When attempting to improve the performance of the entire enterprise, a question arises. What process or set of processes should be improved first? That question is sometimes answered by top leadership who have a specific process they want improved or by a department leader who has a lot of political clout. A question more fundamental than which process to improve first, is the question: is the sequence of process improvement significant? We believe it is. In the pages that follow, we will provide support for the notion that the sequence in which an enterprise engineer improves processes is vital to developing a competitive advantage for the enterprise.

Enterprise Engineering, process improvement, reengineering

To illustrate the importance of the sequence of process improvements in Enterprise Engineering projects.

Enterprise engineering is concerned with the daunting task of improving all enterprise processes. The enterprise engineer takes a holistic view of the enterprise. The holistic view considers the entire enterprise to be a system of integrated processes. Thus the enterprise is composed of a finite set of processes that are linked to one another in various configurations. When attempting to improve the performance of the entire enterprise, a question arises. What process or set of processes should be improved first? That question is sometimes answered by top leadership who have a specific process they want improved or by a department leader who has a lot of political clout. A question more fundamental than which process to improve first, is the question: is the sequence of process improvement significant? We believe it is. In the pages that follow, we will provide support for the notion that the sequence in which an enterprise engineer improves processes is vital to developing a competitive advantage for the enterprise. Sources of support include literature, personal experience in enterprise engineering and common analogies found in everyday life.

Reengineering is defined as, "the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed" [1]. From all the reengineering literature that has emerged over the past 9 years one conclusion can be made with confidence: everyone has their own method for doing it [2, 3, 4, 5, 6, 7, 8]. The emphasis on methodologies for reengineering in the literature suggests that the sequence in which processes are changed is important. Many authors agree that reengineering is difficult. In response, they provide methodologies to increase the probability of success. Most reengineering methods can be generalized to plan, analyze, design and implement. This simple four-step process looks very similar to a simple problem solving algorithm. Planning is the first step in most of these methodologies. With such emphasis given to planning, readers can conclude that reengineering is a complex process. Part of the complexity is a result of the wide variety of processes in which to start improving. Hammer's process for determining the sequence of processes to reengineer is simple: start with a clean slate. Forget the old processes and start over. Sounds good. That approach certainly eliminates the question of "in what sequence should we reengineer the processes". The problem with his approach, of course, is implementation [9]. The counter to Hammer's "clean slate" approach is to take a more practical incremental approach. An incremental approach, of course, requires an answer to the sequence question.

Few authors in reengineering literature will commit to a particular methodology for determining that sequence of processes to reengineer. One fact we do know, reengineering typically requires an investment in information technology. The sequence in which processes are improved with this technology is critical to the overall success of the project. Processes depend on one another to operate. Changing one process with information technology will impact several others in a chain reaction type of explosion. With information technology, systems depend on one another to operate. Thus, the primary information system must be in place before others can be installed. As you can see, the sequence issue can become quite complex.

Contingency theory states that there is no one best way to organize an enterprise. Therefore, any methodology for determining how best to configure business processes and determining which one to improve first needs to be in a template format which can be uniquely employed by enterprise with varying results. Powell summarizes the connection between organizational alignments and performance, which contingency and configuration theorists have proclaimed for decades [10]. Organization theory-based research attributes the popularity of contingency theory partly to a fundamental assumption that there is no one best way to organize, and that any one way of organizing is not equally effective under all conditions [11]. In terms of responding to environments of uncertainty change, various differentiated structures were adopted by successful firms versus unsuccessful firms [12].

Contingency approaches realize that structure, people, technology, strategy, and culture all combine to determine the performance of an enterprise [13]. Ginsberg and Venkatraman [14] propose a two-level scheme for reviewing contingency theory research on organizational strategy. This scheme employs a systems model emphasizing environmental, organizational, and performance variables for perspectives on strategy research at the first level and incorporates relevant analytical dimensions at the second level [14]. In discussing the organizational life-cycle in terms of organizational contingency theory a systems approach was suggested to provide a more comprehensive picture of the organization [15]. However, no methodology is presented.

