2.4 Business Processes: The New Medieval Guilds

The process of business comprises tasks that when combined with skilled people produce an added value to a product or service. The discrete tasks and the individuals performing them, do not add value when viewed as isolated components.^[80] Rather, the entire process creates value by accumulating the value of each process step into a unit of value perceivable by the customer. Here again, today’s organization needs to unlearn the command and control structure which is the legacy of assembly-line thinking and develop a process focus. However, adopting a process focus does come with a hidden price. Firstly, existing processes need to be examined and separated into their component parts, and the value of each assessed as to its relevance to the entire process. Secondly, people need to adopt a process orientation and jettison the traditional hierarchical organization structure in favour of a process focus. This includes the creation of process owners who are ultimately responsible for the performance of the processes and their component steps. Thirdly, during the transition to a process orientation and the subsequent establishment of a normative process, the issues of maintaining product quality and the introduction of product alterations such as engineering change orders must be addressed.

Strangely, the new process-oriented business imperative is once again evocative of medieval craftsmen who, during the creation of these goods, were process focused, because they themselves were the process. They possessed a uniquely proactive approach to maintaining a high degree of product quality. Marjorie Quennell describes the craftsmen of the Middle Ages:

In the mediaeval period the arts and crafts were much more representative of the whole community than they are now. The craftsmen learnt not only the practical details of his trade, the way to use his tools, and to select materials, but was taught as well to design his work; and all his fellows did the same, working together on much the same lines – all interested in doing good work, and in trying to find better methods and designs. All this accumulated knowledge was handed down from generation to generation, and formed what we call tradition, and it resulted in the work being extraordinarily truthful. The man in the fourteenth century was not content to copy the work done in the thirteenth, but with all his fellows was trying to improve on it; so if we have sufficient knowledge, we can recognize the details, and say this place must have been built at such a date.^[81]

Medieval craftsmen employed a process of building in which quality and continual design improvement were integral parts of the normal course of work. This is evident in the numerous castles and churches still standing throughout Europe. Contemporary archaeologists, architects and historians, using their knowledge of the medieval period, can look at a building and identify which parts were built when, based on the progression of techniques known to the masons of each era. An understanding of the medieval process thus provides a context for the problems that today’s companies face in moving towards a process-oriented organization.

At the centre of the notion of ‘medieval process’ was the concept of ‘guilds’. It is important to note that there were two distinct types of guilds in medieval society. ‘Merchant guilds’ were associations that brought together a town’s tradesmen to exercise control over trade; ‘craft guilds’, on the other hand, were composed of master craftsmen, journeymen and apprentices in various craft disciplines. As we can see, each type of guild has its modern equivalent. Merchant guilds are analogous to today’s market-makers and product aggregators, such as eMarketplaces and Internet portal providers, where customers can buy goods that have been brought together into an electronic market space. Our modern guild counterparts act in their own self-interest, contrary to the intention of the medieval merchant guilds as described by Christine Wiener:

A medieval guild can be seen as a sort of early mutual benefit society for it had a dual purpose: to obtain a fair deal for its members as well as to protect the public. The merchant guilds for instance were to ensure fair prices while the master of a craft guild had strict responsibilities towards his journeymen and apprentices.^[82]

Today these responsibilities have been assumed, to some extent, by government agencies and other regulatory groups.

Craft guilds, on the other hand, resemble organizations within modern firms such as the emerging centres of excellence and core competency groups which now focus on products, processes and customers. Wiener describes the master of a craft guild: ‘He acted as business manager, planning and costing, deploying skilled labour – the journeymen – and looking to the future, training young men – his apprentices – into the profession.’^[83] Only a few words short of the job description of today’s process owner or manager.

