- How to think about Core Processes (PACe) vs Functional Processes (FACe)
Receive infrequent tools, workshops and articles related to growing your business!
April 23, 2023

As a business coach, I'm passionate about empowering organizations to achieve sustainable growth and improved performance using the Scaling Up FACe (Functional Accountability Chart) and PACe (Process Accountability Chart) tools. These transformative tools are designed to create clarity and accountability by explicitly defining roles, responsibilities, and ownership across functional areas and core processes. The power of alignment and clear communication, achieved through these tools, fosters a culture of continuous improvement and streamlined decision-making. By incorporating measurable KPIs, businesses can stay agile, responsive, and focused on the health and success of their core processes. The FACe and PACe tools have become an essential part of my coaching toolbox, enabling my clients to unlock their full potential, drive operational efficiency, increase employee engagement, and gain a competitive edge in the marketplace, ultimately setting them on the path to long-term success.

FACe and PACe are complementary tools used in the Scaling Up methodology to improve organizational accountability, performance, and growth. FACe defines roles, responsibilities, and accountabilities within functional areas or departments, such as finance, marketing, and operations, thus creating a clear structure for decision-making and communication. On the other hand, PACe concentrates on identifying, improving, and monitoring the organization's core processes, assigning process owners, and establishing Key Performance Indicators (KPIs) to measure performance and progress. These tools interact by aligning core processes with functional areas, ensuring that process owners and functional leaders collaborate effectively to optimize processes and achieve organizational objectives. The combination of FACe and PACe enables organizations to evaluate and optimize their performance at both the process and functional levels, contributing to overall growth and success.

Verne Harnish said it best, "FACe is how you see your company. PACe is how your customers experience it." I recommend the following sequence to avoid the common mistakes teams make while scoping out FACe and PACe. 

 - How to think about Core Processes (PACe) vs Functional Processes (FACe)

Start with PACe and define the roughly 5 to 9 core processes that make up the business. Core processes are critical, cross-functional activities within an organization that significantly impact the organization's success, competitive advantage, and value proposition. Core processes typically span multiple functional areas and involve collaboration among various departments. These processes are integral to the business's functioning, and their improvement or optimization can lead to better performance and growth. Core processes are often unique or closely aligned with the organization's core competencies.

Here are two examples of core competencies that are easily recognizable and how they lend themselves to core processes:

Apple - Design and User Experience: One of Apple's core competencies is its exceptional focus on design and user experience. The company has built a reputation for creating aesthetically appealing, intuitive, and user-friendly products. Apple's design philosophy emphasizes simplicity, attention to detail, and seamless hardware and software integration. This core competency has allowed Apple to differentiate itself in a highly competitive market and build a loyal customer base that appreciates the unique value proposition of its products.

Amazon - Supply Chain and Logistics Management: Amazon's core competency lies in its highly efficient supply chain and logistics management. The company has developed advanced systems and technologies to optimize inventory management, order processing, and delivery times. Amazon's vast distribution network, its proprietary algorithms, and data-driven decision-making allow it to provide fast, reliable shipping for a wide range of products. This core competency has enabled Amazon to become the dominant player in the e-commerce industry and continually expand its offerings and market reach.

Our goal with each PACe core process is to make it "better, faster, cheaper." We should be able to apply 2 to 3 KPIs to give us an idea of the health of the process. 

Better: Improving the quality of a process's output or outcome ensures greater customer satisfaction, reduced error rates, and higher overall performance. Quality improvement might involve refining the process steps, incorporating new technologies, or implementing more stringent quality control measures. A better process ultimately produces a superior product or service that meets or exceeds customer expectations.

Faster: Speeding up the process reduces lead times, increases throughput, and enables the organization to be more agile and responsive to market demands. Accelerating a process may involve eliminating bottlenecks, automating manual tasks, or streamlining communication channels. A faster process allows the company to deliver its products or services more quickly, giving it a competitive edge in the market.

