Reengineering Management

James Champy

• Publisher: HarperCollins e-books
• Year: 2009
• ISBN:
  9780061852817
• Topic: Negocios y empresa
• Subtopic: Desarrollo organizacional

The co-author of the monumental bestseller Reengineering the Corporation continues the reengineering revolution with another national bestseller that has already sold more than 165, 000 copies in hardcover

Reengineering Management is a brilliant, practical and much needed book on the most powerful management idea of the decade. Reengineering—changing the traditional and outdated organization, processes and culture of a company—is corporate America's greatest challenge today.

In Reengineering Management, Champy examines the far-reaching changes managers must make for themselves and their companies to succeed in an era of unprecedented competition. Through his extensive consulting and research work, he shows how reengineering succeeds only when managers reinvent their own jobs and managerial styles. Otherwise, the ultra-efficient and effective reengineered processes for acquiring and serving customers, filling orders, bringing new concepts to market and other key business activities eventually fall apart.

Champy illustrates this new management agenda through first-hand experiences of managers of reengineered operations at Federal Express, Wisconsin Electric, CIGNA Health Care, Hewlett-Packard, AT&T Universal Card Services and other companies. Champy shows how they are mastering the managerial challenges of reengineering, and as a result are making their organizations exciting and competitive. As more and more organizations reengineer, the experiences of these managers will become an insiders' guide to managerial life in the company of the future.

Reengineering Management picks up where Reengineering the Corporation left off—by exploring the managerial implications of the reengineered workplace. As reengineering becomes critical to all organizations, Reengineering Management will be the road map for managerial success in the future. It is, indeed, the manifesto for the next managerial revolution.

CHAPTER 1

MANAGEMENT? WHY REENGINEER MANAGEMENT?

The results are in: Reengineering works—up to a point.

The obstacle is management.

The only way we’re going to deliver on the full promise of reengineering is to start reengineering management—by reengineering ourselves.

Reengineering is in trouble. It’s not easy for me to make this admission. I was one of the two people who introduced the concept.

Reengineering the Corporation has sold nearly two million copies worldwide since it was published in 1993, an astonishing success for a business book. But it’s your bottom line, not ours, that ought to measure the success of any set of management ideas. And by that measure, there’s much more reengineering to do.

Reengineering the Corporation was written to improve business performance by showing managers how to revolutionize their key operational processes—product development, for example, or order fulfillment. And it has worked. I have the evidence of my own eyes and ears, from visits to scores of companies that practice reengineering. I have the testimony of more than 150 managers, gathered over 18 months’ worth of interviews for this book. I have the evidence, too, of the first thorough study of the effects of the would-be revolution.

That study, “The State of Reengineering Report,” was conducted in early 1994 by CSC Index, the strategic management consulting arm of the firm I head. Six hundred and twenty-one companies, representing a sample of 6,000 of the largest corporations in North America and Europe, completed an extensive questionnaire. The sample showed that fully 69 percent of the 497 American companies responding, and 75 percent of the 124 European, were already engaged in one or more reengineering projects, and that half of the remaining companies were thinking about such projects.

In North America, projects tended to be driven by competition and customer pressure, and focused therefore on processes with direct customer contact—e.g., customer service (25 percent), order fulfillment (16 percent), and customer acquisition (11 percent). In Europe, the focus was on cost-cutting initiatives in manufacturing and its service-industry equivalents (23 percent). On both continents there were a smattering of projects across the full range of operational processes: 9 percent on links in the inbound supply chain, 6 percent on corporate information systems, 4 percent on product development, and so on.

Many companies reported big changes and reaped big rewards. An American mining company, for example, saw its revenues increase by 30 percent and its market share by 20 percent, while its costs went down 12 percent and its cycle time 25 percent. A European retail group gained a 50 percent improvement in cycle time and a 15 percent improvement in productivity. After reengineering its inventory-replenishment process, a U.S. clothing manufacturer doubled sales, increased its market share by 50 percent, and cut its cycle time by 25 percent. A North American chemical company cut its order-delivery time by more than 50 percent and its costs by more than $300 million.

There have been many equally dramatic success stories. On the whole, however, even substantial reengineering payoffs appear to have fallen well short of their potential. Reengineering the Corporation set big goals: 70 percent decreases in cycle time and 40 percent decreases in costs; 40 percent increases in customer satisfaction, quality, and revenue; and 25 percent growth in market share. Although the jury is still out on 71 percent of the ongoing North American reengineering efforts in our sample, overall, the study shows, participants failed to attain these benchmarks by as much as 30 percent.

