CIO INSIGHT: We've been studying process management and process improvement for years, but it seems many companies flounder when trying to figuring out how to improve their processes. Why is that?

MICHAEL HAMMER: Many organizations have made a lot of progress. It's also important to distinguish between process improvement and process management. Without getting too technical, process improvement is not as hard to do because it doesn't involve much organizational change. Process management, on the other hand, involves a lot of organizational change, and that's fundamentally what makes it hard to do.

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The issue with process management is that it requires new managerial responsibilities in the organization. Someone has to take responsibility for processes that cross organizational boundaries. The title we often use for this role is process owner. And the challenge is that the process owner takes authority away from functional managers.

That doesn't happen so much with process improvement because functional managers can make their own local improvements. But process management really entails a transfer of authority from functional managers to process owners, and that's a very difficult shift.

Because it involves so much fundamental change, this only can happen if it's driven from the top of the enterprise. This is not something that happens bottom up. And the problem is that in a lot of organizations the senior leadership is distracted by other things, unfamiliar with these ideas, and so is unready to do anything about them, or not focused on operational issues because they're accustomed to business being easy over the last several years.

In a variety of ways—not just because of the credit problem [collapse of the subprime mortgage industry]—it's a much tougher time in business. And I think this is directing more and more people to pay attention to operations generally and their cross-functional processes specifically.

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