Corporate or Business Process Management Laws

The theory of process laws is based on the principle that the fundamental success or failure of organizations is not a result of whether an organization met its budget targets in the near past but how well the organization's processes are structured to adapt to a volatile economic future. Today's practice of dividing the river of time into arbitrary time buckets and analyzing past events causes us to react to false signals and misses many critical symptoms that portend a crisis.

It is the ability of an organization to adapt to the forces of change that mark excellence. The theory of process laws is based on the observation that an organization's work processes are subject to fundamental natural forces that shape future performance. Organizational excellence depends on explicitly aligning an organization's management system with these fundamental natural forces and creating an organization that is nimble enough to adapt its processes to the ebb and flow of the natural forces.

Why processes? A process understanding is absolutely essential to an understanding of how the world behaves. Organizational performance can be viewed as a bundle of transitional outcomes that is shaped by environmental forces. Processes provide an understanding how dynamic events impact an organization with results being the derivative. A process foundation views an organization as a continuing flow; from being to becoming. Being (results) follows from processes because the transitory state of an output is the product of a process. The past is what it was. The future is what can be. Viewed thus, organizational performance is a consequence of versions of transitions of adapting an organization's processes to changed conditions.

Processes model the transformation of an organization and the forces that shape its ultimate outcome as it transitions through time. A process is governed by basic volatile natural forces and operates in an environment that in certain cases can be controlled. A process can survive only when it is in equilibrium with its environment. The key elements that distinguish a process is that it is repeatable, it is dynamic (flows through time), the impact of natural forces is predictable, and there is an ultimate outcome.

Processes are both natural or manmade. A natural process is created by nature. A manmade process is made by humans to replicate natural processes under controlled conditions or create an output that does not occur in nature. Manmade processes augment natural processes. Manmade processes employ technology in lieu of natural forces. Consider that natural diamonds are formed when carbon is subject to high-pressure, high-temperature forces that occur deep within the Earth's mantle. Diamonds are then brought close to the Earth surface through deep volcanic eruptions by magma. Alternatively, diamonds can also be produced synthetically by a process that approximates the high-pressure and high-temperature natural forces. Thus, manmade processes substitute technology for natural forces.

Process knowledge is timeless. When you have a body of water and high temperatures then there will be water evaporation. This process understanding can be used to comprehend yesterday's, today's or tomorrow's evaporation. Similarly, when I use a dull knife, I get a jagged cut yesterday, today and tomorrow. Substantive improvement of results can come only through mending the processes.

It takes process knowledge to extract understanding from the turbulent confusion of the world's events. In the real context of time, past events exist only as objects remembered, and future events exits only as objects imagined. The theory of process laws views the world in terms of clusters of processes that are interdependent with other processes and are constantly adapting to environmental forces. Processes are the centerpiece of understanding why things happened as they did and more importantly what is the most likely future performance if an organization does not intercede to achieve a better performance. Processes rather than reported historical results furnish the basic materials of performance.

Processes are the inverse of a historical measurement perspective. All we can ever observe about a result is what was done to cause the result. Understanding results and the forces that shaped those results is the penultimate goal of a measurement system. The historical reporting model that reports results in comparison with its planned resource consumption lacks an understanding of cause and effect. Process knowledge sees results as the product of a process and also as the manifestations of the interaction of processes as complex bundles of coordinated processes with environmental forces. It replaces the troublesome dualism of results and resource consumption with the analysis of activities, potentially compound interaction, and environmental forces.

At the basis of the theory of process laws are a set of assumptions and supporting theorems. The assumptions are necessary and sufficient. The key assumptions that underlie process laws include the following:

Assumption 1: All organizations provide customers products and services through its work processes.

A crucial constituent in the theory of process laws is that processes are elementary to understanding all natural phenomena and manmade organizations. The "essential nature" of an organization is most aptly described by the essential nature of a process. An organization transforms inputs, people, technology and other resources into specified products and services by following repetitive actions over time. Every organization action is a process. The key elements that distinguish a process is that it is repeatable, it is dynamic (flows through time), the impact of natural forces is predictable, and there is a preordained outcome. An organization could not function without the same essential attributes possessed by a process.

