The Securities & Exchange Commission is scheduled to decide before the end of 2011 whether US companies will be required to prepare their financial reports according to international financial reporting standards, or IFRS, rather than according to generally accepted accounting principles, or GAAP.  If the SEC takes this step — and most every indication is that it will — the largest public companies would begin reporting according to IFRS in 2014.  All public companies would have to implement the international standards at some point in 2016.  That means that large companies could begin implementing IFRS as early as 2011.

Some multinationals are in the process of switching to IFRS in their American operations.  They’ve been using IFRS in their non-US operations and financial results reporting according to a single set of standards promises greater efficiency and, therefore, less cost.  A move like this, if undertaken by many more companies in the next year or so, may make the decision to switch accounting standards easier for the SEC.

What about private companies, though?  What about companies with just a few hundred employees, or fewer?  Well, there’s been some talk (but not a lot) that small-to-medium enterprises (SMEs) — companies with fewer than 250 employees — might not be required by Federal law to use the IFRS standards.  However, market forces alone promise to exact a toll on the company that wants to stick with GAAP since commerce in some quarters has been global for decades and is becoming increasingly so in virtually every area.  We see stories all the time about small, family-run businesses eager to sell overseas.  If switching to IFRS helps them achieve their goals, they’ll use it.

The FASB and the AICPA have been working closely with the IASB in preparing for the conversion and between them and the IRS, there isn’t much enthusiasm for managing two sets of standards.  Just last week, the IASB and FASB talked about their continuing commitment to the improvement and convergence of IFRS and GAAP.  The AICPA has already developed courses so that accountants in the US can make the transition.

Small companies ought to be able to make the switch easier than public ones.  To make the conversion even easier for small-to-medium enterprises, the IASB published a slimmed-down version of the IFRS earlier this year.  Simply titled “IFRS for SMEs”, it comes in at around 230 pages, so it appears the IASB really wants to get all types of businesses (and their accounting firms) on board.

Now, my questions to you, the audience:

• Are you looking into IFRS compliance?
• Are you already taking steps to comply with IFRS?
• What are you doing to drive compliance to accounting standards?  What tools are you using or what do you plan to use?
• Which of your Accounting Procedures and Processes — as well as other processes – will need to change?
• What accounting internal control issues are most important to you?
• How can we at Bizmanualz help?

As the Chief Financial Officer (CFO) of your company, you are responsible to the company’s Board of Directors for all accounting and financial matters.  You must establish company-wide objectives, policies, procedures, processes, programs, and practices to assure the company of a continuously sound financial accounting structure.

1. Cash Flow.  As a new CFO, your job is to control the cash flow position throughout the company, understand the sources and uses of cash,  and maintain the integrity of funds, securities and other valuable documents. You receive, have custody of, and disburse the company’s monies and securities. New CFO responsibility includes the authority to establish accounting policies and procedures for credit and collections, purchasing, payment of bills, and other financial obligations.  Cash is king and the flow of cash, or cash flow, is the most important job a new CFO has in any company.
2. Company Liabilities.  After cash flow, the new CFO must understand all of the company’s liabilities.  A company has many legal contracts, statutory & tax obligations, hidden liabilities in the form of contingencies, leases, or insurance summaries, and expectations from loan covenants and/or the board of directors.  As a new CFO, if you’re not watching out for the liabilities, who is?
3. Company Performance.  The new CFO must understand the company business model for generating customer value and translate the operational metrics into measures for performance.  The new CFO is the company scorekeeper using tools like the balanced scorecard, dashboards, and financial statement ratio analysis to communicate both the company’s expected and actual financial performance.
4. Department Supervision.  In a small organization, the CFO is the supervisor of Accounting, Finance, HR, and IT.  In a larger company, the CFO may only be responsible for the Accounting and Finance functions.  Either way, the new CFO supports the company’s accounting and financial functions using job descriptions, policies, and procedures, and methods for automating document control.
5. Budgeting and Expense Control.  Budgets are a fact of life, and the new CFO is responsible for overseeing the budget process, collecting the inputs, and comparing the company’s actual performance with estimates (the budget).  It is an ugly process that falls within the CFO area of control.
6. Financial Relationships.  As a new CFO, you establish and maintain lines of communication with investment bankers, financial analysts, and shareholders in conjunction with the President.  You administer banking arrangements and loan agreements and maintain adequate sources of capital for the company’s current borrowings from commercial banks and other lending institutions. In addition, you invest the company’s funds and administer incentive stock option plans.
7. Finance or Raising Capital.  You would think that finance is one of the key roles of the Chief Financial Officer.  Yes, it is important, but it comes after other more pressing operational issues, like those listed above.  The new CFO will establish and execute programs for the provision of capital required by the company, including negotiating the procurement of debt and equity capital and maintaining the required financial arrangements.  As the new CFO, you’ll coordinate the long-range plans of the company, assess the financial requirements implicit in these plans, and develop alternative ways in which financial requirements can be satisfied.
8. Financial Obligations.  As the new CFO, you need to approve all agreements concerning financial obligations, such as contracts for raw materials, IT assets, and services, and other actions requiring a commitment of financial resources.
9. Record Control.  The new CFO is responsible for the financial aspects of all company transactions including real estate bids, contracts, and leases.  The CFO also provides insurance coverage, as required, ensures the maintenance of appropriate financial records, prepares required financial reports, insures audits are completed in time and statutory book closing occur.  The CFO has primary responsibility for ensuring company compliance with financial regulations and standards, like Sarbanes-Oxley, the IRS Tax Code, and GAAP (and soon, IFRS).
10. Shareholder Relations.  A new CFO analyzes company shareholder relations policies, procedures, and information programs, including the annual and interim reports to shareholders and the Board of Directors, as well as recommends to the President new or revised policies, procedures, or programs when needed.

