Module 5-1

978-1-6654-0615-4/21/$31.00 ©2021 IEEE

Self-managed Organization: A Role of Business Process Management

Alina Ore Dept.of Business Process Development

Rimi Baltic

Riga, Latvia [email protected]

Oksana Kuznecova Supply Chain Development Unit

Rimi Baltic

Riga, Latvia [email protected]

Anna Jegorova IT department

Grindeks Group

Riga, Latvia [email protected]

Abstract—Among with process automation and

digitalization trends, which requires a strong structural and

process-oriented approach, new paradigm of self-managed

organization become a mainstream cultivating the value of

decentralization of decision power. With different titles as

Management 3.0, holacracy, teal organization or reinventing

organization, the same idea is spread – a transition from typical

hierarchical management pyramid to the flat organization of

self-organized teams with given authorities for decision making.

Ongoing discussions are both supporting and criticizing. Most

of them are focused on organizational changes, mind-set, and

methods to assist transition. Keeping attention to the social

component of the new management paradigm in organizational

ecosystem, an attention to its technical side is missed. It includes

business process and information system governance. The aim

of the paper is to start a discourse and consider if self-managed

organization benefit from a systematic approach of process

management, as well as consider risks what can bring to

business process continuity.

Keywords— business process management, self-managed

teams, teal organization

I. INTRODUCTION

Management 3.0, holacracy, teal organization, reinventing organization, self-managed organization, all this recently became mainstream in scientific and professional societies. With some slight difference, all have one element in common, i.e. organization of work without hierarchal model by inventing self-managed team of engaged employees in all decisions about company operations and development. Teal supplements this idea with evolutionary purpose as driver and common value for all employees. With different opinions, a question in ongoing discourse remains the same, i.e. if Teal management will become a common model in future and if it can be scaled up for large organizations.

A. Retrospective

Some organizations have been inventing decentralized management from mid 90s of the last century (for example, SME manufacturer FAVI). Another, as Zappos, Medium, GitHub started to apply it as a part of Holacracy, firstly developed at Ternary Software by Brian Robertson in 2007. Holacracy as organizational system was formulated based on company's best practices and suggest to distributes authority and decision-making throughout an organization. It defines people not by hierarchy and titles, but by roles. Holacracy is stated as enabler for fast and agile organisations that succeed by pursuing their purpose, not following a dated and artificial plan [1]. Holacracy consteitution was formulated, inventing specific roles for team set-up replacing hierarchy and managerial positions.

Another wave came in 2014 with a term of “Teal organization” introduced by Frederik Laloux in his book “Reinventing Organizations: A Guide to Creating

Organizations Inspired by the Next Stage in Human Consciousness” [2]. Besides decentralization and wholeness, Laloux add a new principle of evolutionary purpose of organization. In total, he formulated following core principles for Teal organization [3]:

• No need for hierarchy, central command and control.

• Wholeness for enabling employees to present their full personas rather than ones following instructions.

• Evolutionary purpose as a core driver for organization growth.

B. Ongoing discurce

Most of articles posted are usually focused on main principles, which Laloux defined as a core of teal organization. Among in-depth discussions, there are topics about new organizational forms, communication set-up and information sharing, employee competences as well changes in leadership and management mind-set.

Inspired with several success stories of the Teal adepts, practitioners investigate benefits of teal management comparing with traditional set-up. Some suggests Teal and Holacracy as solution for companies looking for tools to improving way of working. Positive comments praise idea of Teal and in general express the hope that one day all companies will become Teal [4]. However, as stated in [5] the simplicity of transition is cognitive illusion and therefore there should be clear understanding, need and plan to convert existing organizational set-up to the new way of working.

The opposite opinion considers Teal as utopia and rises doubts to its sustainability in long-term perspective. The study of Laloux is criticized for the lack of critical thinking and not analysing the circumstances under which Teal wouldn’t work [6]. Some stress that radical decentralization should remain limited anyway, as non-limits may rise risks on business process continuity and people management, especially in large companies [7]. Another criticism is about the power of human consciousness that stated as vital factor in a whole success story around Teal. The implementation of Teal principles is stated as challenging in large companies. Oppositely, SME and Start-ups could adapt both Teal and Holacracy more easily as they naturally are involved in solving either scientific problems or being concerned on innovation in a small team. Teal is called as a platform for innovation and incubators [8].