All work (actions) undertaken by an organization is a process. Take for example, airport Immigration and Customs inspectors who are responsible for processing all people and materials entering the U. S. on commercial aircraft to ensure the proper customs fees are assessed. To do their job, they create work procedures (processes) that employ modern technology. They process millions of passengers per year, clearly a repetitive process. They follow their procedures rigorously. They work in a dynamic environment where the violators are constantly seeking ways to avoid being caught. The natural forces of delayed planes and passenger characteristic mix changes cause strains on the process while they strive for a uniform outcome.

The antecedent of a process is inertia and static. Without processes, events are inert, unrepeatable, disconnected from the world's casual economy and inherently unknowable. Reporting inert events is pointless since they are not repeatable and thus no action is possible to prevent a reoccurrence in the future. For without processes, there is only randomness; and ultimately chaos.

Assumption 2: Given a process is fundamental to an organization, an understanding how processes behave is fundamental to understanding how organizations behave.

It is from a process through which results manifest themselves. See figure 1. A process is impacted by a variety of environmental factors in time. The transformation process thrives or is stunted depending on the impact of the environmental factor on the process. The process adapts to changing environmental forces. The ability of the process to adapt to changing environmental factors determines whether the process results are as desired and can be extended in time.

It must be kept in mind that it is from a process through which results manifest themselves. The world will continue to behave as a process irrespective of whatever measurement system is in place. A measurement system that explicitly mirrors process knowledge will provide greater insight of the factors of success than one that does not.

Consider the game of twenty one. The object of the game is to have the hand of cards that comes closest to twenty one without going over. Now suppose that a measurement system counted the total number of cards selected by each player. It may turn out that the person who selected the most cards was the same person who won the most hands but such an outcome would be a random result. What we have is a measurement system that is mismatched to the process of the game twenty one.

It follows that a measurement system cannot adequately portray the world without process knowledge. Too many measurement systems only observe results and whether the results are as intended. Processes measurement systems go beyond such simplistic measures and provide knowledge on why the results transpired and whether a process needs to adapt to a changing environment.

Assumption 3: Natural forces and environmental relationships govern all processes.

Organizations create manmade processes to transform resources into outputs as part of an overall coordinated effort to offer products and services to customers. The process is in constant interaction with its environment. There are two types of environments to consider. First, processes where an organization can control the environment. Controllable processes include all business functions and upper management. These groups set policies, allocate resources, set goals provide supporting services, and try to control how a process interacts with its environment. As a result, the transformation process must adapt to an ever evolving organization controlled work environment.

Second, there are many events and stakeholders that are patently outside of an organization's control. No single organization controls legal requirements, political interests, social pressure, interest rates, inflation or economic prosperity. These factors are influenced by the collective efforts of all organizations, government policy and the world economy. These external factors are termed environmental factors. A process must adapt its processes to changes in environmental factors or risk poor performance.

In addition to internal and environmental factors, processes are also subject to natural forces that are beyond the ability of an organization or the collective economy to change. These natural forces shape process behavior. If I drop a stack of papers, they will fall to the floor not to the ceiling. Gravity is a natural force. The natural forces are every bit as real as regulative authorities and management policies. The natural laws are analogous to a magnet. Processes and measurement systems that acknowledge and mirror the natural forces are equivalent to putting the positive and negative poles of a magnet together. They attract and are sustainable. Processes and measurement systems that ignore the natural laws are like putting the same poles of a magnet together. They repel and are not unsustainable. This article will articulate the natural forces. In summary, the three sets of forces are illustrated in figure 2.

Assumption 4: A measurement systems must emulate process behavior otherwise the measurement system will give false signals or fail to measure key factors that impact organizational performance.

Much of today's measurement systems are based on history. Historical analysis measures events that, when reported, are past facts. Historical analysis on the surface seems very logical. Consider, the famous axiom is that if you don't understand history that you are bound to repeat its mistakes. Or, the accounting profession has insisted that historical reporting is objective and auditable and thus makes it the centerpiece of its reporting model. Or, forecasting techniques measures the past to extrapolate to the future. Or, statistics analyzes historical data to understand distributions and isolate patterns. These are but a few examples of the focus on historical data that is prevalent today. All the above seems logical but...