In stark contrast to today’s business processes, quality was taken for granted in medieval times. This is not to say that there was less quality; it was simply built into the fabric of the craftsman’s work. In the case of medieval masons, the finished product carried a mason’s mark indicating which craftsman had done the work while simultaneously acting as a mechanism for payment. Only a minimal amount of specification was required while constructing a building because the master builder had intimate knowledge of the capabilities of each mason he employed. For example, in the medieval stonemason’s guild, quality was not maintained by a separate group inspecting the work of individual masons. Each mason was responsible for the quality of his own work as a matter of course. Yes, medieval structures did collapse on occasion, but not due to any lack of quality in any of the individual components. If they fell down, it was because medieval master builders were stretching the limits of their designs in an effort to maximize the use of materials, such as making the walls of a cathedral thinner, higher and lighter to enable the maximum surface area to be used for stained glass.

Needless to say, the craft guilds of the Middle Ages were not without problems which would today be equivalent to price fixing and monopolistic behaviour. However, their approach to continuous, lifelong learning and experimentation within each craft and their ability to incorporate new technological improvements into the course of construction without significant alterations to the work flow stands as a benchmark which modern society has yet to replicate. Roman concrete’s disappearance and subsequent rediscovery demonstrates how knowledge, even simple knowledge, can be lost over time as a product of poor or non-existent paths of communication. Corporations today must ensure that, when adopting a process-centred approach, the communications infrastructure enables individuals within the firm to communicate both hierarchically and laterally to other individuals within a process and to colleagues engaged in other processes.

Future Business Processes

Oddly, the hierarchical command and control structure in today’s corporations is based on the same feudal lord–liege relationship, actually referred to as ‘fiefdoms’ in some organizations. However, unlike the Middle Ages, adopting a process orientation means focusing one’s allegiance to the customer, who is at the heart of the process’s value equation. To what we can only imagine would be the dismay of our medieval counterparts, technology has brought to the process-centred organization of today the ability to produce enormous quantities of goods and the ability to adapt to repetitive work. Unfortunately, the legacy of post-industrial structures has, in many instances, led technology to be applied to the compartmentalization of work, where one person is the designer, and the rest tend the machines, often with a slow erosion of quality. The current generation of technologies, including the Internet, collaborative systems and distance-bridging technologies, is quickly reshaping not only business processes, but the actions taken by individuals who perform the work.

The far-reaching effects of the convergence of computing, telecommunications and software technologies is instituting an unavoidable change, and has become a major factor in the competitiveness of organizations. Each year, corporations invest billions of dollars on employee development, often without a clear mechanism for measuring their return on investment. David Sutherland, of the Business Innovation Consortium, identified another value proposition, the ‘employee value proposition’ (EVP), according to which a company needs talent to exist, and therefore must rely on the existing employees and attract new employees to maintain the flow of ideas. Linked to the corporate value proposition, the EVP is the base for a business practice which focuses on the idea that employees always have another job waiting. A company must then identify which employees comprise its ‘strategic talent pool’ in order to ensure that employees are satisfied. Certified employee attraction, retention and satisfaction is what makes a company a good place to work, keeping high production levels and good customer services.^[84] This seemingly new concept is in reality similar to that of medieval guilds, more evidence of how much knowledge about business processes has been lost over the centuries, only now to be regained.

Organizations are now discovering an accelerated approach to learning called a community of practice. The establishment of an informal community of practice that exchanges lessons learned, case studies, best-in-class knowledge is reminiscent of the more formalized structure of the medieval craftsman guilds. Today’s corporations have the opportunity to combine the best of both periods of learning by adopting the process of medieval learning with the advantages of technology. A technology-enabled virtual community of practice enables a firm to capitalize on not only industry-specific knowledge, but also on the multicultural aspects of specific market or socio-economic conditions.

Contemporary firms must engage employee knowledge or intellectual capital in order to drive factors like innovation and employee development. This can be economically achieved by adapting the attributes of a medieval guild system to foster a greater propensity for self-generating informal learning communities. In an informal knowledge system, each person will require two key components in order to be an active participant: appropriate technology and a series of interwoven relationships.

