"Reengineering" ⁽¹⁾

In the second half of the 1980s, a handful of companies-Ford Motor Company, Texas Instruments, Taco Bell, and a few others-embarked on programs of business improvement that would transform American industry beyond recognition. Faced with unrelenting global competition and ever more powerful and demanding customers, these companies came to realize that their old ways of operating-their long-standing methods for developing, making, selling, and servicing products-were no longer adequate. They also discovered that their existing tools for improving operations were not making a dent in persistent problems of high cost, poor quality, and bad service. In order to address these problems, these companies had to take measures more radical than they had ever taken before. Forced to choose between sure failure and radical change, they opted for the latter. They began to reengineer. They ripped apart their old ways of doing things and started over with clean sheets of paper.

The good news is that these extreme measures, born out of desperation, succeeded far beyond anyone's expectations. These pioneering companies and the many others who followed them achieved breathtaking improvements in their performance. As word of their success spread, reengineering became a mass phenomenon, a vast global business movement. Only the willfully ignorant or those with private agendas question the impact that reengineering has had on businesses around the world.

However, some bad news followed this good news. In the aftermath of reengineering, business leaders discovered that they no longer understood how to manage their businesses. Reengineering had not just modified their ways of working, it had transformed their organizations to the point where they were scarcely recognizable.

The source of this dislocation was to be found in a modest and unassuming word in the definition of the term "reengineering." Since I first coined that term in the late 1980s, I have consistently used the same definition for it:

Reengineering is the radical redesign of business processes for dramatic improvement.

Originally, I felt that the most important word in the definition was "radical." The clean sheet of paper, the breaking of assumptions, the throw-it-all-out-and-start-again flavor of reengineering-this was what I felt distinguished it from other business improvement programs. This also turned out to be the aspect of reengineering that captured and excited the imagination of managers around the world.

I have now come to realize that I was wrong, that the radical character of reengineering, however important and exciting, is not its most significant aspect. The key word in the definition of reengineering is "process": a complete end-to-end set of activities that together create value for a customer. The Industrial Revolution had turned its back on processes, deconstructing them into specialized tasks and then focusing on improving the performance of these tasks. Tasks-and the organizations based on them-formed the basic building blocks of twentieth-century corporations. The persistent problems companies faced in the late twentieth century, however, could not be addressed by means of task improvement. Their problems were process problems, and in order to solve them companies had to make processes the center of their attention. In taking this momentous step, corporate leaders were doing more than solving a set of vexing performance problems. They were bringing down the curtain on close to two hundred years of industrial history.

By bringing processes to the fore, reengineering turned organizations ninety degrees on their sides and caused managers to take a lateral, rather than a vertical, view of them. This shift has obviated the certainties and prescriptions of management textbooks. Virtually everything that has been learned in the twentieth century about enterprises applies only to task-centered enterprises, the hitherto dominant form of organizational life. For a world of process-centered organizations everything must be rethought: the kinds of work that people do, the jobs they hold, the skills they need, the ways in which their performance is measured and rewarded, the careers they follow, the roles managers play, the principles of strategy that enterprises follow. Process-centered organizations demand the complete reinvention of the systems and disciplines of management.

(1) Beyond Reengineering - Michael Hammer - page xi-xiii

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