Process knowledge takes precedence over historical knowledge. Process knowledge stands in stark contrast to historical knowledge. Historical knowledge measures the results of organizations in time increments past facts. Historical knowledge is the nouns of organizations. Process knowledge is the verbs. Processes, events, occurrences are more meaningful to the present and future rather than the past. The essence of change is stressed precisely because of the difference between a museum and the real world of an ever-changing nature is seen to be crucial to our understanding of reality.

Without an understanding of processes, change appears chaotic, unpredictable, and often out of management's control. Managers see a current crisis as a situation specific event rather than as part of a never ending need to adapt. Adaptation is a process, not an event. Process management identifies the major forces of change and highlights the need to continuously adapt to these changing forces.

The Laws of Processes challenges the importance of history. Sustainability is not a constellation of past events, but one of processes. The Process Laws are based on an entirely different set of logic. It asserts that to evaluate processes as they exist today can be accomplished without the need to look back in history. History merely provides an understanding of why processes are as they are today. It is much more relevant to decision making to understand today's process behavior and the key factors that influence the process as it passes through time. Becoming (future) is as, or more, important than being (as is). The best run organizations will avoid the fallacy of focusing on past events.

Natural laws of the universe persist. Work processes must obey nature! To holistically understand change one must understand the natural order of things if but the natural laws was only known. Instead, we rely on historical analysis using isolated management techniques that we term best practices. We embrace the dangerous illusion that the techniques will explain organizational performance even though the world continues to operate as a process.

The foundation for building an adaptive management system is process laws. The following process laws explain how objects are transformed through time. The process laws follow:

Process Law 1: Processes are repeatable. Processes repeat themselves in time. Process repeatability facilitates a homogeneous transformation from a starting condition to an ending condition. For any process to produce homogeneous results, the inputs to a process, the stages of process transformation and the process environment must be similar in nature. Process repeatability does not imply that every process output will be identical but that there are common (homogeneous) characteristics of the input, process transformation steps, and the output.

One way to understand process homogeneity is to introduce the concepts of features.

A feature is a prominent and distinctive property of an input and output. Features are the unique characteristics of the inputs and outputs of a process that set it apart from other similar objects. A process controls the transformation from an initial to a new set of features.

Consider, when you plant an acorn and you get an oak tree. You don't get a flower. You don't get a rock, you get an oak tree. Similarly, a barber cuts hair. A barber acquires facilities and purchases a barber chair, hair cutting equipment and supplies. The barber hires people with training and experience cutting hair. When the process is in place then the barber has created a repeatable structure. The process cannot be employed to cast metal or provide dental services. Thus every process has a single focus and has universal features (properties).

While the similarity of processes occurs at the feature level, the differences manifest itself in magnitude. A process output will be nearest to its ideal outcome the closer the actual process environment adheres to an ideal environment. Consider an oak tree. A tree's growth circles will be largest in years with favorable weather conditions. Growth will be less in magnitude in years of drought or other unfavorable whether conditions.

G. K. Chesterton could be recognizing the importance of Process Law 1 when he said in 1908: "So one elephant having a trunk was odd; but all elephants having trunks looked like a plot."

Implication: (1) Process measurement systems provide an understanding of why results are as reported.

(2) Processes are quantifiable. Each stage in the transformation process consumes resources and has a measurable performance.

(3) Processes performance is predictable within a range of outcomes of differing likelihood. By understanding the current process and the most likely environmental conditions in the near future, process knowledge enables the management team to predict the most likely performance in the near term.

Corollary 1a: The physical capabilities embedded in every process define process functionality (intrinsic processes). All processes are functionally similar. Natural processes contain inherent properties that manifest themselves as a preordained outcome. Living organisms contain genetic instructions (DNA) that determines the organism's development and functioning. A lump of coal under certain conditions of temperature and pressure becomes a diamond and under other conditions becomes an energy source.