Business processes combine technology (in most cases) with people who can execute actions that facilitate a customer’s needs. The execution of a process centres on the activities performed by the individuals as they participate in an interwoven set of relationships which are all dependent on information and subsequently communicating the results of their actions. The first component, technology, is at the heart of this complex set of relationships, providing the mechanisms that will facilitate communications and monitor the inputs, outputs and performance of executions. Developing an inside-out view of process is essential because applications are evolving to represent the business processes and communications they serve. Therefore, just sending eMail is not a solution. Collaboration and communication are two separate, distinct concepts that organizations often get confused. Technologies that permit collaboration and the exchange of ideas – not simply of words – enable individuals engaged in the process to discover further improvements to process steps during the normal course of execution. These discoveries are not simply a by-product of the technology itself, but the product of enabling individuals to see the entirety of the process and their relative contribution to the total process. A collaborative infrastructure combined with a formal and informal network of communications reduces process inefficiencies. The establishment of formal and informal relationships is a vital component and organizations are now developing new structures that foster communications that transcend traditional hierarchical structures.

The second component is a series of relationships – labelled ‘thought partner model’ – where the individual is at the centre of three primary lines of communication: a mentor, an apprentice and a thought partner (Figure 2.3). At the heart of the relationship is the individual. It is a given that each individual has a unique skill which contributes to the organization’s ability to add value. Understanding this therefore creates the necessity for each individual to mentor another person within the firm. The mentoring process has a twofold impact on an individual: firstly, the passing of a skill to another, thereby reducing the amount of communication required while performing a specific task; secondly, the fact that it increases an individual’s feeling of self-worth by establishing a value or field in which he or she adds to the organization.

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Figure 2.3: The thought partner model

Since an individual does not necessarily know every aspect of every added value skill within the organization, there is also a need to be mentored. As an apprentice, the individual receives the same basic type of informal knowledge sharing, and in many cases learns from the mentor how to be a better mentor to his or her apprentice. Finally, like the medieval guild structure, a thought partner is a peer within the firm. There is an ethical contract between two individuals in which the agreement is the free exchange of ideas, problems and information with the express condition that this is not to be shared with anyone else within the organization. A thought partner takes on the role of a devil’s advocate, confidant, idea enabler and a host of other roles in which ideas are examined and refined before they are presented to other members of the firm. It is a mechanism for censorship, but in many organizations it provides a vehicle for flushing out an idea before it becomes an item for discussion within the community of practice.

However, unlike the medieval guild system, in contemporary organizations it is advantageous to rotate the members of the relationship on a regular basis, for example annually. This provides a greater variety of ideas and skills to be exchanged, also allowing the individual to develop an informal network of learning within the firm. The intention of the rotation is to foster new perspectives in the process of creativity and innovation while facilitating a systematic process of knowledge transfer.

Within this associate thought partner model, individuals can use the formal and informal network to form groups of special interest or those focused on developing a particular set of skills. Brown and Gray developed a similar idea, which they called ‘communities of practice’. These consist of individuals who are connected via formal, informal and electronic networks, exchanging information and knowledge at regular intervals. These communities may be formed by individuals who work within the same company, or by individuals collaborating with others with similar job functions in external organizations. Like their medieval counterparts, individuals in a ‘community of practice’ are peers in the execution of tangible operating activities. These communities often emerge through a desire to learn what others know or in conjunction with a goal which is part of a business need.^[85] The needs of the business are often translated into deficiencies of the process or changes in the business environment which were not anticipated by the limits of a business.

