# Faster Cheaper Better **Michael Hammer and Lisa Hershman** | [[Action]]  --- Most organisations don't know what they're actually doing. They do things because "that's how we've always done it." When you map an end-to-end process, you'll find ninety-four steps—and you can classify each as **value-adding** (what the customer will pay for), **non-value-adding** (overhead like checking, tracking, scheduling), or **waste** (duplicate efforts, errors, reports nobody reads). > "Value-adding work is work that the customer will pay for, work that directly contributes to creating the desired result." The real goal of any company is simple: **get and keep customers.** Everything else is a means to that end. But most companies measure the wrong things, reward the wrong behaviours, and organise work in ways that optimise functional efficiency whilst destroying end-to-end performance. > "One of the most enduring lessons of social psychology is that behavior change often precedes changes in attitudes and feelings." You don't need people to believe in teamwork before you implement processes that force collaboration. You implement the processes, and belief follows. --- ## Core Frameworks ### [[End-to-End Process]] End-to-end process is about running your business in a different way. What are now individual fiefdoms meld seamlessly into a unified structure with one goal: customer satisfaction. There are three types of processes: **Core** (product development, customer acquisition, order fulfilment), **Enabling** (credit-to-collection, people development), and **Governing** (strategic planning). The Industrial Revolution ended long ago, but we're still organising work like it's 1920. Functional departments (sales, engineering, manufacturing, finance) create fragmented work processes. End-to-end thinking dissolves those boundaries. ### [[Value-Adding vs Waste]] Every step in a process falls into one of three categories: **Value-adding work** (work the customer will pay for, work that directly creates the desired result), **non-value-adding work** (meta-work that doesn't contribute to a result but enables other work—checking, tracking, prioritising, scheduling. The customer doesn't care about it, but it's needed for proper functioning), and **waste** (unnecessary and useless work—duplicate efforts, errors, reports that no one reads). The root cause of persistent performance problems is found not in who reports to whom but in how work itself is organised and performed. When you actually map a process, you'll be shocked. One company found that less than 15% of steps were truly value-adding. The rest was overhead and waste. ### [[Process Owner]] Any effective process organisation needs process owners. Unlike functional managers who supervise people within departments, the process owner owns the **design** of an end-to-end process across the organisation. The process owner has sole authority to sanction changes to the process, owns the design but not all the resources, exercises influence more than control, demands advocacy rather than authority, and is an unusual blend of engineer and salesperson—adept at analysis but also a forceful spokesperson. Making sure that process owners and functional managers work together closely is essential. One way to enforce this: give process owners exclusive control of IT expenditures. Only a process owner can request system development or modifications. This puts real handcuffs on operating managers who consider defying the process owner. ### [[The Seven Principles of Design]] When redesigning a process, ask yourself: will changing any of these seven principles lead to better performance? 1. **What** – What tasks are performed? 2. **Whether** – Should they be performed, and under what circumstances? 3. **Who** – Who performs them? 4. **When** – When are they performed? (Sequence, parallelisation) 5. **Where** – Where are they performed? (Centralisation, decentralisation) 6. **How Precisely** – How precisely are they performed? 7. **What Information** – What information do they employ? The "how precisely" question is counterintuitive but powerful. Even if a step needs to be performed, it may not need to be performed as thoroughly or as precisely as it was in the past. Doing work less thoroughly or less precisely can save a great deal of time or money. Amerin Guaranty reinvented the mortgage insurance business by consciously deciding to be less precise. ### [[Outcomes and Drivers]] Build a measurement system that connects enterprise outcomes to process drivers. **Outcomes** are things you want to achieve but can only do so indirectly (e.g., increased revenue, customer satisfaction). You can't increase revenue by waving a magic wand—only indirectly, by getting more customers and selling more to them. **Drivers** are controllable factors that lead to achieving your desired outcomes (e.g., traffic into stores, conversion ratio, on-shelf availability, customer coverage). > "Identifying desired enterprise outcomes, connecting them to process drivers, and creating metrics for both outcomes and drivers is the basis of an effective measurement system." One person's driver is another person's outcome. Getting customers to buy more is an outcome that can only be achieved through other drivers, such as having products on the shelves. And how do we achieve that? Through processes. ### [[Professional vs Worker]] > "Ultimately they conclude that a professional is someone who does what it takes, as opposed to an ordinary worker, who does what he's told." Converting mere workers into professionals means creating a hybrid breed of employee who not only does the work but manages the work as well, with all the requisite decision-making authority, responsibility, and accountability that implies. Faster, cheaper, better. No longer will they be a mere cog in a wheel; rather, they're the wheel itself. --- ## Key Insights **Companies that don't perform well often are measuring the wrong things and therefore driving the wrong behaviour.