The Top Ten Responsibilities for the New CFO:

1. Cash Flow
2. Company Liabilities
3. Company Performance
4. Department Supervision
5. Budgeting and Expense Control
6. Financial Relationships
7. Finance or Raising Capital
8. Financial Obligations
9. Record Control
10. Shareholder Relations

As a new CFO, sample accounting policies and procedures are be helpful to serve as a model, or framework, for your own accounting policies and procedures.  Save time.  The CFO Accounting Policies and Procedures Manuals set contains 239 procedures you can use to address the ten accounting cycles within your responsibility.  And now, Bizmanualz NEW OnPolicy software application can help you automate your document control process to easily maintain your conformance to critical compliance standards like Sarbanes-Oxley, ISO, ITIL, CoBit, FDA, or JCAHO.  Sign up for a free software trial today.

You have decided you need policies and procedures, but which business policies and procedures do you need?  Assess the business impact of each of your core business processes to generating revenue or introducing risk and then rank the results.  Core business processes that greatly impact your revenue or risk are where you want to start.

The Bizmanualz CEO Company Policies Procedures Manuals are designed with your core business processes in mind.  The nine business procedures manuals in the series provide your entire company with examples of the primary procedures used in writing your company procedure manuals.  How do the nine procedure manuals address the core business processes?

1. Customer Strategy & Relationships (Marketing) is a good place to start.  Most businesses talk about the customer being the most important part of any business.  Well, if your customer is so critical, have you mapped out a clear customer strategy and customer relationship process?  Do you have customer strategy procedures for developing awareness and education of your business in the marketplace?  The Bizmanualz Sales and Marketing Policies and Procedures Manual provides sample policies and procedures to help you set marketing strategy, marketing tactics, and marketing planning to cover the first part of your marketing sales funnel — awareness and education.

2. Employee Development & Satisfaction is essential to your business because your employees are the ones that talk to and develop your customers.  The Bizmanualz Human Resources Procedures Manual provides example procedures for hiring, administration (e.g., personnel records, compliance), compensation, and — the most important part – developing your employees.

The HR manual also includes a sample Employee Handbook and an HR Manager’s manual to provide a complete discussion of human resources.  Keeping employees and facilities safe is the focus of the Bizmanualz Security Procedures Manual, which includes coverage of guard force management, employee conduct, emergency operations, protection, and safety.

3. Quality, Process Improvement & Change Management is driven by competition, your desire to excel at what you do and make your customers happy.  The Bizmanualz ISO 9001 QMS Procedures Manual provides a sample quality manual, the six quality procedures required by ISO 9001, and additional supporting procedures to provide a foundation for your process improvement and change management initiatives.

4. Financial Analysis, Reporting, & Capital Management is critical to fast growth companies.  Cash is the lifeblood of your company and a fast growth company consumes cash quickly.  The Bizmanualz Financial Procedures Manual has example procedures for financial administration, raising capital, managing capital, financial statement reporting, and the internal controls necessary in a fast growth company.  A controllers manual is included to provide the direction and organization for controlling your company cash.

