I just finished reading Reengineering The Corporation by Michael Hammer & James Champy. Organizations have been traditionally structured around the division of labor, as introduced by Adam Smith. This principle stated that people work most efficiently when they have only one well understood task to perform. While this specialization has led to local effectiveness on the given task, it created complex processes to knit and combine all these simple processes together. This has for the most part created inconvenience, inefficiencies and higher cost for their respective companies and customers. From a customer viewpoint, only the overall process matters, and success is achieved when the good or service is delivered to them quickly, at the right cost and quality. While in the last century corporations were able to get away with having complex processes and inefficiencies today’s forces namely “the Three Cs”: Customers, Competition, and Change are driving them into unchartered teritory.
What the authors introduce is the principle of Reengineering. They define reengineering as ” 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.” Although the definition sounds simple, the consequences run very deep. It involves every aspect of a company’s inner working such as: organization structure, empowerment, career paths, the role of information technology etc. The book goes on to detail general principles on some common themes that evolve from such exercises such as who will reengineer, which opportunities to tackle, the enabling role of IT etc. Finally despite the fact that every company will have individual nuances when it embarks on such an effort, the authors do give some example companies that have undergone and continue to undergo reengineering efforts (Hallmark, Taco Bell etc.).
One of the key learnings for me, coming from an IT background is how the authors think about IT within the reengineering effort. While they do acknowledge that IT is a great enabler of reengineering, it is by no means sufficient in and by itself. Companies that simply automate parts of a process or install systems without rethinking the processes and people around them do not reap the desired benefits and do not achieve dramatic improvements.
This is a truly revolutionary book in this area, given both the scope and impact its principles can have on a corporation and how we think about them. A highly recommended must read!