This partial revolution is not the one I intended. If I’ve learned anything in the last 18 months, it is that the revolution we started has gone, at best, only halfway. I have also learned that half a revolution is not better than none. It may, in fact, be worse.

Our earlier book was largely about reengineering work—the operational processes performed by salespeople, clerks, factory and warehouse hands, repair people, engineers, technicians, customer-service folks, field representatives—anyone and everyone in the value-adding chain. Now, in this book, I must shift my focus. This book is not about operational processes. It is about managing, written for managers, and (it may be reassuring to note) by a manager. It is about us, about changing our managerial work, the way we think about, organize, inspire, deploy, enable, measure, and reward the value-adding operational work. It is about changing management itself.

But who, exactly, is a manager these days? How do we know one when we see one?

In the wholeheartedly reengineered corporation, responsibility and authority are so widely distributed throughout the organization that virtually everyone becomes a manager, if only of his or her own work. Still, there’s no ignoring two facts. First, as our study shows, the thoroughly reengineered corporation is as yet a rarity. Second, even a reengineering revolution leaves some people with more general authority and responsibility than it leaves others. The old pyramid may be flattened out, but the remnants are still discernible in these levels of managerial accountability:

• Self-managers—people who may not think of themselves as managers because, in the last analysis, they answer only for the quality of their own work. Examples include customer-service representatives, researchers, salespeople, lawyers, and accountants—in short, just about everyone working individually or as a member of a team.
• Process and people managers—those who answer for the work of others, usually individuals, a team, or group of teams working closely with customers or on a specific process. An example would be a manager of a case team, a group of people who have among them all the skills needed to handle a specific process—the installation of a telephone, say, or the sale of an insurance policy, or the development of a new drug. In the reengineered workplace, employees often rotate in and out of this sort of managerial responsibility as the occasion demands.
• Expertise managers—people whose responsibility is the care and development of a company’s intelligence (in all senses of the word). Examples are technology managers and managers of human resource development programs.
• Enterprise managers—CEOs, division heads, all those with profit-and-loss responsibility. “Senior management” we used to call them, when business authority was established by years of service.

This book is written for managers on all these levels. It is written out of the conviction, buttressed by solid evidence, that without their help the revolution we began with the 1993 book will remain painfully incomplete. We certainly knew back then that management was critical to reengineering’s success. But not until we had some real experience of how these ideas worked in practice did we begin to understand how radically managers themselves would have to change their way of doing things for reengineering to fulfill its promise. Anything less than a fundamental revolution in actual management practice, we discovered, is like a communist regime introducing free enterprise into a controlled economy while trying to hold on to power. It can be done for a while (look at China), but no one supposes that such an arrangement can last. Something’s gotta give, and history shows that it’s not going to be free enterprise. It has to be management. If management doesn’t change, reengineering will be stopped in its tracks, and we can’t afford to let that happen.

Look what takes place when work gets reengineered and management doesn’t:

 

• The three vice presidents (for sales, service, and order-fulfillment) at a major computer company were thrilled that reengineered work processes promised to cut product introduction time in half, raise customer retention rates by 20 percent, and slice 30 percent from administrative costs in their areas. They weren’t thrilled enough, however, to willingly give up control of their fiefdoms and collaborate. Result: The reengineering effort died a year after its inception.

 

• A large European aerospace company, acknowledging that it was in trouble, encouraged the launch of multiple reengineering efforts. Redesign teams were authorized and fundamental changes to operations were proposed. Presentations were made to senior management, but no action was taken. Management was unable to move, frozen by the question of the company’s future. Everything stopped. Result: demoralized workers. The best prospect for the company: acquisition.

 

• A large pharmaceutical company saw its customers growing more and more annoyed at having to deal with each of its business units separately. The reengineering solution was to integrate the sales and distribution operations of all the units. The unit heads protested, arguing that they had to retain control of these functions. The CEO and chairman refused to act on the necessary changes, afraid of reform’s inevitable disruption. Business was good before the current recession, they argued, and would rebound when it was over. Result: For this company, the recession goes on and on.

 

• Old management practices subverted an insurance company’s ambitious reengineering effort to introduce teams to the process of new customer acquisition. The rub came with the news that team members would evaluate each others’ performances. Such measures “never work,” declared the human resources chief, adding that performances could be evaluated only by an “objective observer”—to wit, a manager. Result: end of teams, end of reengineering.

