REENGINEERING

THE
ORGANIZATION
 Evolution of Work

► The evolution of work has gone

through different phases.
► The approaches to work evolved and
developed along with the development
of human race.
► From hunting/gathering, craft
production, mass production to the
current tough global world.
 Evolution of Work
Commonalities in the private and public sector in the
evolution of work:
- They have commonalities in the history of
bureaucratic growth.
- They went through the same development
stages.
- both began with small craft like units led by a few
generalists;
- they grew into large, segmented, fragmented
bureaucracies characterized by
. division of labour, of specialists, of
management levels, of producers from customers
 Evolution of Work

A. Craft Production
Pre-industrial world and characterized
by
- limited production /artisanship/;
- limited division of labour
For example, the production of pottery
uses methods of craft production.
 Evolution of Work

B. Mass Production also called flow

production, repetitive flow production, or
series production
- is the production of large amounts of
standardized products on production lines.
- uses moving tracks or conveyor belts to
move partially complete products to
workers, who perform simple repetitive
tasks to permit very high rates of production
per worker, allowing the high-volume
manufacture of inexpensive finished goods.
 Evolution of Work
► In the late 1770s, Adam Smith
observed two types of production in a
pin factory: mass production & a group
that divided its work into small, narrow
tasks which showed high
productivity /Hammer and Champy.
1993/.
► Thus, Smith /1776/ expressed a new
Idea: the principle of division of labour.
 Adam Smith
He observed two types of
production in a pin factory:
mass production & a
group that divided its
work into small,
narrow tasks which
showed high
productivity.
He /1776/ expressed a new
Idea: the principle of
division of labour.
 Evolution of Work

► The beginning of Scientific Management

- a method in management theory which
determines changes to improve labour
productivity
► Some features of Scientific Management:
- Specialization and fragmentation of work
- Standard method for performing each job
► Taylor proposed Planning Department made
up of highly specialized “Functional Forman”.
 Frederick Winslow Taylor’s
Principles of

Scientific Management
1. Replace rule-of-thumb work methods
with methods based on a scientific
study of the tasks.
2. Scientifically select, train, and develop
each employee rather than passively
leaving them to train themselves.
3. Cooperate with the workers to ensure
that the scientifically developed
methods are being followed.
4. Divide work nearly equally between
managers and workers,
so that the managers apply
scientific management
principles to planning the work and the
workers actually perform the tasks
 Evolution of Work

- Mass production was

popularized by Henry Ford in
the early 20th Century.
- Henry Ford revolutionized in
productivity using a
constantly-moving assembly
line, subdivision of labor
 Henry Ford
. Prior to Henry Ford’s innovations,
most auto manufacturers used a
system of craft’s people to make and
assemble a car.
. Small groups of craftspeople were
making customer-ordered cars, one at
a
time.
. The craft system was decentralized.
. A small number of machine shops started
to make the various parts.
► The technological advancement increased production
making the craftspeople lose their places.
 Evolution of Work

- Alfred Sloan of General Motors took

specialization to another step
establishing separate divisions for each
car model such as Chevrolet, Cadillac;
additional units for separate components
like generators, steering gears …
- They were run by specialists organized
by functions such as accounting,
manufacturing, and engineering.
 Alfred Sloan
/General Motors/
He took specialization another step
establishing:

- separate divisions for each car model:

Chevrolet,
Cadillac…
- additional units for separate components:
generators, steering gears…
- divisions run by specialists were organized by
function such as accounting, manufacturing,
engineering…
► Few people understood what it took to build a car from
start to finish, but everyone knew what his or her
individual job and unit did.
 Evolution of Work

► In mass production, each worker

repeats one or a few related tasks that
use the same tool to perform identical
or near-identical operations on a
stream of products.
► Consequently, mass production is
inflexible because it is difficult to alter
a design or production process after a
production line is implemented.
 Evolution of Work

