In the first of an occasional series on management thinkers, the architect of re-engineering takes on its critics, the press and fellow gurus. By Trevor Merriden re-engineering with a brief discussion of his company's latest management concept.
In his own mind at least, his rejection of the ivory tower is what sets Jim Champy apart from other management gurus. 'I sleep well at night because I know I have a genuine empathy for managers and their problems,' he says. 'There are some management thinkers who don't know what it is like, who are purely from the world of ideas, who have never worked on factory floors and have never had to fire anybody.'
Champy is in London and in full flow, proudly and passionately defending his reputation as a management radical. It is now three years since his book put the seal on the re-engineering revolution; co-authored by Champy and Michael Hammer, Re-engineering the Corporation has now sold more than two million copies and been translated into 17 languages.
Now, after 27 years at management consultancy CSC Index, Champy is resigning as chief executive and chairman to face fresh challenges working for the consulting arm of Perot Systems, the company mostly owned by Ross Perot and family. Not content with re-engineering other industries, Champy now wants to re-engineer his own. 'There's a real need for re-invention in our industry, (a need) to create a different kind of services consultancy.
I am better able to do that in a company like Perot.
There, I can eliminate the kind of fragmentation that exists in most large consultancies.'
So re-engineering has brought Champy a new job as well as fame. The trouble is that it's now rather odd to find him talking about anything else. We are supposed to be discussing CSC Index's latest concept, Organisational Agility, which emphasises the need for companies to 'refresh their capabilities constantly'. But I'm more interested in discussing his views on the wider re-engineering picture and, in his final days at CSC Index, I sense that perhaps Champy feels the same way. So, like a veteran rock star who knows what his audience wants, he warms up with just a short medley of the untried material before returning once again to the old favourites.
Reduced to its bare bones, re-engineering, says Champy, is about the radical reinvention of a company's processes. Over the past 40 or 50 years, companies have built up in ways that are very costly to operate, that have become frozen in their functioning and that have been very poor in customer response. 'Re-engineering says, "Don't fit work into compartments but look at the fundamental processes",' explains its architect. He repeats his trademark phrase,'It's about starting over, starting from scratch'.
Anyone who has read Re-engineering the Corporation already knows this much. The real problem, at least according to Champy, is that there are many, many more who have not read what he says, but still proceed to criticise re-engineering in the same breath with which they condemn the dreaded 'D' word - downsizing. Companies, particularly in the US, have, says Champy, used his theories as an excuse for substantial cuts in manpower without undertaking the rigorous review of processes that re-engineering demands. While he claims that he does not lose any sleep over it, Champy devotes a considerable number of his waking hours to explaining to anyone who will listen why re-engineering is a necessity for all companies, rather than simply a short cut to the misery of mass unemployment.
Among the business community, he suggests, there is widespread support for his ideas. 'You know what gives me inspiration? There's not a chief executive I meet who says to me, "We don't have to do this".' Even when re-engineering does result in large-scale job losses, Champy argues that the long-term employment effects are beneficial. 'I used to worry about whether (re-engineering) would cause a major employment dislocation; economists suggested to me that it would take five to 10 years before those discarded would be reabsorbed into the workforce. In fact, it has happened much more quickly than that.' In the US, he notes, it's now proving hard to fill some jobs (he chooses not to focus on the low wage that is often offered for such posts).
Champy feels that what he terms the 'misconceptions' about his work are the result, in part at least, of simplistic media coverage. 'I look at the press, and I think, "They're actually not out there, they don't see the struggle and changes that companies and people are going through right now," and that does make me angry once in a while, because it's such bullshit.' He cites the example of the flurry of negative media and political comment following the recent decision of AT&T's CEO, Bob Allen, to remove around 30,000 people from the payroll. Champy seized the opportunity of an invitation from the New York Times to write a column on the move. 'I said that Allen had no choice and that he was better to do it now and get on with it.' Subsequent messages of support for his stand convinced him that he, rather than the hacks in the newsrooms or on the hustings, was in tune with the public mood.
Champy's perception is that European managers find tough re-engineering decisions harder to make than their US counterparts, and have a certain inability to get to grips with necessary redundancies. Champy doesn't agitate for his European clients to make job cuts as a matter of course - 'I'm not one of those people who believes that there is a law of physics which says you must reduce headcount'. But he does focus on the recent agonising of a client (the management of a major British bank) over potential redundancies. Here Champy's voice rises an octave: 'If that had been an American bank, quite frankly, those bastards would have said, "We know 35% of our staff have to go and we're going to get rid of them on day one. We're going to decide who we're going to keep, who's got to go and what kind of person we need".' He quotes one US bank manager who argued that because he took such hard decisions fast, he was more successful; the pain was not prolonged and the remaining workers were more committed than if they had still been living in fear of the axe.
The managers who can take on a process redesign and get it into the business and make it actually work are indeed exceptional creatures, says Champy.
More rare still is a manager who is exceptional at running a company in its present form yet has the vision to take on the degree of change necessary.
So what does Champy offer clients forced to face such challenges? 'I think I can coach managers to behave differently - if they are open to it, that is. Otherwise there's absolutely nothing I can do,' he admits. What are his most notable successes? 'Hallmark is one company where I feel very good about the advice I gave. There have been parts of General Electric where my advice has stuck. I genuinely enjoyed my work with GE managers because of their inventiveness.'
Champy prefers to do his coaching in person, rather than through the written word. 'Actually I don't like to write - not unless I have something new to write about.' He is refreshingly intolerant of other academics who write all the time but have very little new to say. 'Many of them have no insight. They make observations and come to some very naive conclusions about what is going on.' Not included in this list, however, is his co-author from three years ago, Mike Hammer. The two have drifted apart professionally, but Champy maintains that their different approaches have always been in evidence. 'Mike's always been the process guy, but I took on the issues of management because unless you can work out how to get managerial behaviour to change, re-engineering gets stuck at the top of the organisation.'
As one prong of the change management attack, Champy somewhat surprisingly confesses that he has been known to encourage business chiefs to fib about their plans. 'I push managers to say that fundamental change should show up in 18 months, when I know that, typically, real culture change is more like a five-year cycle.' His rationale is that, without such hype, it can be hard for reformers to maintain any intensity. 'There is a need to get some early results to validate what you're doing and to provide the incentive to keep the thing going. Maintaining this momentum is central to re-engineering philosophy. Managers come back to me and argue for incremental change. To me, incrementality is the high risk proposition. I won't compromise around incrementality.' Spoken like a true radical.