Business Process Management: Impact on Organizational Flexibility

Global Journal of Flexible Systems Management, Oct-Dec 2008 by Stohr, Edward A, zur Muehlen, Michael

Flexibility is a reflexive property of the organization as well as proactive and offensive in nature

The need for organizational flexibility in an era of rapid technology changes, increasing competition, and globalization, is apparent. While definitions vary, flexibility is usually defined as the ability to respond appropriately and rapidly to changes in the environment of the organization (Stalk 1988). A flexible organization can thus meet an increasing variety of external changes in technology, competitor threats, customer demands and government requirements without excessive costs, undue delays, organizational disruptions and performance losses. Thus, from this point of view, flexibility is a reflexive property of the organization - essentially a defensive capability. From a different teleological viewpoint, the goal of organizational flexibility can be proactive and offensive in nature, i.e. the capability of seizing opportunities, introducing new innovative products and services into the market, disrupting traditional supply chains, and continuously staying ahead of the competition.

Flexibility is important in all industries and areas of management and is a multifaceted concept

Flexibility is important in all industries and areas of management. The study of flexibility has a long history in the areas of "Flexible Manufacturing" and "Advanced Manufacturing Technologies" whose objective is to reduce manufacturing product life cycles, enable a broader range of products to be produced efficiently, and increase productivity and profitability. More recently, Graves and Tomlin (2003) and others have studied supply chain flexibility. Taking a broad viewpoint, Sushil (2001) describes other dimensions of flexibility. In his view, Infrastructure (Information Systems), Operational, Organizational Flexibility, and must all work together to achieve Strategic Flexibility for the organization. Thus, flexibility is a multi-faceted concept.

In this special issue, a process-oriented view of flexibility is taken

In this special issue, we take a process-oriented view of flexibility. Our argument is that an organization's strategy is realized through the activities it engages in and that these activities are embedded in processes (Alter 2006). Organizational processes include not only those that are well-defined and can be wholly or partially automated. Equally important are managerial processes such as strategy formation, directing, coordinating, monitoring and motivating employees, managing change, and developing the culture of the organization (Garvin 1998). Since processes cut across internal functional boundaries they can serve as a means for breaking down hierarchical barriers (Rummler and Brache 2002). The documentation, improvement and automation of these processes as a result of various competitive and regulatory pressures should lessen the internal rigidity of organizations. Processes also serve as the link between an organization and its business partners. To the extent that inter-organizational processes are improved, documented and automated, one would expect that the ability of the firm to interact flexibly in its environment should be improved. Process flexibility also allows organizations to rapidly assume new competitive positions and to act proactively to achieve competitive advantage. After all, this was the main message of the business process reengineering movement of the 1990's with its exhortation to radically rethink standard ways of doing business (Hammer 1990). Proponents of Business Process Management (BPM) argue that the new workflow-oriented technologies and process-oriented philosophies can provide the firm with great opportunities to innovate product delivery and service, change fundamentally the value chain, and allow companies to compete in hitherto unheard of ways.

Flexible business processes should help firms efficiently respond to market changes and to rapidly bring new products and services to the market place

At face value therefore, flexible business processes should help firms efficiently respond to market changes and to rapidly bring new products and services to the market place. Considerable research attention has been devoted to the impact of various process-oriented methodologies and technologies such as six-sigma, workflow automation and ERP systems on organizational flexibility (Hackman and Wageman 1995). However, the evidence to date has been mixed. ERP systems in particular, have been criticized because they seem to require the organization to adapt to the processes encapsulated in the software. Even though these processes may be "best of breed" critics argue that firms can lose the ability to seize competitive opportunities and that, in fact, many processes are becoming commoditized and are no longer sources of competitive advantage (Carr 2003). Some recent studies have also shown that while processoriented management techniques such as business process reengineering and six-sigma have been successful in increasing the efficiency of organizations but have resulted in a culture that encourages incremental, "continuous improvement" innovation rather than fundamental breakthrough innovation that can improve the firm's competitive position (Hindo 2007).