Cheaper: Reducing the cost associated with a process enables the organization to allocate resources more effectively, improve profitability, and offer products or services at a more competitive price. Cutting costs can involve eliminating waste, improving resource utilization, or leveraging economies of scale. A cheaper process contributes to a leaner, more cost-efficient operation that maximizes the return on investment.

Core processes are essential operations or activities that contribute significantly to its success and competitive advantage. In contrast, a non-core process is a secondary activity that, while important, does not directly impact the organization's primary objectives or competitive advantage.

Here are some guidelines to help you differentiate between core processes and non-core processes:

  1. Impact on the organization's objectives: Core processes have a direct and significant influence on achieving the organization's primary goals and objectives. Non-core processes may contribute to the overall operations but are not critical to the organization's success. You must be willing to elevate the important processes from those secondary to the company's goals. 
  2. Unique value proposition: Core processes typically differentiate the organization from its competitors, creating a unique value proposition. Non-core processes, on the other hand, are more generic and may be common across organizations within the same industry.
  3. Competitive advantage: Core processes often provide a competitive advantage for the organization, allowing it to excel in its industry. Non-core processes, while necessary, do not typically provide the same level of competitive edge.
  4. Essential to business functioning: Core processes are integral to the business's functioning, and their failure or underperformance may lead to significant disruptions in operations or loss of business. Non-core processes can usually be interrupted or altered without causing major operational issues.

To identify the Core Processes in your organization, assess each process based on these guidelines and prioritize those that significantly impact the organization's success, competitive advantage, and alignment with its core competencies.

Once the process is identified, assign and owner to the process, and start mapping out what the process looks like. As a tip, ensure the process owner has the authority, ownership and accountability for making changes to the process. For mapping out the process, in the interest of brevity, I recommend watching the TED Talk, "How to draw toast."

Now let's look at FACe or the key functions of the company. Functional processes are activities and tasks specific to an organization's functional area or department, such as marketing, sales, finance, operations, or human resources. These processes are necessary for the day-to-day functioning of the respective departments and contribute to the organization's overall operations. Functional processes often include routine tasks and responsibilities that need to be performed by designated roles within each department. 

Team often get hung up and confuse a functional process for a core process. Yes, sales is important. It's also a process that resides under the Sales Department, split amongst several functional roles of the company. The department head, is responsible for making that process run well, AND it is likely a sub-process to the bigger core process of Customer Acquisition. Here are three core processs examples that cut across functions. 

New Product Development (Tech/Manufacturing Industry): New product development is a core process in technology or manufacturing companies. This process involves identifying market needs, researching and developing innovative solutions, designing and engineering products, and bringing them to market. A robust new product development process enables a company to continuously innovate, stay ahead of the competition, and maintain a strong market presence.  

Example: Tesla's new product development process has been instrumental in its success within the EV market. The process involves several stages, including market research, concept creation, design, engineering, prototyping, testing, production, and launch.

Tesla's ability to identify market needs and opportunities for clean, electric vehicles has significantly influenced its growth. The company has continuously innovated and introduced new technologies, such as the electric powertrain, Autopilot (an advanced driver-assistance system), and over-the-air software updates, which have set it apart from competitors.

Tesla focuses on creating vehicles with exceptional design, performance, and sustainability throughout the new product development process. The company's lineup, including the Model S, Model X, Model 3, Model Y, and upcoming Cybertruck, demonstrates its commitment to pushing the boundaries of electric vehicle technology.

Tesla's robust new product development process has enabled it to become a market leader in the EV industry, disrupt the traditional automotive market, and set new standards for sustainable transportation.

Customer Acquisition (Sales/Marketing): In many businesses, customer acquisition is a core process that drives growth and revenue generation. This process involves identifying target markets, creating and implementing marketing campaigns, nurturing leads, and converting prospects into customers. A well-defined and effective customer acquisition process ensures that a company can attract new customers consistently and sustainably, contributing to long-term growth. 

