pace. However, progressive insurance's success is not due to mergers or acquisitions, as is often the case. What was the reason for such an unexpected rise of a representative of a stagnant industry?

The secret lies in the process approach. The company's specialists analyzed such aspects of the work as "who", "what", "when", "where", etc., which allowed them not only to track the effectiveness of each employee's performance of tasks, but also to assess how well these tasks are consistent with each other and fit into the overall picture.

First of all, Progressive Insurance has revised the process of accepting claims from customers. Let's compare the situation before and after the design, which will help us understand its very essence.

The process of processing claims in Progressive Insurance was the same as in other insurance companies. It began with the fact that the claimant, i.e. the person involved in the accident, sent the claim to the agent with whom he was insured. The agent would fill out a damage report and send it to an employee in the claims processing department. The clerk recorded the logbook, checked to see if everything was filled out correctly, and handed the papers to the claims manager. The manager waited until a certain number of claims were collected, and then handed over the entire pack to the emergency commissioner. Usually, claims were referred to the commissioner for accidents that occurred in one area. 


This was done so that he could inspect the cars in one day. The emergency commissioner called the claimant, set a meeting time, came to the site and assessed the damage. Then he handed over the results of the assessment to the claims manager, who was already deciding how much money to pay to the injured party.

In the standard model of the insurance company, each employee has a certain area of work: the agent communicates with the client, the employee in the claims processing department checks whether the form is filled out correctly, the emergency commissioner inspects the car and assesses the damage, and the manager calculates the amount of the insurance payment. The only thing that the old process coped well with was the optimization of the work of emergency commissars, because they did not have to travel to different areas, that is, to spend time on the road. 


Similarly, factories increase the efficiency of equipment use by organizing shift-by-shift work. In this case, some indicators, such as the number of calls for which the commissioner traveled per day, indicated a decrease in the cost of his labor. But these savings were achieved due to the low efficiency of the process as a whole. Usually, at least five days passed before the arrival of the accident commissioner at the site (in some companies it takes even more time). 


The reason was the delays associated with the transfer of the claim from department to department, and the need to collect a sufficient number of claims for a particular area. For an insurance company, this makes sense, of course, but after all, customers are not at all interested in such nuances. Suppose you bring a claim to your insurance agent. What do you care how much the company saves on the salaries of office workers? You need to get the money and get your car back (and with it a normal life).

Progressive Insurance now has a new process called Immediate Response. First, an agent, a customer service representative, and a claims manager were excluded from the process. The company's customers are now issued a card with a phone number, which they always carry with them in their wallet. In the event of an accident, the client simply calls this number, no matter whether it is day or night in the yard, and tells about the incident to the representative of the company, who is fully responsible for all further actions. The representative of the company checks whether the client has paid for insurance, sends a tow truck to the scene, calls the police if necessary and does everything necessary to make life easier for the client. 


This person works in the same team with other employees - accident commissioners, but they do not sit in the office, but constantly travel around the city on the company's branded cars. Emergency commissioners are available around the clock, as they work in three shifts. When a customer reports an accident, a company representative calls one of the emergency commissioners and makes an appointment to inspect the car. The time is selected so that everyone is comfortable, but most often the emergency commissioner leaves immediately after the call.

The introduction of the new process has led to startling results. Service in the event of an insured event is now much faster - usually it takes no more than one day, whereas before it took almost a week. Many other difficulties in work, because of which the company lost customers, disappeared. In addition, by reducing the time for processing claims, the company significantly reduced its own costs. The daily cost of storing a damaged car or renting another car to replace a damaged one is approximately $ 28, which is equal to almost six months of profit from one insurance policy. It's easy to estimate how much the company is saving now when you consider that its employees process more than 10,000 claims every day. 


The new process has other advantages. Since the accident commissioner arrives before the brake trail disappears and witnesses leave the scene of the accident, it is now easier for him to track down cases of fraud. The company's costs have decreased significantly, because fewer people work with claims. In addition, the payments themselves have become smaller, as customers often agree to a more modest amount of money, provided that they receive them quickly and without unnecessary hassle.

But let's not go into details, but focus on highlighting the main differences between the new process and the old one. In the new process, as in the old one, there are three steps that add value: collecting information about the accident, inspecting the car and determining the amount of payment. All other actions at best contribute to the organization of the main work. Surprisingly, the new process uses the same working methods as the old one. 


Emergency commissioners did not have special devices with which it would be possible to illuminate the car with X-rays and identify damage faster and more accurately. Everything happens exactly the same as before. The operations themselves have not changed, but they are differently consistent with each other, and this has changed the overall picture. In addition, now the focus is on the final result, which is really important for the client.

If in the old process the client was interviewed by an insurance agent, now a representative of Progressive Insurance is engaged in this. 


The insurance agent, as well as the employee who checks the correctness of the registration of claims, simply disappeared from the process, as a result of which a lot of time was freed up. In the old process, the accident commissioner came to inspect the car when it was convenient for him. Now he asks the client when to arrive, and arrives, usually within nine hours of receiving the accident report. Progressive Insurance called this innovation a transition from "our time" to "the time of the customer." 


In the old process, the decision on the amount of insurance payment was made in the office, now it is made on the spot immediately after inspecting the car, that is, much faster. These simple changes greatly simplified the initial claims processing process. Now customer service is faster, better and cheaper!

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