5. Management Responsibility addresses all of your core business processes and is integral to every area of your company.  Every manual in the “CEO Company Policies Procedures Manuals” covers the management of that departmental area.  Each manual provides a departmental (functional) manager’s manual that describes the departmental organization structure, major responsibilities, departmental guidelines, ethics, policies, and – of course – the primary business processes for that department.  The Bizmanualz Business Procedures Manual provides a simple, fast, and easy way to provide immediate oversight for all of your operations.

6. Customer Acquisition (Sales) is about engaging the customer and closing the sale.  The Bizmanualz Sales and Marketing Procedure Manual contains procedures for the entire sales funnel, sales process, sales administration and sales management common to organizations that have to oversee a sales force.  The Bizmanualz Accounting Procedures Manual contains procedures for controlling cash and the revenue cycle, which is a parallel and supporting activity to the sales process.

7. Product Development must obtain requirements from sales and develop products that satisfy the customer.  Therefore, product development procedures are found in both the Bizmanualz Sales and Marketing Procedure Manual and the Bizmanualz ISO 9001 QMS Procedures Manual, which contains procedures for customer requirements, as well as the design and development of new products.

8. Product/Service Delivery The Bizmanualz Accounting Procedures Manual contains procedures for shipping, receiving, and inventory control.  But since delivery is part of ISO and quality, the Bizmanualz ISO 9001 QMS Procedures Manual also provides coverage of this critical customer facing area.

9. Accounting Management is about accounting transaction management, as opposed to finance which is focused more on raising, managing, and using cash effectively.  The Bizmanualz Accounting Procedures Manual focus is on controlling operating cash receipts, cash disbursements, inventory and assets, the revenue cycle, and general accounting administration.

10. Technology Management is about all of the technology in your company.  The Bizmanualz Computer, Network and IT Procedures Manual contains procedures for IT administration, IT asset management, IT training, technical support, IT security, IT disaster recovery, and software development.  More in-depth continuity planning coverage is provided with the Bizmanualz Disaster Recovery Procedures Manual.

Business Process Policies Procedures

The Bizmanualz CEO Company Policies Procedures Manuals collection is the best overall deal — you save 45% when you buy the set, compared with purchasing all nine manuals individually.  The series covers all of the core business processes in one simple bundle.  It includes manuals for:

• Financial Policies and Procedures
• Accounting Policies and Procedures
• Computer & IT Policies and Procedures
• Human Resources Policies and Procedures
• Sales & Marketing Policies and Procedures
• ISO 9001 Quality Policies and Procedures
• Security & Disaster Policies and Procedures
• Business Policies and Procedures Sampler

Every critical area of your company is now covered with the Bizmanualz CEO Company Policies Procedures Manuals set.  Coverage is now easily at hand for Accounting, Administration, Customer Service, Disaster Management, Engineering, Environmental Management, Finance & Credit, Information Technology, Manufacturing, Personnel, Sales & Marketing, Security Operations, Shipping, Purchasing, Inventory, and ISO 9001 conformance.

More than one son or daughter of a company founder has been coaxed into the family business in the years before dad’s retirement. Dad wants to back away from the business. “Planning for a graceful exit”, he says. “And”, he continues, “You are the heir to the company business.” Dad says that he realizes that it will take some time to transition out and transition you in.

From your corporate experience, you will bring new ideas to the family business like concepts about intellectual property and compliance. In the corporate world, key inventions, know-how, customer lists, and the like are documented, managed within information systems, and counted as assets.

Similarly, those corporations mitigated risk through auditing to compliance standards and then sustaining compliance through development of clearly written procedure manuals. Documentation was coupled with staff training which reinforced comliance with the procedures. At the corporation, decisions were arrived at in working groups, with key functions in the company agreeing on how they would support a change. New technology? Has Engineering approved the design? Has Legal protected the intellectual property? Has Marketing positioned the change in the marketplace. Has Sales introduced the concept to key customers and provided them with a beta product to evaluate? Eventually, change was adopted and enforced by the chain of command.

Arriving at the family business, you may find a troubling lack of documentation of core know-how, and a lack of internal controls and cross-checks you were accustomed to in a public company, at least since passage of the Sarbanes-Oxley Act (SOX) law. But when you bring up lax controls with your father, he may shrug it off. You start to realize that he is the center of everything at the company. The company was built on his great invention and know-how. He personally manages all the key accounts. He watches over the books and bank balances.  He is the company’s knowledge management system. When he does delegate, it is usually to loyal, trusted staff, whom also are approaching retirement. It begins to dawn on you that your presence may be the first tangible sign of “succession planning” within the family business.