 

• And there are other strange phenomena I am observing broadly across many companies that are reengineering: Senior managers are angrily complaining that middle managers are entrenched, blocking the necessary changes; middle managers are bitterly complaining that senior managers have neither the vision nor fortitude to take the enterprise through the changes. As you already know, there may be some truth in both accusations.

 

“Reengineering” has proved to be an extraordinarily popular concept. The trouble is, popular concepts sometimes look like magic, and the more popular they become, the more powerful the magic seems. Some managers, misled by wishful thinking, believe that merely repeating the key words in Reengineering the Corporation is enough to bring the transformation, like the newsboy in the comic strip who yelled “Shazaam!” and became powerful Captain Marvel. Managers have been saying, “Fundamental!” “Dramatic!” “Radical!” “Processes!”—and, lo, that which they proclaim to be so is so…they hope.

Unfortunately, nothing is that simple. Reengineering prescribes actions, not words, and difficult, long-term actions at that, not just one-shot expedients like downsizing or outsourcing. Reengineering involves a voyage that will last years, possibly our entire management lifetime.

For us managers, nothing seems sure anymore, neither our professional know-how nor our career paths—and certainly not our job security. For failed CEOs, the consequences are partially mitigated by gold and platinum parachutes, but the parachutes themselves are a measure, by way of compensation, of the exponential increase in the pressures on top corporate officers. Management has joined the ranks of the dangerous professions.

I shall spell all this out in the pages that follow, a practical exploration of the key questions that the actual practice of reengineering (successful and otherwise) has kicked up, all of which must be addressed for reengineering to succeed. There are four broad issues:

 

• Issues of purpose. Insistently, persistently, relentlessly, the new manager must ask, “What for?” What is it that we’re in business for? What is this process for? This product? This task? This team? This job? What are we doing here, anyway?

 

• Issues of culture. If successful reengineering requires a change in a company’s whole culture, as seems to be the case in many instances, how is it to be accomplished by the same management that did so well in the old culture? If it is true (and it is) that reengineering is unlikely to succeed where the corporate atmosphere is charged with fear (and its twin, mistrust), how do we generate another, better environment—one, say, of willingness and mutual confidence?

 

• Issues of process and performance. How do we get the kind of processes we want? How do we get the performances we need from our people? How do we set norms and standards, or measure results—for worker performance, management performance, and the performance of the whole enterprise? Reengineering usually demands radical objectives, leadership, and political skills to realize. But how do we know whether we have the stuff? What does it take to be a good manager today?

 

• Issues of people. Who do we want to work with? How can we find them from both inside and outside the company? How do we get them to want to work with us? How do we know whether they’re the kind of people we want?

 

Although these are hard questions to pose, they are harder to answer—and learning to live the answer is far harder still. As I look at the practice of business management today, I sometimes think of the exchange between Vladimir and Estragon in Beckett’s Waiting for Godot. The two wretches have been shuffling along in silence, when suddenly Estragon groans, “I can’t stand it anymore.” To which Vladimir says, “Oh, yes, you can.”

Fortunately, things are not as bad as that. For most of us, “Yes, you can” is not yet a curse. It is an opportunity for us to reinvent ourselves.

We must look to ourselves, and to each other, to find the personal resources we need to do our jobs—the courage and trust and smarts. That’s where this book, I hope, can be especially useful. I can provide some ideas, even some encouragement. But managers cannot hope to carry out their responsibilities to employees and investors without first facing up to the tensions, problems, and conflicts of corporate leadership today.

This book is for people I know as heroes and heroines. They are the protagonists in the great central drama of our time—the creation of a better workplace and the production of wealth. But never before has this drama been so shot through with peril, conflict, and anxiety. Never before has it been so heightened by raw contingency. And never before have its opportunities—personal and corporate—been so vast, or so potentially rewarding. This book is for those who, in the face of these realities, are keen for the battle and determined to win.

CHAPTER 2

THE ORDEAL OF MANAGEMENT

We must dramatically improve business results, now, and do it while earning the hearts and minds of our people.

To make things still more difficult, “now” has no traditions, no precedents, no time-tested formulas.

Now has never been seen before.

Nothing is simple anymore. Nothing is stable. The business environment is changing before our eyes, rapidly, radically, perplexingly.

Now, whatever we do is not enough. Incremental change is what we’re used to: the kind we could manage gradually, with careful planning, broad consensus-building, and controlled execution. Now we must not only manage change, we must create change—big change—and fast. If we stop for a leisurely consideration of the issues, the situation will alter in front of our eyes and our careful judgments will not apply.

Everything is in question. The old ways of managing no longer work. The organization charts, the compensation schemes, the hierar...