C. The Need for Reengineering

► Division of labour, specialized positions,
separate “line” and “staff”, and so on
become challenged in private businesses
and government agencies.
► The government reforms used the principles
of separation to meet public demands for
accountability and honesty.
► However, such separation led to
fragmentation, overlap, and duplication.
… Need for Reengineering
► It tied the hands of bright and committed civil
servants and reduced the quality and effectiveness
of government programmes.
► They are unable to provide seamless services.
► The driving forces of change i.e the 3Cs:
► customers,
► competition and
► change

► These have created tough environment for

organizations that have been working in the
principles of mass production which helped their
businesses succeed yesterday but does not fit in
today's new world of work.
Michael Hammer
Tom Davenport
Russell M Linden
 Driving Forces
A. Customers
Customers have become
► much more sophisticated and
demanding;
► much more knowledgeable about their
own needs; and
► are exerting ever greater pressure on
their suppliers.
 Driving Forces
B. Competition
► Which at one time was local and
relatively gentle has become global and
cutthroat.
C. Change
► Whether in geopolitical realities,
technology, or customer preferences,
the pace of change is extremely fast,
that is, what was unthinkable yesterday
is routine today.
 … Need for Reengineering
► The new world requires organizations to
build working system that can make them
responsive, flexible and customer focus .
► The fragmentation and traditional
bureaucratic organization of mass
production era do not fit this requirements.

► These new feature of organization entailed

the shift in the approach of work from task
based to process based thinking.
 … Need for Reengineering
► Organizations have to make process
the center of their attention.
► Any organization that hopes to thrive
in the twenty-first century must reach
the destination of process centering.
 Shift from mass to seamless
Category Mass Production Seamless
Organization
Narrow, segmented, Broad, multi-skilled
Jobs little control over how teams, generalist
work is done or individuals, exercise great
decision made control over work
procedure and decision
Measureme Based on inputs and Based on outcomes,
nt activities, size of consumer satisfaction
one’s staff and
budget
Technology Used to control, Used to enable
centralize activities decentralized activities
Internal Fragmented Integrated process
organization departments, and teams formed to
functions, driven by deliver according to
the organization’s consumer’s needs
 Shift from mass to seamless
Categor Mass Production Seamless Organization
y
Time Low; works best when High; focus on end user
sensitivit able to maintain its and outcomes places a
y own rhythm; slow to premium on quick
respond to external response; services
demands and delivered faster
opportunities
Clarity, High; internal division Low; organized by cross-
Distinctio of labour; clear functional teams within;
n of roles distinctions between
organization, its
customers, and its
suppliers
Nature of Standardized, Customized, oriented to
products oriented to what the what the consumer
or organization wants, high variety, high
 … Need for Reengineering
► The key question here is
What is the way for transforming
organizations into seamless and process
centering?
► There are two tools called TQM and
Reengineering that could help
organizations more lead to process
centering.
► However, it is critical to understand the
different results the tools provide.
 … Need for Reengineering
► Both have some important common
features: process orientation and
begin with customer.
► However, the two have fundamental
difference in essence.
- TQM is about modifying the process to
solve the problem in which results in
incremental change.
 BPR vs TQM /Davenport,
1993/

Aspect Improvement Innovation

(TQM) (BPR)

Level of Incremental Radical

change
Starting Existing process Clean slate
points

Frequenc One time/ One-time

y of continuous
Time required Long Short

Risk Moderate High

Participation Bottom-up Top-down

Type of change Cultural Cultural/

structural
Typical Scope Narrow, within Broad,
functions cross functional
… Need for Reengineering
- Business Process Reengineering is the
fundamental rethinking and radical
redesign of business processes to
achieve dramatic improvements in
critical measures of performance
/Hammer and Champy, 1993/.
 Important terms in the definition