Manmade processes are also inherently intrinsic in nature regardless of the type of organization that employs the process. Think of all the different types of organizations in the world. Next consider how organizations pay their employees. Is there a dramatic difference other than the number of employees or the computer systems used to pay employees? The answer, of course, is no. The experience of many years is enfolded into a universal approach of processing a payroll. Process knowledge embedded in textbooks, handbooks and operating procedures make many processes universally accepted.

The DNA of a manmade process derives from the technology employed to perform a process. There is a limited array of technology options that can produce any desired outcome. Technology harnesses nature's capabilities to perform a function. Consider it requires high temperature and high pressure to transform a lump of coal into a diamond. There is a very limited number of ways to create high temperature and pressure. It follows that there are only a limited number of processes that can fabricate a diamond.

An intrinsic process cannot change its essential nature, a hair cutting process is a hair cutting process. Since an intrinsic process has an unchangeable outcome and there is a limited set of technology that can support the transformation process, intrinsic processes provide constraints to what organizational process forms are possible.

Implication: (1) The knowledge attributable to an intrinsic process is applicable to all organizations that employ the process.

(2) Process performance is directly measurable. Process performance is a function of how well it achieves the ideal transitional outcome.

(3) All processes have intrinsic performance measures. Process performance measures are not unique to the organization but are dependent on an organization's processes.

(4) The intrinsic nature of processes is stable over time. Therefore, once an organization maps its unique resource consumption to the intrinsic process then the maintenance of the process system is relatively stable over time.

(5) There are only a finite number of ways to perform a process. Process management is practical in scope.

(6) Process improvement is empirical. The need for, timing and best technology option process improvement can be automatically derived by understanding a process's technology, the organization's work environment (work mix, etc.), the process technology options and process economics.

Corollary 1b: All processes have physical limitations. A physical limitation is where an activity's physical capabilities are limited by scientific laws. An oak tree requires water. A prolonged drought will kill an oak tree. Equally, a prolonged overabundance of water can rot the tree's roots killing the tree. Thus there are physical limitations to the amount of water needed for healthy growth.

There are physical limitations to manmade processes. A metal drilling process is constrained by the hardness of the metal being drilled as well as its thickness. For example, a common drill bit cannot penetrate titanium. A special drill bit is required. The physical limitations are a function of natural properties.

A special form of physical limitation is that the physical process is altered each time it is executed. Consider that the drill bit is worn each time a drilling operation is performed. Process resources are always in a different set of condition each time a process is executed.

There are practical limitations to manmade processes in addition to physical limitations. Certain processes may be practically feasible but not so economically. The practical limitations are indirect while the physical limitations are immutable. However, the impact of practical limitations is as significant as physical limitations.

Corollary 1c: Manmade processes exist to create societal value. Manmade processes apply technology to (1) increase the efficiency and effectiveness of a natural process, (2) increase the capabilities of a natural process. Manmade processes increase the efficiency of natural process by decreasing time, increasing the availability of natural outputs, controlling the environment and lowering the cost of a unit output of a natural process. The power of a controlled environment is that it greatly reduces the number of variables that the process must deal with to achieve a desired outcome.

Manmade processes can also enhance the capabilities of natural processes. There is no natural process that produces a defibrillator. Technology is employed to create an output that improves human wellbeing. Capital is allocated, resources dedicated, and knowledge is developed to create a manmade process. Why? Because they believe that the world will be a better place with the new product or service. The forces of supply and demand then confirm or deny the assertion.

Process Law 2: All processes vary. An important characteristic of a process is that there is variability in each and every output, no two items produced by a process are the same. No two baked bean cans are exactly the same! No two renewals of a driver's license at a Department of Motor Vehicle are the same! The variation might be normal and expected or result in quality problems generally adding an element of chaos and sometimes causing unintended consequences. A goal of management is to ensure the effects of variability are negligible and unobservable by the user.

Implication: The value of the traditional practice of comparing actual results to budget has limited value because it compares two absolute numbers. Since variation is inevitably present in any process, it is difficult to determine how much of the difference between the actual and budget is due to expected random variation, and how much, if any, of the difference is due to problems. It is unwise to manage absolute value in a world that varies.

