Why standardize operations and why not?

Sep 17, 2014 / by Esko Hannula

Any decent company works on or at least talks about, processes, templates, standard reports, and other forms of harmonization. Quite often the discussion is sparked by an individual observation of a problem: confusion, error proneness or inefficiency somewhere in the operations of the company.

Most likely, the conclusion of the discussion is that it would be a good idea to standardize something, such as the format of the monthly status report or the process of handling a customer complaint. Everybody will nod their heads to signal that yes, the problem could have been avoided if we had a standard form of monthly reporting. If many persons enough are serious about the issue they may even decide to do something about it: define a process, create a work instruction and standard operating procedure, or create a new document template.

Finally there is a consensus decision that, from now on, everybody is going to apply the new process, instruction, or template. In a few days, this all will be forgotten but everybody still agrees that it would be a good idea.

Benefits of standardized processes

Why do people actually want standardized processes? Most common reason is probably urge for security. If there is a standardized way of working you are less likely to make mistakes, less likely to be blamed about them, and more likely to be able to control those following the process. Besides being easier to manage, a standardized process is also easier to automate. On the other hand, the more complex and the more customizable the activity is the more difficult it is to standardize.

Before standardizing anything it makes sense to ask a couple of sanity-checking questions. Why do I want this thing standardized? What is the business benefit I will gain? What is the business benefit worth?

I can identify four possible business reasons for standardizing operations. The obvious ones are, obviously, operational efficiency, reduction of deviations, and ability to scale. The less obvious ones are brand value and speed of learning.

If you go to McDonald’s you know exactly what you are going to get. If there are any deviations from the standard process you’ll notice it immediately – and you’ll be disappointed. The customer service process at McDonald’s is carefully thought and highly standardized and it defines the McDonald’s brand at least as much as their logo, their colors, their meals, and the good old Ronald McDonald.

But what applies to McDonald’s junk food business cannot apply to highly sophisticated professional services. Wrong! What works at McDonald’s works also at McKinsey. The customer engagement process at McKinsey is also carefully thought and designed for strengthening the brand. Even the roles of McKinsey consultants in a customer assignment follow always the same pattern and strengthen their brand.

They want their customer to understand that they are dealing with McKinsey, not just any other – probably equally good – management consulting company. Next time the customer buys a project from McKinsey he knows what kind of setting, roles, and deliverables to expect. The process defines the brand.

Learning the unique standardized habits

How about the speed of learning? When McDonald’s opens a new restaurant they carefully replicate the standardized concept, including standardized processes. The manager of the new restaurant never considers of “thinking out of the box”, “starting from a clean table”, or “building from scratch.” He cannot afford that.

When an employee joins McDonald’s he goes through a standardize training and induction. If the employee moves to another McDonald’s restaurant he does not need to be re-trained. He doesn’t need to learn the unique habits of the co-workers either because they, too, know the standard process. Believe it or not, the same applies to McKinsey.

A standardized process can be a blessing or it can be a nightmare. Standardized processes help standardize results, minimize deviations, achieve scale and accelerate learning. But if you standardize when standardization does not add value your process becomes plain waste. In any case your processes define your brand.

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Topics: Standardization

Esko Hannula

Written by Esko Hannula