Re-engineering revisited - management philosophy author James Champy

Nation's Business, May, 1995 by Michael Barrier

The success of radical change will be determined not just by what you do, but by how you do it.

Seldom does a business book storm onto the best-seller lists, but two years ago, Reengineering the Corporation (HarperBusiness) did exactly that. Its message--that American businesses must radically transform themselves to survive--attracted hundreds of thousands of readers.

But the term "re-engineering" also became attached to some management practices--meat-ax lay-offs, for instance---that didn't fit the two authors' definition. Now authors James Champy and Michael Hammer are taking steps to reemphasize their core message.

Champy and Hammer have always been clear about what "reengineering" means. To undertake re-engineering, Champy said in a recent interview, "you work from the outside in, by moving to the marketplace and understanding how you want to perform as a company. Then you look back into the organization to see what it is that you have to change.

"At the core of real re-engineering is a recognition that doing work in the old fragmented way--building an organization simply on departments and functions--is no longer appropriate. Such 'stovepipe thinking' is too expensive and typically leads to poor quality and poor service."

Re-engineering demands instead that businesses think in terms of processes-- order fulfillment, for example--that may extend across many departments, and that they organize their work accordingly.

Although Champy and Hammer thought at first that the concept applied only to larger businesses, they subsequently acknowledged that small businesses can re-engineer, too--often more easily and thoroughly than large companies, because the layers of bureaucracy are fewer.

Now Champy and Hammer have amplified their message, this time each with his own book. Champy's Reengineering Management (HarperBusiness) appeared in January, and Hammer's The Reengineering Revolution (HarperBusiness), co-authored with Steven Stanton, was published in April.

Champy will also bring his message to a nationwide television audience May 23, when he leads a satellite seminar sponsored by the U.S. Chamber of Commerce.

The new books are united in the importance they attach to the philosophical underpinnings of any re-engineering effort, although Hammer's book more nearly resembles a "cookbook" of specific re-engineering techniques. It is Champy who addresses the big questions head-on.

Successful re-engineering, he argues, requires that issues traditionally regarded as "soft"--issues of people and company culture-be handled as "hard issues, tangible issues, disciplined issues." They must be recognized, in short, as issues that are as critical to the success and survival of a company as the more commonplace "hard" issues, such as money and machinery.

Business owners and managers, Champy says, must understand that re-engineering requires changes not just in how work is organized but also within the individuals doing the work--themselves included.

Such ideas summon up thoughts of Total Quality Management, but Champy and Hammer have always drawn a distinction between reengineering, on the one hand, and TQM, on the other. TQM is based, as Champy says, on the idea of incremental improvement, over time, with broad participation by employees. Re-engineering, by contrast, calls for more dramatic change, in a shorter time, directed from the top down.

But Champy argues in effect that, if it is to be successful, re-engineering itself must be undertaken in the spirit of TQM. The goal, in addition to reducing costs, must be to shed old habits of command and control-- habits that make it increasingly difficult in a rapidly evolving economy for a company to respond quickly and effectively to its customers.

Re-engineering of that kind may be particularly hard for small businesses, Champy suggests. "The classic entrepreneur is actually one of the most hierarchical thinkers," he says. "The classic entrepreneur wants to control everything. The entrenchment of traditional managerial thought may be even greater in a small, privately run company than in a large company."

But, he believes, "the customer will drive the smaller entrepreneurial operation to move more authority and control out into the field. The customers want to talk to someone who can do something for them; so the entrepreneur is going to have to give more power and authority deeper into the line."

When he leads his satellite seminar, Champy says, his message to small and midsize businesses that are contemplating re-engineering will be this: "I want you to let go of control, in terms of letting other people make decisions, particularly when they affect customers. You've got to do that in order to grow. But don't lose your focus and the energy that you have in the marketplace."

For Seminar Information

To learn how you can host the Champy satellite seminar or attend at a site in your area, call the U.S. Chamber of Commerce's Quality Learning Services department at 1-800-835-4730 or (202) 463-5940.