Project Management Institute

Meeting the reengineering challenge

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The successfully reengineered enterprise doesn't just manage change, it thrives on it. Likewise, positioning for the future means not just changing, but revitalizing.

Milan Moravec

Teams, which are replacing standard departments and units as the major means of accomplishing work, are also becoming the major means of accomplishing change. Project team leaders today need to understand and manage not only incremental change, but transformation on a large scale. Such transformation is usually referred to, these days, as reengineering.

Reengineering is not, as some people believe, simply the elimination of certain types of work—or workers—to gain efficiency. It involves redesigning the entire business system to position the organization for competing in the future.

Necessary—But Not Always Positive

A recent study by the American Management Association and Deloitte & Touche revealed that 93.4 percent of the U.S. corporate respondents were involved in business process reengineering. To be competitive, companies need to reengineer periodically. Some do it a lot better than others.

It's no great secret that reengineering efforts can cause major disruptions without achieving the desired goals. Focusing on how to save dollars today rather than on how to compete in the future, too many companies have seen their short-term rosy balance sheets turn ink-red a couple of years later.

Other companies, however, reengineer with impressive results. For example, Texas Instruments reported a 76 percent reduction in procurement cycle time and a 91 percent improvement in on-time delivery, not to mention upgraded job skills and sharp reductions in errors. Successful change is possible, and morale crashes are not inevitable.

Managing a reengineering project is a more complex endeavor than managing a limited or incremental change. How can the reengineering team manage the transformation effort and also ensure revitalization? The answer depends largely on two key factors: how the project is launched and who's on the team.

Leading from the Future

Any team about to embark on reengineering can feel the rumblings of dread and terror from inside the volcano. Business processes, management, structures, culture, and the workforce are about to be spewed out into a chaotic mass, from which order may or may not emerge. From the beginning, communication—about five to ten times more communication than usual—is absolutely essential.

But what should be communicated? That depends on the future—the desired future.

Where is the industry going? What role will this company play? Which customers will be served, and which new benefits will be offered to them? What do customers believe is valuable—in view of how they plan to compete in the future? What competencies must this company acquire or develop in order to delight customers?

Answers to such questions create a vision that provides the “pull” toward successful change. If the company's vision is too vague, the project team may need to enlist senior management's participation in refining it.

Reengineering, if it is truly to be followed by revitalization, must be not only about running the race but about deciding which race to run. A study by Index of 80 successful companies determined that they all fell into one or more of three leadership categories: best price, best product, and best total solution. Winners decide which category they belong in and act accordingly.

It's important that everyone in the company understand and be advocates for the vision. If they helped to create it, this part comes more naturally. Communication about the vision is still necessary, however, and should precede the actual reengineering process.

Who's on First?

Years of study and experience with reengineering efforts have highlighted certain principles affecting success. The first principle is that reengineering is a whole-systems process—and that the whole system includes customers, suppliers, employees, and other stakeholders. It may even include competitors.

The reengineering team, therefore, has to draw on ideas and expertise from all these parts of the system—not just from managers. Some organizations ask key customers and vendors to serve on their reengineering teams. Employees, particularly those who deal directly with customers, are essential sources of information on where the current roadblocks are and where change is needed. And since massive communication is essential before and during reengineering, a communications professional should serve on the team.

Teams should also include someone with an overview of the organization, familiarity with the competition, and no ox that will be gored by major change. In many cases, that person is an outside consultant. Project managers tend to view consultants with suspicion, but senior management may insist that they become part of the team anyway. The challenge for the project leader is to use the consultant to best advantage.

The old view of the consultant was of someone who would swoop in, stir up dust, and then vanish, leaving a limited, jargon-infested, difficult-to-implement solution—and no forwarding address. In today's business environment, which operates via relationships and networks, the consultant is more likely to be seen as a member of the corporate family, called upon as needed, on an ongoing basis, for perspective and assistance in various phases of change.

If he or she is kept informed about corporate culture and business priorities, a consultant can help the team integrate ideas and practices while maintaining detachment from corporate politics. Project teams have used consultants to facilitate meetings, present overviews, help design implementation and communication plans, and train other team members.

