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Reengineering Revisited
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June 23, 2003 (Computerworld) -- At its height, business-process reengineering was one of the biggest business ideas ever. Business historians of the future will characterize the 1990s as the decade of reengineering. Described in more than 25 books, featured in articles in every major business publication, discussed at hundreds of conferences, reengineering penetrated every continent, with the possible exception of Antarctica.
Reengineering became a money machine for several of its constituents: the gurus who propounded the idea (at least a couple of them!), the consulting firms that offered reengineering services to their clients, and the software vendors who managed to convince firms that their wares were critical to successful reengineering. Unfortunately, the idea didn't enrich those who were most responsible for its birth and continued life within organizations: the faithful practitioners. These individuals played their customary heroic roles on the reengineering stage, but others got all the credit.
Reengineering Defined
• Radical redesign and improvement of work.
• Attacking broad, cross-functional business processes.
• "Stretch" goals of order-of-magnitude improvement.
• The use of IT as an enabler of new ways of working.
In the general business audience, however, other meanings proliferated. To some, reengineering came to mean any attempt to change how work is done -- even incremental change of very small processes. To others, it became a code word for downsizing. The latter meaning wasn't really fair, since none of the original literature on reengineering had stressed that objective. It was a somewhat cynical adoption of the word by senior executives (and their communications staffs) that brought this meaning into being.
We still remember the first time the reengineering-as-downsizing notion appeared in the press. In 1995, Pacific Bell announced that it was cutting 10,000 employees. Because of "reengineering," it didn't need them anymore, the press release said. We were conducting some research at Pac Bell at the time, and we knew that although the company was doing some reengineering, it certainly wasn't far enough along for anyone to know how many people (if any) would be freed up. Shortly thereafter, Apple Computer Inc. announced a similar reduction using the "R word." We were also familiar enough with that company to know that it wasn't true reengineering.
What happened to the term reengineering is typical of the proliferation of meanings that accompanies any successful new business idea. Consultants, middle and senior managers, and vendors had lots of incentives to jump on the reengineering bandwagon. Experts in continuous improvement, systems analysis, industrial engineering and cycle-time reduction all suddenly became experts in reengineering. We once heard a staffer from the California legislature say that reengineering was "any project I want to get funded."
Of course, saying that all these diverse activities were forms of reengineering raised expectations for the concept and no doubt hastened its demise. The late adopters of the term dropped it rapidly as soon as it became unpopular.
Where did reengineering go astray? Like any other business idea, reengineering had to be bought by companies and sold by business gurus. The failure of reengineering can be attributed to both parties.
Guru Shortcomings
A key factor in the rise of reengineering was Michael Hammer's 1990 Harvard Business Review article on reengineering ("Don't Automate, Obliterate") and the subsequent book Hammer co-authored with Jim Champy, Reengineering the Corporation. These two sources made reengineering look both appealing and easy. But in late 1996, a front-page Wall Street Journal article featured a confession by Hammer: "Dr. Hammer points out a flaw: He and the other leaders of the $4.7 billion re-engineering industry forgot about people. 'I wasn't smart enough about that,' he says. 'I was reflecting my engineering background and was insufficiently appreciative of the human dimension. I've learned that's critical.' "
Hammer's earlier rhetoric certainly neglected the human element, with phrases such as, "In reengineering, we carry the wounded and shoot the stragglers," and, "It's basically taking an ax and a machine gun to your existing organization." This rhetoric not only made employees fear for their livelihoods; it also raised expectations of managers for revolutionary changes that couldn't be delivered.
There is little doubt that the Hammer and Champy version of reengineering was guilty of overblown rhetoric. (Most of this rhetoric comes either from Hammer or from ghostwriters; Champy is more genial and mild-mannered.) Both in Hammer's 1990 Harvard Business Review article and in Hammer and Champy's 1993 book, the claims were extravagant and unsupported by fact. The book cover suggests, for example, that "everything you thought you knew about business is wrong," and highly simplistic arguments are made throughout.
The greatest shortcoming of the Hammer and Champy reengineering work is not that it neglects people or that it employs overblown rhetoric, but that it fails to acknowledge how difficult, time-consuming and expensive it is to reengineer. They implied that one could reengineer an entire corporation in as little as a year. We aren't suggesting that Hammer and Champy intentionally misled anyone; they're both honorable men. This unfounded optimism was, however, a major factor in the rapid rise and fall of reengineering. Inspired by the book, managers initiated projects with high expectations of rapid success. But when they encountered difficulties and slipping project deadlines, many became disenchanted and dropped their projects.
Implementation Problems
The gurus of reengineering made some mistakes, but then so did many of the practitioners. First of all, many managers reinforced the numerous errors made by the gurus. They focused too much on process and not enough on practice -- and didn't involve the people who did the work. Just as some irresponsible writers and consultants generated exaggerated rhetoric and repackaged ideas in reengineering, so did companies.
Corporate communications departments teamed with senior executives to create reengineering programs with names like Advantage 2000, Program 10X and, perhaps most unfortunately, Project Infinity. They predicted radical improvements well before they were achieved. In some cases, they argued for funding by calling their projects "reengineering." The worst offense, of course, was to lay off people and dignify the act as reengineering.
But there were several other, more subtle problems with how companies implemented reengineering. One is that executives turned too much of their initiatives over to outside firms -- both consultants and vendors of enterprise software (such as ERP systems). The software vendors supplied a relatively easy way to automate a broad range of business processes in an integrated fashion.
Not surprisingly, the managers of reengineering projects flocked to the enterprise software vendors such as SAP AG, Oracle Corp. and PeopleSoft Inc. and wrapped up their reengineering and ERP projects into one integrated change program. But these companies probably relied too heavily on the software as the way to implement reengineering. While the packages were built around best practices, they were generic rather than specific to a particular company's needs. Because it was difficult to modify these systems, most firms ended up with the same processes and information support as every other firm in their industry. Reengineered processes were supposed to yield competitive advantage, but this was impossible with heavy reliance on an enterprise software package.
Also, many corporate reengineers took on too much change at once. Encouraged by the rhetoric of some gurus, they tried to change multiple processes, information systems, organizational structure and sometimes even business strategy all at once. Such all-encompassing change in a short time frame is difficult, if not impossible. One observer noted that it was akin to pilots attempting to change all the engines in a jet airplane at once while flying through the sky. It may be possible, but the risk of failure is great.
The Good Stuff
Despite the problems with the reengineering movement, you might ask, does it have any ideas worth keeping? You bet.
In fact, almost all the ideas within reengineering have substantial merit when used in moderation. Certainly, firms should sometimes address broad, cross-functional processes. And from time to time, they need a serious kick in the pants.
Sometimes it's better to throw a broken process away altogether and start from scratch than to improve it incrementally. And IT can no doubt be a powerful enabler and reshaper of processes.
The key is to also remember that reengineering involves risk. Any time an organization needs radical change to deliver the results it needs, it's more likely to fail or to come up short.
Like baseball players who swing for the fences or soccer stars who take kicks from midfield, they'll miss their goal most of the time. But sometimes, desperate moves are called for.
Reprinted by permission of Harvard Business School Press. Excerpted from What's the Big Idea: Creating and Capitalizing on the Best Management Thinking. Copyright 2003 by Accenture Ltd. and Laurence Prusak.
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