Re-engineering the Corporation: Summary & Analysis

Within corporate America, a dogma of using best practices has been profoundly followed for hundreds of years. This process of using techniques that work best has been supported by the notion that it is ultimately ineffective to re-invent the wheel. However, when it comes to innovation, Michael Hammer, James Champy and colleagues focused on identifying fundamental weaknesses in the status quo of business operations and redesigned the concept from scratch. In order to accomplish this, a truly unique and fresh perspective is required. In taking the concept of process-oriented business organization, the main emphasis was to use existing knowledge regarding customers and their preferences and redesign the business organization from the start. Hammer reconstructs the modern day business organizations in terms of a fresh and relevant perspective. In doing so, Hammer applied current knowledge and then focused on cultivating a new paradigm in which a new radical and competitive advantage is developed.

Hammer first began by clearly defining the major elements that a reengineered corporation needed to have. Fundamentally, business operations need to be consolidated in order to clearly define a new paradigm. Moreover, international notions of the individual are adapted in the sense that the interests of the company are primarily focused on. For instance, Hammer focused on giving individual employees more power across a spectrum of a wide variety of tasks. Moreover, there is a major increase in accountability. Instead of focusing on a strict organizational structure based on control and limits, employees are treated as a major component of success and managers take the role of coaches rather than superiors. As individuals and managers are oriented towards producing tangible results, the overall value system is focused on measuring and appeasing customer values and achieving ultimate productivity. The process of reengineering is not solely about implementing new processes for improvement; instead, the focus is placed on a new culture that is based on customer value and tangible results.

Hammer utilized case studies and main points that focused on emulating what other companies have done successfully in the past. For instance, an emphasis was placed on not only utilizing new technological advancements, but also breaking old dogmas and habits that were archaic in nature. This included an internal motivation to outperform the industry and focus on processes of improvement rather than organizational limits of performance. This process of moving progressively through time began with taking the perspective of the customer and reverse engineering that experience into the nuts and bolts of the company’s operations. This also included quickly adapting to changing business climates as well as accepting risks as a normal part of business progression. Finally, a trial and error perspective was strongly supported as it was the only way to truly evolve the business model to fully adapt to customer needs. Finally, time was an essential portion of the process. It is super important to focus on the fact that an astounding business model takes adaptation, consideration and ultimately reworking of the original model.

Moving into the nuts and bolts of his method, Hammer emphasized on realistic goals that any company can develop. The current paradigm in business science has focused on archaic methods that worked up through 1960. For instance, the development of automotive production has steered executives to focus on key elements such as a strict and rigid organizational structure in which middle managers controlled production environments while pyramid style hierarchies controlled the events in a top-down fashion. However, there were some fundamental flaws in this perspective. Such a rigid and fixed environment caused more variability in the final product and had overly high overhead in terms of staffing and production staffing. Instead, the focus should rest on incredible foresight in terms of potential issues as well as an infrastructure that can quickly adapt to various business demands. Most specifically, principles of Total Quality Management (TQM) should be avoided as this does not encourage a culture of innovated; instead, a perspective of a flat organizational structure in which each individual has total accountability is preferred.

In general, more emphasis is collectively placed on the workers rather than the managers. Rather than doing assembly line style work, employees are assigned multiple tasks in which they are equipped with the power to make executive decisions and are not subject to the bureacracy of standardization. In decentralizing the organizational structure of companies, managers are held solely for the accountability of their departments and are simultaneously given the tools and resources that they need to further develop their teams to perform and make organizational changes. Indeed, focusing on delivering a product that satisfies a customer is highly emphasized. Rather than empowering managers and large teams with projects that do not add value to the end product, services and products are streamlined to ensure that each team member is accountable for their work as it adds direct value to what the customer is willing to pay for.

Empowering employees also requires that a new organizational structure be implemented. For instance, rather than focusing on bureaucracy and shared accountability, the corporate hierarchy is flattened in order to reduce the manager’s role. Because the manager is responsible for the end product and not the actual process, the team’s achievements should be a milestone that everyone is not only aware of, but also proactively takes part of. There is also an active role of a “reengineering team” in which senior managers and executives guide the process of organizational change. This steering committee is responsible for not only the re-allocation of resources, but also the newly redesigned priorities of the team. Finally, as conflict is inevitable, this team also focuses on resolving on any inherent issues as well as being directly accountable for the results and improvements that are achieved, or not achieved. Ultimately, instead of focusing on the organizational structure of managers and subordinates, the focus is placed on engineering new processes and deprecating the use of old archaic ones. The main catalyst for moving forward is the successful implementation of information technology because it uses relevant information in new ways.

In order to support his main points, Hammer included case studies with large companies that have implemented his principles in order to attain tangible results. For instance, IBM had major issues with their credit application services in terms of turn-around time. A typical application would take anywhere in between seven days to two weeks before it was fully processed. Despite a relatively quick processing time through human hands, the process permitted that applications sat on desks and waited for processing. Rather than asking how to enhance or develop credit checking, they focused on the process and how it could be reengineered to better suit the end customer better. Indeed, IBM redesigned the computer software and consolidated the staff into general coordinators who would only utilize extraneous resources for special cases. This, in turn, resulted in the average application being fully processed from start to finish in merely four hours. As their efficiency increased one hundred fold, the emphasis was not on downsizing staff or eliminating costs; instead, reengineering the process from the customer’s perspective was taken into account. A similar change was documented in Ford’s checking of accounts receivables in terms of accuracy. The main theme among both of these changes was that an adequate information technology infrastructure was essential in automating certain tasks that did not need to be done by humans. In removing unnecessary steps from the process and automating as much as possible, efficiency was increased by a tremendous amount.

Another relevant case study was Taco Bell, who by 1983 had experiences stagnant growth in terms of revenue and profit. In reengineering the whole retail store concept, Taco Bell conducted extensive research of its customers in order to find a balance in terms of delivery and cost. The results were dramatic and relatively quick. Rather than emphasizing store operations on 70% kitchen size and 30% customer space, the store was redesigned from scratch to deliver a maximum allotment of customer space and very little manufacturing. Instead, retail, or end customer value was the main focal point. Within a few short years, Taco Bell not only reengineered their whole management and store initiatives, but also increased sales. As customers were given what they want, store managers were given more flexibility to deliver value based on the specific needs of customer needs. Numerous layers of management were cut in order to streamline efforts to produce accountable positions of employment. Consequently, as food was pre made in order to reduce manufacturing time, retail use of the store delivered much richer and more robust of fast food in which customers still retained low cost while extracting the highest possible value from the product. This case study epitomized the reengineering process from scratch without paying attention to out dated dogmas of management and production.

As Hammer and his colleagues reiterated, finding new ways to deliver value and reduce costs was not dependent on higher budgets and rigid control of employees. Instead, emphasis was placed on giving employees control and purpose while appointing managers with the role of being coaches who were accountable for the results. Focusing on the process rather than the organizational structure required redesigning the information technology that automated processes without added human intervention. Finally, focusing on the end product from the consumer’s perspective helped realign goals and aspirations in terms of progressive growth and higher retention rates of clients.

Works Cited

Hammer, Michael, and James Champy. REENGINEERING THE CORPORATION: A Manifesto For Business Revolution. New York: HarperCollins Publishing, 1993. Print.