Book Summary In “Re-engineering the Corporation,” Michael Hammer and James Champs co- authored a book that forever changed and influenced the way corporations reorganized their workplaces and environments. The authors looked beyond tasks and Jobs and stressed on the importance of innovation, and why corporate structures today need to be focusing on how the work can be best done in modern times, using today’s technologies rather than traditional methods.
Hammer and Champs believes only the companies willing to take on this difficult task will remain competitive in contemporary world markets. It is necessary for corporations to reinvent themselves every so often because ever since the Industrial Revolution, industrial work has been broken down to its simplest and most basic task. But in today’s age, those tasks must be rectified into coherent business processes. This changes everything from how work is performed to how companies are organized.
Hammer and Choppy defined processes as a set of activities that crosses functional boundaries and take information, raw materials, labor, and other inputs to produce outputs made specifically to meet customer’s needs. In the course of this thirteen-chaptered book, Hammer and Champs criticize old methods and approach to management based on Adam Smith’s division of labor and methods of business relations. They argued that in order to get a better handle on business processes, companies have to take into consideration the type of works the company does in terms of beginning and end states.
All Jobs and tasks can’t be assigned to more than ten processes. Some examples of processes Hammer and Champs provided were: product development which is a method of bringing new products to a market, manufacturing which relates to the use of machine, tools, and labors to produce goods for sale, sales which s the act of selling a product or service in return for compensation, and order fulfillment which completes the process from point of sales to delivery of a product to the customer. Usually companies divide each of their processes into smaller tasks.
For example, in product development, a business would start off with the product idea planning stage or brainstorming where they get together and generate ideas for a product. They would then ask employees especially the ones that deals with customers regularly for product ideas and/or generate surveys to the customers. The ext step would be to evaluate the ideas they came up with, and the management team would discuss the pros and cons of each ideas, and narrow down the list to the absolute best ideas which are usually based on their potential to generate revenue.
After evaluating the ideas, seeking feedback from customers and employees is important because it lets the company knows if the idea works or not. After an idea is selected, the marketing team would analyze the product idea, and determine where the competition exists for similar products. They would also figure out the demand for the product along with other costs to determine the profit margin. After developing a prototype and market testing for the product, the product is then ready for launch. And that’s how companies do business today.
By dividing processes into small but methodical tasks. Hammer and Champs argues that although focusing on specific tasks is important, companies oaten lose sight to their larger objective which is the efficiency, cost, and purpose of an entire business process. By focusing on specific tasks, companies usually tend to Just look at each worker’s ability to complete individual tasks, and not the big picture. In chapter two, the authors introduces us to the “reengineering” process. To Hammer and Champs, reengineering meaner to simply start over.
To abandon long-established procedures and looking afresh at the work required to create a company’s product or service and deliver value to its customers. A common question often to ask to Hammer and Champs is how does a company reengineering its business processes? How does a company simply toss aside traditional ways and start over? They answered that by saying, “We have watched companies use trial and error to answer these questions about radical change. We’ve served as advisers to companies that have made such changes.
Out of their experience and our win emerged the concept of business reengineering, which we have developed into a process for reinventing a company. We’ve developed tools that companies can use to reinvent the way their work gets done. ” (Hammer and Choppy pig. 35). Under reengineering for example, businesses would carefully examine the outputs and inputs of a process and ask how it might combine or eliminate inputs while adding value to the outputs. By doing so, they wont be overlooking the importance of cost and efficiency of an entire process.
Throughout the book, Hammer and Champs showed many examples where companies used reengineering throughout different recesses. This included four lengthy case studies which was observed (Hallmark, Taco Bell, Capital Holding, and Bell Atlantic). While each case study demonstrated different approach to reengineering, they all provided evidence of extraordinary business results that can be obtained from genuine efforts to reinvent processes. One case study that was particularly interesting was that of Hallmark. It showed that reengineering can be as important for companies that are doing well as for those who are doing not so well.
Hallmark didn’t anticipate any difficulties ahead but their management were ambitious and aggressive. Hallmark’s decision to embark reengineering was a “far-sighted effort” to ensure competitive edge over their competitors. To undertake reengineering while a company is in a position of strength is a difficult thing to do. Usually reengineering is performed by firms who are either in deep trouble like Ford Motor Company, or companies who are not yet in trouble but whose management foresees trouble in the near future. Companies like Hallmark and Wall-Mart are special because they constantly rewrite the rules.
Their secret to success is their willingness to abandon what has been long successful and implement new ways and methods to make the company even better because they’re never satisfied with their current performance. By constantly improving, they raise the competitive bar even higher and make things even tougher for their competitors. With all the stressing of companies needing to reinvent itself every so often, Chapters two and three showed us how companies can reengineering its business processes and what happens when they do.
In Chapter 2, Hammer and Champs gave the example of IBM or International Business Machine. IBM is in the business of manufacturing computer hardware and software. The company is efficient in what they do except they discovered that although the work involved in dealing with an application for finance took only ninety minutes, the whole process it went through extended for days and sometimes even weeks because the application was shih Ted trot one specialist department to another. In effort to resolve this issue, IBM tried several fixes.
Eventually they came up with the idea to replace specialists with generalists. Instead of sending an application from office to office, one person called a deal structures to process the entire application from beginning to end. By adopting the approach of one generalist dealing with the entire process, along with access to appropriate computer technology, IBM was able to massively reduced its turnaround time and at the same time increased the numbers of applications dealt with. The issue they had didn’t lie in the tasks or the people performing them, it was in the structure of the process itself.
By reinventing its process, IBM became much more efficient as a company. Moving forward to Chapter 3 in context with the previous chapter, Hammer and Champs outlined several characteristics that are customary to the reengineering process they’ve observed. The most basic one is the integration of several Jobs into one. Basically one person or team is responsible for the whole process for customer service representation. The term commonly used for an individual whose responsible for end to end process is a case worker.
Some other characteristics included : workers being able to make their own decisions, work being carried out in a natural order as oppose to a linear flow, and every company having their own unique approach to business processes. These characteristics among others are essential to companies thinking about redesigning their processes cause they’ve been proven to work by experience. When a company does decide to reengineering its processes, it naturally finds that the impact goes much further than just improved efficiency.
It effects other aspects of its operations as well which includes Job being more broader in scope and employees being more empowered to make key decisions for themselves. In conclusion, the reason why I put such heavy emphasis on chapters two and three was because I felt that those two chapters taught me the most about reengineering business processes. Throughout the book, Hammer and Champs did a great Job examining different issues and coming up with pacific solutions that helps companies solve those issues through forms of processes reengineering.
It’s important to remember that business processes reengineering should be seen as a strategic, cross-functional activity that needs to be integrated with other aspects of management if it hopes to be successful. Hammer and Champs never guaranteed success through their methods, but if a company does decide to take a chance and work hard at reforming the way they operate, more likely than not they will see major improvements in the performance of their business system.
