BA652 Ying Zhao Date: 10/30/2003
REENGINEERING THE two respected management consultants Hammer and
CORPORATION
By Michael Hammer & James Champy
Reviewed by Ying Zhao
Why does a corporation need reengineering?
When I first picked out this book from hundreds of
other bestsellers, I was instantly impressed by its
alluring name Reengineering the Corporation. I
realized that this book must be closely related with
what I have learned in the MBA program of NAU.
This international bestseller is the pioneering book
on the most important topic in business circles
today: reengineering--the radical redesign of a
company's processes, organization, and culture to
achieve a quantum leap in performance. Neither a
quick fix nor a plan for incremental improvements,
reengineering is a radical corporate redesign that
discards the accumulated business wisdom of the
past 200 years, replacing it with a brand new model
and an associated set of principles. We should
realize that today's workers and managers are
prisoners of antiquated theories about
organizing work - theories that date back to
the beginnings of the Industrial Revolution.
These ideas - the division of labor, the need
for elaborate controls, the managerial
hierarchy - no longer work in a world of
global competition and unrelenting change.
In their stead, the authors introduce the notion of
process orientation, of concentrating on and
rethinking end-to-end activities that create value
for customers. In this book we are told that it is
time to adopt new principles and abandon those
outdated ones which were deeply embedded in our
minds and significantly shaped the structure,
management, and performance of American
businesses throughout the nineteenth and twentieth
centuries. Building on their firsthand experiences,
Champy show how some of the world's premier
corporations use the principles of reengineering to save
hundreds of millions of dollars a year, to achieve
unprecedented levels of customer satisfaction, and to
speed up and make more flexible all aspects of their
operations.
Reengineering the Corporation offers nothing less than
a brand-new vision of how companies should be
organized and managed if they are to succeed - indeed
even survive - in the 1990s and beyond. Reengineering
does not seek to make businesses better through
incremental improvements - 10 percent faster here or
20 percent less expensive there. Business reengineering
isnt about fixing anything. Business reengineering
means starting all over and starting from scratch.
Business reengineering means forgetting how work was
done in the age of the mass market and deciding how it
can best be done now. The aim of reengineering is a
quantum leap in performance - the 100 percent or even
tenfold improvement that can follow from entirely new
work processes and structures.
The problem with American business is that it is
entering the 21st century dragging behind it an
outdated and cumbersome set of corporate
principles formulated in the 1800s. Although these
principles may have served us well in the past, the
time has come to retire and replace them if we are to
survive the 1990s and beyond. Examining the
firsthand experiences of companies that have
reinvented themselves for success, Hammer and
Champy present their revolutionary blueprint for
creating a new kind of company for the brave new
world of business. The book also provides numerous
examples and in-depth case studies of how leading
organizations are achieving significant competitive
gains through reengineering: How Ford Motor reduced
the size of its North American accounts payable
organization by 80% while improving the process; how
IBM is leasing subsidiary cut its deal-making process
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BA652 Ying Zhao Date: 10/30/2003
from seven days to four hours; and how Taco Bell
used a new set of production and management
processes to fuel a six-fold growth in revenue.
Integration and Information System
After reading through this book, I found that my
perception of a corporation reached a higher level.
In the past most multinational companies tended to
establish a very hierarchical structure and
artificially fragment business process into
indivisible segments. People are scattered all over
the company in functional silos and are not
organizationally integrated. This traditional
structure has seriously impeded the further
improvement in efficiency and productivity when
those multinationals are entering a new
information era. The modern enterprises should be
lean enough to make a quick response to the
changing business world, flexible enough to satisfy
the dynamic needs of customers, innovative enough
to face various competitions. Integrated processes
give rise to multidimensional jobs that are best
organized into process teams. The development of
information system which is one of the most
efficient approaches to implement reengineering
strategy has greatly facilitated the reengineering
process for various organizations. I always wonder
why the unblocked information flow in real time is
crucial to the survival and success of a corporation.
With the powerful support of high-performance
information system, the previously fragmented
functional areas can be integrated together to
achieve its maximum efficiency through
information sharing. For most people, the
implementation of information system is a process
of automation and computerization which
undoubtedly can improve efficiency, but IS contains
far more connotations than merely automation and
computerization. By computerizing the process, the
company might have achieved 10 percent
performance improvement instead of the more than
90 percent improvement it attained through
reengineering. That is why the dominant ERP software
giants such as SAP, Oracle have imposed tremendous
impact on the reengineering process of most premier
corporations. The implementation of ERP software can
sparkle an innovative thinking and initiate
revolutionary reengineering process which can generate
unpredictable value to a corporation.
Teamwork and Process
The fragmented processes found in traditional
companies lead to narrowly specialized jobs and
organizations based on functional departments. This
fractionation creates numerous problems, but in
particular it promotes incongruent goals among the
different people involved. One person might care about
inventory turns while another is focused on delivery
time. That is why teamwork is so highly valued in
American companies. Everyday MBA students work on
group projects in the form of a team because everyone
can get cross-functional training from each other.
Process team workers, who are collectively responsible
for tasks, have process results rather than individually
responsible for tasks, have a different kind of job. They
share joint responsibility with their team members for
performing the whole process, not just a small piece of
it. They not only use a broader range of skills from day
to day, they have to be thinking of a far bigger picture.
Moreover, everything an individual does is imbued with
an appreciation for the process as a whole.
Create more value to customers
Another important apocalypse I got from this book is
how to redesign the business process which is more
value-added to customers. Reducing cost to improve
competitive advantages in pricing is always a main
concern of modern companies. We should try to
eliminate those processes which consume tremendous
energy and money to a company but add little or no
value to customers. Customers dont care about how
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many steps taken to produce final products and also

care little about the strict internal monitoring
process and elaborate quality control. Their main
concern is how to get their desired functionalities at
the minimum cost. Therefore the design of business
process should focus on either on reducing
unnecessary cost or improve desired functionalities.
This customer-oriented focus can be best
elaborated by the principle weve learned - target
costing in marketing class.