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You decide the substance and I'll decide the process, and I'll beat you every time.

Despite beliefs spawned by change-management and reengineering programs, processes are not nearly as flexible as resources are -- and values are even less so.

I think control systems are one of the most important, least understood, and least examined aspects of management that we have today. Most companies tend to accrete their control systems, whether on the financial, production, or sales side. So over time you get hundreds of these systems. If you ask companies how many control systems they have, they don't know. If you ask them how much they're spending on control, they say, "We don't add it up like that." If you ask them to rank their control systems from most to least cost-effective, then cut out the 20 percent at the bottom, they can't.

Unlike many systems, ERP suites are designed under the assumption that an organization will modify its business processes to suit the software, rather than the other way around. ERP systems work most effectively in an organization that integrates processes across all parts of the enterprise, freely shares information, and uses common terminology. "You have to step back from ERP and realize that its success lies as much with business process reengineering and standardizing business rules and processes as it does with the software."

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Processes don't do work, people do. Look closely at the inner workings of any company and you'll discover gaps between official work processes -- the "ideal" flows of tasks and procedures - and the real-world practices behind how things actually get done. These gaps are not problems that need fixing; they're opportunities that deserve leveragingÂ…We're not arguing against business processes per se. The challenge is to keep them elegantly minimal - to under prescribe formal procedures and create "elbow room" for local interpretations and innovations. It's a point that off-the-shelf reengineering misses: you can't build processes without the practices to implement them - and the most effective practices grow from the grassroots.

The reality is that an ERP system locks in the operating principles and processes for the corporation. Once the ERP system is installed, the odds of being able or willing to pay for modifications are close to zero. The cost; complexity; investment of time and staff, and implications and politics of untangling such an expensive investment prohibit most companies from tackling this issue. Consequently, it is important that ERP systems be implemented in a business-driven, cost-effective fashion from the start.

What we have now is a multidimensional organization. On one hand, we have markets; on the other hand, functional departments. Business processes cut across all the above. In that kind of complex environment, hierarchy and power make no sense. Instead, it's about influence and collaboration.

Processes improve fastest when those involved in the improvement effort understand the whole process rather than just their piece of it.

The distinction between process and procedure is essential. Procedures contain only explicit knowledge. Processes embed procedures in tacit knowledge of both the expert and the social kinds. Many of the problems of reengineering can be traced to the treatment of processes as though they were procedures - i.e., as though people's tacit knowledge didn't matter.

Management processes often contain subtle biases that favor continuity over change. Planning processes reinforce out-of-date views of customers and competitors, for instance; budgeting processes make it difficult for speculative ideas to get seed funding; incentive systems provide larger rewards for caretaker managers than for internal entrepreneurs; measurement systems understate the value of creating new strategic options; and recruitment processes overvalue analytical skills and undervalue conceptual skills. While continuity is important, these subtle, baked-in preferences for the status quo must be exposed, examined, and, if necessary, excised.

There are two kinds of people in the world—either process-oriented or project-oriented.

The capabilities of business units reside in their processes and their values, and by their very nature, processes and values are inflexible and meant not to change.

Businesses thrive on stability and repeatability. Stable and repeatable processes justify large-scale capital expenses; they justify large-scale employee training; and they reduce cognitive overhead because processes and decisions do not change and hence their rationale does not have to be explained repeatedly.

By contrast, an analytically based enterprise of the future will have to be designed around volatility rather than repeatability. Volatility—or rapidly changing decisions that are context- and time-sensitive—will be a big challenge for enterprises. Decisions are no longer easily explainable; capital investments cannot be based on mass repeatability but must cater to endemic volatility