UK: HOW TO WORK WONDERS, COMPLETELY - MANAGEMENT REVOLUTION. - The fact that management revolution is under way cannot be denied. Nor can its nature be doubted. The great shift is from vertical to horizontal. Organisations are changing from centrally con

by Robert Heller is a former editor of Management Today.
Last Updated: 31 Aug 2010

The fact that management revolution is under way cannot be denied. Nor can its nature be doubted. The great shift is from vertical to horizontal. Organisations are changing from centrally controlled, multi-layered pyramids to flatter, devolved structures. This is being matched by the transformation of business systems: the sequential, departmental, vertical division of work is yielding to the concept of the business system constructed of horizontal processes that cut across traditional divisions.

The high road to success lies in improving process, and the richest improvements are won by reworking, redesigning, replacing, even removing the process. Nobody has a monopoly on this abundantly demonstrated truth, which doughty veterans such as Peter Drucker and W Edwards Deming have been preaching for decades.

So it is surprising to find consultants Michael Hammer and James Champy claiming 'reengineering' almost as a personal discovery. Moreover, they intend this to be 'a seminal book', mentioned in the same admiring breath as Adam Smith's The Wealth of Nations. Hubris apart, this is a thoroughly competent and succinct exposition of what reengineering is, what it can do, how and why. The book is replete with long and short accounts of astonishing gains - not just in productivity, but in market penetration - that flowed from 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 tone of this definition, and of the book's abundant practical advice is overwhelmingly positive. Yet the authors conclude that 'most companies that begin reengineering ... end their efforts precisely where they began, making no significant changes, achieving no major performance improvement ... Our unscientific estimate is that as many as 70% of organisations fail to achieve any results.'

Much the same has been said of Total Quality Management, and for the same reason. Almost as an aside, the authors mention that 'work is best organised around outcomes, not tasks'. Success comes only to managements which have clearly decided what truly ambitious business results they want to achieve. In fact, the authors embody this principle in an important discussion on how to enlist support for re-engineering. They advocate starting with a five to 10-page 'case for action'.

The case powerfully identifies the business problem, spells out the marketplace demands, diagnoses why present processes cannot respond adequately, and spells out the cost of inaction. This rather negative start is coupled with a positive 'vision statement': 'here is what we want to be'. The authors prefer short, gutsy visions - literally gutsy in the case of the fast-food company, Taco Bell: 'We want to be number one in share of stomach'.

The company's reengineering, as related by its CEO, started from the discovery that customers' desires were simple: 'good food, served fast and hot, in a clean environment, at a price they could afford'. Taco Bell promptly switched its emphasis from marketing to value-for-money and grew sixfold in a decade. But was it reengineering to reduce the marketing spend? Or to remove a supervisory layer from the backs of restaurant managers?

In their longer cases, the authors stray from their driving concept of process change - powerful enough, surely, in its own right. Reorienting Taco Bell or Hallmark Cards is not the same thing as slashing Ford's account payable costs by 80% (by eliminating the invoice stage). This example, and several others, involved relatively low-level teamwork and initiative, which plainly contradicts the assertion that 'reengineering never, ever happens from the bottom up'.

Any business process can be rethought and radically redesigned to produce dramatic improvement. It is true, however, that many a mickle does not necessarily make a large enough muckle. Much improvement work in Total Quality companies, for instance, makes a larger contribution to involvement and morale than to profits. That is why 'the push for reengineering must come from the top' - not in one sense, but in two. First, only the top can turn process redesign into a way of life, by insistence, endorsement, recognition and, above all, by example. Thus, second, the 'broad perspective' that cannot be expected from 'people near the front line' is demonstrated by those further away. Their cardinal responsibility is to monitor, update and, if necessary, reengineer the overall business system or systems. Outside that context, the process reengineering to which Hammer and Champy are invaluable guides cannot work its wonders.

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