Optimize your processes.
May 2023, Vol. 12 No. 5

Businesses need processes.

But what makes a process a good process and what factors need to be considered to optimize process within your organization?
Today's newsletter takes a look and shares suggestions.

Please reply with your thoughts and comments.
Charlie Goodrich
Founder and Principal
Goodrich & Associates
In this issue…
Business Processes — the Key to Consistent Results
Heard on the Street
About Us
Business Processes — the Key to Consistent Results
When Steve Jobs passed in 2011, many thought Apple’s best days were behind them. Clearly, that has not been the case. 

There are many reasons why, but I am confident one of them is because under Jobs, Apple had adopted well-honed processes for getting just about anything done. Even with Jobs gone, Apple kept following — and improving — those processes.

When is a process a good process? Simple: when things are done consistently and efficiently, with no mistakes or surprises. 

When Processes Are Needed

For getting things done. Transaction activities such as buying things, paying bills, entering orders, and so forth require processes. This helps prevent mistakes that, ultimately, cost money (e.g., paying the same invoice twice). Moreover, customers, vendors, and others expect to be treated consistently each time they place an order, etc. 

For making decisions. Most decisions should also be made through a process. At a minimum, this means not wasting time to rethink how to make a particular decision each time such a decision needs to be made. Better still, decision processes focus the organization on the information needed to make the decision so there is no hold up due to late information. 

Improve Your Business Processes

Some things to consider…

Be clear about WHAT the process is trying to achieve.

You need the right process for the right purpose. For example, a detailed, bottoms-up process is not a good way to develop annual financial goals for operating groups. However, it can be a good way for operating groups to financially validate their operating plans to achieve financial goals.

Further, consider whether you are trying to do too much with a given process. Is the process of recording sales transactions intended to make sure the customer is satisfied; that the company gets paid the proper amount; to obtain market research information; or some combination of all three? Understanding what the output of the process should be can eliminate work that is not needed or that conflicts with more important objectives, such as customer satisfaction.

Determine the TYPE of process you are dealing with.

Transaction processes should be different than decision-making processes. Transaction processes require thinking about what works best for the customer. Decision-making processes require that we first focus on the decision to be made.

Note that transaction processes are usually highly automated and performed by lower-level employees. Decision-making processes are far less automated, made on an as needed basis, and intended to support decisions by middle and senior management.

Decide WHERE in the organization the process should occur.

It is often the case that those closest to the initiation of a transaction are most knowledgeable and therefore most qualified to process it. On the other hand, if a given type of transaction doesn't happen often enough for a front-line person to process it reliably and promptly, then some centralization may make sense.

When I was in the rent a car business, for example, credit card chargebacks were originally handled by accounting clerks at the airport. After all, they were closest to the paper records and the customer transaction happened only a few feet away at the front counter. But back then, chargeback notification from the credit card processer was by fax and sporadic. In this case, it made sense to centralize processing in my regional office.

Determine WHICH processes need to get done (and which don't).

Doing unneeded work often happens in the control aspect of processes or in decision-making support processes, as the nature of decisions and how they are made changes over time. This is particularly common when a process is the subset of a larger, unnecessary process.

For example, when I worked at State Street Corporation, I had a group that processed the annual budget. One subgroup of five did nothing but make sure that budgeted inter-company transactions netted to zero on a consolidated basis. We were able to streamline the process a bit, but the bigger issue is that none of the work should have ever been done: Why budget something that is supposed to net to zero?

Establish a means for handling EXCEPTIONS.

Establishing exception-processing rules beforehand will streamline their handling when these inevitably occur. Determine which criteria must be met as a tripwire for staff to consult with a manager. For reoccurring exceptions, such as when limits of authority are exceeded , have a process that defines what to do.

STEAL the wheel.

Businesses have more in common than many people realize. This is particularly true for routine processes, something financial auditors are well aware of. So, other than processes that are deliberately different and that represent your competitive advantage, there is no need to reinvent the “wheel” when somebody else has already figured out a good way to get things done.


  • Establish a formal policy. Develop principles, rules, and guidelines that frame the process. Make sure the policy is readily accessible by all employees, particularly first line supervisors and above in your organization.

  • Put procedures in place that support the policy. Describe the process, so people know what to follow. 

  • Develop "desktop procedures." These are step-by-step details for execution. Think of these as how you would explain the process to somebody who was covering for an employee on vacation. Without desktop procedures, new employees and fill-ins will make inadvertent, minor changes that can be significant when accumulated over time.

  • Train, train, train. This can be as simple as having a covering person sit with someone before going on vacation, all the way up to formal training with dedicated staff, programs, and facilities. However it's accomplished, don't shortchange this critical step. 

  • Audit. To ensure compliance, as well as to be certain the process is being executed as designed.

Process is Not Free

All of the above costs time and money. Which leads to an important question: How much time and money should be spent on a process?

In general, the more often the same work is done, the more it will benefit from thinking through how to do the work and institutionalizing that how. Payback also increases when the dollar value of the outcome increases, be it the number of times the process should be done or the dollar value of each process.

Every situation and company is different, but wherever you come out, take a page from Steve Jobs by understanding the value of process within your organization, following and improving these as best you can. 
Please share with your colleagues:
Heard on the Street
Common thinking is that an influx of first-time home buyers during the Pandemic drove the increase in housing prices, particularly in 2021. The idea is that since first-time home buyers are not also selling a house, they represent an increase in demand for housing. 

Turns out the percentage of first-time home buyers didn’t change much during the pandemic. Read the short research by Donghoon Lee and Joseph S. Tracy with the Federal Reserve Bank of New York here .
About Us
Goodrich & Associates is a management consulting firm. We specialize in restructuring and insolvency problems. Our Founder and Principal, Charlie Goodrich, holds an MBA in Finance from the University of Chicago and a Bachelor's Degree in Economics from the University of Virginia, and has over 30 years' experience in this area.

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