Understanding Processes in Organizations

We contribute to the evolving theory of organizational processes by developing a precise conceptualization of process. We argue that processes are assemblies of activities and explore constraints on assembling them. We observe that assembling activities into processes often requires performance of additional activities. We illustrate the applicability of these ideas to a case of restaurant service. We conclude by sketching linkages between traditional concerns of organization scholars and a process view of organizations. INTRODUCTION: PROCESSES AS A THEORETICAL ISSUE IN ORGANIZATION SCIENCE Relationships between organizational attributes and performance have long held the attention of researchers. Within organization science, the sub-field of organization design has come to refer to the specialty area that explores the relationships between configurations of structures, processes and technologies to selected organizational outcomes, most typically effectiveness (Lenz, 1981; Lewin & Minton, 1986). Gradually, a multidimensional view of performance has emerged (Cameron, 1986; Price & Mueller, 1986). Researchers have been interested especially in finding recurring patterns of internally consistent organizational attributes associated with improved performance (Miller & Friesen, 1980). In strategic management, understanding relationships between organizational taxonomies (similarities across firms) and industry performance has long been a cornerstone of the field (Rumelt, 1974). An evolving area of organization theory and of design is a focus on organizational processes. Work has been conducted into areas including process modeling and supply chain management (Curtis, et al., 1992; Lee & Billington, 1992; Lee & Billington, 1993), in the relationships between organizational processes and coordination theory (Malone & Crowston, 1994; Crowston, 1997), and in generative models of processes (Pentland, 1992). In this paper, we build on the underlying premise of these works, namely, that thinking carefully about processes is a promising way to think about organizations (Mohr, 1982). More specifically, our goal is to contribute to a developing theory of organizational processes, by examining carefully the concept of process and the organizational constraints on assembling processes. We suggest a focus on process helps us to define organizational activities more precisely, and to determine how activities depend on resource constraints and available coordination mechanisms within the organization. Following Mohr’s (1982) call for organization theorists to take processes more seriously, we begin by asking, what is an organizational process? We motivate our discussion by developing a series of increasingly elaborate process conceptualizations of service processes in restaurants. We look closely at the goals, activities, resource dependencies and agency problems in this setting. Our approach includes decomposing processes into activities, considering ways in which activities may be grouped into higher levels of activity, then considering how dependencies and agency constrain assembly for designing processes. In parallel, we relate options for process designs to organizational form and to the relationship between form and performance. Specifically, we address how assembling activities into processes sugUnderstanding processes in organizations 2 gests options for configuring organizational attributes where the goal is improved performance. And where performance is viewed multi-dimensionally, we examine implications for process assembly and design. The results of our analysis suggest ways to use processes as the unit of analysis in organizational research, and the theoretical and practical benefits of doing so. Of course, processes at the end of the day are about what people, work teams and business units actually do in organizations. Daft and Lewin (1993: p. iv) suggest the importance of process research lies in its shifting of the focus of design inquiry to the organization’s “white space”, e.g., the “space” between people, tasks and work roles, away from tangible items such as boxes on the organization chart, people in hierarchies, and facilities. Processes are endemic to organizations, and focusing on them would appear to promise insights into organizational form and into the generic elements of activities, people and roles (the “white space”) defining form. Once understood, interventions intended to reshape work processes and improve performance should become more effective (van de Ven & Poole, 1990). Processes as a Practical Problem Processes of course pose important practical problems for managers as well as for organizational researchers and theoreticians. A prominent theme in applied management in recent years has been that thinking carefully about processes, then redesigning them, is a useful way to achieve radical performance improvement (Davenport, 1993; Hammer & Champy, 1993). Frequently this intervention is tied to the introduction of information technology, which is seen to affect the necessary communication and coordination structures (Malone & Crowston, 1994). Practitioner definitions of processes. Practitioners define “business processes” as goal-oriented actions undertaken by work units or business firms that repeat over time and which can be measured in performance terms (time, resources expended, costs) (Harrington, 1991; Davenport, 1993). Examples include product development, order management, or customer service. Harrington (1991: 9) defines processes as “any activity or group of activities that takes an input, adds value to it, and provides an output to an internal or external customer. Processes use an organization’s resources to provide definitive results.” Different ways of defining process hierarchies have been suggested, the objective being to rationalize the large number of process and sub-process definitions that can be developed. Harrington (1991), for example, defines over 100 processes, and groups them according to macro-processes, sub-processes, activities and tasks. A related approach, taken by Davenport and Short (1990), defines different process types according to the entities or sub-units involved, the type of objects manipulated, and the type of work activities taking place. These approaches can be seen as variants of familiar modeling techniques including flowcharting, state transition diagrams and hierarchy charts. Evolution of applied work. Wide dissemination of practitioner literatures have served to establish working definitions of process intervention, redesign and change, and offered competing prescriptions for successful process designs. However, data reported in company redesign initiatives and/or reengineering project implementations have not been collected or presented using case level criteria developed for research purposes (Eisenhardt, 1989b; Lee, 1989; Barley, 1990). This complicates the utility of any theory building exercise (Eisenhardt, 1989b) using concepts or data so reported. We do acknowledge, however, the importance of management literatures in charting the phenomenon of