Corollary 2a: Process performance robustness depends on the extent of its tolerance to differences in inputs and changes in environmental factors. Process tolerance is the acceptable range of variation from a centered value. A centered value is the average or normal process performance value. Every execution of the process results in different process performance values. The differences are a result of the changes in input requirements, process resource differences, process execution variation and changing environmental factors. However, there are limits to how wide the performance values can stray from the centered value and still achieve the desired process outcome.

Tolerance is a double edged sword. Process performance derogates as the factor approaches the limits of tolerance for the process. Therefore, wide variation tolerance causes output variation that can lead to quality problems. Conversely, greater tolerances enable more robust process capabilities. Wider tolerances reflect a processes capability to handle diverse conditions.

There are two levels of tolerance (Figure 3). The first level of tolerance is the most favorable level. Process performance is acceptable as the factor varies from the ideal conditions until it reaches the most favorable tolerance level. Beyond this point performance degrades exponentially until the physical process limitations are reached and the process is incapable.

To illustrate this corollary, consider the human body's tolerance to lack of food. The ideal state is where a human has adequate food. As food is removed, the body compensates by living on body fats. This condition of hunger can last up to a couple of weeks without permanently damaging the person. This stage is within the most favorable conditions. A person enters the rapid deterioration phase when the fat reserves are depleted and the body switches to consuming proteins as the major energy source. Muscles are rapidly depleted and cell function degenerate. Starvation occurs at the maximum toleration limit.

Corollary 2a(1): Process performance has minor derogation of performance within the most favorable tolerance level. Process survival depends on every process having a tolerance to variation in the input, process execution and environmental factors. Typically the variation within the most favorable tolerance range embraces the conditions that are most commonly encountered. A process that is unable to operate in normal conditions must be improved or it will perish. Process performance is at a peak under ideal conditions but process loss is minimal up to limits of the most favorable level.

Corollary 2a(2): Process performance has exponential derogation of performance from the most favorable tolerance level to the maximum tolerance level. A maximum tolerance level is the most limiting operation or action that the process is capable of processing. A process is pushed beyond its inherent capabilities when the process factors exceed the most favorable tolerance levels. The process is able to function but performance degrades exponentially. Process cost skyrocket; process quality plunges; and process time soars.

Implication: (1) Narrow process tolerances improve repeatable outputs (Six Sigma)

(2) Narrow process tolerances limit process adaptability (Six Sigma is not universally applicable).

Corollary 2b: Process variation oscillates when it is in equilibrium with its environment. Oscillation is the repetitive range of process variation over in time. The oscillation emanates from a central value. The centered attribute of a process is a function of its interaction with factors that influence variation under normal conditions. The normal conditions represent the process equilibrium point. The process oscillates around the centered point since one would equally expect favorable or unfavorable conditions when a process is in equilibrium with its environment. Statistics terms such processes as being "in control" and displaying a bell shaped distribution.

The centered of a process will shift to a new equilibrium with changed conditions. The changed conditions act as a form of resonance of the process's oscillation. The process resonance is the tendency of a process to oscillate at larger amplitude and to shift its center value from the original equilibrium value. The nature of the new conditions must always be discovered and, if possible, managed. In this sense the cause of performance problems is a shift in factors that impact a process's behavior.

Consistent oscillation enables predictability (See Figure 4). Stable process oscillation enables process results to be predictable within a range of outcomes of differing likelihood. Predictability is possible because processes evolve slowly over time, are repeatable and work is sequential in nature. The sequential relationship of processes is the key to assessing work patterns. If an organization does repetitive work in an expected sequence, there is no reason that the organization should not look forward as well as back. Given this understanding, processes consider the current state of transformation that has already occurred and statistically projects future transition states based on process knowledge. Cost and performance can be projected, within statistical limits, by associating resource consumption with these future events.