The best way to organize depends on the nature of the environment to which the organization must relate. The problem in improving business processes is that there will be no one overall solution. Contingency theory suggests an interdependence of business-level strategy, organizational structure, and competitive environment in order to achieve high performance. A study conducted by Priem supports that judgment policies favoring strategy, structure, and environment matches produce higher performance than do other judgment policies [16]. In summary contingency theory is a theoretical backdrop for situational analysis of organizing the enterprise.

Contingency theory supports the idea that the sequence of processes to improve will be different for every enterprise. A "silver bullet" sequence of processes to improve does not exist. The sequence that is best you’re a particular enterprise will be "contingent" upon internal and external factors. Knowledge of this fact emphasizes the importance of an assessment of he internal and external environments.

Prahalad and Hamel first introduced the term "core competence" in their Harvard Business Review article [17]. Unique competencies are said to give the enterprise the competitive advantage in the resource-based model [18, 19, 20, 21, 22, 23]. Core competencies exemplify excellence and provide competitive advantage [24].

Competition occurs at the business level not the corporate level (17, 25, 26]. The roots of competition for Prahalad and Hamel are core competencies, which are the technical skills possessed by people scattered throughout an organization. A competency tree is used to convey the concept. The "roots" are the core competencies, which feed the "trunk" and "major limbs" of core products. These core products sustain the firm's business units by becoming components in their end product. For example, Casio has core competencies in miniaturization, microprocessor design, material science, and ultra thin precision casting. It uses these to make components (core products) such as thin plastic wafers and miniature microchips. Its business units can then combine these into credit-card-sized calculators, pocket televisions, and digital watches [17].

The concept of core capabilities is not new and Leonard-Barton provides an excellent review on the development dating back to 1974. Furthermore, she suggests four dimensions in which a core competency can be embodied: 1) employee knowledge and skills, 2) technical systems, 3) managerial systems, and 4) values and norms [27]. Capabilities are considered core if they differentiate a company strategically. This excellence is translated into customer-perceived value and is difficult to imitate by competitors and is extendable to new markets. An enterprise's current product and service offerings is simply a physical embodiment of its competencies [24]. Sometimes there is confusion between core technologies and core competencies. Core technologies are a component of core competencies. For example the implementation of a JIT system is required to be a tier one supplier. Core technologies are crucial for survival but do not offer any specific differential advantage over other competitors in that industry. The key to understanding competence is that it includes not only a technology component but also the governance process inside the organization. Competence = (Tech * Governance Process * Collective Learning) where the Governance process is the capability to work across business and functional unit boundaries [28]. A suitable definition of a core competency is "a set of differentiated skills, complementary assets, and routines that provide the basis for a firm's competitive capacities and sustainable advantage in a particular business" [29].

A core competence has potential access to wide variety of markets, makes significant contribution to customers benefits, and is difficult for competitors to imitate [24]. All these definitions contain the "difficult to imitate" characteristic for a bundle of resources to be a core competency. However, Von Krogh and Roos [30] review the existing literature which study the issue of imitability. The imitation process is an extremely complex process which is not yet understood completely but it is concluded that "purchasable resources can never be sources of sustainable competitive advantage, because they can be traded in the market" [30].

Core competence is a major factor to consider in the question of what sequence of processes to improve. Following the competency tree analogy, do you change from the roots to the leaves or from the leaves to the roots? Understanding the relationships between the core competencies and the processes that grow from them must be fully understood before a sequence can be established.

The resource view of the firm is concerned with the unique competitive advantages of individual enterprises [31, 29, 32]. Furthermore, strategic management utilizes resource theory as the fundamental characteristic of performance and competitive advantage [20, 31, 32]. "A firm’s competitive position is defined by a bundle of unique resources and relationships and that the task of general management is to adjust and renew these resources and relationships as time, competitions, and change erode their value" [31]. A firm’s resources include all assets, capabilities, organizational processes, firm attributes, information, and knowledge controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness [34].