process-based, change initiatives in a large number of firms. They help clarify the number, scope and sponsorship of these initiatives. MOTIVATING EXAMPLE: SERVICE PROCESSES IN TWO RESTAURANTS We begin with a concrete example of service processes in two restaurants. We have chosen a service example for several reasons, among them the increasing importance of service processes to the total economy, and the importance of both tangible (e.g., flow of physical goods) and intangible (e.g., relationships among personnel) factors in designing service processes. Moreover, information technology is frequently identified in practitioner literatures as an enabler of process innovation and, because of the importance of information in service businesses generally and restaurant operations specifically, these businesses may be affected particularly by the increased use of information technology (IT). Restaurants have long been studied as important forums for coordination. The essential characteristics of restaurants—many customers, many orders, frequent deliveries, continuous monitoring of customers and of personnel in accomplishing work, and perishable products—makes them particularly illuminating for studies of logistical flows, information flows, and resultant needs for coordination. As Whyte (1948: 18–19) noted “Failure of coordination is perhaps the chief enemy of job satisfaction for the worker. And the varying and unpredictable demands of customers makes this coordination always difficult to achieve.” Understanding processes in organizations 3 He noted further that in a small restaurant, everyone was in direct contact “and the problems of communication and coordination are relatively simple,” while in a larger restaurant, “coordination must be accomplished through people who are not generally in faceto-face contact with each other” (p. 47). He noted also the importance of cordial relations between staff and customers for coordinating service, and equally important, the need for clear lines of communication, not only for orders, but also for complaints and information about order status (p. 75). Whyte focused most of his analysis on the effects of differences in worker status on communication and coordination between parts of the restaurant. Our analysis will focus more generally on how the two restaurants provide service, and compare different levels of information technology. While Whyte was less sure about the importance of technology in this setting—“mechanical devices are not an adequate substitute for face-to-face communications” (p. 60)—he wrote at a time when all orders had to be handwritten and delivered. The cost of any such system—manual or electronic—was therefore high. Today, new IT makes such communications significantly cheaper, making the analysis of such applications timely. Our two restaurants both belonged to the same national chain, one in Florida and the other in Michigan. Both were similar in size and shared common decor and menus. They differed significantly, however, in their use of information technology as we describe below. We will use the two systems, manual and automated, as illustration for our analysis of organizational processes. Our description and analysis is based on observations of lunch and dinner service at the two restaurants, discussions with staff, and analysis of documentation describing the IT system provided by the software services company that developed and sold the system to the restaurant chain (Karp, 1994; Rock Systems, 1994). The Restaurant Information System The Michigan restaurant was a conventional sitdown restaurant, organized for high-volume operations. Seats were allocated by assigning entries in a conventional pen-and-paper record used by the hostess. Communications were face-to-face. By contrast, the Florida restaurant used an information system to track table status and to automate some communications between restaurant staff. When we arrived, the hostess consulted a map of seats in the restaurant maintained by the information system to select a table for us. If there were several free tables of appropriate size and in the appropriate section (smoking or non-smoking), the information system was programmed to suggest a table in order to balance customers evenly among the restaurant wait staff. When the restaurant was busy or full, the system maintained a table waiting list. When a table became free, the system suggested which customers to seat based on the size and section of the table. Throughout, the system kept an up-to-date estimate of the current waiting time; as well, the system reported how long each table had been occupied, reportedly to allow hosts to predict how long it was until an appropriate table became available. As we were seated, our hostess pointed out a button under the table. Pressing the button updated the status of the table in the information system, e.g., from free, to occupied, to waiting-to-be-bused, and finally back to free. As the button was pressed, the system confirmed that we had been seated. In addition to the “wired table,” the restaurant information system included pagers carried by the wait staff. When the table button was pressed indicating we had been seated, the system paged the waitress responsible for the table, indicating there were new customers. Also, there was a button on the table with which we could page our waitress if desired. Having received the page, our waitress arrived and took our order on a pad, and relayed the order to the kitchen. We believe, but did not observe directly, that food preparation was the same in both restaurants. However, because we did not collect information on processes used by the two kitchens in preparing our food, we will not consider these processes in our analysis. When our meals were ready, the kitchen used the pagers to inform the waitress our order was ready to be picked up and served. When we had finished our meal, we asked the waitress for our bill and paid it. On collecting the bill, she pushed the button under the table to indicate that we were leaving. In this case, pushing the table button paged a table buser, who arrived to bus and prepare our table for the next party. Similarly, when the buser had finished, he in turn pushed the button, informing the hostess that the table was now available and the next party could be seated. Theoretical challenge. The information system reportedly has significant practical impact: the Florida restaurant manager stated, for example, that the average waiting time on a busy Friday night had decreased from approximately one hour to fifteen minutes following the installation of the system. If the reduced waiting time was due to increased table utilization, then the monetary benefit of such a system is clear, explaining why owners would choose to invest in it. Understanding processes in organizations 4 The theoretical question we wish now to consider is: how we can conceptualize the service process to illuminate the source(s) of improvements reported by the Florida restaurant? Or more succinctly, in what ways are the two service processes—manual and IT-assisted—different? CONCEPTUALIZATIONS OF