A process will provide repeatable results until a factor changes that will greatly disrupt a process. Unfortunately, things go wrong. Every process is subject to changes in the environment and other interrelated processes. Some events can be so significant that it will cause a major disruption to a process. For example, a jet engine that fails to start will disrupt an airline schedule. Poor performance and waste occurs where a process is disrupted. For example, the train a person takes to work may be delayed or canceled. The roads they drive by be congested due to a traffic accident. Disruptive events happen.

It is only when a key event occurs that unstable process performance is likely to result. A key event is where a critical process factor is outside the normal tolerance range. The key event changes process oscillation resulting in a large effect or a new emergent order. Given this premise, process knowledge searches for the events that cause significant disruption to the processes. This enables organizations to monitor initiating events, detect whether (or when) the events were expected, assess whether the events will cause a significant disruption.

Implication: (1) Predictable oscillation (bell shaped curve) improves process predictability.

(2) Historical accounting reports the financial results of how well the organization performed its processes in previous periods. Process management reports how well the processes are capable of performing in the future periods.

Corollary 2c: Process variation arises from (1) poor process execution; (2) incompatible product and service features and (3) environmental changes. One source of process variation occurs when a process is does is not executed as planned to achieve an outcome. Variation due to poor process execution can be caused by a myriad of reasons including cycle time differences, failure to follow best practices, information errors, redundant work, expediting, reworking, correcting errors to name a few. The quality movement has dealt extensively with poor process execution.

A second form of process variation is due to requiring a process to perform beyond its inherent capabilities. Every manmade process is developed to transform an input into a targeted output. The selection of the process resources (skill of workers, machines, information, etc.) determines the process capabilities. The process capabilities can be categorized into adept, problematical and impractical. Adept capability specifies the range of input characteristics that are compatible with process capabilities (favorable tolerance level). Problematical capability specify a range of input characteristics that the process is capable of transforming but with great inefficiency and a high probability of poor quality (between favorable and maximum tolerance level). An impractical capability specifies a range of input characteristics that the process is unable to transform (exceeds process physical limits).

Consider a machining process that applies a finish to a steel product (See Figure 5). A surface finishing process has adept capabilities until it is required to apply a finish 32 micro inches or less. From 32 to 15 micro inches only the grinding process is capable of achieving the desired surface at a high cost and greater potential for quality errors. This process is problematical. There are limits beyond which even the grinding process is incapable. These limits define the impractical capabilities or limits.

The features of a process input determine the degree of conformity to process capability. Features are the unique properties of a product or service that distinguish it from other similar products or services. Understanding the unique features configuration relative to process compatibility is a major factor in determining process variation. This knowledge of features enables an organization to minimize variation resulting in a more predictable and process performance.

A third cause of process variation is due to changes in the environment in which the process operates. The environmental changes are either internal (such as, policy changes or management actions) or external (such as the price of gasoline or interest rates).

Implication: (1) The compatibility of features (natural characteristics) of a process input to the process capabilities and limitations has a direct effect on process performance.

(2) Process input features that are incompatible with process capabilities create process variation that is beyond the capability of the process to produce targeted results.

(3) Process variation that is beyond the capability of the process to produce targeted results but may be under control of the organization's management.

Process Law 3: Processes are interdependent when a process has a dynamic relationship based on mutual influence and common purpose. No process exists in isolation. Every process expects certain conditions to be met by the preceding and following processes. Processes are connected in a hierarchical manner as well as by flow. A hierarchical process connection consists of master and sub-process relationships. A hierarchical connection is the ordering of processes from the highest to the lowest. A hierarchy is based on the principle of control that stems from the master process to its sub-processes. It permits a hierarchical decomposition of an organization's processes as a basic device for dealing with complexity. The factors impacting a process are ordered from the general (master process) to the constituent components (sub processes).

A work flow condition exists where there is a precedence of action. One cannot drive to work until the roads have been constructed, drivers licenses issued, the automobile built and so on. After arriving at work, the return drive must be made. Thus, all processes are dependent on its preceding and its subsequent processes. It is through the unique web of processes and their interactions that an entirely new property emerges synergy or disharmony.