Resources are critical constraints to determining the sequence of processes to improve. Human resources may need additional training before an improvement initiative can begin. A piece of equipment or technology may be crucial to improving a particular process. Without that technology, the improvement sequence must change.

Consider the example of constructing a puzzle. You could start with finding the corners and then look for all pieces that have a flat side signifying an outside border of the puzzle. This approach attempts to find the boundaries of the puzzles before connecting the remaining pieces. You could also start by just trying to find pieces that have similar colors or patterns. This approach attempts to build interior sections of the puzzles and linking them together before looking for the boundaries. Which approach is best? The answer will be different for each person. Some people must see the overall picture before looking at details where as others just jump in and look for patterns, letting the big picture emerge as interior sections are linked. These approaches could be compared with transforming companies. Enterprise engineers take a holistic view of the enterprise. Thus they would build the perimeter of the puzzle before looking to the interior. This approach provides a measure of the scope of the work to be done on the enterprise. Those who look for interior patterns first typically are not concerned with how their solution fits with the overall performance of the enterprise. They have a narrow expertise, such as automated packaging systems, or marketing, and are concerned with improving the performance of one particular area of the enterprise. The lesson to be learned from this example is that the sequence of events to improve the enterprise depends on the goal of the improvement initiative. Companies looking to improve the overall performance of their enterprise will take an enterprise engineering approach (border builders). Companies looking to improve only a small area of their enterprise will take the specialist approach (interior builders).

Baking a cake requires a specific sequence of events to create an ideal cake. A typical recipe calls for specific ingredients in a specific order. Slight deviations can be made from the recipe, but major changes could result in catastrophe. From personal experience, a cake can become food for your trash can rather than desert for you guests when you ignore the sequence of adding the ingredients or the importance of including particular ingredients themselves. A recipe recommends a unique sequence of activities to produce an idea cake. Any deviation from this recommended sequence increases the probability of a substandard cake. Why will a substandard cake result from changing the sequence? Chemical reactions and mixtures are taking place. The rising agent must react and mix properly with the other ingredients. Thus, the sequence is determined, in part, by physical and chemical limitations. The first lesson to be learned from this example is that the sequence will be determined, in part, by constraints.

A recipe is a set of instructions that will fit all customers. When baking a cake we all want the same results. We want a delicious cake. When transforming an enterprise, we all want the same result on a very abstract level. We all want a profitable enterprise that has a sustained competitive advantage. At lower levels of abstraction, enterprise leaders want different outcomes such as specific goals for growth, new markets, or products to be offered. The second lesson to be learned from this example is that at a very high level of abstraction all enterprises should follow the same sequence of steps to transform their enterprise. In order to achieve specific goals, these steps will be customized to fit the individual needs of each enterprise.

The third lesson to be learned from this example is that a defined sequence is important to a successful transformation. Just like the recipe is a guide for baking a cake, the sequence of events that lead to a successful transformation should be planned. Many enterprises have discovered the hard way that attempting to transform their enterprise without a specific sequence of events (or transformation plan), can lead the company to a condition far worst than before the transformation initiative began. Imagine trying to bake a cake without a recipe! This is particularly true if you have never baked a specific type of cake. Most enterprises attempting to transform have not transformed in the past. Thus, they do not have experience as a guide for the process.

Consider the example of repairing a car. Suppose you are attempting to replace the water pump. In order to perform this rather laborious repair, you might consult a repair manual for specific instructions. These instructions would tell you the step by step procedures for replacing the water pump. One revelation you will quickly discover is that there are a lot of parts to remove before getting close to the water pump you want to replace (this discovery is similar to companies who jump into transforming and quickly realize that transformation requires a lot more work than originally expected). The sequence of parts to be removed is strict. The engine assembly constrains the sequence in which the parts are removed. The fan cover must be removed before the fan. The fan must be removed before the water pump, and so on. Companies have similar constraints. The organizational structure, geographic dispersion, human resource policies, or other constraints will limit the sequence of activities in which the enterprise will be transformed. The first to be learned from this example is that constraints can dictate a very specific sequence of activities. This sequence cannot be changed.

