Procedure vs Process

If one were to look from the wrong end of a telescopic magnifier it will lead to a misinterpretation of the distance to the object being observed, it’s all about detail and depth. Any decisions dependent on the outcome of the observation will also be misleading. The same can be said of the apparent confusion of the term ‘Procedure’, and the term ‘Process’, it is all about depth.

Procedure is to a task, what Process is to a (business) goal. When an actor completes a task, he earns the right to income; when a process is completed, the business earns revenue and/or survives another day! Tasks are normally executed by a single actor, whereas the execution of a process may have one or more departments involved, and in most cases include business partners.

Procedure is a way of doing something. An actor will apply a procedure to complete a task. But, not all “way of doing something” is obvious. A skilled actors execution of a task may include a considerable amount of tacit knowledge, consider domains such as insurance, healthcare etc. Except for the most simple tasks, procedural optimisation usually requires ingenuity on the part of the organisation. The dangerous solution is to replace all procedures with something akin to a checklist. Of course, there is nothing inherently wrong with checklists, they are an excellent disengaged way of performing tasks. And, therein lies the danger.
Only the simplest variety of tasks can be converted to checklists. In particular, tasks that require skilled decision making are usually best left to the skilled actor. The flexibility and knowledge the skilled actor brings cannot be replaced by an unskilled actor with a checklist. Of course, it would be highly negligent to not mention that AI (and/or machine learning) will make all of this redundant.

It should by now be obvious that a process is not procedure in the sense that we imposed in this article. A process is a collective of tasks (and actors), that collaborate to reach a goal. Since most (financially) interesting processes are ones that are customer inclusive, optimising these processes must increase customer satisfaction, which one hopes will lead to increased revenue. Where procedure is about detail, a process is about depth. Like looking through a fisheye lens to see more of the picture. This is also one of the reasons why piecemeal tweaking of a process doesn’t always give the expected returns. The whole process and its goal must be the perspective when an exercise of optimisation is taken up.

Conclusion

This is not an exercise in pedantry. In any discussion of the subject matter there must be an agreement on the definition and meaning of the terms. Lack of this agreement takes us to the same place of obfuscation in which ‘agile’ now finds itself.

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Smart Processes to Smart Businesses

Why append the adjective “smart” to a process? Interestingly in the UK “smart” would suggest a very stylish process! Whereas in the US to speak of a “smart” process is to speak of an intelligent process. Since all processes are stylish by design, we only question the secondary use of “smart”, when appended to the term process.

  • Replacing humans by robots, and implementing machine learning algorithms to perform activities previously performed by humans, is not a valid enough reason for the adjective “smart”. What adjective would then be adequate for a process without assist from robots and machine learning algorithms? After all a classification scheme for processes should cover all classes.
  • Perhaps it is an application of the “differentiate or die” principle from some marketing wags.

There is a more valid reason for distinguishing a process by the adjective “smart”, it has less to do to do with what it is, and everything to do with how and what it achieves for the business.

  1. A “smart” process is one that makes for a “smart” business. This is not a question of simply achieving some business gaol at the end of the process. It is more to do with orchestrating the business and its partners so as to benefit both parties.
  2. A “smart” process takes part in a three way relationship. A triumvirate which when running optimally increases business value, and hence makes for a “smart” business.
  3. The actions of the three parties are influenced by, and in turn influence the relationships.

* Changes in the internal structure, or business model of the business will impact its processes. Similarly external economic or regulatory changes will also force some modifications to its processes. The changes incurred by the processes will in turn alter the business practices with partners.
* New players in the market may be keen to become business partners. They may be in a better position to add value to the business, compared to existing partnerships.
* Process optimisation may also force redefining the relationship with the partners, the optimisation may also lead to structural changes within the business.

Adjectives should be used sparingly, lest their effectiveness comes up short when faced with a deserving case.

Having come this far, the real question is, how are we to make a business “smarter”. We need to make dynamic that which is static. This is achieved by a secure transparent market place, where businesses would do business via their processes. This would not require a fixed relationship with partner(s). The market place would provide any and all validation of the partner. This would make the relationship dynamic, and on a transaction by transaction basis.

An example of such a market place is the implementation of the ripple protocol for (mostly, and currently) cross-border money transfer. The ripple network provides security, transparency, reduced cost (through the removal of the middle party), and way faster turn around time. Of course, as this is money transfer it is easy to verify and validate the transaction, if instead of a service we have a product, then many more checks and balances are required. The ripple network also has issues that have to be smoothed out, legal, liquidity etc.

This is the blockchain enabled marketplace that is waiting to disrupt the process triumvirate.

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