Another aspect of teal success is explored within industry. In [9] authors stated that Teal organizations are present from different industries in Poland. Among them are IT, packaging, manufacturers, kindergartens, and internet portals. Authors state that whether the company apply Teal is not determined by the industries but by need and readiness.

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In [10] author proposes a model of Self-Organized Process Organization as a blueprint for self-organized process for companies. A qualitative research was done to get insights in several phenomena, that can help understand the underlying forces driving organizations toward new forms of organization, which make the satisfaction of the true needs of their key stakeholders. Another research [11] is done with the purpose of providing insights into how teal organizations work with respect to their common principles of wholeness, evolutionary purpose, and self-management. The study highlights relevant practical organizational aspects that can better facilitate the management of transition to the new way of working.

The scientific analysis of teal aspects discussed in literature is presented in [12] and states main discussion topics as follows: evolution and main rules, talents, competences and leadership, rules for organizational structures, values as employee driver for continuous improvement, communication model, and decision making.

The conclusion is that there is a scarcity of reviews, scientific studies, and in-depth empirical research on this topic. A particular lack is on business process management and development of information system in self-managed organizations. We discuss this in section IV. Prior to this, section II considers some success stories of self-managed organization on retail and manufacturing industry, as well as banking, as they the most have cross-disciplinary processes and strong process standardization needs to be followed in management model. In section III the roles of business process management is stated as enabler for business continuity and digitalization projects.

II. A NEED FOR SELF-MANAGEMENT

Although the idea of self-managed teams is the same both in Teal and Holacracy, preconditions for changing management model are different. Laloux connects it to the social and cultural factor and see the organization as a living entity with its own energy and sense of direction. People are then joining an organization when their values and goals are in line with company evolutionary purpose. Important is that evolutionary purpose is neither a clear purpose statement, nor company goals and targets, expressed in financial numbers.

Holacracy focus more on the business purpose and its customers. Being more customer-centric, it tries to decrease all bureaucracy in delivering product to end-customer and consider managerial approvals as one process waste, costly and having no value on product. In general, one can say that Holacracy is a part of the Teal movement focused on self- management, even it was formulated prior to Teal.

Zappos, internet retail in USA, uses Holacracy since 2014 as a tool that allows every employee to quickly surface and act on customer feedback for continuously providing “WOW service”. A switch to self-managed teams started with identifying slow service to respond to customer feedback, because of the layers of managerial approvals needed to go through. Important note within current paper is that Zappos moved from Holacracy to Teal setting focus on culture at the same time understanding that Teal will not help to set-up a structure which would support business outcomes and purposes. In Zappos power is distributed throughout organizational structure giving teams freedom while staying aligned to the organization’s purpose [13].

FAVI, SME automotive part manufacturer in France, presents its success story by introduction of mini-factories, a self-organized teams, resulted in productivity increase. The story says that all started once with “worker coupon” for new gloves a worker asked from his manager. Converting time spend for managerial approval for gloves into the idle time of production process lead to insight about skipping this step at all. Transition took 14 years with permanent and continuous mind-set and behaviour changes rituals. Middle management of the initial hierarchical pyramid was main resistance element. Support functions were also against innovations, as for example design office were resigned, instead salespersons got authority to discuss this with client. Important note is that continuous improvement methods were invented into manufacturing process along with ISO and OHSAS certification. This requires that core business processes are documented and followed [14, 15].

Tochka, a digital-only bank, embrace of Holacracy makes it the largest-scale use case to date in Russia, involving more than 2000 employees. A shift to Holacracy made a clear distinction from traditional way of working where processes and procedure had been at the forefront and supported by top management to the new one, where new processes are built around values. Transition to Holacracy started in 2014 when bank lost its operating license. Setting up a new on-line service, management team designed a process resulted in slow customer service of up to 7 days to open account for new client. Any request variance required alignment with predecessors in process chain. From customer perspective that meant communications with up to six different company representatives [16, 17]. To design a process from end- customer perspective, Tochka used customer journey mapping, a visual storyline of every engagement customer has with service, brand, or product. The work was organized by a set of self-managed teams or cycles, grouped into domains, as for example Product, Communication, New customers etc. Important note is about management tools. Tochka uses guidelines and policies with clear descriptions of process and ownership, as well as penalties for violating rules. This means that process documentation plays a vital role for business process continuity within given authority for changes without managerial approval.

