Why Reengineering Fails so Often Greg Walters Prepared for: Dr. Foster Supply Chain Management

INSANITY “Doing things the same way you’ve always done them and expecting different results”

Overview of Reengineering Definition How does it apply to my organization? Who’s done it? How does it work? Why does it fail?

Reengineering Defined “The fundamental rethinking and radical redesign of processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed”

Application Retail Service Manufacturing Support All processes are subject to potential reengineering!

Manufacturing/Retail Complete reevaluation of how to bring new cards to market Goal: Cycle Time Reduction Result: Cycle Time Reduced

Service Manufacturing or Service? “K-minus Program” Focused on Core Competency Went from a $500 Million regional company to a $3 Billion national chain

Support Processes Problem: Falling behind in customer service Solution: Internally propagated customer review process Result: Decreased customer turnover

Why should we reengineer? “The only constant in life is change”

How do I get started? (Nuts and Bolts) Evaluate your processes –How do we do this process? –Why do we do it this way? –How can we do it better?

How do we do this process? Guidebooks/Manuals are a useful resource, but... Call in the experts Flowchart, flowchart, flowchart Model, model, model

Why do we do it this way? Keep those experts onboard! Every step of the process should have a purpose Does it make sense?

How can we do it better? Ask the experts Only benchmark if absolutely necessary Initially disregard viability, cost, etc. BE OPEN TO SUGGESTIONS!

Now what? Identify core competencies/processes Evaluate alternatives, consult, and model Implement the change

Implementation Varies from project to project –Questions to ask: Slow and steady? Or quick and painless? How are we perceived? Is that a light, or a train, at the end of the tunnel? How are we doing? Implementation is where we stumble

Why reengineering fails Two major breakdown points: –The actual reengineering process –The Human consideration

Failure due to the process Trying to fix a process instead of changing it Not focusing on the business process Ignoring impact on other processes/scope Quitting too early/settling for minor results

Reengineering takes time “It has been so aggravating. Finally, in the last six months or so, we have been getting to the point where we're really changing how we do business. But it's taken years. Not weeks. Not months. On a day-to-day basis, it feels like bowling in sand.” --Ben Powell, GTE Mobilnet

The Human Effect Poor leadership of the effort Trying to make reengineering happen from the bottom up Neglecting people’s values and beliefs Failing to account for the overall impact on the people in the organization

Leading the change Lackluster support and/or poor understanding from management guarantees disaster

The Human Effect (cont) Types of individual resistance –Habit –Security –Economic –Fear of the unknown Use Lewin’s 3 step approach

Types of organizational resistance –Structural inertia –Group inertia –Threat to Power/Resource Allocations –Threat to expertise

BUT... “The real cause of reengineering failure is not the resistance itself, but management's failure to deal with it." - Michael Hammer

Exercise/Application Let’s start small... –Evaluate the process of cleaning your home Is it as clean as you’d like? How does it get clean? Who cleans what? Why do we/I do it that way? Do I do it as efficiently as those around me?

Cleaning house (cont) If I could change anything I wanted about the way my house got clean, what would it be? What would it take to implement the change? How would this impact me/my family? Do I have the resources to make this possible? Write out an implementation program/schedule and begin the reengineering application.

Summary Reengineering is for everyone Evaluate existing processes Institute reengineered processes Avoid the common pitfalls Evaluate your performance and begin again

Bibliography and Suggested Reading List “Beating the risks of reengineering,” Hammer, Michael. Fortune. New York: May 15, 1995.Vol. 131, Iss. 9; pg. 105 “Identifying sources of reengineering failures,” Journal of Management Information Systems; Fall 1995 “Reengineering the Corporation: A Manifesto for Business Revolution”; Michael Hammer, James Champy “Beyond Reengineering : How the Processed-Centered Organization is Changing Our Work and Our Lives” Michael Hammer “Making change stick,” Fisher, Anne B. Fortune. New York: Apr 17, 1995.Vol.131, Iss. 7; pg. 121 “Reengineering: Righting wrong organizations” Kinni, Theodore B. Industry Week. Cleveland: Feb 7, 1994.Vol.243, Iss. 3; pg. 14 “The Reengineering Revolution;” Michael Hammer

Bibliography (Cont) “Leading Strategic Change: Breaking through the Brain Barrier,” J. Stewart Black and Hal. B Gregersen “Essentials of Organizational Behavior,” Stephen P. Robbins, 8 Ed. “Introduction to Operations and Supply Chain Management,” Cecil C. Bozarth & Robert B. Handfeld “Specific Examples from Reengineering,” Various Definitions: