SummaryThe most successful business book of the last decade, Reengineering the Corporation is the pioneering work on the most important topic in business today: achieving dramatic performance improvements. This book leads readers through the radical redesign of a company's processes, organization, and culture to achieve a quantum leap in performance.Michael Hammer and James Champy have updated and revised their milestone work for the New Economy they helped to create - promising to help corporations save hundreds of millions of dollars more, raise their customer satisfaction still higher, and grow ever more nimble in the years to come. Publisher PROLOGUE: REENGINEERING FOR THE TWENTY-FIRST CENTURYReengineering is back.Conventional wisdom suggests that reengineering was a management fad of the early 1990s, one that like all such fads had its short time in the sun and then deservedly passed into obscurity. Today, one can scarcely pick up a self-styled guide to the new economy without encountering dismissive comments about reengineering as quintessential old economy thinking. A kinder version of this story asserts that reengineering was a concept suited to its times: one of recession and retreat, when American companies were running from the Japanese colossus. Costs were out of control, quality was abysmal, and the U.S.

• Reengineering The Corporation Pdf
• Michael Hammer Prenova

Reengineering The Corporation Pdf

Economy seemed to be in free fall. It was a time of drastic steps, of takeover artists prowling Wall Street, of slash-and-burn downsizing, of reengineering.Now, however, we have been saved by Bill Gates, the microprocessor, and the Internet. Information technology has driven U.S. Productivity through the roof, while a combination of economic mismanagement and social inflexibility has obstructed our competitors. Reengineering may have been relevant once upon a time, but that time is long gone.

An even harsher version of this story paints reengineering either as an outright fraud—empty slogans without any substance—or nothing more than a synonym for downsizing.All of this is wrong.Reengineering is not gone; it is alive and well. In fact, it is a little misleading to say that reengineering is back. The truth is, it never went away. Out of the glare of the spotlight, real businesses have been using reengineering assiduously to transform vast segments of their operations.

Order filling, manufacturing, purchasing, and customer service are some of the major areas that today bear no resemblance to how they were performed just a few years ago. Reengineering gave birth to such notions as assigning a single person to perform all the steps involved in handling a customer service request; having order fulfillment performed by a colocated, cross-functional team; building products in response to actual customer orders rather than to forecasts of demand; having low-cost items procured by the people who need them rather than by the company’s purchasing department; and many others.Reengineering is, in fact, one of the success stories of business history. Once considered revolutionary, these practices are now commonplace, and they have played a major role in the resurgence of U.S. IBM, profiled in Chapter 11, is just one of the many giants saved from decline or even extinction by a concerted program of reengineering. American Express, American Standard, Ford, Chrysler, Texas Instruments, and Duke Power are but a few of the Fortune 500 that succeeded at reengineering their businesses.Indeed, the impact of reengineering has been felt not only at the individual level but at the macroeconomic level as well. To attribute the current strength of the U.S.

Economy solely to reengineering would be excessive. Still, it joins other significant factors, such as sound monetary policy and an interesting surge of entrepreneurial spirit, as one of the key drivers.Were it not for reengineering, many sectors of the U.S. Economy would not be flourishing as they are now.

Michael Hammer Prenova

Prices would still be too high, quality would still be too low, and customers would still be looking offshore. American companies would have been unable to respond to the great changes in customer demand, and the threats posed by foreign competitors and aggressive start-ups.The most striking feature of the contemporary U.S. Economy is that neither prices nor wages are rising, despite high demand and low unemployment.

In other words, the monster of inflation has been pushed back into its cage. It is correct, but insufficient, to ascribe this miracle to the Federal Reserve’s steady hand or to companies’ inability to raise prices. If companies today were still operating as they were fifteen years ago, these conditions could not remain stable. If costs are out of control and you cannot raise prices, you go out of business. If your customers’ demand for your product increases your own demand for labor, then wages will rise.

Because companies have been reengineering, they can maintain profit margins in the face of declining prices and avoid increasing their workforces when confronted with escalating demand.It is particularly ironic that information technology has been proclaimed as the force behind the renaissance of U.S. Industry; in fact, reengineering has been the key that unlocked the potential of this technology. Merely overlaying new technology on old ways of doing business achieves very little. As one wag put it, IT allows us to make worse decisions sooner. Indeed, until the advent of reengineering, companies were hard-pressed to identify major performance benefits from many of their systems investments.

Reengineering showed companies how to transform their processes and ways of working to capitalize on technology.Why, then, is reengineering held in such ill repute in some circles? We leave the definitive account of this phenomenon to some future business or social historian. Our view is that what occurred was an inevitable backlash to the excessive enthusiasm with which the press and business public first embraced reengineering. In the early 1990s, there was scarcely a business magazine that did not run a cover story on reengineering, and, likewise, there was scarcely a corporation that did not start a reengineering effort. More than a touch of hysteria permeated this phenomenon.

Through the 1980s, U.S. Companies had been searching desperately, and in vain, for some way to permanently improve their operations. Everything they tried either did not work or produced positive results only fleetingly.Then reengineering, which already had a successful track record, became more widespread.

The experiences of Ford, Kodak, Union Carbide, and the numerous other companies cited in this book, in our other publications, and in the early press reports, made it clear that reengineering was not a hypothesis: It actually worked.Perhaps predictably, reengineering quickly became a bandwagon that everyone tried to jump on; but, problematically, not everyone knew precisely what it was he or she was getting involved in. Give me reengineering, whatever it is, and give it to me fast, was the command from many uniformed chief executives. This was a situation ripe for disaster.

