Archive for the ‘Economy’ Category
1. The cost reduction thrust. BPR arose in the early l990s, fueled by a recession and the beginnings of the restructuring of western economies. Cost cutting was the focus of most businesses, and BPR fit in well with that goal. Downsizing, rightsizing, smartsizing, streamlining, working out, and n ‘engineering became euphemisms for cutting costs—typically headcount.
As one CEO asked of the BPR manager in a bank, “How many heads are we gonna get?” Another was heard describing a project: “When we found redundancies everywhere, I had to bite the bullet and lay off a hunch of people.” (The reference to biting the bullet is interesting. During (lie American Civil War, soldiers facing amputation were given a bullet to 1,1k to help distract them from the excruciating pain. But here we have the amputator, rather than amputee biting the bullet.) One company was so I obsessed by reengineering that to save money they turned off the light at the end of the tunnel
As the new economy gathers steam, companies in most sectors need to locus on growth and value—added objectives, rather than just cost cutting.Cost control will be important forever and in some sectors key to competitive success. But even in the most cost-sensitive businesses such as retailing, companies need to shift their paradigms—marketing electronically, for example, delivering goods rather than building actual structures. BPR is inadcquate and in some cases diversionary from such out-of-the-box thinking. Whether reengineering is well intentioned or not, there is a danger of companies entering into some new corporate anorexia, to use the phrase made popular by management consultant Gary Hamel, where in pursuit of cost control they permanently downsize their market share, revenues, profits, long-term competitiveness, and viability.
2. BPR focuses on business processes. A business is more than a set of processes, so process improvement is an inadequate response to the challenges of the new economy. BPR projects typically miss opportunities to go beyond the streamlining of work to the transformation of business objectives and effectiveness. The starting point for transformation should not be the business process but the business model—the high-level abstraction of how the business can respond to and create markets, of what the business is and could be. The new economy demands that companies change their business model, and the new techno1o’ enables it.
The best impact of BPR itself occurs if it is done within the context of a higher-level model of the business. Says Dave Cox, ClO at Northern Telecom: “We found that we needed to get beyond the lower-level process modeling being done by many companies today. We found that when we did BPR we lacked the larger context of the business model. Having spent some time developing that model, our horizons have been widened and reengineering projects have far greater scope and creativity. Companies need to bring business modeling into prime time.”
Furthermore, reengineering typically focuses on and results in creating relatively structured business processes. However, in the new economy much of the effort of the new enterprise is knowledge work based on teams, changing human networks, new types of jobs, serendipitous communications, ad hoc collaboration, and brainstorming for innovation.
Ron Ponder, ClO of AT&T, is responsible for the work of more than 25,000 information systems professionals. His message to all of them is to focus on the customer. “Reengineering doesn’t cut it. Every company needs to make processes better, faster, and more economical—but this is really just continually fine-tuning your operating structure,” says Ponder. “But you can’t use reengineering to transform a business. You reengineer inside of a business, addressing operational needs of the business. But our transformation is coming from the outside in. It is market-driven, not process-driven.”
3. The human imperative. In many situations, BPR projects have misunderstood the human imperative. Projects with a goal of massive cost cutting have often been resisted by workers; newly reengineered business processes are conducted by demotivated workers. Couple this with what Paul Strassman calls “the violence of reengineering” and you have a formula for fear. Finding the dark side of reengineering is simple. Here are just a few of the pronouncements by reengineering leaders. “On this journey… we shoot the dissenters.”22 “What you do with the existing structure is nuke it!”23 “[Re]engineering must be initiated … by someone who has enough status to break legs.”24
Furthermore, many reengineering efforts falsely assume that some senior czar or steering committee can, in a top-down way, comprehend business processes as well as opportunities for change and sell this vision down to the organization. Such approaches are contrary to modem thinking and practice about creating learning organizations, shared vision, and team leadership.
Reengineering theorists to date have also missed the broader implications of the IT-enabled transformation of business on virtually every other aspect of human work and social life. Huge issues need to be tackled— from quality of work life, retraining, and lifelong learning for the new economy, the changing nature of work and the end of the career as we know it, the danger of a haves and have-nots society all the way to fundamental changes in the nature of the workings of government, the democratic process, and democracy itself.
4. Old paradigm views of technology. Many reengineering proponents assume information technoloi is critical to new processes. However, other than Paradigm Shut, none have really explained how the old paradigm in technolo’ is ill-equipped for the new enterprise. As a result, many
l)tT1ies have thrown old paradigm technology at new paradigm reengineer ing problems. To bring about organizations that are high performance, integrated, networked, open, and client-service companies need the new technology that is high performance, integrated, networked, open, and client-server. The old model of computing_low performance (traditional mainframe or minicomputer), unintegrated (based on islands of computing), host-based (rather than networked), proprietary (nonembracing stan- (lards), command and control (unlike client-server) computing—is the antithesis of the new enterprise.