Process v Outcome

On the surface, Western business today is very results-oriented.  Companies hire people with ‘records of achievement.’  Corporate spokesmen tout the company’s culture of excellence.  CEO’s fill their talks with sports analogies to the digital world of winning and losing.

Scratch the surface, however, and you will find that all of these companies have built their winning formulas around process.  The key to winning is all about X’s and O’s, playbooks, metrics, and the discipline of accountability.

Western business people tend to be very process oriented due to the fact that a process is but a formal expression of deductive reasoning (i.e. cause and effect).  If the path from “A” to “B” ultimately leads to the desired outcome, “C”, the Western business person wants to formalize and codify the procedures necessary to travel that path with efficiency and consistency.

Western corporations, as a result, frequently expend massive amounts of time and energy mapping their business processes and codifying the procedures that formalize them in the belief that such formal planning and control systems will assure efficiency, enhance predictability, and minimize the economic and legal risk of poor decision-making or unethical or illegal behavior.

Chinese companies, by comparison, are equally consumed with results.  Process, not so much.  To their way of thinking speed, agility, and relationships are the keys to success.

Once again it comes back to reason and worldview.  The Chinese are less concerned with cause than effect simply because they presume no sequential linkage between the two.  In their more holistic view of reality outcome stands on its own, not at the end of a process.

My company recently undertook a major maintenance project costing millions of dollars.  For a company our size it was huge.  And we had all hands on deck, including our SME’s, or subject-matter-experts, as headquarters likes to refer to them, from corporate engineering.

The main contractor was a private Chinese company who we had never done business with before.  They had a lot of experience and the price was less than half of the price quoted by other contractors with foreign-enterprise ties.  But his methods, understandably, were classic Chinese.

Safety was a critical concern.  Molten glass is hot – more than 1300 C.  You don’t want to be near it, much less touch it.  And there was one simple tool that was critical to the first step of the project because it was the key to keeping the molten glass where we wanted it.

The contractor, of course, brought a perfectly adequate tool to handle the job.  But he only brought one.  Our corporate engineers wanted a backup in case of failure.  The contractor argued that a backup wasn’t necessary and would add unnecessary cost.  He had performed hundreds of similar jobs and the tool had never failed before.

But our engineers, with my full and sincere support, would not back down.  And our machine shop worked all night to build a backup.  That, of course, we never needed.  And that’s okay.

We also wanted to see a schedule so we could track progress under the Western theory that these metrics would allow us to react more quickly to problems and take corrective action.  The contractor, of course, maintained that there was no need for a detailed schedule.  He would know there was a problem before it appeared on a schedule, he argued.  He would, he assured us, finish on time.

Again, our engineers, with my full support, would not back down and provided the contractor with a list of milestones that they wanted to see in the schedule.  And he finally complied.  He took the start date, the end date, and divided the time in between by the number of milestones on the list, attached each of the milestones to one of those dates, and returned the completed schedule to the engineers.

In the end, the contractor finished ahead of schedule, no one got hurt, and we came in under budget.  And the quality of the work was perfectly adequate.  Our corporate engineers are still shaking their heads, but the lead engineer respectfully noted that they completed one critical part of the project faster than any crew he has ever seen.  And he has seen a lot of them.

It is one of dozens of similar stories I could tell.  When I first arrived here we had a brilliant Supply Chain Manager who was probably one of the smartest mangers I’ve ever worked with in any field.  And he was a wizard with technology.  He learned our ERP system inside out in a matter of weeks and could absorb and implement complex new planning systems in a fraction of the time headquarters would schedule for the task.

Needless to say he was a great asset to have on the team during startup, when we had an entire company of people with no knowledge of our corporate processes, no familiarity with the industry, and no prior experience working together.  If a customer had a special request and we needed the order out by 5 p.m. he got it done.

But, of course, in order to do it he had to work outside of the formal process that headquarters wanted us to follow.  And the people who had authored the corporate process went spastic.  Time after time after time I was called upon to justify why we had circumvented ‘the system,’ the pillar of process, upon which all operations were built and, by implication, all success turned.

My point here is not to take sides or to lay blame at the feet of one perspective or the other.  Both have their advantages and their disadvantages.

The process-centric approach maximizes predictability, repeatability, and lends itself to strong operational controls.  In turn, however, the process can take on a life of its own; it can be expensive; and it can impede the agility and flexibility needed in a fast-changing world where customers have choices.

The organization can become so process-centric that it loses sight of the desired outcome that gave rise to the process in the fist place.  Bureaucracy overwhelms efficiency; predictability hardens into rigidity; and false security masks impending doom

The outcome-centric approach, on the other hand, is great for getting things done quickly.  It’s totally agile and responsive.  And it can materially reduce costs.  Repeatability, however, isn’t always there and I would not recommend a casino adopt this approach in managing its dealers and croupiers.  The same mistakes can be made repeatedly; past experience may not be efficiently shared; and rogue behavior can more readily go undetected.

You’ll have to decide which approach is best for your business.  Like most things in life and business I think it comes down to achieving some balance between the two.  That said, I caution Western companies setting up operations here to avoid shoe horning their Western processes into their Chinese operations.  You may unduly frustrate your Chinese staff, which will in turn lead to turnover, and you may find yourselves hopelessly flat-footed and out-maneuvered in the rapidly changing Chinese marketplace.

But just one more note on the control issue that is so much on the mind of Western companies consumed with living their values and avoiding regulatory hot water.  It’s a bit counter-intuitive to a Westerner but I believe it is correct.

For those seeking to impose certain standards of behavior (e.g. the government, the police, corporate attorneys) ambiguity, not clarity, is their most powerful ally.  As the Chinese know so well, if a law or regulation is brief and vaguely worded the government has the authority to interpret it as it sees fit at any point in time.  If, on the other hand, the law or regulation is precise and all-encompassing regulators have less flexibility in applying it.  And the cheaters can more easily figure out ways to cheat.

In essence, the detailed control systems that Western companies rely on to control rogue behavior can, in fact, work to the advantage of the rogues.  It’s akin to a bank or museum putting the details of its security systems online for all to see.  The rogues, in essence, are empowered to turn the tables on the predictability and repeatability that the enforcers so cherish.

Think about it.  It’s the beauty of circular thinking.  “Wherever you go, there you are.”

Copyright © 2013 Glassmaker in China

Notice:  The views expressed in this post are strictly those of the writer acting in a personal capacity.  They are not in any way endorsed or sanctioned by his employer or any other individual with which he may be personally or professionally affiliated.