By looking at the performance of the entire process, the team can identify where a yield improvement project would be most beneficial. Here, the identified project may be either a process improvement or a design project. Process management can also be used as a framework to standardize processes or to identify benchmarks for process performance, and in some cases it can even provide a framework for integrating acquisitions by identifying common processes, picking the one that performs best for both companies (Peters and Nancy 1999, 88).

Assuming a process management system has been implemented, one of the key questions is whether the business should abandon the existing functional organization structure. Unless the performance measures for every single function are realigned with the metrics outlined in the process management system, a clash is inevitable: Functional heads will try to optimize their local metric, while the process owner strives to improve the overall process.

Abandoning the functional organization structure is a radical departure from the old way of doing business and can have a liberating effect on the entire business. However, the risk of failure is substantial: Adopting a process structure changes the power structure of the organization, reporting relationships, performance measures, processes and routines, and so on. A compromise is to adopt a matrix structure in which the process owner has control over process changes and has input into organizational processes such as budgeting and performance management (Peters 2003, 53). In this case, it is important that the compensation system be adjusted to reward functional leaders for meeting process goals first and functional goals second. Failure to address the performance management issues results in a structure that is too weak to ensure that overall process goals drive performance.

6.    Conclusion

We live in an information age, in which knowledge and intellectual capital are necessary to compete in the marketplace. Ikujiro Nonaka and Hirotaka Takeuchi (1999) developed a model whereby knowledge creation has two dimensions (93-95). On the one hand, knowledge can be explicit or implicit (tacit), and on the other hand, knowledge can be individual, group, organizational, or inter-organizational. The distinction between these two dimensions is not trivial. Knowledge that is only implicit is hard to share and transfer. And knowledge that exists only within an individual but is not shared with others has limited utility for an organization. What does all this have to do with Six Sigma?

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