Principles

A bad decision can cost a company dearly.

The wrong supplier is chosen. A poor proposal is made. The wrong person is hired. Money is invested in a project that does not work.

Once the mistake is noticed, the decision can be changed. The partnership can be ended, the proposal corrected, the project closed, or a different decision made next time.

A broken process works differently.

It does not make one bad decision.

It produces the same mistake again with every order, project, customer, or employee.

A broken process is essentially a bad decision embedded in the company's operations.

No one needs to make the mistake consciously anymore.

The system makes it on the company's behalf.

A bad decision may be a one-off; a broken process repeats itself

Suppose a salesperson forgets once to pass important information on to a customer.

That is a mistake.

But if sales and delivery have not agreed on what information must be passed on, who is responsible for it, and where it is stored, the next incomplete handover is no longer a one-off.

The same mistake is built into the process.

Or suppose one invoice is sent with incorrect details.

That may be an oversight.

If customer data is held in several systems, the pricing agreement is in the salesperson's inbox, and the person preparing the invoice has to track down the missing information, an incorrect invoice is the expected outcome of the process.

The key difference is repetition.

A bad decision produces one consequence.

A broken process produces a consequence every time new work passes through it.

A process is a decision made earlier about how to act in the future

Every process contains decisions.

Who does what?

What information is used?

In what order is the work done?

Who is authorised to decide?

When does the work pass to the next person?

What outcome is considered complete?

If these decisions are good, people do not have to reinvent the logic of the work each time.

If these decisions are poor or have not been made at all, people repeat the same uncertainty every time.

That is why one broken process can cost more than several isolated bad decisions.

It is a bad decision that is triggered automatically with every new case.

The more the company grows, the more often it is triggered.

The cost of a process comes from multiplication

The cost of a broken process is usually assessed too narrowly.

People look at the time spent correcting one mistake.

But the real cost consists of at least five parts:

Frequency. How often does the problem recur?

Number of people. How many people have to intervene each time?

Time spent. How long does it take to discover, investigate, and correct the problem?

Downstream impact. What subsequent activities have to be redone because of the mistake?

Lost value. What sales, customer relationship work, or other important work is left undone in the meantime?

If one process error takes up the time of four people at once and recurs every week, its cost is not one hour.

Add to that interruptions, waiting time, rework, management intervention, and the work that was not done in the meantime.

Over a year, a small process error can turn into hundreds or thousands of working hours.

Because the cost is spread across many people and many weeks, it usually does not appear as a single line item.

That is why it remains invisible for so long.

A broken process creates work beyond its own boundaries

A process error does not usually stay where it originated.

Incorrect or incomplete input passes to the next person.

They discover the problem, stop their work, and start looking for information. They may make an inaccurate assumption and pass on a flawed result in turn.

Ultimately, one early mistake may make it necessary to:

• revise the proposal;
• amend the contract;
• replan the project;
• redo part of the work;
• explain the situation to the customer;
• prepare a new invoice;
• revise the management report;
• resolve the resulting conflict within the team.

The later the mistake is discovered, the more work has already been built on that flawed assumption.

That is why a small mistake made at the beginning of a process is often far more costly than the large problem visible at the end.

The problem is not just the incorrect result.

The problem is all the work that was built on that result before the mistake was discovered.

Good people can conceal a broken process for a long time

A broken process does not mean the work immediately goes undone.

Capable people learn to compensate for the system's shortcomings.

They know whom to ask for missing information. They maintain their own spreadsheet. They check other people's work. They correct mistakes before they reach the customer. In the evening, they complete the part that the process missed.

To management, it may appear that the company is functioning.

The customer gets the result and the project is completed.

But the result does not come from the system.

It comes at the expense of a few people's memory, experience, and extra effort.

Such a process may seem inexpensive because problems are resolved within the organisation.

In reality, the company pays for them through:

• overtime;
• management attention;
• slower growth;
• overloaded key employees;
• other tasks being postponed;
• the risk of losing strong employees.

When one key person leaves, all the work they had been doing in place of the system becomes visible.

It then appears that the process suddenly broke down.

In reality, there was never a functioning process in the first place.

A broken process makes people appear ineffective

When necessary information is missing, responsibility is unclear, and decisions are delayed, a person cannot consistently do good work.