You begin to realize that the company is designed around your father. Separating the business knowledge from your father will be something like surgery. Is he even sincere about backing off? And if he is, you’re not sure that filling his central role is what’s best for the future of the company.

So you’re left with this realization: How do you capture the business processes, policies, and procedures from your father. And how do you do so without draining the personality out of the business?

Sell Progress as a Retirement Plan for Dad

So if you’re that son or daughter stepping into the family business, you probably realize by now that if you want the business to grow profitably and continue as a leader in its markets after dad leaves, he can’t remain the personification of all company know-how, relationships and control. He has to gradually entrust the essence of his company to your efforts to document policies, procedures, systems and controls. And your job, as it’s shaping up, is like a cruise director that can organize all the right get-togethers, but can’t make anyone come to them.

Deep down, you know this. Trying to fill your dad’s shoes is not the way to go. And you couldn’t do it anyway, because you’re not your dad and not one of the employees would pretend that you were.

But first things first. You sense that your first customer for this change is your dad and other family currently with hands-on control of the closely held business. You’re going to have to sell it to them on the idea of replacing personalities with process.

So, how do you sell something to your father that he never embraced? And why would employees accept any policy or process so long as your dad is still there at the center of everything? They can always just ask him, right?

There is no easy answer to this. Clearly it’s a journey of small steps for everyone. Your job will be twofold: helping employees develop and adopt policies, processes and controls that will govern their work lives; and coaxing your dad to encourage decisions to be made by consulting policies instead of him. Work with employees to develop policies and controls and they will support them. Then work with your dad to accept policies, procedures and controls as codification of his way of doing things that have made the company successful.

This is the hard work of business succession planning. You face the task of transplanting your dad’s way of doing things into the people and processes of the company. Bit by bit, the man can be separated from the company, and the company will continue to function successfully.

What Business Buyers Are Looking For

Buyers will look to see if the founder is separable from the business. Replacing the key man with policies, procedures and systems transforms the company in the eyes of potential buyers into an asset that can sustain and grow without the founder. Will sales dry up or key know-how vanish when the founder clears out of the corner office? If they will, the company can’t compete in the buyer’s mind with other buying opportunities where the intangible assets of the company have been corporatized into the documentation, policies, procedures and systems of a company.

How will buyers know? In their due diligence, buyers will look to see if the company has up-to-date procedure manuals. They will look at HR and accounting compliance and evaluate the company’s vulnerability to legal trouble should allegations of harassment, fraud or abuse arise. What is the risk that management attention and capital will be tied up in law suits, allowing competitors to pull ahead? Buyers will talk to employees and observe how decisions are made. They will observe the operation and size up the viability of the company without the founder.

Your Leadership Style Should Build on Your Strengths

If our Baby-Boomer parents counted on hard work to get ahead, we Millennials have learned that they also have to work smarter. They have learned that they don’t have to make all the decisions. Millenials built careers on the leverage of teams, systems and controls, and relied less on a personal hard-driving style like their parents did. As the next in line, your leadership style nurtures continuous improvement: You expect those closest to the work to make decisions and act on them. You have more patience for mistakes than inaction or constant checking-in with the boss. Examine your leadership style, and how you lead differently than your dad. Work to your strengths.

The Management Layer - a Mirror for Dad’s Management Style

Of course leading a transition will take some time. Will you have enough? As if you were a buyer sizing up the compnay, you should also size up the risk of challenge.

One indicator of how serious dad is about ceding management of the company, is the approach taken by his management staff in place today. They have had many years to develop patterns of work and action in response to your dad’s leadership style. Is the management independent-minded? Are they making real decisions, and acting on them? Or do they complain and shrug their shoulders about what they would like to do, but cite dad’s lack of support. Do they get in line with dad as quickly as possible?

Is the management staff fundamentally weak and simply implementing whatever dad wants, or is the management commitment there for it to work? Are they proactive and focused on meaningful change? Does every decision have to go through dad, or are there policies and procedures in place to govern decision making? In short, do managers manage or do they react to dad?

So above, in broad terms, we have laid out the challenge — can you perform the transplant surgery without cutting out the heart of the business? But we have not gotten into specifics about what you do in HR, what you do in accounting, in procurement, sales, marketing, etc. Describing development of policies and procedures in each function of the business will be addressed in a series of future articles, one per function.

Jerry Sweas contributed to this article jerry.sweas@comcast.net.

