REENGINEERING THE CORPORATION: A MANIFESTO FOR BUSINESS REVOLUTION
By Michael Hammer and James Champy
HarperBusiness x 223pp x $25.00
Every month, our senior management goes to some seminar and comes home with a new religion. We just hold our breath until they get ever it.
--Unidentified manager, quoted in Reengineering the Corporation
Here's one idea that's going to last a lot longer than you can hold your breath: reengineering. It's the hottest management concept since the quality movement. It has made former MIT computer science professor Michael Hammer, who coined the term, a highly sought-after guru. And it has propelled Cambridge (Mass.)-based CSC/Index Inc., which conceived the approach with Hammer, to the forefront of the consulting business. Thousands of managers flock to Hammer's seminars annually, while CSC/Index expects its revenues to hit $150 million this year, up from only $28 million five years ago.
Already, a number of books on the subject are tumbling out, from Process Innovation: Reengineering Work through Information Technology (Harvard Business School Press) to the forthcoming Business Process Reengineering: Breakpoint Strategies for Market Dominance (John Wiley & Sons). But the first one you should spend your time and money on is the work of reengineering's originators--Hammer and CSC/Index Chairman James Champy.
Indeed, in writing Reengineering the Corporation, Hammer and Champy have done some badly needed reengineering of the business book genre. For one thing, their book, at a digestible 223 pages, is succinct. For another, it offers both big-think and nuts and bolts: It lays out the reasons reengineering is important, and it provides the how-to information demanded by practicing managers. What's more, Hammer and Champy make what could be a prosaic topic interesting. Reengineering may well be the best-written, most well-reasoned business book for the managerial masses since Tom Peters and Robert Waterman's In Search of Excellence.
Just what is this idea that has Corporate America feverishly buzzing, and why has it taken hold? While some skeptics claim that reengineering is little more than a euphemism for laying people off, the authors define the term as "the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed." The creative use of information technology is essential, not to merely computerize tasks but to start from scratch, discarding traditions and reinventing the way work is organized.
A central idea behind reengineering is that most work in companies is organized inefficiently, around specialists employed in what Hammer and Champy call "functional silos," such as accounting or marketing. "Everyone involved in a process looks inward toward their department and upward toward their boss, but no one looks outward toward the customer," argue the authors.
That explains why it used to take IBM Credit Corp., the Big Blue unit that arranges financing for the company's computers, six full days to approve a loan application--even though the actual work consumed only 90 minutes. Documents used to move from one specialist to another. Now, a single person handles a request from beginning to end. Reengineering slashed turnaround time to just four hours and the number of personnel involved was reduced.
Surprisingly, Hammer and Champy concede that 7 out of 10 reengineering efforts "fail to achieve any results"--not the sort of success rate you'd think would inspire so much interest. The reason managers continue to jump on the bandwagon is that when reengineering does work, the results are so remarkable. Successful reengineering efforts produce "quantum leaps in performance," as Champy and Hammer put it, not 10% or 20% gains.
Most reengineering efforts fail, the authors say, because people resist them. "Getting people to accept the idea that their work lives--their jobs--will undergo radical change is not a war won in a single battle," they acknowledge. "It is an educational and propaganda campaign that runs from reengineering's start to its finish." Companies that have succeeded are those that have made compelling arguments for change.
Among the many examples Hammer and Champy cite are detailed case studies delivered in the words of the managers who led major reengineering campaigns at Hallmark Cards, Taco Bell, Capital Holding, and Bell Atlantic. These efforts are described in vivid, sometimes evangelical terms. Hallmark Cards Inc. dubbed its transformation "The Journey." Before reengineering, it took Hallmark two to three years to get a line of greeting cards from concept to market. It discovered that during 90% of that time, work sat in someone's in- or out-basket. From the time a concept was given to Hallmark's creative staff to when the product hit the printing department, work was handed off 25 times.
To cut down on wasted time and spur creativity, the company grouped together people who previously had been separated by disciplines, departments, floors, even buildings. The upshot: Hallmark's integrated teams of artists, writers, marketers, and production people pushed new lines out within a year. Hallmark's experience, like IBM Credit's, underlines a key reengineering principle: Work is best organized around results, not tasks such as sales or production.
While these profiles capture the enthusiasm of managers who have achieved dramatic improvements, they fail to deal objectively with the trauma reengineering efforts obviously must cause. PepsiCo Inc.'s Taco Bell likened the process of reengineering to a "voyage of discovery." That voyage helped Taco Bell, which only 10 years earlier had been a $500 million regional company, become a $3 billion national fast-food chain. Among the things reengineering led to, we are told, is the creation of a taco-making machine that churns out as many as 900 tacos an hour and a decision to shift cooking from restaurants to central commissaries to save money. What we're not told is how many jobs were lost as a result.
Ultimately, reengineering means doing more with less--not only less time but fewer people. That means individual hardship. But in these tough times, it's an idea that's bound to endure.