A. Fundamental Rethinking
This is asking the most basic questions about the
company and how they operate.
. Why do we do what we do?
. Why do we do it the way we do it?
► It makes people to look at the tacit rules and
assumptions that underlie the way they conduct their
business. Often the rules turn to be obsolete,
erroneous, or inappropriate.
► Reengineering begins with no assumptions and no
givens.
► It ignores what is and concentrates on what should
be.
 Important terms in the definition

B. Radical Redesign
► Radical means going to the root of things as
reengineering is not about improving what already
exists.
► It is about throwing it away and starting over, that
is, beginning with a clean slate and reinventing/
redesigning how you do your work.
► If a business process is poorly designed, it will not
be well executed. The starting point for
organizational success is well- designed process.
► Thus, reengineering is about business reinvention
not business improvement, business enhancement,
or business modification.
 Important terms in the definition

C. Dramatic Improvement
► Reengineering is not making marginal
improvements to the business.
► It is not about making 5% or 10% better but
about achieving quantum leap in
performance.
► Here, the performance can be measured in
various ways: reduce costs, increased speed
and greater accuracy.
► The hallmark of reengineering is always a
dramatic breakthrough in performance.
 Important terms in the definition

D. Business Process
► This is the core of the Reengineering
definition.
► And according to Hammer /2001/ process is
an organized group of related activities that
together create value to customers. It is
about how work is done.
► In other words, processes are what create
the results that an institution delivers to its
customers.
 Need for Reengineering
- We have seen a dramatic change of
work environment in the world.
- Let’s consider the following instance
“The Quiet Revolution’.
 … Need for Reengineering
The Quiet Revolution in the public sector
- is characterized by the emergence of
the seamless organization,
► Seamless organization
- can be described as
. flexible, agile, integrated,
transparent and connected.
- provides a smooth, virtually effortless
experience for those who interact with
it.
… Need for Reengineering
- The customers are in direct contact with
the service providers, there are no forms,
handoffs or runarounds.
- Waiting time is radically reduced.
- Service is rendered in a holistic, not
fragmented manner.
- Anything about the seamless organization
is “of a pipe”.
- It all fits together; it sends a set of
consistent messages to both staff and end
users.
… Need for Reengineering
a. The fall of Berlin Wall
- Agencies were highly structured,
bureaucratic having
walls that separate the departments
from each other.
- There were no motivation to see the big
pictures.
- People were rewarded only for meeting
their departments’ immediate objectives.
… Need for Reengineering
However, since such approach was not responsive,
flexible and customer focused, agencies started to
rethink of the way they were rendering services.

- The use of self-managing teams has grown in the

public
as well as private sector
.plan, implement, and evaluate their work, with
minimal involvement from senior management
- Cross-functional teams have been used in increasing
numbers.
. Such teams have been made up of staff from
different functional areas.
… Need for Reengineering
- One-stop shopping for consumers of government

services
.It reduced the number of people customers
must deal with.
- A number of government agencies removed
internal boundaries to create virtual teams.
. Teams have been assembled anytime, any
place to perform tasks…
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… Need for Reengineering
b. Alliances between Agencies and with Customers
and Suppliers
- Government agencies are formed to render
services to citizens.
- There is nothing new for agencies to work with
each other and with the customers to solve
problems and improve services.
To this effect, agencies started to show integrations…
- Partnering
. Bridged the agency, suppliers and others
working on a project together.
… Need for Reengineering
- Community policing
. It helped to build bridges among groups that
have been adversaries in the past.
- Technology is building networks and alliances
among formerly disconnected groups.
c. Obsession with speed
- Bureaucracies are not fast.
- They can mass produce products and services but
speed isn’t one of them.
- However, they started streamlining their
processes to give fast services.
… Need for Reengineering
► The new world requires a paradigm
shift before the total quality program
comes to support the continuous
improvement.

