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October 13, 2006
BI = Business Interfaces
Brasseries de Bourbon, an operating company on Ile de la Reunion of beer brewer Heineken, has been pioneering the concept of what I have been calling business interface metrics for a few years now.
La Reunion found out that the traditional ways of target setting and ownership led to organizational silos and suboptimal results. For instance, it is in the best interest of the production department (a business domain) to have as large as possible production batches. The marketing department (another business domain), in the meantime, would prefer as many production variants as possible. The solution has been to introduce a shared objective and target between both departments called time to market”, to manage the business interface between those two business domains. Another example is the shared objective between HR and production, each being equally responsible for an efficient workforce planning.
Throughout the process La Reunion has developed some interesting insights into successful management of business interfaces, including its measurement. To show the concept of shared responsibility (part of the concept of business interface metrics) in a non-confrontational way, the Controlling department decided to measure its degree of health with an official performance indicator called total weight”. The weight of the three people within the department was not to exceed 250kg. Every month, in the management report, the team would have to comment on whether the team target was achieved . Brewery-wide, Brasseries de Bourbon organized a meeting for all process-owners twice a year. In this meeting, all participants would have to explain their processes, how they contributed to overall objectives, as well as to other processes, and what they needed from other process owners in order to be successful. Each process-owner would build a little stand and show what it was doing. In this way, the different process-owners would not only consider the needs of their process, but the needs of other process-owners as well.
Co-ownership was cascaded down into the organization. For instance, the Head of accounting department was made co-responsible for the days-sales-outstanding (DSO), a metric with great financial consequences, but which, as a process, was the responsibility of Sales.
Brasseries de Bourbon concludes there are a few essential preconditions successful implementation of business interface metrics. First of all, it requires a strong process orientation. Secondly there needs to be strong commitment of every director to focus not only on the business domain, but also on the interfaces, in order to optimize the performance of the organization as a whole. The targets on the business interfaces then need also to be connected to the bonus plan, so that there is a strong incentive for collaboration. Lastly, there needs to be an adaptive culture, in which the managers allow themselves to be coached by each other and are willing to change their plans if certain performance indicators show failing targets, regardless if this happens within ones own domain or someone elses.
This is perhaps the most important precondition of all: information shouldnt be proprietary and shared on a need-to-know basis. Successful collaboration hinges strongly on information democracy: an open sharing of information between the various stakeholders.
Posted by Frank Buytenkijk at October 13, 2006 5:16 AM