Reengineering came to be viewed as an easy panacea that the CEO can simply delegate. And these are erroneous conclusions. Many managers did not want to read the book, consider seriously what the term meant, or make difficult and significant choices. Instead, they looked for simple ways to reengineer and found a plethora of equally uninformed consultants who were eager to help.Soon reengineering became devoid of meaning. Some companies used it as a generic term for change or as a synonym for whatever activities they had underway that fell under the umbrella of improvement, from rebuilding their information systems to changing their human resource strategy. Yet these same companies maintained extravagant expectations of their reengineering efforts, and when these were not met, they naturally attributed this failure to the concept itself.

The press, at first wildly enthusiastic about these ideas, now seized upon the failures and proclaimed the age of reengineering at an end. But despite this hue and cry, the companies that were accurately and skillfully implementing reengineering were harvesting spectacular benefits.Reengineering has, in fact, been an enormous success. Nonetheless, it has not yet realized its full potential. On the one hand, it is just now getting underway in some industries (banking and utilities, for example) that had been able until now to avoid making fundamental operating changes.

Moreover, even companies that have been working with the ideas for some time have not completed their efforts. On the other hand, new technology is creating opportunities for an entirely new wave of reengineering efforts. In the 1990s, reengineering was implemented in the back office, the factory, and the warehouse. For the new century, it is being applied to the front office and the revenue-producing side of the business: product development, sales, and marketing.From its inception, reengineering has been a close partner of information technology. Technology enables the processes that are the essence of reengineering to be redesigned. The two have a symbiotic relationship: Without reengineering, information technology delivers little payoff; without information technology, little reengineering can be done. The most important reengineering-related technology of the last five years has been enterprise resource planning (ERP), an integrated software system that supports not individual functional areas but complete business processes.

Companies that have attempted to implement an ERP system without first (or simultaneously) reengineering their processes were disappointed by the modest payoffs they received (outside the narrow domain of improved information technology operations and cost). On the other hand, those companies that linked the two—such as IBM, Owens Corning, Amoco, and General Mills—achieved prodigious payoffs. The next wave of reengineering will be closely linked with a technology that integrates not just corporate functions but entire corporations.As everyone who has not been in hibernation for years knows, we are living in the age of the Internet. It is hard to recall any other innovation that has received as much press or as much hype. Yet businesses will only be able to harness the true power of the Internet if they realize that it too must be tied to reengineering. The genesis of reengineering lies in a phrase one of us coined in the late 1980s: Automating a mess yields an automated mess. Unless an organization reconceptualized its operations, overlaying new technology on these operations accomplished little.Today, that slogan has been updated: Putting a Web site in front of lousy business processes merely advertises how lousy they are.

In the absence of robust, reengineered processes, electronic commerce is a nightmare, not a dream. Nonreengineered processes for handling and filling orders are so complex and unreliable that they can barely be performed by trained specialists; to inflict them on an unmediated basis on innocent customers is positively cruel. Selling over the Internet demands a fresh round of reengineering, even for those companies that have just completed their last round.IBM, for instance, reengineered most of its processes in the mid-1990s, but has just embarked on it again, this time to Web-enable these same processes for electronic commerce.

Business Week recognized the relationship between the Internet and reengineering in its first special report on electronic business: It dubbed the implementation of e-commerce e-engineering. The Internet demands new ways of working, and reengineering is the tool that can create them.The hallmark of first-wave reengineering is that it dissolved functional boundaries in order to concentrate on the end-to-end business processes that create all real customer value and transcend these boundaries. The new wave of Internet-enabled reengineering is breaking down the walls that separate corporations from each other. Processes do not stop at corporate doorsteps. Product development, planning and forecasting, and a host of other processes are really interenterprise in nature; they entail work by both customer and supplier. The Internet facilitates the reengineering of these intercorporate processes by allowing information to be shared across corporate boundaries.In short, the reengineering agenda is far from complete. More and more companies are revving their reengineering engines to reinvent how they work with their customers and suppliers.

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It is to help them get grounded in the basic principles of reengineering that we have updated and reissued this book.When our publisher approached us about issuing a new edition, we quietly groaned. It had been some time since we last read this book, and we assumed that if it was going to be relevant to a new generation of reengineers, it would have to be completely rewritten. With some surprise and substantial pleasure, we realized that what we wrote in 1992 remains valid in the new millennium. Certainly, the basic motivations for reengineering—the three Cs of customers, competition, and change that we explore in Chapter 1—are as germane now as ever.

The concept of process is as applicable in the front office and across corporate boundaries as it was in the back room. The techniques of process design and the roles of process owner, leader, and design team still work. On the whole, we have made only minor editorial changes to maintain the book’s accuracy and relevance.We have, however, prepared an entirely new set of case studies for this edition (Chapters 10 through 12). The original version of the book described the experiences of the early pioneers. While their stories were important and instructive, in many cases, the companies that followed and learned from them have surpassed those trailblazers. Our new case studies focus on three well-known companies—Duke Power, IBM, and Deere.

Their leadership positions at the end of the 1990s are due in no small part to the success of their reengineering programs.We welcome to this new edition old friends and new acquaintances alike. Those already knowledgeable on the subject of reengineering will learn much from the new case studies. Those new to the topic have the opportunity to begin with the basics and, as the book continues, become acquainted with the most current thinking in this area.We hope that this book will be as useful for the new wave of reengineering as it was for the first one. Reengineering is here to stay. Until the world stops changing, it will remain an essential business tool.