Vkusvill is another Russian company, operating in Food retail and positioning its organizational form as Teal. Even though, wholeness as a core Teal principle is not present in Vkusvill due to its franchising business model. With own focus on dairy quality, co-founder of Vkusvill started to build business around the idea of providing the highest quality for dairy products for his customers. In fact, this is an evolutionary purpose by Teal. However, before Teal business was built with traditional model and used balanced score cards. Vkussvill started self-managed teams in 2012 inspired by Hamel’s book “First, Let’s Fire All the Managers” [18]. Personal mission statement was used a core idea of work organization. Statements outlines how employee will contribute to the company’s goal [19]. Also, every business process has its description and set of rules. As for example, new store opening includes up to 30 subtasks, or sub- processes to be performed.

Considering above mentioned case studies among with some others, we found that switch to self-management can be triggered by different needs, not just the mainstream to follow. Clarity should be in place about that improvements company

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expect to see comparing with its status quo. In most cases transition is triggered by inefficiency of current model expressed in business results. From work organizations, self- managed teams are well-structured by roles and ceremonies that ensures focus on operational excellence, information sharing and conflict solving. A novelty comparing with hierarchical organization is that structure can be re-shaped easily if there are new obstacles for serving customer or new business purpose is needed.

The most important finding is about business processes documentation. Despite illusion of less bureaucracy as no documents at all, critical business processes are well- documented and serve as warranty for business continuity in self-managed environment. A common practice is consulting with other knowledgeable associates before taking actions that might causing damage or change to the company. Although to ensure speed for decision making by autonomous teams there is a need to rethink about traditional ways of process management, including tools, roles, guidelines, and mind-set.

III. BUSINESS PROCESS MANAGEMENT ROLE

Every business or organization can be considered as a set of processes and projects. Traditionally business processes, if described at all, are documented either from their ownership perspective (typically, department) or value-chain perspective considering that different department contribute to the entire business process (as for example Supply Chain SCOR, [20]). Processes are categorized into management, operational and support processes. Operational processes are strongly impacting on company’s Profit&Loss statement. Decision on process documentation depends on maturity of business process management within organizations. Scaling up business and/or its digitalization ambition, process documentation become vital for business process continuity.

A. Enabler for Business Continuity

Business process is defined as series of actions needed to achieve results. Business process management is set of skills and methods to examine end-to-end process and ensure its continuous improvements

As majority of organizations have financial targets and build business process to deliver them in the most efficient way. Business processes as strategic and operational assets should be designed for efficiency and competitive advantage. Furthermore, for providing best service for customers, good practices and process standards are documented as benchmark unless there is better way identified and agreed. To have continuous improvement culture and mechanisms for business processes re-engineering is decision based on company business process maturity level. Process documentation serves as a foundation for employees to know their role in end-to-end process, including impacts on other processes, IT and standards they must follow to react on internal or external regulations. Business process visualization supports in fast and qualitative onboarding of new employees as well.

Business process management enablers cross-department projects and activities. Having up-to-date process maps, business analytics foresee risks related with impact of change decisions to dependent processes. This is especially important projects related to process automation, digitalization, and information system implementation.

The bigger a company is (number and complexity of the processes, number of employees, teams), the vital is a role of

process management. Risks that company might face with are related to absence of critical information for continuous development and decisions made based on illusionary picture. This can lead to the following:

• Not secured business continuity.

• Financial results can be unpredictable and fluctuating.

• Product or service quality is not stable.

• Inefficient and less stable operational flows due to lack of understanding of process and related standards, instructions.

• Delays in project implementation and decision making. Specially in for IT system implementation.

