“Is Reengineering and Strategy Implementation Just Another Management Fad or Does It Offer Something of Lasting Value?”

1. 0 Introduction Implementation is the challenge that comes at the end of all new (and old) methods for improving organizations. Strategic planning, architecture development, change management, total quality management, new information systems technologies, and re-engineering, are some of the concepts that are being advocated to effect a radical improvement organizational performance. Advocates of each concept, however, struggle when questioned about successful implementation (Deshpande and Parasuraman, 1986). Strategic planning literature abounds on how to develop a plan, but there is comparatively little said about how to implement a strategic plan once it is developed. Reengineering is a radical rethinking of an organization and its cross-functional, end-to-end processes (Hammer, 1993). After it’s introduction reengineering had taken corporations by storm. In a survey of over 500 chief information officers (CIOs), the average CIO is involved in 4. 4 re-engineering projects (Moad, 1993). Walmart (example 1) is seen as one of the successful executers of reengineering. Despite the excitement over reengineering, however, the rate of failure for re-engineered projects is over 50 per cent (Stewart, 1993). Hammer and Champy (1993) estimate as much as a 70 per cent failure rate. Luthfansa AG (example 2) is one such company. Such is the position that reengineering is labelled as a â€Å"management fad†. This paper looks to explore the facets of strategy implementation, reegineering that and analyze the label of â€Å"fad† is a worthy one or does the two offer a lasting value. 2. 0 Literature Review 2. The evolution of reengineering The concept of reengineering was first presented in two articles published simultaneously by Hammer (1990) and Davenport and Short (1990). Reengineering is a totally new approach with regard to the ideas and models used for improving business Hammer and Champy (1993). The reengineering approach is a result of the combination of concepts from different schools, including strategic IT systems, quality, systems thin king, industrial engineering, and technological innovation. The increasing power of ustomers, competitors and today’s constantly changing business environment, forced many organisations to recognise the need to move away from focusing on individual tasks and functions to focusing on more communicated, integrated and co-ordinated ways of work by looking at operations in terms of business processes (Davenport, 1993). 2. 2 Defining reengineering Several researchers and practitioners have defined reengineering in different ways with different emphases. The following are some of those definitions: the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed (Hammer and Champy, 1993, p. 32). †¦ a methodical process that uses information technology to radically overhaul business process and thereby attain major business goals (Alter, 1990, p. 32) . The fundamental rethinking and redesign of operating processes and organisational structure, focused on the organisation’s core competencies, to achieve dramatic improvements in organisational performance (Lowenthal, 1994, p. 2). During the last decade, many authors have produced ideas regarding what reengineering really is. And thus, to conclude that there is only a single theoretical proposition underpinning reengineering remains debatable. The following table shows that there are three recognisable perspectives to reengineering as suggested by Tinnila (1995), i. e. strategic, operational and organisational perspectives. [pic] Figure 1: Summary of definition of reengineering (Khong and Richardson, 2003) Despite the differences in definitions, and terminology, the emphasis in all hese definitions and in the reengineering -related literature, is on redesigning business processes using a radical IT-enabled approach to organisational change. 2. 3 The need for reengineering Re engineering is motivated by external drivers, internal drivers, or both. External drivers are related mainly to the increased level of competition, the changes in customers’ needs, IT changes, and changes in regulations (Grover etal. , 1993). Internal drivers are mainly related to changes in both organisational strategies and structures. External drivers The increasing level of competition in the global market has emphasised the need for organisational innovation to cope with global standards of products and services. reengineering is approached as a tool to improve dramatically business performance and provide competitive position (Schnitt, 1993). First National Bank of Chicago (example 3), reengineered in order to keep up with the stiff global competition Davenport (1993a), also believe that re-engineering is driven by the never-ending needs of customers to look for better services and products. IBM Credit Corp (example 4) reengineered primarily for satisfying the customer or providing superior customer service. Owing to the unsettled changes in the global business environment, social life, technological and organisational practices, and economical situations, new rules and regulations are introduced to reflect these changes (Plowman, 1995). Yellow Freight (example 5) decided to reengineer because of external factors related to governmental or political pressure. Internal drivers Many organisational strategic and structural changes are centred on IT-enabled reengineering (Venkatraman, 1993). Parcel Service (example 6), found that they had to improve their technology in order to survive in the competitive shipping business. Changes in organisational strategy may involve some reengineering efforts to bring about the new business desires (Keen, 1991). The desire to reduce cost was one major reason that led First National Bank of Chicago (example 7) to reengineer. Changes of capability in terms of processes, methods, skills competencies, attitudes and behaviours can also be considered as internal drivers (Plowman, 1995). Arco Chemical (example 8) is one such company who reengineered to achieve dramatic company-wide improvements, increase organizational efficiencies, and reduce throughput time. Plowman (1995) views business transformation as a journey driven by a strategy that links short-term changes to capability in terms of processes, skills and style, with long-term changes to position the business among its competitors and customers. Ryder System Inc (example 9). reengineering efforts began with a rethink of its view of the market and a readjustment of the company‘s strategic focus. The following is a figure showing the result of survey (example 10) on the factors that trigger reengineering in the UK [pic] Figure 2: Factors driving reengineering (Tennant and Yi-Chieh, 2005) The following is a figure showing the result of survey (example 11) on the goal and objectives meant to be achieved through reengineering in the UK [pic] Figure 3: Goals and objectives of reengineering (Tennant and Yi-Chieh, 2005) 2. 