Example: HubSpot's customer acquisition process involves several key components: content marketing, search engine optimization (SEO), email marketing, social media, webinars, and events. They use an inbound marketing approach to attract potential customers by creating valuable, relevant content that addresses their target audience's needs and challenges.

By offering valuable resources like blog posts, e-books, and guides, HubSpot attracts potential customers seeking solutions to their marketing and sales challenges. These leads are then nurtured through email campaigns and personalized content, guiding them through the buyer's journey.

HubSpot also offers free tools, such as the HubSpot CRM, which allows prospects to experience the benefits of their software suite firsthand. This freemium model helps convert potential customers into paying users by demonstrating the value of their platform.

In addition to their marketing efforts, HubSpot's sales team engages with leads to provide customized solutions and support during the decision-making process, ultimately converting them into customers.

HubSpot's well-defined and effective customer acquisition process has enabled the company to rapidly grow its user base, expand its product offerings, and establish itself as a marketing, sales, and customer service leader.

Order Fulfillment (E-commerce/Retail): For e-commerce and retail businesses, order fulfillment is a core process encompassing receiving, processing, and delivering customer orders. This process requires efficient inventory management, warehousing, packaging, and shipping operations. An optimized order fulfillment process ensures timely and accurate deliveries, leading to higher customer satisfaction and loyalty, and a strong reputation for reliability.

Example: Zappos' order fulfillment process involves several key components: inventory management, warehouse operations, picking and packing, shipping, and returns management. The company focuses on delivering customers a seamless and convenient shopping experience, ensuring that orders are processed and delivered promptly and accurately.

To achieve this, Zappos operates a highly efficient and automated warehouse system. They use advanced technologies, such as barcode scanners and conveyor systems, to optimize the picking and packing process. This enables them to minimize errors and fulfill orders quickly, often shipping out products on the same day the order is placed.

Zappos also emphasizes the importance of reliable shipping and offers free shipping on all orders and free returns for up to 365 days. They partner with reputable shipping carriers to ensure timely and accurate deliveries.

In addition to their efficient order fulfillment process, Zappos provides exceptional customer service, including a 24/7 customer support hotline and a user-friendly website with detailed product information and customer reviews.

Zappos' well-executed order fulfillment process has contributed to its strong reputation for reliability and customer satisfaction, setting it apart from competitors in the online retail and helping it grow into a highly successful e-commerce business.

Here are common places where teams get tripped up in the FACe and PACe process exercises. 

  1. Elevating non-core processes: Occasionally, team members need "skin in the game," so they offer up one of their functional processes as a core process. 
  2. Not stepping back far enough: Look at the organization through the eyes of the customers, partners and vendors. They are unable to see the internal walls in the organization. They just want better, faster, cheaper. 
  3. Less is more: The best practice is 5 to 9 core processes. You might have 3 core processes out of the gate, and that's ok. Please don't force it. The rest will reveal themselves in time. 
  4. It's NEVER finished: In Scaling Up we talk about Kaizen, the continuous application of making something better. The output of these tools require refinement regularly. Documenting and applying ownership and KPIs is just the beginning of the work. 

FACe and PACe are complex tools. If you need help, reach out to myself or any other number of Scaling Up coaches. 

author avatar
George Morris
I use my 20+ years of entrepreneurial experience and training to coach businesses on scaling up rapidly using Verne Harnish's Scaling Up framework. By doing so, my clients are more efficient and profitable, giving them the ability to make bigger impacts in the world. I deeply believe entrepreneurs are the best equipped to be the vehicle for meaningful change, and in the decade ahead, we'll see a substantial shift in how business is done. We'll move to a model where company purpose, impact, curiosity, and team health will be differentiators in overall business success. As Simon Sinek has pointed out, the finite games are the legacy of the past; we're moving to an infinite game.