The Reengineering Approach to Corporate Transformation

Shareholder Value
Customer Service and Retention

Efficient Operations
Cross-Functional Processes and Cross-Organizational Activities First Principles Review and Redesign of Business/Key Processes

Strategic Alignment Value Creation Optimized Drives Activity Architecture

Capability, Performance, External Ambition Benchmarks

Core Business Processes

New Product Development
Market Research Competitor Analysis Concept Proving Detailed Design Product Approvals Product Trialing Process Design

Customer Service
Inquiry Handling Sales Order Processing Order Fulillment Delivery After Sales Service Account Management

Human Resource Management

Recruitment Performance Appraisal Training and Development Counseling and Guidance Disciplinary Action Promotion and Selection

Supply Chain Management

Physical Network Design Inbound/outbound Logistics Service and Cost Measurement Contract Management Partnership Management Resource Management

Financial Management

Activity Costing Budgeting Cash Forecasting Revenue Budgeting/Forecasting Tax Planning Financial Reporting

A Strategy Driven Approach to Business Reengineering

Business Strategy (Who, What, Where, How, When, Why, etc.)

Influence

Determines

Core Competencies/Capabilities Change Process Support Demands Core Processes Risk Assessment

Enables

Drive

Business Architecture (Locations, Structure, Technology, Skills)

Hammers Six Principles of Reengineering

1
2

Organize around outcomes not tasks Have those who use the output of the process perform the process

3 4 5 6

Subsume information processing work into the real work that produces the information Treat geographically dispersed resources as though they were centralized Link parallel activities instead of integrating their tasks Put the decision point where the work is performed and build control into the process

The Traditional Functional View of the Organization

Management M A R K E T I N G M F G & A D M I N D I S T R I B U T I O N

Supplier Value Chain

&
D

S A L E S

S E R V I Business Process C E S

Customer Value Chain

Staff

The Process View of the Firm

Shareholder
Management Processes Strategic Financial Technology Sales/Service Human Resources Production/Operations Supply Chain Product Customer Stakeholder

Supplier

Customer

Management & Staff

Managements Changing Role

Element Channels of Communication
Operations Authority for Decisions Adaptability Work Emphasis Control Behaviour Participation
Functional Approach
Highly structured controlled information flow

Process Approach
Open- free flow of information

Uniform and restricted

Vary from business unit tobusiness unit

Taken within formal line management position

Taken by empowered individuals with relevant expertise Changes as needed in line with continuous improvement Devise own effective processes Devise own measurement in line with fulfilling process role

Slow and reluctant even when business circumstances warrant change Formal procedures handed down

Tight through strict, formal systems

Contained by need to follow job description Little- information is handed up, decisions down

Role and responsibilities evolved to meet needs of process

Team working with cooperation between teams

Commands and Controls

Empowers, Enables and Motivates

Six Key Steps in the Reengineering Process

Vision Definition
Plan Development

Measurement

Business Analysis

Implementation

Business Redesign

Building a Vision of the Reengineered Organization

Strategic Focus
Mission, Intent, Values Products, Markets, Segments Scenarios Objectives, Options, Priorities Vision of Reengineered Organization

TOP TEAM CONSENSUS

Readiness for Change

Consensus on Goals Results of Past Initiatives Initiative Fatigue Leadership & Followership Management Mindset Staff Competencies

Change Process
Stimulus Candidate Processes Scope, Goals, Timescales Project Champion(s) Core Team Role of the Board Communications Mechanism CHANGE BLUEPRINT

RISK ASSESSMENT

Assessing the Value of a Process

Complaints Handling High Installation

Sales
Product Development

Customer Value

After Sales

Account Management

Low

Warranty Repairs

Customer Reach

Purchasing

Disciplinary
Low

Budgeting Shareholder Value

High

Shareholder Reporting

Comparing Value and Cost

Cost of Process Ownership

High

ELIMINATE RATIONALIZE OUTSOURCE

RETHINK REALIGN OUTSOURCE ELIMINATE

ENHANCE REFOCUS REDESIGN SIMPLIFY EXPLOIT

Low

Low

High Value Index (Customer Value x Shareholder Value)

Strategic Dimensions of Process Reengineering

Developing and Prioritizing Objectives. Defining the Process Structure and the Assumptions. Identifying Trade-Offs Between Processes. Identifying New Product and Market Opportunities. Coordinating the Reengineering Effort. Developing a Human Resources Strategy.