Thursday, December 10, 2009

Part Two: Putting Principles into Action

These principles, identified by the authors, serve as a framework for building CSR and long-term value for any companies. Each of the seven principles is illustrated with case studies throughout the book.

Principle #1: Harness Innovation for Public Good

In a business framework as globalized as today’s is, corporate competitiveness is central to achieving sustainable growth. Many companies have come to understand that incorporating ethical and environmental innovation has indeed helped create a distinctive advantage. Companies examined throughout this chapter are amongst those that, through sustainable innovation, have become leaders in many industries.

One example that caught my attention is DuPont, a leader in the chemical industry. Going back to the late 1980s, when concerns about chlorofluorocarbons (CFCs) and the ozone layer were rising, DuPont strategically decided to invest in finding an alternative to using substances that deplete the ozone layer. After the 1990s, some of these tactics, formerly seen as expensive and not worthwhile, have now become comparative advantages (win-win approaches) which have given enterprises a distinct advantage over their competitors

Part One: Doing Business in a Turbulent World

This section of the book focuses mainly on the fact that the way we do business has changed tremendously over the past years. Indeed, globalization can be used by companies for the better of humanity, that is, to make a more equitable society and undo the deterioration of the environment we are to leave for future generations. Because of that, there is a rising need for companies to associate with governments and other stakeholders in order to look for the best means to achieve these objectives.[iii]

The authors note several issues currently affecting free market conditions that are prompting that new rules be created within capitalism, since expectations are rising and new challenges appearing. These issues can be summarized as follows:

the current global economic downturn, and the previous bursting of the dot-com bubble (the crash of dot-com companies after 2001)

* the failure of corporate governance and ethics
* growing geopolitical uncertainty—war against terrorism, international trade tensions and anti-globalization campaigns
* ongoing environmental degradation—global climate change, loss of biodiversity, and water insecurity

These situations are creating new challenges for enterprises, which nowadays are facing new crises (e.g., trust, inequality, and sustainability). Unfortunately, after scandals such as Enron and Andersen, trust has become one of the main concerns for companies searching for long-term positioning in the market. Furthermore, there is now without a doubt a global crisis regarding inequality. According to a survey conducted in 2000, the general trend for options distribution in companies is as follows: 75 percent are top five company executives; 15 percent are the next 50 executives; and 10 percent, all other employees.[iv] Furthermore, sustainability is indeed a central concern not only for companies but for our entire civilization, as humanity’s ecological footprint continues to grow. Therefore, the roles of businesses, as well as governments and non-governmental organizations (NGOs), have to be adapted to confront these new realities.

Review: Profits with Principles

Many years have passed since corporate social responsibility (CSR) made its entrance as a major issue for companies. Performance on social and environmental levels has also become important for organizations to consider. Since CSR’s inception, many initiatives have arisen.

Businesses around the world have sought to take account of sustainable development to conform to the general trend across industries toward better management of global regulatory requirements and a reduction of environmental impact. On the other hand, since globalization has become a crucial aspect of organizations economically, organizationally, politically, technologically, and culturally, it has pushed them towards making adjustments in order to incorporate these new requirements into existing processes.

“Business leaders face complex economic challenges, political uncertainty, and changing societal expectations. Regardless of their industry sector, they are under growing pressure to demonstrate outstanding performance in corporate competitiveness, governance, and responsibility.”[i] – Kofi Annan

The book I’ve chosen to review, Profits with Principles: Seven Strategies for Delivering Value with Values, helps clarify the definition of CSR. The volume (which presents more than 60 case studies on corporate social responsibility) follows a pattern of six projected main values, and focuses mainly on how practicing CSR can help organizations accomplish sustainable development—that is, to fulfill the needs of our current generation without compromising those of future ones. It was put together by Ira A. Jackson (a fellow at the Center for Public Leadership at Harvard University) and Jane Nelson (a senior fellow and director of the Corporate Social Responsibility Initiative at Harvard’s Kennedy School of Government, and director of Business Leadership and Strategy at the Prince of Wales’ International Business Leaders Forum).[ii]

The book is organized in two sections: “Doing Business in a Turbulent World” and “Putting Principles into Practice.”

Workflow vs. BPM

Both Workflow and BPM are systematic approaches and technologies to improve a company’s business processes (and performance). From a business perspective, they are ways to make people, information and computers work together more consistently and efficiently to produce needed results.

For example, a workflow/BPM-enabled application could monitor receiving systems for missing or defective items, or walk an employee through the steps to troubleshoot why an order arrived late or not at all.

Both technologies foster ongoing collaboration between information technology (IT) and business users to jointly build applications that effectively integrate people, processes and information. They provide organizations with the ability to define, execute, manage and refine processes that:

* Involve human interaction (such as placing or approving orders);
* Integrate and work with multiple diverse applications; and
* Handle dynamic process rules and changes, not just simple static flows, (i.e., those flows that enable tasks with multiple choices and contingencies/escalations).

The market for workflow and BPM applications is highly stratified and fragmented, in part because the currently available products stem from different origins. Namely, there are former pure integration vendors or document management/enterprise content management (ECM) vendors that have meanwhile encroached into the BPM space.

The difference between workflow tools and BPM suites is largely a semantic distinction, and the gist of the matter is that a workflow engine is at the heart of BPM suites with process execution capabilities. Also, in most cases vendors who sell applications labeled as BPM are aiming at a bigger scope and more complex projects, with elaborate software supporting even more elaborate methodologies, process defintion and modeling, collaboration methods, and so on.