Synergy is a beneficial, reciprocal relationship between processes that creates value for a whole that is greater than the sum of the parts. Synergy provides capabilities not found in each separate process. Process interdependence presupposes interchange of information or physical transformation between processes such as bees pollinating flowers. This exchange is a source of new applications that was beyond the capability of each independent process. In this sense, synergy is where we have emergence of new process capabilities.

Implication: (1) Intrinsic processes enable management systems to focus on a single process to simplify management analysis.

(2) Key process interactions must be monitored by a measurement system since processes stand connected with one another as integrated wholes.

(3) Root cause analysis defines key dependencies.

Corollary 3a: Due to process interconnection, all actions have unintended consequences. Purposeful action will produce some unintended, unanticipated, and often unwanted consequences. Unintended consequences occur because each action has more than one effect, and these effects will invariably include at least one unforeseen side-effect. Unintended consequences arise from the inherent complexity of the interrelationship of processes, biased decision-making toward a preconceived solution and deficient analysis. Deficient analysis and biased decision-making is particularly nefarious since important unintended consequences are often ignored or suppressed. The adverse effects of complexity can also be minimized with insightful analysis in cases where an organization did not falsely reason, but incompletely. The potential impact of true unintended consequence has been illustrated by the Butterfly effect where apparently insignificant changes with far-reaching effects.

The unintended side-effect can be more significant than the intended effect. These unintended consequences can either be positive or negative. The timing of action can have unintended consequences. Actions taken too early or inaction can harm an organization. It is critical that management be given information in a timely manner and in a format that makes obvious the appropriate action.

Implication: The goal of process reporting is to provide a decision making system (data plus analytics) that provides insight into why a process achieved a result and to minimize unintended consequences with comprehensive decision making analytics.

Process Law 4: Processes seek equilibrium with its environment. A process seeks equilibrium as it flows through time, or is overwhelmed by environmental factors. Equilibrium is essential to achieving a process outcome. Returning to the oak tree example, over time the oak tree will experience different temperatures and rainfall. An oak tree can survive the environmental fluctuations within limits. How well a process establishes equilibrium with its environmental factors are a key determinant of success and process well being.

The ever changing nature of our environment results in process stability and instability co-existing while competing for domination. Instability exists because a process is constantly barraged by a ceaselessly changing set of events that affect its performance. All processes are subject to this uncertainty (chaotic influences). Stability exists because a processes structure limits the number of variables with which it must deal and the process creates tolerances to variation under normal conditions.

Process instability results in process risk. Process risk is a function of the degree of change in an external factor and the adaptability of the process to changes in the environment. Process risk is the probability that a process will not achieve its intended outcome and what is the potential consequence.

The events that introduce uncertainty into a process are either direct or indirect. A direct influence is one where a significant change in a factor will directly influence process performance. In the home building industry, a significant change in interest rates will boost or diminish home purchase sales. An indirect factor has an oblique dampening or amplifying effect. For example, the state of the economy will dampen or amplify the impact of interest rates on home purchases. Direct factors are more material to an organization and must be closely monitored and managed where possible.

Process instability also directly impacts process capacity. Process capacity that is essential to buffer changes in process factors. The greater the process instability the greater the process capacity needed. Capacity stores capability, transformation potential, qualification or competency within a process that can be used as a safeguard against future changed conditions. There is a cost of unused capacity. There is a cost of changed conditions. The two costs must be balanced.

Process controls are essential to managing process instability. An out of control process has two major problems. First, the mission effectiveness is diminished. An out of control service cannot be relied on to deliver consistent performance. Second, the cost of the process is not predictable. Adaption requires that process feedback be as close as possible to event occurrence.

Implication: (1) A process will provide repeatable results until there is a significant change in a factor (key event) that greatly disrupts the process.

(2) Process risk is a function of the degree of change in an external factor and the adaptability of the process to changes in the environment.

(3) There is a certain amount of process capacity that is essential to buffer changes in demand and expected process variation (readiness).

(4) Feedback as close as possible to event occurrence (process controls)

(5) Standard cost is superior to actual cost. Standard cost embeds process knowledge while actual cost is based on historical data.

