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Business Process And Execution Capability

By Professor KC Chan & Christopher Goh

In this turbulent economy, to be the market leader, firms need to adopt the best practice in excellent execution capability. This will require organisational change. The most pragmatic way is by changing the process, not the people. Developing execution capability comprises of People (who have discipline in execution); Process (which is the ability of the people to execute); and Tools/Technologies (to accelerate the speed of execution).

The business process of converting strategy into superior performance is dependent on the degree of organisational maturity capability of a firm. Worldwide, world-class organisations attribute their success to project management, therefore, making project management indispensable for business results.

Winning companies thrive during a crisis/financial meltdown (article on ‘Results-Driven and Crisis Turnaround Leadership for Business Continuity’ in July 2009 issue*). Why?

These most admired companies in the world advocated that execution capability is attained by developing leaders who can handle different types of crisis situation (types I; II; and III) by adopting a Wholistic™ Solution approach through effective and efficient business process of managing the 3P’s.

The Execution Capability Paradigm

The result of execution capability is to achieve faster, better and/or cheaper products/ services for superior advantage through clarity in planning. Strategy can be cascaded down through the organisational structure for its execution through:

Portfolio Management at corporate level:
Conduct portfolio management to ensure that investments are prioritised so that they are strategically acceptable. Commitment by top management is crucial.

Programme management at managerial level:
These prioritised investments must be transformed into a series of projects to be integrated for critical business mission of being financially sensible. Projects are monitored for cost-benefit realisation.

Project management at operational level:
Each and every project must be optimised to ensure that it is tactically viable.

The business process for execution capability model, S-I-O (also discussed in the article in January 2009 issue)*, ensures that the investment decisions, financial returns and project deliverables are connected and monitored for sustainable business results. The business process and execution capability paradigm is depicted as Figure 2.

In portfolio management, investment strategy can be thus categorised:

Nice-to-Have:
Can be dropped if there is inadequate resources/ budget.

Essential:
Need to maintain as corporate initiative.

Intellectual Property:
Medium to longer-term projects which need to be developed, tested, inclusive of training to be provided during the implementation.

Cash Cow:
+ Support business unit/ functional department to realise the targeted savings/ benefits
+ Projects that result in savings/ benefits/ profits/ market share.

Programme management refers to the integration of the many and varied projects in support of the preferred investment strategy. In reality, there is a gap caused by inadequate integration between “the strategy” (Knowing) and “the project” (Doing) which leads to non-performance or under-performance.

Project management refers to the optimisation of Resources, Scope and Schedule for each project. In essence, business process and execution capability starts with strategy, the visioning or “Knowing”. The firm knows what to do. This has to be translated into a series of projects, collectively called Programme Management. All projects must be potential winners. Often times, one project may excel at the expense of others to the detriment of the company. According to Jack Welch, the former CEO of General Electric (US), all projects must be in the winner’s league. Otherwise, you fix, sell or close the project. This makes business sense.

Strategy is not everything. Strategy must be transformed into winning projects for business results. All great visions and ideas are worthless if they cannot be implemented effectively and efficiently. Ninety percent of strategy remains in the strategic realm because of disintegrated execution. Business process and execution capability is a Wholistic™ solution approach to performance, resulting in faster, better and cheaper products/services for superior competitive advantage through knowing what to do and how to do it within a systematic and rationally integrated framework.

Scope Of Execution Capability

Based on the common language of managing a project, the execution capability process can be encapsulated into nine knowledge areas. See Figure 3.

The business process of managing a project (or investment) is known as the five key process groups, i.e. Initiating; Planning; Executing; Monitoring and Controlling; and Closing. The stakeholders involved in influencing the success or failure of a project must not be overlooked. These stakeholders can be captured in Figure 4.

The project structure should be kept simple for effective communications. The critical activities are not only managed by the project manager, but must obtain full support from a project support officer who does nothing but to monitor and control project deliverables.

The Execution Capability System

Execution capability is dependent on having the right people who has the ability to implement the right process, equipped with the right tools in order to attain the right business results. Figure 5 shows the interrelationship for each stage of execution capability, supported by the corresponding people, process and tools.

The tools will measure the milestone schedule for the strategy which has been translated into major deliverables so that improvements can be made throughout the whole project life cycle. A typical milestone schedule is revealed in Figure 6.

Different Levels Of Execution Capability

Organisational capability can only mature progressively in tandem with the different management levels, namely corporate, business and operations. Hence, it is imperative that all the three levels must share a common mechanism to advance the organisational development from the initial phase of ad hoc through to an optimised stage. It is obvious that execution capability cannot be developed overnight, but has to be incremental and leverage with the right type of leadership as explained in the July 2009 article. Figure 7 reveals that there are five stages of execution capability development. The respective strategic initiative for each stage is given.

To be sure, business process and execution capability is not an option, but is the lethal weapon to survive the impact of globalization forces and financial meltdown. Those who ignore are at their own peril.

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About the authors

Professor/Dr K C Chan has had over 25 years of senior management experience covering agricultural, industrial as well as commercial products and services.

Specifically, Dr Chan led the turnover project in one of the largest conglomerates in Indonesia during the economical crisis beginning 1997. Prior to switching to the commercial-services arena, he was the Regional General Manager of Husky Injection Molding Systems (S) Pte Ltd.

Dr Chan is also a corporate trainer. He has been actively teaching for the past 20 years on a part-time basis. About a decade ago, he decided to focus on this full-time and transformed it into his own business. He is today the Founding Director at the Centre for Professional Training and Development Pte Ltd.

Dr Chan is also a visiting Professor to Southeast Asian universities for their EMBA degree and senior executive programmes. He was a visiting Professor to the University of Glasglow, Department of Business & Management, for a tenure of five years before being conferred a Distinguished Professor in Action Learning in 2003 by IMCA (UK) for the original and pragmatic concept of the ‘Management by Olympic System through Integrative Leadership’.

Christopher Goh has worked in the banking industry for the past 22 years of which 13 years were at senior management levels. He has more than five years of heading the credit structuring and wealth management advisory department serving High-Net-Worth clients throughout the Asia Pacific region.

Goh had conducted many corporate seminars over the past decade, training international and central bankers from around the world. His seminars are mainly focused on Structured Products, Credit Derivatives, Financial Derivatives, Portfolio Construction, Banking Operations, Valuation Strategies on financial products and risk management. He has also been actively lecturing in various banking and finance subjects at both undergraduate and postgraduate level for a number of Australian and British universities in Singapore for the past 10 years. He is Visiting Professor at the Harbin Institute of Technology, China, lecturing on “Financial Markets and Financial Tools” to its EMBA students and also at S.P. Jain, Singapore Campus to lecture on Wealth Planning for the EMBA students.