Framework for identifying key business processes

Key business processes are those processes which have maximum impact on the success of an organization, as these processes deliver results that are directed towards specific and measurable business goals. These are the business processes that an organization must excel at to remain competitive, in the industry - both now and in future. In other words these are the real value creating processes in the organization that customers and shareholders are concerned with.

Senior management team ought to have an in depth knowledge and understanding of key business processes, in order to drive improvements in these processes through planning and resource allocation, as these improvements will have greatest effect on the business of the company.

A vital few

In general there will not be many key business processes that a company may have – a maximum of 12 to 15. Some of these key processes may be generic across the industry in which the company competes – generally those that appear along the value chain, though each of the competitors may have a different approach to perform them. A company may also have distinct key processes when compared to its competitors, which may be related to the company's specific issues that address its concerns of pursuing new opportunities, challenges that it needs to counter owing to its unique geographic location, market positioning, future aspiration, technology portfolio or local laws.

Intuitively people know the activities or processes that are important for the organization, for example for a manufacturing company, the importance of production process and sales process is well appreciated by all concerned. But there are other processes which have an equal or bigger impact on the organization though sufficient these processes never receive the deserved attention. Identifying key processes using a structured approach, aligning their outcomes to deliver the business goals, designing appropriate measures and allocating sufficient resources for their improvement is the key to the success of a company at market place.

The framework

Top management team may follow, the framework provided below to identify and gain understanding of key business processes of their organizations:

Step 1: Identify critical success factors (CSFs) to achieve company’s objectives. These are performance drivers which have major contribution towards accomplishment of company’s objectives.

Step 2: Identify metrics for measuring the critical success factors – this amounts to establishing organizational key performance indicators (KPIs).

Step 3: Identify the processes that are deliver the above drivers for performance or KPIs.

Step 4: Group or un-group related or un-related processes and give them names which convey the activity or operation that gets done. These are the key business processes of a company.

The above activity needs to be done through a thorough brain storming among the senior level executives of the company. This will ensure greater understanding of what processes and activities are important for fulfilling the organizational goals.

A closer look at the above framework makes it clear that first two steps are essentially those which are involved in making strategy maps and key performance indicators (KPIs) charts. If an organization already undergoes the rigours of preparing the KPI charts or strategy maps, then more than half the job is done, it needs to focus now on step 3 onwards.

As can be infered, the framework for identification of key business processes is not a stand alone and disjointed activity, but is a logical continuation of the concepts of strategy maps and KPI charts. Strategy maps and KPI charts establish a clear cause and effect relationship between the goals that an organization seeks and the performance indicators that have major impact on those goals. The only extra step involved is to identify the processes that contribute to each of the performance indicators. These are your key business processes or value creating processes.

Identification of key business processes is of utmost importance to the organization as they are the means for deploying its strategy by aligning the results of these processes with the strategic goals.