** Rewarding people on a performance metric (like "perfect shipment") is much more effective than rewarding them on corporate financial measures (like profitability). The reason is **line of sight**: everyone can see how their actions affect the metric. One company established a **quarterly bonus pool based on perfect shipment**, shared equally by all employees irrespective of base pay. This drove collaboration and end-to-end results. Measurement drives behaviour. Reward systems are honourable but too often drive behaviour counter to what we want. In a traditional functional organisation, such motivational tools encourage heroism. **Heroes are merely symptoms that the process isn't working.** **The traditional approach is to hire someone with skills and experience for a specific job.** A process-centric organisation takes the approach: **"draft the athlete, teach the game."** Hire for attitude and aptitude; skills can be taught. The ideal candidate has two qualities: **"plays well with others"** and **"runs with scissors."** Collaboration plus initiative. Companies truly serious about investing in process increase their training and education budgets **400% or more**. This is a necessary investment, not a nice-to-have. > "Automating a bad process simply produces bad results faster." **Technology follows process, not the other way around.** If these steps are performed out of order, or if the process step is overlooked, it leads to costly problems. You can have high-performance processes without technology, but combining technology with high-performance process can be a game changer. Get the order right. > "Massive change cannot be an optional exercise or a voluntary activity. Real leaders don't ask for results; they demand them." One CEO told his managers: "We are going on a journey. On this journey we will carry the wounded and shoot the stragglers." In other words: If you need help, you'll get it. But if you try to slow us down, we will throw you off the bus. And he did. Anticipate that **"things will get worse before they get better"** and maintain commitment when it does. There are five key values essential to process transformation: teamwork, customer focus, responsibility, change, and discipline. **If we implement new processes that compel people to work in teams, they will begin to believe teamwork is important.** If we implement new processes that force decisions down to the front lines, people will start to take personal responsibility. Don't wait for culture to change before you redesign processes. Redesign processes, and culture will follow. **A caseworker is an individual assigned and empowered to make sure every step of a process gets done.** This eliminates handoffs and delays. The caseworker approach works when all steps are relatively simple and can be mastered by a single individual. When steps are complex and require specialised training, use a **case team**—a coherent unit that applies the skills of various members to solve a problem. A **case manager** coordinates the work of others to streamline the process (e.g., hospitalists in healthcare, project managers in IT installations). > "Trust is something that is very difficult for a company to create and has a value that can't necessarily be quantified, but it is a key differentiator among competitive companies." When you reduce handoffs, increase transparency, and deliver consistently, you build trust. And trust compounds. --- ## Connects To - [[The Goal]] - Hammer's "value-adding vs waste" maps directly to Goldratt's distinction between productive work and constraint exploitation - [[High Output Management]] - Grove's leverage principle applies here: process redesign is the ultimate high-leverage activity - [[Turn the Ship Around!]] - The "professional vs worker" distinction echoes Marquet's leader-leader model (intent-based leadership) - [[The Five Dysfunctions of a Team]] - Process redesign forces collaboration and breaks down silos, addressing dysfunction directly through structure - [[Measure What Matters]] - Outcomes and drivers are essentially OKRs: objectives (outcomes) and key results (drivers) --- ## Final Thought Most companies are running on Industrial Revolution logic, optimising task efficiency whilst destroying end-to-end performance. **Don't fix processes, throw them out.** Keep only the value-adding steps and redesign everything else from scratch using the seven principles of design. Then create the infrastructure (metrics, rewards, training, process owners) to sustain it. You don't wait for people to believe in collaboration before you implement collaborative processes. You implement the processes, and belief follows. Behaviour precedes attitude. This is liberating—it means you can start now, with structure, without waiting for hearts and minds. You can demand results, not ask for them. You can throw out legacy processes entirely. You can turn workers into professionals by giving them authority and accountability. You can increase your training budget by 400% because it's not an expense, it's the foundation. The holy trinity—faster, cheaper, better—isn't a trade-off. It's the natural result of obsessive focus on end-to-end value.