What is process debt?
By Joel Cummings
What is process debt? Any work done that does not add value to the customer or business. It’s a process that you keep doing over and over and over again.
Process debt keeps retailers small by consuming the resources that they need to grow
Process debt is any work done that does not add value to the customer or business. It’s a process that you keep doing over and over and over again because you are afraid, unwilling, or unable to change it. You invest in something, and then you continue to use it past the point that it continues to be useful. It’s especially bad when the processes are also inefficient, redundant, or completely unnecessary. Here is an example from the book Traction:
A man was once with his wife’s family for Thanksgiving. During the preparation of the meal, he observed his wife cutting the back of a ham off before putting it in the oven. Curious, he asked her why she cut the back off the ham. She responded, “It’s tradition. It’s the way we’ve always done it in our family.” Her mother had just arrived, so he took the opportunity to go over and ask why they cut off the back of a ham. She said, “It’s tradition. It’s the way we’ve always done it.” Fortunately, his wife’s grandmother was there as well, so he went to her and asked the same question. She replied, “Once upon a time, the pan was too small, and it was the only way to get the ham to fit in the pan.”*
The process lost its original purpose but was preserved, taking time and resources away from other activities without providing value. So, while you may not be cutting the back of your ham, there might be other processes within your business that are eating up time and resources without providing value.
Saving money, but wasting time
Oftentimes, under the guise of saving money, people do not account for opportunity cost, or the loss of potential gains. If a tool costs $1,500 a month, it might feel expensive, but if that tool saves someone five to ten hours a week or, better yet, generates more sales, then it’s likely earning its keep, and maybe even providing a return on investment.
Examples of process debt
- Manual processes: While analog is not always bad, sometimes people hold on to analog, when a system should be automated. Inventory is a process that many people do manually, but automation can save time, eliminate human error and integrate with other systems, optimizing the end results. Are there processes in your business that you are doing manually that could be automated?
- Redundant work: Is there work that is being done twice? This sort of process hides in siloed tools and creates duplicate data. For example, if your email marketing list is not in sync with your CRM (customer relationship management) tech, you may be missing opportunities to segment your customers and serve them customized material to improve their customer experience.
- Slow to respond: If you do not have a great online customer service process set up, it may be hard to respond to customers’ questions and concerns in a timely manner, and you might lose customers over a poor customer experience.
Process debt is a systems issue
Poor undocumented processes cause process debt that people end up paying. Whether it’s how work is done or organized, or how people communicate, process debt is caused by systems and tools, and impacts people.You may be letting an old process or an old way of thinking control the way that your business is growing, which is likely stunting your growth, while increasing process debt.
Clear processes help you grow. If you are just discovering your process debt, it’s important to document each process. Then, as a team, talk through how and why the existing systems are not working, and invite everyone to help improve the process. At Assemble, we have learned a lot from our friends at Kaas Tailored, who practice and teach a philosophy called Kaizen—the practice of continuous improvement.
Improving is not always adding; often, it’s about reducing, saying no, and focusing on what is most important.
Clear processes and systems can support your people to grow the business
When people are bogged down by process debt, it’s hard for them to grow. Addressing process debt can actually help people grow and thrive. Freeing up even an hour or two a week across your organization can help your team identify opportunities and respond to challenges more effectively.
How to tackle process debt
If you want to start paying down your process debt, we assembled a roadmap to help you get started.
1.Prioritize your processes based on their impact
First, create a list of all of the processes that you currently do in your business, regardless of how trivial. You do not have to go into detail; you just need to just identify them. Here are some examples:
- Incoming order processing
- Outgoing order fulfillment
- Product procurement and merchandising
- Cleaning the bathrooms
- Cleaning the warehouse
- Inventory management and cycle counts
- Machine maintenance
- Paying sales tax nationwide
- Emailing our best customers
- Processing customer questions and returns
2.Prioritize your processes based on their impact
Next, it’s time to prioritize these processes. Which process has the biggest impact on your business? First and foremost, which processes add value to your customers and business? This can be from an expense, revenue, top-of-line, or bottom-of-line perspective. Are there any processes that you should stop doing? Are there any processes that you should start doing?
3.Pick one process to improve
You can not fix everything today. So, start by picking one process to improve. We mentioned it earlier, but the Kaizen philosophy of continuous improvement is a great tool that can help businesses make small improvements that, when combined, have a large impact.
Ask your team, “How can we increase the value or decrease the cost that we give to customers through this process?”
4.Automate your processes
After that, figure out which processes can be automated. Many processes, especially for retailers, have already been optimized and are available out of the box. Things like order management or CRMs. And while it may cost some money to start, the right set can help you scale. Start by automating one process, then move to the next one, then the next one, then the next one.
Process debt can be disguised as tech debt, which is why it’s important to first understand how processes work within your organization, before automating them. This helps you avoid automating a process that you should, instead, eliminate.
*Wickman, Gino. Traction (p. 156). BenBella Books, Inc.. Kindle Edition.