Dateline: Utopia, Somewhere in the Near Future

In Utopia, we define our business processes as we develop them.  We plan for the inevitable by formalizing many of our processes.  Granted, there are some processes that are so simple, it doesn’t make sense to document them.  Where it makes sense, we document our processes – we write procedures – so that, among other things, we (a) have a baseline for improving them and (b) can train people, should the need arise.

However, we don’t adhere to our procedures so rigidly that we’re unprepared for change.  We review our processes routinely – as we’re in the midst of them, and on a periodic basis – so we know if we’re getting the results we want. This way, we also know if we’re making our customers happy, if we’re staying abreast or ahead of the competition, and if we’re taking advantage of every opportunity.

Some time ago, we were fortunate enough to learn from some of our mistakes.  One of those mistakes which almost cost us dearly was writing our procedures without knowing where we were coming from or where we were headed.  Basically, we were told to document key processes in order to be compliant, so we jumped in to document those processes without a plan.

We didn’t take a look at the big picture, at first.  We didn’t understand that we were starting a continuous journey somewhere in the middle of it.  It was like being set down in uncharted territory without a plan, let alone the proper provisions and tools.

After several unsuccessful attempts to make deadlines and meet other ill-defined or undefined requirements, we came to the realization that we were starting our journey in the middle without a clear view of where we came from, where we were headed, or how we would get there.  Without a clearly defined project plan, our process journey was always arriving at the same destination: Failure.

How many times have you had to document a process and wished you had a map showing “You Are Here”?  Or, wished you’d started with a better plan?

The swim lane and document maps that we blogged about recently are useful for describing processes.  The swim lane map showed us who was responsible for what: Dad was driving, Mom was navigating, and in this scenario our kids were the customers.

Information flow was better captured in the document map.  It identified the documents handed off at each step of the process.  It also showed when status or other information was not in document form, but was spoken.

Swim lane maps and document maps are descriptive rather than prescriptive: we use them to communicate what is happening today, not what we’d like to happen or what should be taking place.  To change the existing process, we need to map the activities at each step and critique them for the value they add to the process.  One way we can do this is with an activity map.

When It Comes to Making Changes, Start with the Small Things

Activity maps and “value stream” maps help us capture what is happening in the workplace (or, in my example, the family minivan).  Activity maps are great for identifying areas ripe for streamlining or eliminating — if the activity/process doesn’t add value, it probably doesn’t belong.

Using my family vacation example, I could call a family meeting, tape our swim lane and document maps to the dining room wall, and engage my wife and kids in a conversation about the process of driving to summer camp.  I would ask them for their opinions and insights about each process step, to identify opportunities for improvement.  (How popular this would make me!)  

We dig past generalities down to the tasks that we each perform.  We look at each task and determine what’s not necessary – see if we can skip or eliminate steps.  Would we get there faster?  Would we each let go of “non-value-added” activities?  I don’t know, but I know that an activity map could help us get the issues onto the dining room table. (Selling our analysis, conclusions, and the resulting change might require a rendered map, which I’ll cover in upcoming articles and blog posts.)

Here’s the driving process presented in an activity map:

The first row is the process step as appears in the swim lane and document maps for the “Driving” process. Second row is a tally of activities per step and the number of lean value-added steps. Next row is color-coded by responsible party. Green activities are value-added. Red represents waiting or other waste. All other activities (in white) should be reviewed for their necessity and potential improvement.

Green steps transform the product (travel) that the customer (passenger) is receiving. These steps add real or perceived value to the product, in the customer’s eyes, so they’re called “value-added” steps.  The green steps help transform the end product, whether or not the customer is aware of the transformation. 

The “check/fix car” activity (at the top of the “Drive” column) is an example.  Preventive maintenance in advance of the trip assures my customers a trouble-free trip, though they may not be informed of the oil change, tire rotation, fluid check, etc.  Other green steps – loading/unloading luggage, occasional status reports, driving — are readily apparent to my customers.

Few would argue that waiting doesn’t add value.  Any waiting “activity” (shaded in red) is a non-value-added step.  Today — “Star Trek” notwithstanding — it is impossible to arrive instantly at a destination.  Ideally, we would look to cutting “wait time”, but in our scenario it’s unavoidable.  (Dad could go faster, but the minivan and the law enforcement authorities have their limits.)  We note that some wait time is unavoidable in this case, and we proceed with the analysis.

The remaining activities (in white) will lead to further discussion and analysis.  We acknowledge that these individual activities are not what the customers are buying — they’re buying the whole experience.  But we can’t call all of them waste — some of them are necessary.

Can We Cut Activities?

