If there is any business design approach that has been more distorted in its subsequent interpretation and application, it is Business Re-engineering, or Business Process Re-engineering (BPR), as it is more commonly referred to.
It feels as if just about everything has been done in the name of BPR at some point, although today the term is generally used to refer to the re-design of an organisation’s business processes through the application of technology.
But BPR, as set out by the term’s originators, Michael Hammer and James Champy, in their early 90’s book “Re-engineering the Corporation” is about much more than the application of technology, indeed they guarded against such an emphasis.
Hammer and Champy argued that the post-industrial age required a move away from industrial age methods of production – the breaking down of work into its simplest and most basic tasks and the division and specialisation of management. They advocated an approach based on the reunification of these tasks into “coherent business processes”; and the empowerment of workers to make decisions.
Hammer and Champy cited the drivers for this change as the “three Cs” – Customers, Competition and Change. They identified that customers, rather than being a mass, homogeneous market, had begun to demand products and services designed for their unique and particular needs. Competition had intensified. Big was no longer impregnable. Change had become pervasive, persistent and accelerated. If this was true in the early 90s, how much truer is it today.
Hammer and Champy advocated a break from the past:
Organisations designed to operate in one environment cannot be fixed to work well in another…..At the heart of business re-engineering lies the notion of discontinuous thinking – identifying and abandoning the outdated rules and fundamental assumptions that underlie current business operations.
They argued that the difference between winning and losing companies is that winning companies know how to do their work better. The key was to focus on how the work is done. They saw the core message of their book as:
It is no longer necessary or desirable for companies to organise their work around Adam Smith’s division of labour. Task-oriented jobs in today’s world of customers, competition and change are obsolete. Instead, companies must organise work around process.
Hammer and Champy talked about the “dis-economies of scale”, and what they referred to as the “Humpty Dumpty School of Organisational Management” – the fragmentation of processes and the “hiring of all the king’s horses and all the king’s men to paste the fragmented work back together again”. What today is often referred to as the Management factory.
Hammer and Champy argued that “in order to meet the contemporary demands of quality, service, flexibility and low cost, processes must be kept simple”.
Hammer and Champy outlined some common BPR themes, or characteristics – or as I would term them, design principles:
Several jobs are combined into one. Formerly distinct jobs or tasks are integrated and compressed into one. Where a number of people are involved, rather than being based in different departments and/or locations, these are combined into case teams.
Workers make decisions. Not only are processes compressed horizontally, but vertically as well. Where before a worker had to refer to a manager for a decision, the worker is able to make that decision themselves. Decision making becomes part of the work.
The steps in the process are performed in a natural order. In re-engineered processes, work is sequenced in terms of what needs to follow what, not in some artificially imposed straight-line sequence. This allows for concurrent processing, reducing the time a process takes to complete.
Processes have multiple versions. Re-engineered processes represent the end of industrial-scale standardisation. To meet the modern day nature of demand, multiple versions of the same process are required, each tuned to the requirements of different markets, situations and/or inputs.
Work is performed where it makes the most sense. Work is shifted across organisational boundaries. Functional specialisation is broken down. Where it makes sense, repair work is shifted to the customer, activities shifted to the supplier. The need to integrate related pieces of work performed by separate organisational units is minimised.
Checks and controls are minimised. Re-engineered processes use controls only where it makes economic sense to do so. Aggregated or deferred controls are used, working against patterns of events, rather than individual instances.
Reconciliation is minimised. The number of external contact points that a process has is minimised, reducing the chances of inconsistent data, processing and/or decision making.
Hybrid centralised/decentralised operations are prevalent. Information technology enables organisations to operate as through there units were fully autonomous, whilst drawing on the benefits of centralisation – improved coordination, governance and economies of scale, e.g. in the purchasing of commodities.
Hammer and Champy stressed that not all re-engineered business processes would display the above characteristics; and that creating a new design requires “insight, creativity and judgement”. Put another way, the above should not be treated as a checklist, rather as guidance, to be applied intelligently to a given design project.
The World of Work
Beyond the business processes, Hammer and Champy stressed the fundamental implications for many other parts and aspects of an organisation, including the nature of the work, or ‘People’ design domain:
When a company re-engineers, once complex processes become simpler while once simple jobs grow complex……Process teams do not need bosses, they need coaches…..traditional bosses design and allocate work. Teams do that for themselves. Traditional bosses supervise, monitor, control and check work….teams do this for themselves.
They summarised these key changes as:
- jobs change from the completion of simple tasks to multi-dimensional work
- people’s roles change from controlled to empowered
- the emphasis on job preparation shifts from training (the ‘how’ of the job) to education (the ‘why’ of the job)
- the focus of performance measures and rewards shifts from activity, to results
- values, beliefs and behaviours change, e.g. customers pay my salary, every job in the company is essential and important, the buck stops here, constant learning is part of the job, managers are facilitators and coaches, not supervisors
- changes in organisational structure – from hierarchical to flat
- Executives become leaders, not scorekeepers (purely concerned with the numbers)
The Enabling Role of Technology
The other design domain they focused on was Technology. Hammer and Champy emphasised that technology was an enabling force, not a driving force, for business re-engineering:
Information technology plays a crucial role in business re-engineering, but one that is easily miscast….the misuse of technology can block re-engineering altogether by reinforcing old ways of thinking and old behavior patterns.
They stressed that re-engineering is not about automation, but innovation – doing new things in new ways, not automating existing processes. It is about exploiting the latest capabilities of technology – recognising the new unfamiliar capabilities instead of its familiar ones.
Remember, this was written before the explosion of the Internet in the second half of the 1990s; and long before the emergence of today’s more agile technologies, such as Business Process Management Systems (BPMS), Web Services and mobile technologies.
BPR and Service Design
BPR contributes some important ideas to service design. Hammer and Champy very much presented their ideas as something unique and unconnected with any others, including those “imported from Japan”. In fact, BPR sits very well and is greatly enhanced when viewed through the lens of Systems Thinking; and when married up with those very ideas imported from Japan (specifically Lean Thinking), which in reality, it has much in common.
As a practical method, it works well within the architectural approach to design advocated here. This provides a much stronger framework for the holistic design of businesses, somewhat lacking in BPR itself.
Michael Hammer and James Champy, Reengineering the Corporation
Despite it’s age, it is still well worth reading the original book, although with present day business conditions and modern day delivery models in mind!
See my associated blog post – BPR Revisited.
Last Updated: 8/09/2012