The Pros and Cons Low and High Process Variation Approaches

The Pros and Cons Low and High Process Variation Approaches
The spectrum between low and high process variation approaches can have an immense impact on your people and your business. Understanding the cultural nuances of these approaches is important during both strategy design and strategy execution.  Why?  Because the way work gets done directly impacts both customers and employees.

Our organizational alignment research found that the way work gets done within an organization accounts for 40% of the difference between high and low performing companies in terms of:

• Revenue growth
• Profitability
• Leadership effectiveness
• Customer loyalty
• Employee engagement

That makes sense to us because strategies must go through ways of working and people to be successfully implemented.

Low and High Process Variation Approaches

• Low Process Variation
  Organizations with a low process variation approach enforce standardized approaches to ALL work to ensure quality. In a low process variation organization, consistency, predictability, and meticulous attention to detail matter most to deliver on the strategy for success.

  An example of a company with low process variation is In-N-Out Burger.  Since its inception, they have only served burgers (3 options), fries (1 option), and drinks (4 sizes of soda, 3 flavors of shakes, Coffee, and Milk.)  This simplicity allows them to optimize workflow, maximize quality, and minimize expenses.  Their low process variation approach aligns with their regional “quality over quantity” business strategy and has earned them the #1 ranking in the fast food burger chain segment.As you can imagine, organizations embracing this philosophy prioritize streamlining workflows, optimizing resource allocation, and mitigating risks. By reducing variability in operations, they cultivate an environment conducive to delivering consistent outcomes, fostering customer satisfaction, and bolstering reputation.

  However, the allure of uniformity comes with its caveats. While a low process variation approach fosters efficiency and reliability, it may inadvertently stifle innovation and adaptability. Rigidity in processes can hinder organizational agility, making it challenging to respond swiftly to evolving market dynamics or capitalize on emergent opportunities. Striking the delicate balance between stability and flexibility emerges as a perennial challenge in a low process variation approach.

  In response to this challenge, way back in 1948 In-N-Out invented the first drive-thru restaurant and two-way speaker system that allowed customers to order without ever leaving their cars.  And more recently they have begun to offer additional options called the “secret menu.”  This was in stark contrast to the assembly-line approach that McDonald’s brought to the industry. Although McDonald’s has also become more flexible over the years – not long ago you had to take pickles off your own burger if you did not want them.

• High Process Variation
  Organizations with a high process variation approach encourage employees to determine the best path to complete high quality work.

  An example of a company with low process variation is Wolfgang Puck restaurants.  Puck believes in experimenting with new concepts, making mistakes, learning, taking risks, and being passionate about constant innovation.  Unlike In-N-Out, he refreshes his menus and experiments frequently to court new customers and stay ahead of the competition.  This high process variation approach aligns with Puck’s customer first strategy and has help grow Puck’s business empire to about $600 million.

  As you can imagine, organizations embracing these principles prioritize fluidity, experimentation, and adaptability. Organizations that adopt a high process variation approach foster a culture of innovation and exploration required for their strategy to thrive.  Challenging the status quo, encouraging diversity of thought, empowering individuals, and having a tolerance for calculated risks are central to success.

  Yet, amidst the allure of innovation, the high process variation approach grapples with its own set of challenges. The inherent risk of failure looms large, necessitating a resilient organizational culture that views setbacks as learning opportunities rather than insurmountable obstacles. Even Wolfgang Puck was forced to declare bankruptcy after opening a brewery-and-restaurant combination that ran out of funds when all the beer spoiled.

  There is little doubt that managing the delicate equilibrium between experimentation and operational stability demands adept leadership and a nuanced understanding of risk-reward dynamics.

What is the Right Balance?
Our organizational culture assessment data found that one approach is not fundamentally better than the other.  Even though they have vastly different approaches to process variation, both of the above restaurants are phenomenally successful. Why?  Because their approach to process variation aligns with their mission, vision, values, unique value proposition and ideal target client profile.

Both low and high process variation approaches can lead to elevated levels of efficiency and effectiveness.  Because each approach has specific strengths and weaknesses, it all depends on your go-to-market strategy.  Recognizing that neither extreme offers a panacea, astute leaders leverage the strengths of each approach to align with what makes sense for their unique strategy and work environment.

Many companies define a thoughtful mix of stability and adaptability for different areas in the business.  For example, many legal departments need to lean toward being consistent to mitigate risk while many marketing departments need to constantly innovate and take risks to attract new customers.  Similarly, Medical First Responders need to follow highly practiced, consistent, stringent protocols to help save people’s lives while simultaneously using their best judgement to navigate unique circumstances that arise in the field.

The Bottom Line
When strategies change, ways of working must often change to support the new direction.  Smart leaders navigate the spectrum between low and high process variation approaches to ensure that the company is performing at its peak in a way that makes sense to the people AND the business.  By thoughtfully leveraging the strengths of each approach, organizations can drive both efficiency and effectiveness.

Where are you and where should you be on the spectrum of low and high process variation for different areas of your organization?

To learn more about aligning the way work gets done with your unique strategy, download How to Create a Purposeful and Aligned Organizational Culture as Your DNA for Success