Reengineering - The Path to Change

Intro An informal definition of reengineering … means asking the question: "If I were re-creating this company today, given what I know and given current technology, what would it look like?" Reengineering a company means tossing aside old systems and starting over. It involves going back to the beginning and inventing a better way of doing work.

Intro Definition… Reengineering is “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”

Intro Four key words KEY WORD: FUNDAMENTAL In doing reengineering, businesspeople must ask the most basic questions about their companies and how they operate: Why do we do what we do? And why do we do it the way we do? Asking these fundamental questions forces people to look at the tacit rules and assumptions that underlie the way they conduct their businesses. Often, these rules turn out to be obsolete, erroneous, or inappropriate.

Intro KEY WORD: RADICAL The second key word in our definition is radical, which is derived from the Latin word "radix," meaning root. Radical redesign means getting to the root of things: not making superficial changes or fiddling with what is already in place, but throwing away the old. In reengineering, radical redesign means disregarding all existing structures and procedures and inventing completely new ways of accomplishing work. Reengineering is about business reinvention—not business improvement, business enhancement, or business modification.

Intro KEY WORD: DRAMATIC The third key word is dramatic. Reengineering isn't about making marginal or incremental improvements but about achieving quantum leaps in performance. Reengineering should be brought in only when a need exists for heavy blasting. Marginal improvement requires fine-tuning; dramatic improvement demands blowing up the old and replacing it with something new.

Intro KEY WORD: PROCESSES The fourth key word in our definition is processes. Although this word is the most important in the definition, it is also the one that gives most corporate managers the greatest difficulty. Most businesspeople are not "process-oriented"; they are focused on tasks, on jobs, on people, on structures, but not on processes. We define a business process as a collection of activities that takes one or more kinds of input and creates an output that is of value to the customer.

Successful reengineering programs undertaken by large and Successful reengineering programs undertaken by large and small corporations in the past have these common themes: 1. A focus on processes rather than organizational boundaries. 2. The ambition to create breakthrough performance gains. 3. A willingness to break with old traditions and rules. 4. The creative use of new information technology. Every company’s reengineering program must be unique if it is to achieve anything substantial. There are no guaranteed-to-work or step-by-step prescriptions that can be followed in reengineering.

Some Cases Here are four examples of reengineering to illustrate how it works and what it can accomplish for companies. In reading these examples, it is helpful to keep in mind the four key words that characterize reengineering—fundamental, radical, dramatic, and process—but especially process.

Cases - Summaries Case - IBM Credit.doc Case – Ford Motor Company Case – Hallmark Case - Taco Bell

Themes in the Cases Several themes emerge in these three cases:- Process orientation The improvements that IBM Credit, Ford Motor Company, Hallmark and Taco Bell effected/ did not come about by attending to narrowly defined tasks and working within predefined organizational boundaries. Each was achieved by looking at an entire process—credit issuance, procurement, and product development—that cut across organizational boundaries.

Themes in the Cases Ambition Minor improvements would not have been sufficient in any of these situations. All three companies aimed for breakthroughs. In reengineering its accounts payable process, Ford, for example, skipped the 20 percent fix and went for the 80 percent solution.

Themes in the Cases Rule-breaking Each of these companies broke with old traditions as they reengineered their processes. Assumptions of specialization, sequentiality, and timing were deliberately abandoned.

Themes in the Cases Creative use of information technology The agent that enabled these companies to break their old rules and create new process models was modern information technology. Information technology acts as an enabler that allows organizations to do work in radically different ways.