In hindsight, the activity “Plan alternate route in case of trouble” could be considered waste.  We don’t know that we will run into slowdowns, detours, open drawbridges, or inaccuracies on the roadmap/TripTik.  You could cut that activity.

But we ran into all those problems.  Good thing we didn’t cut the activity. However, the activity is not value-added to my customers.  I could tout my wife’s exceptional planning skills and convert a non-value-added activity to a value-added one, in my customer’s opinion.  If road delays were rare or unlikely, I might argue for cutting that activity.  Either way, the Activity Map is the tool that helps make the conversation meaningful.

I thought a local route near Saugatuck, MI, would save us few miles and some time. I learned that you can’t always get there from here in coastal Michigan. Good thing that my navigator had a backup plan.

Getting a job done requires more than just the work.  Often times, there are inputs provided and paperwork handed over, not only before the project, but also between tasks within the project. Now, paperwork may take the form of electronic documents, or records in a database. But either way, handing off or accepting documents is often how we set the boundaries between tasks and transfer control from one party (or project step) to another.

The map used to show the flow of paperwork is one of the seven most-used process maps that we are describing in our process map series.  The document map displays visually what information you should expect to receive, and from whom. It also shows you what information you are expected to produce for someone else. For an example, let’s go back to my family vacation story. One of my usual stops before any family vacation is AAA for a TripTik. You get a custom-printed series of roadmaps showing the territory that you plan to traverse. Tall skinny pages are comb-bound into a book. The route is highlighted, usually with an orange highlighter that is easy to see in daylight and darkness.

Handing off a simple document like a highlighted road map leaves little doubt about what is intended and that control is being handed off from the navigator to the driver.

In our vacation travel example, a TripTik map page could serve as an output document from the navigator to the driver at the “provide directions” step.  Sure, after several hours on the road my wife might just tell me where to go. But she might better show me where to go. With experience, we have agreed that a highlighted TripTik removes all ambiguity between right turns and left and otherwise clarifies the navigator’s intentions.

In this small area of the swim lane map, the navigator "provide(s) directions" to the driver. The navigator is actually handing off a highlighted roadmap, or TripTik, to the driver. This hand-off shows up on the document map shown here. See the previous blog post for the full swim lane map where this example comes from.

Document Maps Help You Recognize Hand-Offs

A simple document map like this one makes it clear what documents are inputs and outputs at each process step. You can see what documents you get, and which ones you need to hand off to others.

Look at the first row labeled “Navigator.” She obtains a TripTik map and tourist brochures (received from outside the process).  The navigator executes the ‘plan route’ process step and produces a ‘highlighted route’ and ‘turn-by-turn instructions’ for the Driver. All four documents are, literally, physical documents, and thus are shown on the map.

Next, the driver uses the documents obtained from the navigator in his ‘driving’ step and produces a status report showing the current location. Notice that a parallelogram is shown instead of a document symbol, indicating that the status report is not a written document, but a spoken one in this case.

The passengers, who don’t really own any process steps, produce a break stop request as part of a pre-defined process called “break process.” That is, the break process comes from somewhere outside of the Driving process. Here, passengers produce a spoken request for a break. Again, a parallelogram is shown, indicating that no actual written document is produced.

Document maps should show all the important written documents so that you could audit your inventory of reports for compliance purposes. The document map is not a recreation of the swim lane map. Decisions and process detail can be left out. You are showing the main steps in rough order.

Document maps come in handy in quality systems like ISO 9001, which require that certain records (like product requirements) be created and maintained. Since they show the records your process creates, documents maps remind and remind process owners to generate output documents without having to name someone as the “document police.” And if you’re in the middle of the process, document maps can tell you if you have the inputs you need to do your job.

Last week I took you along on a family vacation to the Eastern Shore of Lake Michigan near Muskegon. Yes, we got there. But it was a longer journey than it needed to be. We could have spent less time travelling, and more time vacationing in the cool climes of Lake Michigan. Responsibilities between driver and navigator could have been more clearly delineated. The hand-offs could have been better communicated to cut down on some of the indecision and waiting that occurred.  Sounds good but, So how do you do that?

This swim lane process map shows the passenger (customer) in the first lane. Their role is mostly to ask questions. In the second lane, the driver accepts requests for breaks from passengers, and route adjustments from the navigator, who is shown in the third row.

Asking, ‘how are we going to get from where we are to where we want to be,” is a question of implementation.  What are the concrete steps we have to take to get there?  Who is going to do what, and when are they going to do it?

Using Swim Lane process maps is one way to answer some of these questions.  We like to organize Swim Lane process maps by putting the ‘START’ on the left and the ‘END’ on the right.  It’s easier to read the chart from left to right.  Organizing the Swim Lane map and other process maps in predictable ways, and not over-stuffing your maps with information eases communications, which is mainly why you create process maps: to communicate to others a process that you already know.

What’s In A Swim Lane?

Swim Lane Diagrams, as described in part I of our series on process maps, organize tasks by role.  A role gets a swim lane. You are responsible for every task, document or decision shown in your Swim Lane.  The chart above shows three swim lanes: Passenger, Driver, and Navigator.  In our swim lane maps, we always show the customer on top.  Arguably, my daughters in the back seat are the customers of the ‘drive home from camp’ process.  If it wasn’t for the customer, my wife and I might be in Cape Cod, or Colorado, or France.  But we wouldn’t be in the minivan in Michigan.  To determine who goes in the top lane of your Swim Lane map, use the “but for” test.  ‘But for my daughters, I would not be driving five hundred miles north to a very small town in Michigan.  The process would not be taking place.

How Swim Lane Maps Help

What really stands out in this Swim Lane map is that Driving and Navigation are in fact different roles.  Had we consulted a Swim Lane map before our trip, we would have clearly seen that the driver should not be attempting to navigate,  no more than the navigator should be grabbing the wheel and driving.  The roles are clearly distinct.  Swim Lane Maps visually communicate how the roles relate to and communicate with one another.

Swim Lane Maps keep you within the bounds of your role while defining hand-offs of control and information.

Customer Involvement Shows Up In A Swim Lane Map

Swim Lane Maps visually communicate the involvement of each role, the Customer role for example.  As in the example above from my family road trip, my daughters asks of the process, ‘are we there yet?’ and interrupts the process when it is, ‘time for a break.’ But my daughters are passengers, and not responsible for any process steps (rectangular boxes).  In simple processes, customers may provide information at the beginning of a process in the form of requirements, and at the end when they buy the product.  In more complex products, customer requirements may be injected more frequently. In the case of co-development or co-creation of products, customers may have responsibility for processes and therefore process steps would appear in their swim lanes.

ISO-certified organizations must gather requirements from customers. That could be shown as a requirements document, depicted in a process map as a process step box with a wavy bottom. Customer requirements could also stand alone in a separate requirements definition process.

In a Swim Lane Map, handoffs of control and information appear as vertical lines or arrows originating from an activity in one role and connecting to an activity in another. When my daughter asks, “Are we there yet?”, it shows up as a vertical line leading from a decision point. The answer produces different actions, which is another indicator that this role is a customer.

One way to set strategy is to use your clout.  As the company’s chief executive and majority shareholder, convince everyone else that the direction you want to take is essential to achieving the company’s objective goals – increasing sales, improving customer satisfaction, and complying with government regulations.  Maybe not the best way, but it’s one way.

Realistically, there are better ways to determine company strategy, and no one way is the best way.  Any time you can take more than one route to arrive at a desirable goal, you need to balance the relative value of projects, using financial measures like ROI, or prioritization schemes like Pareto charts.  This post considers the interactions between decisions, projects, and systems – in real life, few good decisions occur in isolation. Decisions must take into account that everyone in your company depends on everyone else for information and work-in-process.

That’s where process maps come in

Implementing strategy without a process map is like navigating a family road trip without a road map. It usually doesn’t work out. Ask my wife about my driving and navigating from St. Louis, Missouri, to Michigan. Fortunately, we had plenty of food and water in the minivan, and the kids were already in Michigan at summer camp.

Today in the article section, we continue our series on process maps by introducing three types of process maps: High-level, Low-Level, and Swim Lane Process Maps.

Consider that before packing the minivan, I might have consulted a map of the United States. Were I to look at the big picture, I would have seen right away that the eastern shore of Lake Michigan is north and somewhat east of Saint Louis and that it’s faster to drive through Illinois and Indiana to get there than say, through Missouri, Iowa, Wisconsin, and the Milwaukee Ferry. In that sense, the national map is a High-Level Process Map. It shows the major systems (states) and how communication (highways) pass through them.

My wife asks the question, "why do they call this a minivan?"

If you were updating your company’s automation supporting order-to-cash software, you might want to review a high-level picture showing how Purchasing moves a quote to Production, and Production sends finished goods to Shipping. A High-Level Process Map would show you right away that Shipping has to receive materials before shipping Finished Goods to customers. Knowledge of sequence and dependencies depicted in a High-Level Process Map helps you determine what happens first.