Michael Hammer identifies the reasoning behind developing a process focus. In his opinion, the metric in which business performance has been traditionally evaluated is rapidly losing its meaning. Likewise, process-oriented people can take proactive measures rather than reactive ones, as used to be the case in the traditional organizational hierarchy:

With a process focus, market share ceases to be the measure of success it once was. Among other reasons, economies of scale are no longer the key mechanism for achieving cost advantage and other forms of marketplace leadership. Although it may still be an important goal, market share is no longer a reliable indicator of current performance or a predictor of future success. A company with large market share today will retain it tomorrow only if the market doesn’t change – an extremely unlikely occurrence.^[86]

Measurements such as market share and economies of scale now have meanings that may no longer be a true representation of what is happening within the execution of a business process. It is clear that an increased level of information is required by people engaged in the process in order to function efficiently and make continuous improvements based on the feedback of information. By combining technology, a new philosophy about organizational structure and collaboration, corporations will develop a new level of business agility and increase their ability to react to changes in the business environment. The result of this combination will, by default, reduce organizational latency, which was discussed earlier. However, this new operating model is predicated on a quantum change in corporate policy on the treatment, utilization and relationship that a firm develops with knowledge workers. In many cases, a completely new relationship must be developed to ensure that the efficiency of the organization is maintained.

With regard to knowledge workers, one issue that is not clear in many organizations is the ownership or usage rights of the knowledge of an individual. This issue raises several interesting questions as cross-organizational communities form:

Is the knowledge, experience and wisdom of employees a possession of the employer or is it rented, or perhaps licensed from the employee?
To what degree is the total knowledge of the employee the property of the employer?
To what extent can employers claim ownership of employee-generated knowledge that is only remotely connected with the employer’s business?
When knowledge workers provide their own office infrastructure (computers, backup systems, filing cabinets), to what extent do employers have access to search or claim ownership to the knowledge contained within the devices?
What is the level of ownership between the consultant and the new knowledge he or she acquires while engaged in transient activities within a firm?

Few organizations have developed proactive polices to adequately address these issues. Opting for blanket legal contracts that claim ownership of intellectual property entirely in favour of the business holding sole ownership, many companies may be taking a premature stance on the issue. Legal issues aside, knowledge-sharing technologies used to form communities of practice have met with mixed results; in many cases it is an organizational lack of trust which is often attributed to failed implementations. Regardless of the technology selected, the essential element to leveraging knowledge successfully in any business is to establish an organizational culture that fosters and rewards the sharing of information and knowledge. Knowledge exchanges of this intensity must be encouraged formally and informally by all levels of the organization. This cultural commitment from management must extend into the formal aspects of knowledge exchange, such as providing time, space and opportunities for mentoring or facilitating sharing, and informal mechanisms such as electronic discussion groups, newsgroups and other technologies that enable interaction with colleagues during non-work times. The most important aspect of a community of practice is that each member of the community exhibits a mutual respect for one another and exudes a sense of trust, primarily to dispel any perception that this knowledge exchange is a threat to what they know.

Organizations are learning to address four key areas in developing an operating philosophy for human capital. They must adopt a process orientation, placing the customer at the centre of the process; create an environment of continuous education and mentoring to improve product quality; measure process performance to identify opportunities for improvement; and increase the level of communications to reduce the complexity of the business bureaucracy. At the crux of the application of human knowledge capital is technology, which plays a large part in the differentiation of corporate value propositions. The technology that presents some of the greatest areas of improvement is that of computer software, said to be the key to the information age. It is to this technology that we now turn.

^[80]M. Hammer, Beyond Reengineering: How the Process-Centred Organization is Changing Our Work and Our Lives (London: HarperCollins, 1998) p. 101.

^[81]M. Quennell, The History of Everyday Things in England Vol. 1 (London: B. T. Batsford, 1976) p. ix.

^[82]C. Wiener, Trades and Crafts (London: Wayland, 1972) p. 41.

^[83]Ibid., p. 42.

^[84]See www.bicnow.com.

^[85]J. S. Brown and E. S. Gray, ‘The People Are the Company’, Fastcompany, February (1997).

^[86]M. Hammer. Beyond Reengineering: How the Process-Centred Organization is Changing Our Work and Our Lives (London: HarperCollins, 1998) p. 204.