The Overlooked Strategic Value of Processes, Procedures, & Standards

Oh PPS, how most people hate you for no good reason! Processes, Procedures, and Standards.

These are the money-makers of the big 6, er big 4, er, big 2 Business Consulting Firms. The Showtime show House of Lies takes the idea that business consultants are just snake oil salesmen full of hot air to the next level. I love that show because they do manage to use some of the right buzzwords I’ve heard (and used) in the last 25 years. But like any other show, it’s more “dramedy” than reality when it comes to fixing companies.

In my experience, most senior executives in large companies ($100+ million) think their departments use PPS. When interviewing department heads in the same companies, that percentage drops significantly to about 25%. When interviewing staff in the same departments, virtually no one would call whatever written documentation they had as being usable processes, procedures, or standards! Everyone explained that these documents were old, obsolete, or otherwise not applicable and that the company had changed enough things to make them useless.

Naturally, there are exceptions. Companies that have become certified in standards, such as ISO 9001 or even ISO 27001 must have PPS to become certified, and so they absolutely have PPS – for the areas covered by requirements. For that matter, they have PPS on how to keep their PPS up to date. Of course, companies that practice Kaizen, have Six Sigma programs or have contracts that require PPS, try to have it to whatever degree they need to.

But let’s look at the typical small to mid-sized business. Selling $25 million top line and maybe getting $2 million in bottom line profit. How many of them have up-to-date, meaning actually usable, PPS? Not many at all and if you’re like the average company in the US, you probably don’t either.

So what’s so great about Standards or Processes anyway? Well, to put it into money terms, they allow you to have a more standardized product or service delivery for a lower cost. So you can do stuff cheaper and of consistent quality. With business, unlike art, variety is the enemy of success. No matter how much people like your product, if you can’t repeat what you did, you will never taste the reward of that success.

Repeatability allows you to make and test incremental changes. Quantifying the results of those incremental improvements is impossible without consistency.

Standards define what things are, what they need to be produced, and what to measure the final product against. Procedures describe how things are made or assembled, or designed in a repeatable way. These are step-by-step guides like Ikea furniture might include. Processes are the big-picture view of the business operations. They discuss standards and procedures and show processes necessary to drive the business.

If so many businesses operate without them, then why would small businesses need them? Well, competition favors those who can offer the best thing at the most reasonable price. Notice I didn’t say cheapest since you have to compare apples to apples, not oranges!

There are many advantages to standardization and continual improvement. I had the pleasure of having the W. Edwards Deming Institute as a client many years ago. Deming is the American responsible for most of the Japanese auto industry overtaking US automakers in such a short time. Today Toyota is the world’s largest automobile company. I happily defer to the Institute for training on the benefits of the Deming method or to a plethora of Six Sigma training programs for quality and process improvement.

Most of the Fortune 500 companies utilize some form of PPS, and for one I am happy to name a company where I consulted. P&G – Procter, and Gamble – is leaps and bounds ahead of any other company I have worked with in their adherence to PPS and continuous improvement.

While I came into P&G with multiple certifications in various technology and business practices, I was very happily surprised at the level of process control and improvement at every level of the company with which I interacted. As you can imagine it is much harder to ensure processes are followed and monitored in a large company than a small one – there are just so many more moving pieces – but P&G managed to lead the way for other large businesses. It is interesting to note that in 2017 P&G cut $140 million in advertising online. There may be many factors that played into that decision, but a significant factor was the lack of tangible return on investment.

Unlike companies that act like lemmings, following one another blindly, P&G evaluates all their contracts and expenses to be sure they are performing at the level of expectations. This process is very uncommon in small businesses and almost unheard of in large corporate America. P&G determined that traditional media like television, print, and radio had a better quantifiable return on their branding spend. After all, it’s impossible to have an ad-blocker block out commercials from the radio station you are listening to in the car – and that includes SiriusXM!

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