B. Enabler for Process Automation

Process automation as a part of digital transformation is now in agenda in many companies. Though business process automation solutions are more and more created in a way to cover business needs for flexibility (allowing fast change implementation), they still require clarity about end-to-end process, high level of process standardization to minimize exceptions that have to be run manually and people “owning” a process to imbed it automated version into daily routines.

When there is no clarity and stability of the process (at least on the main process steps’ level), automation becomes more costly, not bringing as high benefits as it could with process standardization. Automation of processes with certain lack of details lead to the risk of not getting expected benefits from investments into the solutions. This can also result in overpaying for automation or getting low monetary benefits due to many exceptional scenarios not previously documented and therefore missed in business case.

Component heads identify the different components of your paper and are not topically subordinate to each other. Examples include Acknowledgments and References and, for these, the correct style to use is “Heading 5”. Use “figure caption” for your Figure captions, and “table head” for your table title. Run-in heads, such as “Abstract”, will require you to apply a style (in this case, italic) in addition to the style provided by the drop down menu to differentiate the head from the text.

C. Enabler for IT Development

Business process documentation is enabler for IT system development providing support at different phases, as stated below:

• Decision on the most appropriate solution requires clear business requirements based on proper understanding of the process and business needs towards the solution. Missing impacting or impacted processes from the scope can result in solution, which is not sufficient, complicated, overpaid, costly to maintain and not flexible for further development. Instead considering end-to-end process needs, the choice for solution can be different and supportive for entire process.

• Process documentation also supports development phase. It can help to release process owner for some extent in the discussions (i.e. save time and costs) in validating developed solution increments versus process.

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• During solution tests important are process scenarios. Documented in a proper way, they allow decreasing risk of delivering functionality not covering business needs.

• Solution handover requires some level of documentation for any organization to explain delivered functionality and serve as a base for instructions by this also supporting business continuity, especially in real-time transactional processes.

Important to mention that at the same IT itself enablers crucial functions for successful operations specially in non-IT industry, such as:

• Platform for collaboration between independent self- managed groups in one ecosystem.

• Information platform for a proper decision-making process.

• Information sharing and processing platform to ensure unified information flow and to avoid unnecessary specialisations, which tend to develop in information vacuum.

IV. BUSINESS PROCESS MANAGEMENT IN SELF-MANAGED

ORGANIZATIONS

A. Business Process transformation

Business process and information in teal organizations are transformed to free cross disciplinary process network supported with consulting and have evolutionary purpose as decision driver. Managerial hierarchy is converted into flat organization of self-managed teams and speed-up decision making by replacing manager approvals steps with clear value-based (or evolutionary purpose) to-go directions (i.e. business rules). With self-managed teams the coordination is done within the team or in ad-hoc meetings when the need arises. Teams work with organic prioritization and self- staffed projects. New organizational structures implement fully decentralized consultancy-based process. It is assumed, that networked structures and a vast usage of technology support team with information anywhere at any time to everyone. The innovations initiatives as digitalization and automation are more agile and scalable according to the current situation the organization is facing.

For understanding transformation of business process management, reinventing organization map can be used. It presents 20 attributes building the core of organization [21]. Impacting business process management are the following: processes, flow of information and communication, resource efficiency, decision making and meetings. The most important for the topic discussed within current paper are processes, information flow and decision making. Table 1 presents attributes’ description for several types of organizations using Laloux colour-based classifications [2]. Important to mention, that transition to teal organization can be started at any point (or colour), but organization would need to pass them all through.

Another point of attention before starting transition to new way of working is understanding how the processes are established and followed in organization. Even with a full responsibility power given to employees, the processes with strong decisions points will not become agile just after

announcing holacracy or teal as basis. In FAVI, it took years to change traditional manufacturing processes into agile and lean-based. A question of explaining values and keeping their correct interpretations among all employees is another challenge coming up with new organizational set-up.

