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Why Process Design Matters

Our daily lives are filled with processes. We renew our driver’s licenses, fill out healthcare claims, and play games based on rules understood by the players. Most processes we do regularly are painless, or at worst a source of annoyance. A really poorly designed process, however, can have wide-reaching, serious repercussions, and this last week showed two big examples of how much can go wrong when processes are badly designed.

First came the North Indian blackout. The factors that contributed to the world’s largest power outage are too many to list, but one anecdote I heard stands out for me. A factory manager must comply with energy regulations designed to encourage reduce power consumption. The rules involve setting an energy usage benchmark for the facility and fining the company for exceeding the benchmark. That all sounds logical, but the rules also included penalties for using less power than the benchmark. This part of the process incentivized the manager to run the air conditioning in the empty facility over the weekend—a shameless waste of energy—in order to avoid the penalty.

Next was the Olympic badminton debacle. Four women’s doubles teams were disqualified for throwing matches simply because their managers thought this would give them a strategic advantage. Their decisions were based on their interpretation of the way the “round robin” process worked. Again, a bad process designed by the organization that manages the sport had an effect that was completely opposite to their intended goals.

The lesson to be learned from these poorly designed processes is this: process design is critically important. Every component of a process needs to be fine-tuned to both make it efficient (quick, cost-effective) and ensure that it delivers the intended results. Since even fairly simple processes involve multiple pieces of technology and multiple human touchpoints, this is not easy to do. The downsides of getting a process design wrong, however, can be substantial – as both the people of energy-challenged India and the badminton bureaucrats now know all too well.

posted by Shyamali Ghosh on August 3, 2012

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