► Inconclusion, Reengineering is not just

the best tool, but also inevitable world
in order to thrive in business today.
 What is not Reengineering
The following are not the primary objectives of
Reengineering.
A. Computerization
► The focus of reengineering is the customer, not
automation.
► Automation is a reengineering tool to help you provide
value to your customers, but simply automating your
operation will not provide the breakthrough performance
increases.
► If your processes are inefficient and not customer focused,
automating them only will allow you to be inefficient more
quietly.
► It is automating obsolete processes with more
sophisticated computerized systems.
► Do not “pave cow path”. First reengineer, and then
automate.
 What is not Reengineering
B. Downsizing

► Downsizing reduces costs by getting rid of

people and jobs, reengineering reduces cost
by eliminating work that simply isn’t
necessary.
► It may or may not affect the number of
people employed. It will affect the work
those people perform.
► Reengineering is r right sizing.
 What is not Reengineering
C. Outsourcing
► The purpose of outsourcing is driven by
the theory that groups outside the
organization can perform some
operations more efficiently.
► Reengineering makes no such
assumptions.
► It simply determines what work needs
to be done and finds the best way to
accomplish it.
 What is not Reengineering
D. Restructuring
► Job descriptions and structures are the
functions of the newly redesign
redesigned business process.
► Overlaying a new organization/structure
on top of an old process is like
► ‘pouring soured/old wine into
new bottles’.
 Who needs BPR?
There are virtually three kind of companies that
undertake reengineering. They are:
A. Companies that are in the deepest trouble.
These companies have no choice and are
desperate. They are ready to do any thing with
out worrying about danger.
B. Companies that are not yet in trouble but
whose management has the foresight to see the
trouble coming.
C. Companies in the peak condition
They have no discernible difficulties, either now
or the horizon. However, their managements are
ambitious and aggressive.
 The Business System Diamon

Business
Process

Jobs and Values and

structure Believes

Management and
measurement
systems

/Hammer and Champy, 1993/.

 The most commonly made
mistakes in Reengineering
1. Saying you are reengineering with out
actually doing it.
Make sure that you know what reengineering
really is before you attempt to do it – and
then do it, not something else.
2. Trying to apply reengineering where it
cannot fit.
We cannot and do not reengineer
organizational unit only process can be
reengineered.
 The most commonly made
mistakes in Reengineering
3. To spend far too much time analyzing
existing process
You must have limits on both the time you
take to develop this understanding and
on the description you create.
4. To attempt reengineering without the
requisite leadership.
If the leadership is normal rather than
serious, and isn’t prepared to make the
required commitment, your efforts are
doomed to failure.
 … commonly made
mistakes
5. Timidity in redesign
Reengineering leaders must encourage
people to pursue stretch goals;
think out of the box and consider any
new idea
6. An attempt to go from a new process design directly into
implementation.
7. Not reengineering quickly enough
8. Limiting the range of the reengineering effort, placing parts of
the organization off limits
9. To adopt the wrong style of implementation
10. Failing to attend to the concerns of the people in the
organization.
Phase One: Planning
 1.1 Leadership
Commitment
► In the process of reengineering, the most
important issue that comes first is the issues
of leadership.
► As it follows top down change, leadership is
required right from the beginning.
► Strong, committed, executive leadership is
the absolute sine qua non for reengineering.
► Hammer and Stanton /1993/ have
recommended the following characteristics
that reengineering leaders need to show.
 Leadership Commitment
a. Passion
- A reengineering leader has to have and
demonstrate a strong feeling and desire for
change.
- The leader has to make the reengineering
change effort his/her personal agenda in
which delegating it to others means proving
early failure.
b. Combination of Patience and Impatience
- Impatience/Restlessness is here inability to
accept the status quo and an urgency to get
things done quickly.
 Leadership Commitment
- Patience means the leader:
. Need not lose heart despite obstacles and setbacks;
. Has to be relentless and single-minded;
. Is a living contradiction i.e. revolting against oneself
and the very system that created him or her
. True leader always has a vision of the future, of what
. the organization is to look like.
- Organizational Climate
. A leader has to continuously communicate about the
change effort to the employees.
. The leader has to mobilize them so that they support
and become part of the change.
. A leader to unfreeze the present situation and initiate
change.
 Leadership Commitment
c. Forming governance structure
The leader organizes a governance structure for the
project consisting of:
. The Reengineering Leader,
. Process owner,
. Reengineering Team,
. Reengineering Czar and
. Steering Team (optional).
► A reengineering leader is a senior executive /CEO/
who authorizes and motivates the overall
reengineering effort. This is so because
reengineering succeeds when driven from the top
most level of an organization /Hammer and Stanton,
1995/.
 Leadership Commitment
The tools of Reengineering Leader
- Signal, explicit communications;
- Symbol, personal behavior; and
- System, measurements and
rewards
/Hammer and Stanton, 1995/.
 1.2 Identifying Entry
Points
► Now that the organization has assigned the leader,
steering team and CZAR for reengineering project,
the next step is identifying and determining the
business process for reengineering.