TABLE I. PROCESS MANAGEMENT RELATED ATTRIBUTES

Organization

set-up

Attribute

Processes Information &

communication

Decision

making

Powerful chiefdom, impulsive (red)

Unscheduled and direct

Production at any costs

Boss decides

Formal hierarchies, conformist (amber)

Decentralized Working groups, meetings

Leaders (not transparent)

Effective- matrix, competitive (orange)

Flexible process with goal focus

Meetings, strategic information

Goals and strategy

Relationships, pluralistic (green)

Cross organizational processes with culture focus

Informal and formal communication platform transparency

Values

Self- management, evolutionary (teal)

Free cross- disciplinary process networks

Free networking, peer consulting

Evolutionar y purpose

B. Business Process management

Leaving apart a question about competences, even with appropriate mind-set and readiness to take over responsibility, the question remains how to protect critical business processes from discrepancy brought by anybody with the lack of x- disciplinary knowledge and de-synchronization of information shared versus decision taken. Following are main risks organization can face if changes are done without understanding of wide picture of processes interconnections:

• Financial and legal risks: this expertise requires a deep understanding of specific regulations and interpretation of them into decisions. Lack of understanding may lead to the process’s changes violating legal regulations. The question is either to ensure the corresponding expertise within every self- managed team or to have a competence centre consulting company’s employee.

• Quality risks for end-product or service: being customer-centric, teams which are more interconnected to customer should also have the expertise on the quality of product or service, especially for manufacturers. The lack of understanding of technological process and related regulations, may lead either to the product quality defects or cost, related to the delivering promised product.

• Business continuity risks: misunderstanding of what is end-to-end process, who are stakeholders, what are interdependencies can lead to unexpected side changes in the processes. People in different teams may make contradicting decisions, which leads to the waste of resources (time, money, people), chaotic processes (changes not synced between participants of the process), risk of dropping customer value and financial results.

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Altogether, above mentioned can lead to disruption of business process flows and unpredictable results, unless either decision power is regulated with some principles truly shared by everybody, or all organization members have extensive competences to mitigate the risks mentioned above.

Business process review and documentation review become also crucial if organizations among with transformation to the new way of working have expectations toward some efficiencies in employee numbers. For example, some managerial position previously supposed to be as approval or decision power are redundant in Teal-like philosophy. The decision of possible cut-off should be either synchronized with current As-Is business process or based on To-Be process design. Otherwise, it can again result in process continuity risks, delays or product defects. One more complexity is coming with a fact, that not all employees would agree to work in self-managed way. In some cases, up to 14- 20% of employee may leave companies. If their knowledge is not well-documented or people have “know-how” expertise, the business process is under the risk.

C. Business Process Documentation as Information source

Business process management is related to information sharing among the company. Business process documentations traditionally is a platform combining instructions, regulations, process descriptions and owners. Without a proper process management system, even with fully shared communication platform, there is a risk that changes will be based on out of date data. Especially it is critical for process automation and digitalization projects because team should follow on daily basis if there are upcoming changes from other inter-related processes. It is crucial not only to store, but also structure data to be enabler for autonomous decision-making. This data should be available and maintained 24 hours a day.

According to [10], business process orientation (as process -centric way of thinking within organization) positively impact on customer satisfaction, product quality, delivery speed, and time-to-market speed, that in fact correlates with expectations from inventing self-managed teams. Some research shows that business process orientation improves overall business performance, helps reducing inter-functional conflicts and improves inter-functional connectedness.

There is not much practical information about how business process management is established in self-managed organisations. Constitutions, regulations, rules are mentioned as some basis in sections II, considering success stories. All this should be available in organizations’ communication platform in easy-accessible way and preventing a risk, that decision is made during upcoming changes in other processes.

The research done in [10] states an important conclusion that despite autonomous organization of work, business orientation approach becomes very useful in self-organized teams and organizations. This means that either business analysis skill must become a competence for anybody within self-managed team or there is still in place business process documentations with clear and easy-to-maintain structure.

One practical example of process mapping in close -to-teal banking service is found in [22]. Author states that with the new way of working and expectations on it, there is a need to re-design the way how processes are documented. Interesting fact is, that new process mapping structure is still hierarchical.