Back on the road

Once we were in Wisconsin, the big US map showed that Milwaukee was to the right (er, east) of Dodgeville. Easy enough. Once we got to Milwaukee we searched for the ferry. There, the big USA map was not much help, so I pulled out the more detailed (or low-level) Wisconsin state map.  On it, I looked for the Milwaukee area insert.  Furthermore, had I stopped to ask directions, someone might have advised staying in the southbound lanes of Carferry Drive rather than end up back on Lake Parkway heading toward Chicago.

That is the kind of insight you can glean about your business from a Low-Level Process Map. Credit checks and accounts-receivables reviews happen before granting credit to customers, so you might want to work on the estimating and accounting software packages before redoing the invoicing systems.

Now my family and I are all safely home.  I’m contemplating our next road trip, and I have become a big fan of Swim Lane Maps. Like a Low-Level Process Map, Swim Lane Maps show the functions that must occur for a successful journey, like “Drive” and “Navigate” (and maybe “Keep your hands off your sister’s iPod”).  Swim Lane Maps show responsibility for each activity and when various parties need to accept information from (or hand off to) one another.

All this, and they're still happy campers, on the eastern shore of Lake Michigan.

Had I consulted a Swim Lane Map before repacking the family in the minivan, it would have been visually apparent that I was responsible for driving, not navigating, and I was supposed to accept information somewhere north of Chicago.

One can come to appreciate that maps get all the information out in the open. And should things go in the wrong direction, you can point to the map. Interested parties can discuss the map calmly, with no need to comment on anyone’s innate abilities such as hearing or sense of direction.

At this point, you might see how Swim Lane Maps could come in handy in your company, when you consider how systems will support people who provide information and work-in-process to each other, and vice versa.  For example, the sales department is supposed to hand off orders to the credit department which, in turn, performs the credit check based on management criteria.  The IT department should want to know about responsibilities, dependencies, and hand-offs — which a Swim Lane Map can convey easily and concisely – before they begin to plan, develop, debug, and roll out software.

So, check out this week’s installment about High-Level, Low-Level and Swim Lane process maps.  An introduction to the series appeared last week in a blog post of ours and in the article site where we posed the question, ‘What is a Process Map?’

I trust that next week, you will find your way back here for more types of maps.

At Bizmanualz, process improvement — internal and external — is one of our main objectives.

Many of us in the USA and elsewhere are aware of the need for significant improvement in many aspects of the health care process — providing and insuring, for example.  In a recent blog post about the US Healthcare Problem, we presented a case for using the ISO 9001 standard to drive health care process improvement.  Now, we’ll look at ”lean” and how it pertains health care.

The concept of “lean” was developed for production environments (see the Toyota Production System) but with a few modifications, it applies to services as well.  In either case, Lean considers the use of resources for goals other than “creating value for the customer” to be waste and such wastes should be eliminated.

From the customer’s perspective, value describes an item or a service they’re willing to pay for.  Lean is sometimes said to be about “creating more value with less work”; in reality, it’s about “maximizing value while minimizing waste”.  And though people can’t seem to agree on much of anything in the health care “debate”, one thing we should all be able to agree on is that there’s plenty of inefficiency throughout the health care system.

Bicheno and Holweg (in their book, “Lean Toolbox”), describe seven service wastes:

1. Delay – customers waiting for a service;
2. Duplication — having to reenter data, repeat details on forms, copy information across, or answer queries from several sources within the same organization;
3. Unnecessary Movement — having to get in line several times, lack of a “one-stop” service encounter, etc.;
4. Unclear Communication – wastes of seeking clarification, confusion over product or service use, wasting time finding a location that may result in misuse or duplication;
5. Incorrect inventory — being out-of-stock, unable to get exactly what was required, substitute products or services, or not having the right provider available;
6. Opportunity lost to retain or win customers – failure to establish rapport, ignoring customers, unfriendliness, and rudeness; and
7. Errors in the service transaction — product defects in the product-service bundle, lost or damaged goods (famously, the airman who was supposed to have his gallbladder removed but had his lower limbs amputated).

As providers and as customers, we’ve seen these wastes…far too many times.  We need to remove as many of these wastes as possible and improve the process.  That’s where Lean can help, and many health care providers are already implementing Lean and other process improvement tools and techniques.

We need to take Lean, ISO 9001, and other tools deeper into the entire process of providing health care — more providers and insurers — if we’re going to make things better and make the improvements last.  The answer is certainly not going to be found in new legislation (see #4, above).

Now, shall we – at long last — begin?