Results begin to vary.

A manager may conclude that the employee:

• is not careful enough;
• does not take responsibility;
• does not communicate;
• does not meet deadlines;
• cannot prioritise;
• needs more supervision.

Sometimes the problem really is the person.

But before assessing the person, look at the system in which they are expected to deliver results.

Did they receive the information needed to begin the work?

Was the expected result clear?

Were they authorised to make the necessary decisions?

Did the priorities remain stable?

Did the previous stage of work provide them with quality input?

Did different people have to intervene constantly to achieve the same result?

A bad process can make a good person perform poorly.

More controls, reporting, and layers of management are then added, making the process even slower.

A broken process creates an invisible customer tax

The company does not pay the full cost of a process error itself.

The customer pays part of it.

They have to:

• provide the same information several times;
• wait longer;
• explain their requirements again;
• correct mistakes made by the company;
• communicate with several people;
• check whether promises are kept;
• adapt their own work to the company's internal confusion.

The company may consider this a minor inconvenience.

For the customer, these moments make up the entire experience.

They do not see the company's internal process. They see that the service provider does not remember, does not know, is late, or gives contradictory answers.

An isolated mistake may be forgiven.

A recurring process error becomes the company's reputation.

The customer may not submit a formal complaint. They simply do not buy again or recommend the company to others.

In that case, the cost of the process does not appear only in the cost of correcting mistakes.

It appears in lost future sales.

A broken process also corrupts management data

Management makes decisions based on information generated by processes.

If the stages of the sales process are unclear, the sales forecast is unreliable.

If project working hours are not linked to the actual customer and outcome, profitability is not visible.

If customer problems are resolved outside the official system, customer satisfaction appears higher than it actually is.

If correcting mistakes is treated as ordinary work, management may believe that the team is simply at full capacity.

A bad process does not just produce bad work.

It also produces an inaccurate picture of how the company operates.

Management then makes further decisions based on flawed data.

New people are hired because the workload appears too high.

Marketing is increased even though the company cannot serve its existing customers profitably.

Employees are replaced even though the cause of the problem lies in the work input.

In this way, one broken process can begin to produce bad management decisions as well.

A process error quickly becomes normal

When a problem recurs for long enough, people stop seeing it as a problem.

They say:

• “We are always busy at the end of the month.”
• “That customer simply needs more attention.”
• “The manager has to review every proposal.”
• “Our data is never completely accurate.”
• “It always takes a new employee a very long time to understand everything.”
• “We have to check several places before sending an invoice.”
• “In this industry, deadlines simply cannot be planned precisely.”

Some of these statements may be true.

But they often describe a system flaw that the organisation has grown accustomed to.

The longer people work around a broken process, the more side activities, spreadsheets, checks, and unspoken agreements emerge.

These make the process even more complex and the true root cause harder to see.

Eventually, no one knows why the work is done this way.

Everyone knows only that doing it differently is supposedly impossible.

Automation can multiply the cost of a broken process

Automation often seems like the logical solution to a broken process.

If manual work produces errors, we have a system do it instead.

But if the logic of the process itself is wrong, automation removes the person who might have noticed the mistake.

Automation can:

• send incorrect information to hundreds of customers at once;
• transfer inaccurate data into several systems;
• apply incorrect pricing to all orders;
• create a large number of unnecessary tasks;
• make a flawed management report highly credible;
• keep a bad decision hidden for a long time.

A manual mistake may affect one customer.

An automated process error may affect every customer before anyone notices the problem.

That is why a broken process should not be automated.

First, unnecessary work must be removed, the necessary logic simplified, and the process checked to ensure that it produces the desired result.

Only then is it worth automating the repetitive part.

How can you tell that the problem lies in the process?

Signs of a broken process include:

• the same problem recurs with different people and customers;
• a queue constantly builds up before one stage of the work;
• people create their own spreadsheets alongside the official system;
• the same information is entered or requested several times;
• quality depends on who does the work;
• a manager must constantly intervene in routine situations;
• exceptions have become standard work;
• people spend more time checking one another's work than creating new value;
• meeting a deadline repeatedly requires heroic effort;
• customers make complaints with the same substance at different times;
• a new employee needs a great deal of verbal explanation to understand the work;
• no one can name the person responsible for the process's overall outcome;
• an error is discovered only at the end of the process;
• solving the problem requires the same manual work every time.