The authors have worked with small manufacturers in the Dallas/Fort Worth area since 1992. The Small Business Development Center for Enterprise Excellence is a program to assist companies to transform their entire enterprise. Funded in part by the Small Business Administration and the State of Texas, we were attempting to facilitate an enterprise transformation. During this time, we have noted the power of sequence.

We used a transformation methodology to assist our customers. Using a methodology meant that on the highest level of abstraction, every company would go through the same sequence of events to transform. With our approach, every company would develop a vision and strategic plan for the transformation. Then we would facilitate cultural change, process improvement and technology implementation initiatives with process improvement teams. The team(s) would attempt to improve some process in the enterprise. The selection of that process was often ad hoc at best. Over years of assisting companies, it became clear that the sequence of processes that was improved made a profound difference on the success of a transformation effort. In the text that follows, we describe several small companies who discovered the importance of sequence.

From 1992 to 1993, we worked with a small company that manufactures sheet metal and metal extrusions for the aerospace industry. The company, which we will refer to as "Machine Co." was feeling pressure from their large aerospace customers to improve their operations. At that time, the aerospace industry was shrinking its supplier base and Machine Co. wanted to survive the cut.

Like many small companies, Machine Co. was initially concerned with symptoms of their real problems rather than the primary issues. After developing a vision for the future and a strategic plan to get there, Machine Co. leaders felt that "order processing" was their primary problem. Despite our efforts to convince top leaders to examine a manufacturing process, they insisted on "order processing." A process improvement team was formed to examine the "order processing" process and make recommendations for improvement. After weeks of investigation, we discovered that paperwork was not the problem. The problems originated from issues in manufacturing, sales and other areas that provide information to the "order processing" process. Team members were frustrated at the lack of real change we had accomplished and were quickly losing enthusiasm for any team activities.

At this point, we met with the team of top leaders to redirect our transformation efforts. We took the top leaders on a tour of a local company that had made wide scale changes to their manufacturing processes in a very short period of time. This company had transformed their functional plant layout to a cellular layout and combined it with self-directed work teams. Machine Co. was inspired by this company to attempt wide scale changes of their own. We started with assisting Machine Co. to implement a pilot cell at one end of their facility. It was a high profile project. The cell was given the best equipment and the best people. To be selected to work in the cell was viewed as an honor. With all the cards stacked in its favor, the cell was a raging success. Purchasing could not keep up with the increased demand for raw materials. Shipping could not move finished goods fast enough. Soon, Machine Co. realized that they had several constraints limiting the performance of their pilot cell. The logical solution was to convert the entire facility to cells. So, over the next few months, regular meetings were held with a wide variety of shop personnel to design and implement cells throughout the manufacturing and office areas. Since 1993, the cells have been very successful. Machine Co. has won numerous awards for excellence from their major customers and government agencies.

How does Machine Co.'s experience support the idea that the sequence of processes to be transformed is important? First, the sequence of processes must be supportive of the vision and strategic plan. Machine Co.'s vision called for radical change. Starting with an insignificant paperwork process was not the most direct path to radical improvement. Order processing was not the process to improve to show employees that Machine Co. was serious about change. Second, all enterprise processes are interconnected and these relationships must be addressed to increase the probability of a successful transformation. Thus, the enterprise engineer must determine the relationships between all processes before deciding the sequence in which processes will be improved. While determining the relationships among processes, the enterprise engineer will discover constraints to what processes can be changed in a particular time frame and a logical sequence will emerge. Contingencies will also be discovered during this investigation that will shape the sequence of process to be changed. Choosing an optimal sequence of processes to change will lead to a more efficient and effective engineering effort. Fewer resources will be wasted on failed improvements or delays. In the case of Machine Co., the pilot cell exposed several constraints including the limitations of purchasing, shipping and outside vendors. Converting the entire shop to cells reduced the limitations of internal support processes but did not solve the vendor constraint. To address this problem, Machine Co. has brought these outside processes in house. They have increased their capabilities as a company to include processes like heat treatment of metals and painting. Fortunately for Machine Co., they tried cellular manufacturing on a pilot basis before converting the entire shop. Thus, constraints and contingencies surfaced before they had a wide-spread impact on the company.

