Perceptive processes - making sense of business as-it-will-be

Businesses are getting better and better at providing technology to support "doing" processes. But what happens when managers need to undertake "thinking" processes, asks Jyoti Banerjee? In answering the question, Jyoti proposes that we recognise a distinct group of business processes that he calls perceptive processes.

There are many different kinds of processes in an organisation. Traditionally, processes have been divided into two categories: transactional or non-transactional. Although that is helpful in terms of identifying which processes need to dealt with by computerised transaction-processing systems, the distinction seems incomplete in an era when almost all processes can be handled by computers.

It is still useful, though, to distinguish between different types of processes. This paper suggests that all kinds of processes in an organisation may be categorised into two different types:
* Learned processes
* Perceptive processes

These two modes of processes are rather analogous to the distinction that psychologists make between experiential cognition and reflective cognition in human thinking. To put it differently, this categorisation separates "doing"€processes from "thinking" processes.

It seems dangerous to divide all sorts of organisational processes into just two categories. However, this sort of analytical approach helps in highlighting and contrasting the differences between learned and perceptive processes, which are the fundamental skills of an organisation that is functioning well today, as well as preparing for whatever tomorrow brings.

Learned and perceptive processes
When in learned process mode, an organisation seems efficient, even effortless, in handling and reacting to the events taking place around it. For example, we expect amazon.com to demonstrate expert skills when we seek to find a particular book, or author. In this situation, amazon.com provides expert input to us, responding automatically to our requests, and anticipating our next question by offering recommendations based on our previous choices.

Just as there is no conscious thought involved in normal flying processes for an expert such as a skilled pilot, there are no conscious decisions made when an organisation is in learned process mode: everything seems like a quick, effortless and appropriate response. If a plane encounters a problem, none of us would like to have a pilot who has to think about what to do next - with the right training, a pilot should be able to respond to problems, while still in expert mode. So too should it be for organisations: even their handling of exceptional issues should be skilled - not laboured, or seemingly ad hoc.

While learned processes are what an organisation bases its day-to-day activities on, such processes do not give room for new ideas, new concepts, new advances in understanding. For these, we need what thinker Don Norman calls "the effort of reflection." However, we need more than just reflection if we wish to take into account our organisation's recent past, our estimates of its future, and our own insights and perceptions of the environment in which we are operating in. I propose that we call such processes perceptive processes. A perceptive process is one that focuses on comparison and contrast, on different perspectives, on decision-making. Processes of this type lead to new ideas, new responses.

To return to the pilot analogy, we have noted that routine, well-practiced flying is primarily a learned process that is skilfully executed. But suppose that something comes up that requires a decision to be made, some thinking to be carried out. For example, a pilot may have to respond to an electrical storm further out on the flight path, possibly impeding progress to the scheduled destination. At this point, the pilot has to think, to reflect, make judgements. Should they detour around the storm? Will they have enough fuel to make the detour, or will they need to aim for a different destination? Will air traffic control let them go where they would like to go? As should be obvious, these perceptive processes are different from those that get an automated response.

An example of a perceptive process in a company might be a decision to enter a new market, or the creation of a new product based on some R&D carried out in a partner organisation. Perceptive processes are not easy. They can be slow and laborious. They might need external inputs. Perceptive processes are best done without learned processes getting in the way, otherwise the dynamically rich, continually present environments typical of learned processes can interfere with perceptive processes.

In a sense, perceptive processes are about analysis and benchmarking. While learned processes are about business "as is," perceptive processes are about business as-it-will-be.

Of course, the two types of processes are linked. A process of reflection and perception can result in a change of direction, or business model, or result in the development of a new product. Ultimately, the new forms of business need to become business as-is, which will only happen when the perceptive processes set in train a series of organisational responses that result in new learned processes.

Applying technology to processes
How does this analysis of the types of processes help the executive who is trying to address process problems in an organisation? There are some key ideas that need to be considered in dealing with a question of this sort.

For an organisation to appear skilled in its interactions with customers, suppliers or partners, it needs to build learned processes that demonstrate its expertise. In the past, this would have meant building good-quality transaction processing systems. The focus of such activities has traditionally been on accounting processes.

The advent of internet-based interactions has meant that many more internal processes have been exposed to the customer: for example, stock look-up or discounts on freight options.