Corollary 4a: Process variation enables equilibrium. Process variation tolerance is a measure of a processes ability to adapt to changed conditions. Process interconnection requires that dependent processes have compatible process variation tolerances. Normal variation in one process will result in poor performance in inter-connected processes that do not have a matching level of variation tolerance.

Every process expects certain conditions to be met by the preceding and following processes. Failures in the preceding processes will disrupt a subsequent process. The flow between processes is one reason cost and performance is never static. The cost and performance varies dynamically depending on how smooth is the flow of information or material between processes. It requires effort on the part of many separate functional groups to work together seamlessly, no easy task. In fact, the traditional functional organizational structure often leads to inappropriate competition among work groups.

Corollary 4b: The forces of polarity among processes determine whether processes are in a state of natural equilibrium. There is a set of conditions or forces that create a synergistic or repulsive relationship among processes. A realistic process description of the relationship between processes must include the effects of attractive and repulsive forces. Polar interactions can be very strong and result in process associations that enhance equilibrium or as great an opposition or contrast as possible.

Implication: (1) Natural forces that exert a positive binding influence are more likely to achieve a lasting equilibrium. Conversely, Natural forces that exert a negative binding influence are more likely to pull apart.

(2) Artificial forces can bond two processes for a period of time but when removed the processes will pull apart.

Corollary 4c: A process does not to have maximum efficiency or effectiveness to be in equilibrium. Optimization rarely if ever exists, only equilibrium No such thing as profit optimization

Process stability depends on how well the process was designed; how much it is influenced by external factors and the stability of its interfacing processes. A process forms a natural protective reaction to its environment by adapting to environmental changes. A relatively stable environment that changes slowly over time is a prerequisite for process stability. The process itself may exert an influence over some of the factors, such as a plant having flowers that encourages pollination.

Manmade processes have an even greater control over its environment than natural processes. Events that could disrupt a process can often be detected and isolated by management manipulating a process. Unacceptable input can be rejected enabling stability. For example, the air traffic controllers may have limited control over the volume of traffic at a particular airport but they do control the timing and spacing of landings and takeoffs.

Processes evolve so that the process is "suited" to use the best resources to achieve equilibrium. The interactive process led to the fittest processes being those that are interdependent with its environment. The evolution of interdependence requires that mutuality leads to compatibility. In process adaption the difference lies, not in what we value, but in the technology and management practices that we use to harness the very nature that we depend upon.

Adaption occurs when a process change offers a real benefit over another variation of that process providing a competitive advantage. In the case of natural processes, environmental factors will "select" the process changes that best suit the prevailing conditions (natural selection). An animal may survive a drought because of a better biological function. This may lead the animal to survive and reproduce passing on the genetic attribute when many other animals without the attribute die. Survival and reproduction will enable the transmission of this trait (differential fitness).

In the case of manmade processes, process adaption occurs through process knowledge transfer. A superior process results in better results. The superior process is studied, the results are disseminated and organizations adapt their processes to the new knowledge.

Natural laws prevail. Much of our management reporting failures can be laid at the feet of measurement systems that do not acknowledge these natural laws. The failure of today's measurement systems is that they create measurement systems that explain the shadow of results rather than the way things always are and could be. These shadows of results often lead to self created crises.

Here processes cut the Gordian knot. A process is dynamic; all things flow. Everything is a matter of process, of activity, of change. Processes provide a descriptive framework for understanding dynamic events and the transformation progression. The Laws of Processes explain how processes transform events from being to becoming. This process knowledge is invaluable in explaining how organizations perform. Process knowledge embraces the passage of time and the environmental factors that influence organizational behavior.

The intent of this paper was to present a beginning set of process laws. These process laws must be refined and expanded. Efforts are underway to do so. The range of applications of the process laws are unlimited; they apply to physics, biology and all natural sciences; they equally apply to industrial engineering, accounting and all organizational management disciplines.

Several implications of these process laws as they apply to measurement systems were presented. The process laws portend that accounting and management systems of the future must undergo significant changes in the future. A new adaptive management system based on process laws must emerge in the future. While much work remains, an exciting challenge awaits us to create a better world based on process knowledge.