Since reengineering will probably have to be done again, it's important to ensure—by making it a deliverable in the contract—that the consultant provides clear, concise documentation so that the knowledge gained in the process can be reused. But it's also important to be able to ask informal questions as often as they occur. Reengineering is a long-term effort and a moving target. Other business priorities will crop up and need to be integrated with the reengineering project.

The consultant on the team should be asked to demonstrate capability in all phases of the reengineering process. Here's an overview of these phases.

A Road Map for Reengineering

Reengineering can progress in many different ways, depending on the type, size, and needs of the organization. This generic road map has been used and adapted successfully by a number of reengineering project teams.

Phase I: Position for Change. To move toward the desired future articulated in the vision, the team needs to understand where the company is now—its position in the industry, its strengths and weaknesses vis-à-vis the competition—and communicate these throughout the organization, so that everyone understands why reengineering is necessary. The team must:

  • Establish urgency and gain commitment.
  • Create a diagram of the way work flows now.
  • Determine which parts of the work process need change (what will add most value from the customer's point of view).
  • Develop the project framework with time frames, resources, and skills needed.

Phase I usually takes two to four months—less if the organization has gone through reengineering before. Establishing urgency and gaining commitment are ongoing activities.

Phase II: Diagnose the Existing Process.

  • Define the most important parts of the work process (again, from the customer's point of view).
  • Identify gaps and blocks.
  • Determine whether there are faster, more economical, more value-added ways of doing things.
  • Establish performance targets; here, benchmarking (researching successful strategies of other organizations) is useful.

Completing all the activities in this phase can take one to five months.

Phase III: Redesign the Process. This phase, which may take two or three months, may start before Phase II is completed. In Phase III, the team must:

  • Determine the ideal flow of work; for example, ask, “If we had to design this process from scratch, what would it look like?”
  • Identify incremental improvements.
  • Determine how performance improvements will be measured.

The more accurately a reengineering team has identified underlying assumptions and root causes of weaknesses in the existing work process, the easier it will be to complete Phase III.

Phase IV: Make the Transition. Inertia is a more powerful force than most people realize. Some organizations, particularly those that have been successful in the past by doing things the old way, are more resistant to change than others. Union Pacific Railroad used a simple questionnaire to gauge the company's readiness to change, and adjusted its change management strategy accordingly. Some other ideas for easing the transition are:

  • Prepare the organization for change.
  • Create transition plans and select transition teams.
  • Prototype and test initial installments.
  • Credit and reward team members.
  • Continually measure and improve the process.

Transition teams are comprised of certain members of the original reengineering team, plus some specialists in the areas targeted for initial changes. As the transition progresses—during a period of eight months to two years—team membership will usually shift, and certain members will spend more or less time on the project.

During the transition phase, the seeds planted in earlier phases begin to bear fruit. Accomplishments are visible all along the way. The team builds and expands on the communication process, recognizing positive steps and documenting performance gains.

The team also alters what has not worked as planned, revisits the big picture to identify which other areas or systems need to change, and recommends strategy adjustments.

Systematic Shifts

When an organization has reengineered its way of doing things, based on new assumptions about what it takes to be successful, other parts of the business system require rethinking as well. Revisions in compensation systems, career paths, and roles are necessary to sustain the changes and ensure revitalization. The project team will be in an excellent position to make recommendations to senior management.

For example, at British Petroleum Exploration, reengineering was required to make the once-bureaucratic organization more flexible and creative. The project team recommended—and management implemented—a new career path system, with one track for would-be managers and a comparable one for individual contributors; a 360-degree feedback mechanism; a personal development program to help employees take charge of their own careers; and other innovations. All were related to each other and to a business strategy based on customer requirements.

Change is never finished. The project team should not just be shepherding change; it should be helping to create a business environment that thrives on it. ▄

Milan Moravec is a principal of Moravec and Associates, a Walnut Creek, Calif., team of management, organization, leadership, and transformation consultants. He will present “Making the Most of Change: A PM's Tactical Guide” at PMI ’96 in Boston.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM Network • August 1996

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