An isolated mistake may be caused by a person or by chance.

A recurring mistake of the same kind is almost always a reason to examine the process.

A process cannot be fixed with instructions alone

When a problem recurs, the response is often a new rule or control point.

Employees are sent a reminder.

A new step is added to the process guide.

An additional approval is introduced.

A new report is required.

Sometimes this is necessary.

But if a new control is added to the process after every mistake, the work becomes progressively slower and more complex.

The cause may still remain.

If the input is inaccurate, the solution may not be three additional reviewers. The solution may be to enter the information once in the right place and make a specific person responsible for its accuracy.

If decisions are delayed, a new meeting may not be needed. Clear decision-making authority may be needed.

If customer support receives too many questions, the solution may not be a new response template. The solution may be to improve the product or customer onboarding.

A good process does not grow longer after every mistake.

It becomes more precise and, where possible, simpler.

The true cost of a broken process can be calculated

Process improvements are often not made because their financial impact is not visible.

Management sees that the work is cumbersome but does not know whether investing in an improvement is worthwhile.

You can begin with a simple calculation.

Take one recurring problem and estimate:

• how many times it occurs each month;
• how many people intervene each time;
• how much time is spent discovering it;
• how much time is spent correcting it;
• what other work is delayed because of it;
• how many customers the problem affects;
• how much is lost through discounts, compensation, or missed sales;
• how much management time the problem takes;
• what the potential risk of the error is in the worst-case scenario.

Then calculate the impact over a year.

One ten-minute problem does not seem significant.

If it recurs across dozens of employees and hundreds of transactions, the result can be a very costly process.

The greatest value does not always come from finding new sales.

Sometimes it comes from removing work from the existing business that should never have been necessary in the first place.

How do you actually fix a broken process?

Improving a process does not begin with buying software.

It begins by making the work visible.

1. Define the outcome of the process

What must the customer or company receive at the end of the process?

If the outcome is not clear, it is impossible to assess which activities are necessary.

2. Look at the entire workflow

Do not analyse only the department where the problem becomes visible. Look at the process from beginning to end.

3. Find the first point where quality is lost

A late-stage error may be the result of inadequate input or a poor decision made earlier.

4. Remove unnecessary steps

Before speeding up the work, ask which activities add no value to the outcome.

5. Assign one person responsibility

The process may pass through several departments, but its overall outcome must have an owner.

6. Clarify decision-making authority

A person cannot be responsible for the outcome if someone else makes all the important decisions.

7. Test the new way of working on a small scale

Do not immediately build a large system. Check whether the change actually reduces errors, waiting time, or workload.

8. Measure the outcome, not compliance with the process

The goal is not for everyone to follow the instructions. The goal is a better, faster, and more reliable outcome.

9. Automate only what already works

Software should support a good process, not entrench unresolved confusion.

The most expensive processes do not always look broken

A completely broken process is easy to notice.

Work grinds to a halt, customers complain, and management has to intervene.

The most expensive processes are often those that produce a result, but at an unreasonable cost.

The customer receives the service, but five people did extra work to deliver it.

The project finishes on time, but the team worked evenings for a week.

The invoice is sent, but the data was first checked across four systems.

The sale is closed, but the founder once again had to intervene personally.

The result exists.

That is why the process appears to work.

But a functioning process is not simply one that eventually produces a result.

It must produce the result at a reasonable cost, within a reasonable time, with reasonable risk and workload for the people involved.

A bad decision hurts once; a broken process builds the mistake into the company

Companies devote a great deal of attention to major decisions.

Which strategy should we choose? Whom should we hire? Which market should we enter? Which technology should we invest in?

These decisions are important.

But a company's day-to-day value and costs are determined to a very large extent by processes that repeat earlier decisions every day.

When the process is good, ordinary people can consistently produce good results.

When the process is broken, even very good people have to spend their energy compensating for the system's shortcomings.

One bad decision can cost a company dearly.

A broken process makes the bad decision again tomorrow, the day after tomorrow, and with every new customer.

Until the company finally decides to fix not yet another consequence, but the system that produces it.

Mikk OrglaanChalleng.ist