Book Review: Reengineering the Corporation

Mahesh W. Kumthekar

This is a must read book for managers who are tasked with strategy development for an organization and/or with implementation of IT infrastructure. This book summarizes the process of reengineering & its implementation.

The Foundation & the Mechanics

The authors start of with the historical perspective of business processes by introducing concepts proposed by Adam Smith, Henry Ford & Alfred Sloan and their relation to each other. The reengineering concept, although elusive, is defined with clarity for the reader. The importance of fundamental, radical and dramatic changes that are needed to achieve quantum gains via reengineering are aptly stressed. Authors discuss three companies, IBM credit, Ford, & Kodak briefly to impress upon the benefits of radically different thinking.

After laying the foundation with reengineering concepts (especially what it isn’t) the authors explain in sufficient detail the mechanics of the process. The important distinction between groups/departments and process teams is explained. The consequences of reengineering organizations & processes are discussed using the IBM credit case. There are far reaching implications of these changes to how decisions are made, performance measurement of teams/individuals, role of different employees, and the whole organization. Managers need to come out of their shell of supervisory role & embrace a more mentorship-type role.

Reengineering and IT

The role of IT in any firm’s reengineering process is crucial. Implementing IT systems & processes doesn’t mean putting a bunch of computers & network systems in the building and training employees to use them. The business process reengineering & implementation of IT systems go hand-in-hand. The IT systems have to be engraved in the business strategy to have any meaningful gains proportionate to the investment. The role of IT systems is to provide enabling technologies (possibly disruptive) and the reengineering process needs to capitalize on them to open new markets, serve current customers better or in general add value to the organization. Going further in the discussion on mechanics of the reengineering the authors describe the functions of different key people/roles in the process.

The Reengineering Experience

Once the groundwork is laid in the organization for reengineering the key questions are: Where to start? and What to Reengineer? The authors have discussed the various “symptoms” for processes that could lead to different “diagnosis” and offer opportunities to implement reengineering concepts. The process reengineering experience of a hypothetical but very realistic auto insurance company is explained in a very interactive and interesting manner. This example gives a very clear picture of how to start with a blank slate for the reengineering process.

From the organization behavior perspective it is critical to have all the affected groups/teams/employees on board for the change that may ensue the reengineering process. The two messages that need to be conveyed are: (a) Here’s where we are & this is why we can’t we stay here & (b) Here’s where we have to go. This is where the senior executives need to ensure that all the stake-holders are committed to the plan.

The reengineering experiences of three companies, Duke Power, IBM, and Deere, are discussed in detail. These case studies give account of specific situations of these three companies and how the IT and reengineering processes enabled them to make strides in progress towards satisfying the customers, employees and eventually leading to a healthier organization. It is claimed that about 50-70% of the companies that under took reengineering failed to gain any significant gains. The most common reasons and pitfalls to look for while reengineering the organization are described at the closing of the book.

Weaknesses of the argument

Although the authors have done a splendid job of proposing the argument for process & business reengineering, one major concept the authors failed to touch was the necessity of business expertise (or experts) for the purpose of reengineering. For e.g., the reengineering efforts in a pharmaceutical research firm should be headed by a pharmaceutical researcher. He/she is the one who knows the ins & outs of the business & will be better able to exploit the techniques than an outsider.

My personal minor brush with “reengineering”

The Problem: I worked in the emissions research division for a major auto OEM in Dearborn, Michigan. One of the roles of this Research Division (about 50 employees) was to interact with various suppliers, receive the latest catalyst technologies from them, test them, & classify them in different “bins” depending on their performance. Catalysts from different bins, depending upon the bin characteristics, were suitable for applications for different vehicle platforms. A vast number of engineers in the Product Development (PD) department on various platforms were our customers for this information. Because different employees in the Research Division were responsible for different parts of the test each would have different “status” information about the approval process. The traditional process involved the supervisor to assimilate all the information for a particular technology and then storing the records in an excel file on his own computer stating the approval and “bin” classification of the catalyst technology. The PD engineers were told about the approval as and when required in an ad hoc manner. The PD engineers, the customers, due to pressure to complete projects on time would try to call in different people (who had incomplete information) in the Research Division or the supplier themselves to know the status and/or the “most probable” bin a particular catalyst would get. This resulted in total chaos that resulted in delays.

The Solution: A group of people decided to set-up an internal website on the company’s intra-net to resolve the issue. Only a few people had access to put information on the web-site. The latest & accurate information on the status of the approval process for every catalyst technology was posted on the web-site eliminating the confusion. The PD engineers were able to get the accurate information accurately and in an expedited fashion. This saved a lot of wasted trials and time for the corporation. A schematic of the process of information flow before and after the reengineering is presented below.

Overall Rating

Overall this is an excellent book for the managers who are starting to realize the need for reengineering in their departments/organizations. I would give this book a rating of 4 on a scale of 1 to 5 (1:Don’t Bother even to go to the Library and 5:Must Buy and Read).