The third lesson to be learned is that the sequence of processes to be improved must address cultural constraints. Just like constraints that originate from raw materials or machinery, people present a powerful constraint. People must have the knowledge, skills and attitude to propel the improvement effort forward. When we started work on the paperwork process, people did not know how to operate or solve problems as a team. Thus, knowledge and skills were below the levels required to make the effort a success. We conducted several training sessions, but not to the extent that was needed. The paperwork process did not impact a large number of people. For many people in the company, the efforts to improve paper flow were invisible. To engineer an enterprise, a critical mass of people must support the change. The pilot cell was very visible. People knew serious change was happening. After seeing the success the cell experienced, people began to support the idea of changing the entire shop to cells. Thus, the pilot cell proved to be an important step in building support for large-scale change. Attitudes began to change. Changing the entire shop to cells forced everyone to get involved in the change process. Involvement helped to build the critical mass needed to succeed.

From 1996 to 1998, we work with a small printing company that produces flyers, brochures and other paper reproductions for a very local market. The company, which we will refer to as "Print Co." wanted to increase profits and create a culture of teamwork and cooperation. After conducting an enterprise assessment, we discovered several barriers to transforming the company. Among the barriers we found were knowledge and skills level of employees were low, as well as low levels of sophistication among production processes and a lack of current technology. Recognizing the lessons learned from Machine Co. and many other companies we worked with over the years, we suggested training key people and bringing processes and technologies up to today's standards. The technology updates would require a significant period of time, so after developing a vision for the future and a strategic plan to achieve it, we started training. We held training sessions focusing on basic team concepts, problem solving and meeting logistics. During the training sessions, we started examining a process to focus our training efforts upon. We knew we could not work on processes that would be impacted by the new information system that was to be implemented later in the year. Any improvements made in accounting, purchasing or other processes that would be automated or otherwise influenced by the information system would have been a waste of resources. With that constraint in mind, we choose to examine the "order fulfillment" process and determine costs and profits associated with different product lines. Before implementing the new information system, Print Co. wanted to be certain that they were promoting their most profitable products. The information we discovered was used to provide realistic numbers for the information system's quoting and estimating functions. Thus, in case of Print Co., we avoided problems associated with constraints and interdependencies encountered with Machine Co.

The first lesson to be learned from Print Co.'s experience is that the sequence of processes to be improved must consider available resources, constraints and contingencies. The idea is similar to the principles of project management. Project management considers interrelationships and constraints when determining how the project will be implemented. The second lesson is that the sequence of processes to be improved does not need to be determined in great detail, but in major initiatives. When engineering and enterprise, you are dealing with the company at its highest level. When making models of the company, you are primarily concerned with processes such as order fulfillment, purchasing, accounting and other processes that are affect the entire enterprise. Thus, an enterprise engineering effort must be primarily concerned with the impact of changes to major processes. With Print Co., we considered a short sequence of major process changes over a three-year period. The details of how these changes would be made were left for later process improvement teams. Our function as enterprise engineers was to make sure the wide scale changes did not conflict or have interrelationships that would be negatively affected.

The sequence in which processes are improved while engineering an enterprise is critical. The enterprise has a finite set of processes to be improved. Many are inter-connected. A change in one process will have a profound impact on several other processes. Thus, the enterprise engineer must determine the relationships between all processes before deciding the sequence in which processes will be improved. While determining the relationships among processes, the enterprise engineer will discover constraints to what processes can be changed, and the logical sequence will emerge. Contingencies will also be discovered that will shape the sequence of process to be changed. Choosing an optimal sequence of processes to change will lead to a more efficient and effective engineering effort. Fewer resources will be wasted on failed improvements or delays.