a. Definition of Business Process

► A process is a set of related activities designed to
produce a particular outcome /AT & T, 1991 cited in
Linden, 1994/.
► A collection of activities that takes one or more
kinds of inputs and creates an output that is of
value to the customer. Process means a group of
related tasks that together create value for a
customer /Hammer and Champy, 1993. /
 Definition
Note that the following rules of thumb /Hammer, 1993/ help you
think about processes.
1. You should be able to describe specific inputs and outputs for it
2. Process should cross a number of organizations boundaries; a rule
of thumb is that if it doesn't make at least three people mad it is
not a process.
3. There should be a focus on goals and ends rather than actions
and means. Process should answer the question of "what?" not
the question of "how?"
4. The process, its inputs and its outputs should be comprehensible
by any one in the organization.
For example procurement is a business process because it
satisfies the above criteria. The input is the customer's request or
order of goods or any other services. The output is the delivered
goods or the offered problems solving service. It crosses a
number of functional boundaries between taking input and
creating output. It is end oriented not action such as single task of
pay. It related to customers and their needs.
 Identifying business process
Identifying Business process.
► Identifying business process is one of the difficult tasks in
reengineering effort.
► In identifying business process, an organization need not
go for creating what the processes should be.
► The first step and perspectives the leader and organization
must pursue when identifying the business processes, is to
start from the mission of the organization that determines
its very existence.
► And then the end results or deliverables, which are
consumed by external customers. In other words, we start
from the outcome and think of the process backward.
► Processes are fragmented and obscured by organizational
structure. They are invisible and unnamed. Now, the point
is how do we make them visible?
Identifying business process
► One way of making processes visible for reengineering
is giving them names that express their beginning and
end state. The names should imply all the work that
gets done between their start and finish. Examples
include: Manufacturing: Procurement-to-shipment
process; Product development: concept-to-prototype
(Model or design); Sales: prospect-to-order; Order
fulfillment: order-to-payment; Service: inquiry-to-
resolution.
► The other way of making processes visible using
process maps. Process maps give a picture of how
work flows through the organization.
► The organization can define its processes in different
ways, in this material, the approach followed is
classifying Business processes into core and support
processes.
Identifying business process
► Core Business Processes:
- These are the processes central to business
functioning.
- They emanate from the organization mission and
meet the important needs of the organization's
external consumer.