Features and capabilities are not necessarily the only differences between tools, since usually the products aimed at simpler processes focus strongly on “ease of use.” The designers’ assumption is generally that the users are non-IT experts within the company. Such workflow products might be built around the concept of an intelligent form. Basically, the user develops the workflow by filling in a familiar-looking form (e.g., a “tasks vs. actions” matrix), including the business rules.

Yet the limitations of the simpler workflow tools become evident when they attempt to manage inter-process dependencies amongst several applications, handle complex database integration and handle tasks that partake in larger, more complex processes.

Workflow Components

The individual components that make up workflow are rules and associated actions — tasks, field updates, and alerts.

In general, a workflow rule is the main container for a set of workflow instructions. It includes the criteria for when the workflow should be activated, as well as the particular actions that should take place when the criteria for that rule are met. Every workflow rule must be based on a single object that users will choose when they define the rule, as this object then influences the fields that are available for setting workflow activation criteria.

For example, if a user defines a workflow rule for the “Job Application” object in an HR application, he/she will be able to set workflow activation criteria based on the values of fields like “Job Application Number” and “Status”. Users can also set workflow activation criteria based on standard fields, like “Record Owner” or “Created Date”, as well as fields based on the currently active user when a rule is evaluated, such as their “Role” or “Time Zone”.

When a workflow rule is triggered, there are many types of actions that can occur, starting with a workflow task (or step), which assigns a task to a user according to a particular template. Just as in Microsoft Outlook, tasks include information about something that needs to be done by a certain time, such as making a telephone call, creating an order, shipping goods, or paying an invoice. Typically, assigned tasks appear in a user’s “My Tasks” related list on their home tab (or page) and generate reminder messages that pop up when a user logs in.

When an administrator defines a workflow task, he/she provides default values for data fields like “Assignee”, “Subject”, “Status”, “Priority”, and “Due Date” for tasks that are generated by its associated workflow rule. Administrators can also make sure that a notification email is sent to the assignee when a task is automatically generated.

In additon, a workflow field update changes the value of a particular field on the record that initially triggered the workflow rule, while a workflow alert sends an email according to a specified email template. Unlike workflow tasks, which can only be assigned to users of the application, workflow alerts can be sent to any user or contact, as long as they have a valid email address.

A workflow rule can include any combination of these actions when the rule is triggered. For example, one rule might send out an alert and update two fields on a particular record. The action that one workflow rule takes can also trigger the execution of another workflow rule.

Introducing Workflow Automation

To that end, a built-in or an external standalone add-on tool (or capability) that can be used to solve the process automation problem is called workflow automation (or workflow management). Some will refer to it as business process management (BPM), and we will shortly try to point out the differences between the two – i.e., workflow and BPM.

Traditional enterprise applications typically feature some built-in functionality, such as a human resource management system (HRMS) or a procurement application, with some capability to tailor the base functionality through parametric configuration options (e.g., via “order types” that entail different mandatory and optional “order steps”) that users have to learn by heart.

To be fair, some enterprise applications have introduced workflow capability into their products to give users some ability to control the process behavior of documents such as an invoice or an engineering specification. But in most enterprise applications workflow is implemented through hard-coding, which means that programmers must develop and maintain the code.

In addition, workflow automation of the typical enterprise application is generally limited to a single document or task routing. This usually means that companies implementing an enterprise application must choose between accepting the vendor’s pre-built business process behavior or paying the vendor dearly to make expensive modifications to accommodate more complex processes, which will then make upgrades either costly or impossible.

In contrast, a specialized workflow tool enhances a single task and/or document routing by providing an integrated capability to include rich user interfaces (UIs), system integration, rule processing and event handling.

Rules are necessary to determine which path users should take next in a process that has multiple possible paths, e.g., an order worth less than US$1,000 does not need manager approval, but over that amount it does. On its part, an example of event handling would be a necessary step after a product recall: a “pull from shelves” notification must be sent throughout the distribution channels.

These capabilities can be pretty powerful, since in general, if users can come up with a standard rule that specifies when a particular event should happen, they can make it happen automatically with workflow. In other words, workflow becomes the magic ingredient that transforms many traditional transactions-capturing applications from a glorified database into fully functional tools that basically everyone in the company should find useful.

It’s About Process (or Ability to be Responsive) – Part I

After several years (if not decades, even) of painstakingly corralling and setting up all their custom data, objects, tables and whatnot, and making sure that these static and/or dynamic transactional data are secure, many enterprise applications users have realized that the time is long overdue for them to start looking at ways to make their applications more process-savvy.

Companies are increasingly trying to adopt and implement standardized (and yet flexible and easily modifiable) business processes to help their operations run more consistently and smoothly. For example, the chief executive officer (CEO) might decide that as of, say, next month “All customer service cases must be resolved within 24 to 48 hours,” or, “We are going to institute a new sales process for all deals worth over US$100,000.”

However, these business processes often get communicated to employees in an ad hoc and unregulated manner. A process document with instructions may exist on a network file share, but people have not the foggiest idea that it’s there. And some employees might rely on word-of-mouth information from co-workers (so called “tribal knowledge”) to learn the processes for their jobs.

Consequently, standardizing and instituting new business processes can prove challenging for most companies, particularly larger organizations.

Indeed, until recently most enterprise applications have hardly been anything more than glorified databases — they could hold all of the information users may need and allow users to search for records based on various criteria, but they could not really help users to perform the functions of their daily jobs more effectively.

There’s still often no native automation and agility within the system that lets, e.g., a recruiter instantly know when the status of a candidate has changed or when a new position requisition has been entered into the system.

Indeed, when any changes are made somewhere in the organization, users have to remember to notify one another of the change or else rely on others finding the updates on their own. Neither solution is practical in the long term and invites the possibility that the software solution or best practice will not be adopted consistently by all employees at the company.