It combines company core processes (business directions), transactional processes which go through the several core directions, transnational processes groups and team’s functional processes. The new way of process mapping allowed to speed-up process changes and release up to 90% of time for changes in functions and cut up to 12% of time in re- design of core processes. Despite new process mapping system supports employees in faster decision making and change implementation, the role of business analyst is highlighted as must and stated as process-design facilitator, owner of process-design best practices and expert in understanding of process interdependencies in the complex process map.

D. Enabler for decision-making in digitalization projects

Business process management and digital innovations have natural synergy that is used to provide expected efficiency on process automation and digitalization. IT (information system) development is used to be stated as is one of the agile (and “tealest”) industries using teamwork, flexible and Agile practices.

Considering how IT implementation projects should be executed in self-managed environment rise a lot of questions, specifically if IT is supporting function with its own development pace. In [23] authors made the analysis to trace the correlation between the stages of organizational development and those of the IT-environment. Same as organizations cannot skip natural mind-set transformation steps toward self-managed organisation, the readiness of IT is considered from different organizational models’ perspectives. Typical challenges are stated at each stage which allow better understanding if IT function could be facilitator or showstopper for teal-like transformation.

Very little attention is paid how implement IT projects and deliver results in self-managed environment, even with agile methods, especially in Production, Banking, Retail, Pharmacy. Following are main concerns:

• IT system complexity. ERP platforms are designed to ensure cross functional end-to-end processes. A clear up-to-date processes map is enabler for successful system implementations. Effective process automation requires that all business process activities, transitions between activities, constraints, conditions, and other attributes are completely presented through formal models or documents.

• Industry regulations. Biotech and Pharmacy production companies should meet legal regulations, quality standards and Good Manufacturing Practice (GMP). GMP is centralized function ensuring holistic view and validation for all processes, including IT platforms. How to ensure decentralization of GMP into autonomous teams keeping it core controlling function is questionable.

• Industry process complexity. Industries as Manufacturing, Retail, Banking requires quite complicated and resource demanding IT system implementation scope even for MVP (minimum viable product) phase. Moreover, IT Roadmap as a strategic planning tool supports companies in business process digitalization with dedicated attention, IT-resource involvement and mitigates risks of desynchronization of product implementations, especially in homogenous

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IT infrastructure [23]. A power of autonomy rises the risk of system implementation and/or maintenance costs increase.

• A concept of self-managed teams has many commonalities with agile methodology mostly used in IT companies. Agile is often stated as a core tool to be used in self-managed organizations. Although important is to eliminate a bias that applying agile methods would promote self-managed way of working.

V. SUMMARY

Business process management as processes reengineering tool with its methods and practicalities is enabler for successful transition to self-managed organizations. Isolating business process management in transformation stage may lead to the risk of core business processes continuity. Few principles are formulated to support smooth transition:

• Maintain information about business processes, at least on a level necessary to secure business continuity and financial position. Critical steps of the business processes and principles for business model to secure its business could be defined, agreed, and documented.

• Maintain business process descriptions in a way that allows fast updates and information sharing, and direct execution for automated business processes.

• Position business process mapping and its value not as directive and bureaucracy rule but rather as platform for facilitating decisions and sharing process expertise or understanding among the members.

Entrusting people with responsibility to run business in self-managed rise a question of allocating Business Analysts competences per organizational units, so anyone can keep business running towards its goals. Self-managed team’s member need to know what are core business processes and interdependencies to involve (or consult) right people in decision making. Among others competencies, there should be focus how to enhance employees process analysis skills to analyse root causes, discover opportunities, foresee effects of changes on the end-to-end processes, translate business needs to business requirements for digitalization and automation solutions, as well as business impact analysis, processes criticality assessment & critical resources identification.

Self-managed set-up shows up a need for the business process management approach which would trade off the need for keeping critical busines processes continuity versus self- managed way of working of autonomous teams. Simply speaking how to ensure that critical business processes will not be disturbed or broken by others decision, misinterpretation, or curse of knowledge. The lack of the methodology is identified within current paper and methodology itself is set as a next research direction. Another aspect to be considered within next research is related to the impact that new organizational paradigm brings to IT management set-up including information architecture (business objects etc.), application architecture (application components, application services etc.) and infrastructure architecture (platform services, nodes etc.).

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