► Support Business Processes:

- These are the back-office processes, which underpin
the core processes.
- Support processes meet important needs of internal
customers: the employees and, increasingly, the
suppliers.
c. Choosing the processes to
be reengineered
► Once processes are identified the next task is
choosing the processes to be reengineered.
► Three major criteria are
- dysfunction, which means processes that are
broken and in the deepest trouble process;
- importance, that is, processes that have the
greatest impact on the company's customer and
highest link to its mission; and,
- feasibility meaning that processes that are most
susceptible to successful redesign at the moment.
► The leader and CZAR with management body and
steering committee must make enough discussion
and set priority of order of reengineering.
 1.3. Assign process owners and
reengineering team
► Once the organization has selected the
processes for reengineering, the next step is
assigning the owners and designing team for the
processes.
a. Process Owner
- A Process owner is one responsible for
reengineering a specific process.
- The owner should be a senior-level manager,
who carries prestige and reputation, credibility,
and clout (power/influence) within the
organization.
 1.3. Assign process owners and
reengineering team
► b. Reengineering Teams /Design Teams
- Reengineering teams are the second key ingredients
next to the leader in making reengineering happen.
- Each process team in charge of one process at a
time does the actual work of reengineering.
- Reengineering work is not a part-time assignment
rather a full time work. Hence, organizations should
assign team members 100% to the project, do not
stretch them with other assignment and
commitments.
- The teams prepare high level maps of the current
processes and identify the overall cycle time and
satisfaction or frustration of the customers.
- They reinvent the business processes by producing
breakthrough changes.
 1.4 Preparing TOR
• The leader with his core staff should have
overall plan and direction of reengineering.
• Reengineering teams with their process
owners should prepare TOR that guides their
operation.
• The TOR shall cover all the study, the redesign
processes and up to implementation stages.
► The TOR should explicitly specify
► Theobjective of the reengineering project
► Methodology of reengineering.
► Have concrete action plan indicating what to be done,
when, how and by whom.
 1.5 Checklist
The planning phase has to be checked against the
following list of points:
► Is the top management (CEO) leading the
reengineering project?
a. Has unfreezing been conducted i.e. by
 showing the pain
 creating conducive environment
 mobilizing the employees
 communicating the plan
b. Is the reengineering leader taking the
reengineering project as his/her personal agenda?
 envisioning the destination of the new world
 assigning sufficient budget
 1.5 Checklist
c. Is the leader has equipped with sufficient
knowledge?
/Reading the books by Michael Hammer, Russell
Linden and other related materials/
d. Is the leader manage the project him/her
self?
- monitoring and evaluation
- giving incentives to successful teams
e. Has he/she demonstrated commitment and
restlessness?
 1.5 Checklist
1.2.2 Are the business processes of the organization
clearly identified as per the criteria?
1.2.3 Are the identified business processes selected
and prioritized using dysfunctional, important and
feasibility criteria?
-Has sufficient discussion been made when
prioritising the business processes for
reengineering?
1.2.4 Is the reengineering governance structure
formed as outlined in the planning phase by
assigning the best and brightest staff?
1.2.5 Is the reengineering project well planned
following the outline in 1.1.4?
 1.6 Key mistakes
► The following mistakes appear to be
commonly made in the planning phase:
i. Leadership problems
 Not leading the reengineering him/herself
considering as his/her personal agenda. Usually
such agenda are given to experts.
 Trying to lead with out having sufficient knowledge
in Business Process Reengineering for instance
(They didn't read the books of attend trainings
properly.
 Delegating the transformation agenda to others.
They fail to get focused and become too busy with
routine activities.
 Not giving enough support to the design teams.
 ii. Mistakes in identifying and
stating business process
► Failure to start from end, outcome
when identifying business processes.
People start at functional perspectives,
rather than process perspective.
► Considering department as business
process. Some organization write
mistakenly bold goals and consider
them as processes. Processes are not
goals. But processes are group of
activities that together and are
organized to create values to
customers.
 iii. Problems in relation to forming
governance structure
 The designing teams are field with people who have
no sufficient knowledge, skill and exemplary
behavior.
 The design teams do not devoting their full time to
the reengineering work.

iv. Problems when preparing the reengineering plan or

TOR
 The plan is prepared in a way that results in
incremental change.
 Some plans tempt the design teams to go to full-
scale analysis.
 Failing to work according to the Terms of Reference.