Nowadays, all interactions (transactional or not) need to demonstrate high levels of expert skill. Good computer-based processes usually allow that sort of demonstration of organisational skill. However, the bar has been raised further over the past five years or so, as expectations grow that individual interactions need to be integrated together.

For example, a customer could experience a highly skilled interaction that enables them to do their own stock look-up, or make an on-line payment for an item that they purchased. However, if the individual activities of stock look-up, making an on-line purchase, arranging shipping address and making an on-line credit limit inquiry are not properly integrated together, then the end-result is anything but expert as far as the customer is concerned.

When business processes are not integrated together, either by the vendor of the software or by the user, then productivity suffers, and the business falls short of appearing expert-like.

A new generation of business systems is enabling such integration of processes in a way that enables the expert theme to carry through multiple processes. The fashion phrase in this regard is end-to-end, making it possible for every individual process involved in a set of related interactions to be integrated together so that the result is cohesive and highly skilled.

While integrated business systems, such as those offered by enterprise resource planning (ERP) software vendors are useful in putting together end-to-end process automation, they are by no means the only way to do it. It is possible to use different disparate systems to create end-to-end processing as long as there is co-ordination of the processes involved. However, such an approach does create additional challenges in making sure that it is possible to implement a hand-off from one process to another.

Given the current emphasis on tying together disparate but related interactions into learned processes, it is not surprising that perceptive processes are starved of attention, relatively speaking. Many companies do not have perceptive processes, and many business software vendors don't provide any support for such processes.

A consistent use of perceptive processing is possible in areas of strategic planning: hiring and firing of employees, opening new markets, analysing customer categories, making R&D choices, or creating new channels to reach the marketplace. Perceptive processing would also be ideal in dealing with issues of forecasting: what does the management board pack look like next month, or next quarter, given what we know about the sales pipeline or a known movement in the exchange rate. However, many companies find it difficult to create perceptive processes that are based on solid external and internal data, while giving participants in such processes the means and tools for thought, reflection, and analysis.

Technology is one part of the problem: there are few business software applications that are good at perception and reflection. The bigger problem is the stuff that technology cannot deal with:
* making sure that employees have enough time built into their work processes that enable reflective thinking,
* giving them training in tools and processes that help them take such reflection further in the realms of perceptive thinking, and
* rewarding the fruits of reflection and perception.

The closest many a company gets to perceptive processing is the use of reporting systems. Reporting is the bridge between learned processes and perceptive processes. It pulls together information acquired from internal and external interactions in a way that allows analysis of the situation that a company is in.

However, many companies simply use reporting systems as a gauge to make sure their learned processes are working well. Others recognise that their perceptive processes are inadequate and attempt to fill in the gaps by taking data from their reporting systems and dropping it into Excel for further analysis.

In fact, Microsoft Excel is the Swiss Army knife of business processing: some use it to further their organisation's reflective processes, while others use it to plug holes in their learned processes. While Excel has many strengths, particularly with reflective and perceptive processing, it has a number of limitations when used to plug gaps in transactional systems. If your organisation uses Excel as part of a learned process, you may want to consider if there is a more appropriate piece of technology to support that process.

One way of incorporating reporting data into a more formal perceptive process is by adding in external data. For example, one soft drinks vendor found that they could predict sales of their product by checking out weather forecasts: the hotter the temperature, the higher their sales were likely to be. This is clearly a perceptive process - they used the lessons they learned from this to enhance their supply chain so that more stock was available on days that were predicted to be hot. This use of perceptive processing made their learned processes appear even more skilful than usual, demonstrating a good link between the two types of processes.

Clearly, it is easier to find technology solutions to support learned processes, rather than perceptive processes. Both are important, though learned processes are currently much more fashionable. As more and more companies find that their learned processes demonstrate a good level of expert skill, the focus will shift to perceptive processes. Building in the means to have time, access to data, and tools that enable perception are currently just as important to senior management as finding technology solutions to support such analysis.

Comments

[Tony Sparks]

The key thing here is the ability to bring the learnt and the perceptive processes together as Jyoti calls them. This is particularly important when planning for the future in business. Financial directors have always struggled with this issue. This breaks down to three fundamental areas where financial planning & forecasting is concerned. The ability to use your existing transactional data whilst including your business drivers and applying your own understanding and interpretation of your business environment is the only way to truly create an accurate financial plan for your business for the future.