Booz Allen Hamilton: Eight principles for optimizing business practices (page 1 of 2)

When reading Middle Eastern newspapers these days, it is hard to miss the economic boom that the region is experiencing. Hardly a day goes by without a new mega project or other interesting developments being announced. Similar to the growth period in the seventies, high oil prices are an important driver behind the current boom.

The similarities end here though, as this time around many more reasons can be identified behind the growth. For example, since "9/11" a significant proportion of local wealth is being invested locally. In addition to that, most countries in the region are actively modernizing and liberalizing their economies and are supporting both local growth and foreign investments. While in the first oil boom, foreign companies were pretty much on their own, this time around they are facing increasingly sophisticated local players in a more and more competitive "playing field" and in a region that is "growing up" fast in an economic sense.

This is why, "simply being there" is not enough these days and as many companies have articulated their overall strategic direction, they are now turning to optimization of their businesses as a basis for economic success. Booz Allen Hamilton has been supporting similar efforts globally for more than 90 years now. A number of lessons have been learned from studies abroad that can also be applied in the Middle East.

This is especially important as research indicates that over 50 percent of large transformation projects, incorporating changes to processes are late, over budget, and/or do not achieve their objectives.

"However, some businesses have managed to master the challenge and ensure successful optimization of their business processes while building on a sound strategic direction," says Karim Ragab of Booz Allen Hamilton.

"The end goal is to always create greater value, which can usually be attained through steady analysis and adequate changes to the corporate operating model. We have made an effort to lay out a general strategy that achieves this."

At Booz Allen Hamilton, our cross industry experience has shown that companies that successfully executed process improvement projects share similar approaches. We have distilled these into eight different principles:

1. Focus on the right levers to create the most value within the organization. Companies should look to their level of process maturity to determine which lever or levers to employ first. By looking at best practices across their industries, companies can determine where they are significantly lagging behind their competition. It is important to view these in light of company strategy to ensure that value creation is done in line with corporate priorities. For instance, a company may be behind best practices in certain areas, but may choose to improve only a bit as this area is not as important or too difficult to change in the local environment. On the other hand, a company may chose to even exceed best practices and strive to be a global leader in other areas.

2. Arrange the process architecture into natural groupings to determine priorities and avoid being overwhelmed. Even the most flexible companies cannot optimize all of their processes at once, even if the management team sees a clear need for this. Many processes within a company fall into natural groupings, based on their organizational alignment and ownership. After finding those natural groupings, companies can use a well-developed business case to set priorities and determine which processes need to be optimized first, depending on how much value they can deliver and what efforts are required to improve them.