How to make reengineering
Reprinted from the
Harvard Business
really work Review
Companies often squander their energies on attractive-looking
projects that fail to produce bottom-line results
Eugene A. Hall, James Rosenthal, and Judy Wade
A study of reengineering projects in over panies reveals how difficult
these projects are to plan and implement and, more important, how often they
fail to achieve real business-unit impact. The study identified two factors –
breadth and depth – that are critical in translating short-term, narrow-focus
process improvements into long-term profits. essful projects at Banca di
America e di Italia, Siemens Nixdorf Service, and AT&T demonstrate how
companies can appropriately make their reengineering projects broader and
deeper. Such efforts, however, if poorly managed, anizational
resistance. But such opposition can be e mitted managers
approach reengineering as a painful but necessary disruption of the status quo.
N ALL TOO PANIES, reengineering has been simultaneously a
great ess and a great failure. After months, even years, of careful
Iredesign, panies achieve dramatic improvements in individual
processes only to watch overall results decline. By now, paradoxical es
of this kind have e monplace. pany
reengineers its finance department, reducing process costs by 34 percent, yet
operating e stalls. An insurer cuts claims-process time by 44 percent,
yet profits drop. Managers proclaim a 20 percent cost reduction, a 50 percent
process-time reduction, a 25 percent quality improvement, yet in the same
period, business-unit costs increase and profits decline.
In short, too panies squander management attention and other
resources on projects that look like winners but fail to produce bottom-line
results for the business unit as a whole.
But why? The promise of reengineering is not empty: it can actually deliver
revolutionary process improvements, and major reengineering efforts ar
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