4 What characterises reengineering Focus on business processes Reengineering focuses on the core concept of business process rather than on function, product or service. As business processes are the manner in which work gets done within an organisation, they are a distinguishing characteristic among organisations (Venkatraman, 1994), and thus a significant factor leading to competitive edge (Hinterhuber, 1995). In addition, the elimination of functional bias can only be best done by adopting process orientation to gain substantial business improvement (Andreu etal. , 1997). By focusing on core activities, Singapore Airlines (example 12) reengineered efforts are expected to help Singapore grow 8-10 er cent per year until the end of the decade. Notion of radicalness Reengineering involves radical and fundamental changes, and it evolves from the need to recognise that long-established ways emphasising on control and cost cutting are being replaced by organisational focus towards improving quality, the customer, and innovation, rather than (Hammer, 1990). Honeywell Inc (example 13) in order to keep up with the global competition reenginerined their proc ess from being focused on efficiency to being focued on quality Use of IT Hammer (1990) considers IT as a major tool and a fundamental enabler of reengineering efforts and emphasises the need to use modern IT to support for its implementation. IT reshapes and creates new effective business processes in that it has the potential to facilitate the flow of information between globally-distributed processes, and ensures the availability of instantaneous and consistent information across the business (Tapscott and Caston, 1993). Western Provident (example 14) is a company which is spotted for extensive of technology. Need for organisational change Reengineering results in change, and successful reengineering implementation requires fundamental organisational change in terms of organisational structure, culture and management processes (Davenport, 1993a). CIGNA Technology (example 15) Services went through a cultural change, from a focus on technology to one on processes and business performance. Change management is a tool used to manage such a change. 2. 5 Reengineering approaches, methodologies, techniques and tools Reengineering approaches Reengineering approaches can be viewed based on the different focuses that reengineering efforts may emphasise: IT, strategy, quality management, operations, and human resources (Edwards and Peppard, 1994a). According to Klein (1994), Reengineering is contextual and believes that having a structured approach to it is impossible. Reengineering methodologies Caterpillar (example 16) tied much of its cost saving success to its reengineering methodology (Paper and Dickinson, 1997). Its methodology is systematic as it provides a disciplined problem-solving approach and acts as a rallying point for everyone involved along the process path. Many structure-based methodologies have been proposed for reengineering implementation. However, most have common elements and view reengineering efforts as a top-down implementation project (Earl and Khan, 1994). Figure 4 summarises the major stages of eight representative reengineering methodologies. Figure 4: Reengineering methodologies [pic] (Kettinger et al. , 1997) Despite the differences among these methodologies, they all confirm that some essential components must exist, such as: †¢ strategies and goals setting; feasibility analysis of a reengineering project; †¢ process analysis and visioning; †¢ top management commitment and sponsorship; †¢ understanding of customer requirements and performance measurement; †¢ integration with TQM and benchmarking; †¢ recognition of IT capabilities; †¢ cross-functional teams and communication; †¢ prototyping and process mapping techniques; and †¢ organisational change to re-engineer management s ystems and organisation. Reengineering techniques Kettinger etal. (1997) show that at least 72 techniques are used to carry out ctivities related to reengineering projects. These techniques were almost all developed in other contexts and imported to the reengineering field. Each technique is mapped to their associated stages in the reengineering framework. and describe some as representative of each stage in the framework. [pic] Figure 5: Framework for Reengineering (Kettinger et al. , 1997) Kettinger etal. (1997) also suggest an approach of selecting techniques for a specific reengineering project. This approach, however, presumes that a customised methodology has been developed in advance. Based on the objective of their application, he identify 11 groups under which a number of techniques are identified. [pic] Figure 6: Groups of reengineering technique (Kettinger et al. , 1997) 2. 6 Strategy implementation Bartlett and Ghoshal (1987, p. 12) noted that in all the companies they studied â€Å"the issue was not a poor understanding of environmental forces or inappropriate strategic intent. Without exception, they knew what they had to do; their difficulties lay in how to achieve the necessary changes†. Supporting this, Miller (2002) reports that organizations fail to implement more than 70 percent of their new strategic initiatives. Given the significance of this area, the focus in the field of strategic management has now shifted from the formulation of strategy to its implementation (Hussey, 1998). There is no agreed-upon and dominant framework in strategy implementation. Concerning this, Alexander (1991, p. 74) has stated that: One key reason why implementation fails is that practicing executives, managers and supervisors do not have practical, yet theoretically sound, models to guide their actions during implementation. Without adequate models, they try to implement strategies without a good understanding of the multiple factors that must be addressed, often simultaneously, to make implementation work. Warid Telecom (example 17) precisely fail to their process for this reason when they started operation in Bangladesh According to Alexander (1985), the ten most frequently occurring strategy implementation problems include underestimating the time needed for implementation and major problems surfacing that had not been anticipated, in addition uncontrollable factors in the external environment had an adverse impact. Beer and Eisenstat, (2000) states that top-down/laissez-faire senior management style; unclear strategic intentions and conflicting priorities; an ineffective senior management team; poor vertical communication; weak co-ordination across functions, businesses or borders; and inadequate down-the-line leadership skills development are also important reasons for implementation failure . It is recognised that such change requires a shared vision and consensus and â€Å"failures of strategy implementation are inevitable† if competence, coordination and commitment are lacking (Eisenstat, 1993). Biman Bangladesh Airlines (example 18) has been in totters for the last decade due to its poor strategy implementation which can be credited to the above reasons. Noble (1999b, p. 132) has further noted that: There is a significant need for detailed and comprehensive conceptual models related to strategy implementation. To date, implementation research has been fairly fragmented due to a lack of clear models on which to build. There are important similarities between the previous frameworks in terms of the key factors forwarded and the assumptions made. Similarities between frameworks that previous researchers have grouped the implementation factors into a number of categories as follows: †¢ context, process and outcomes (Bryson and Bromiley, 1993); †¢ planning and design (Hrebiniak and Joyce, 1984); †¢ realizers and enablers (Miller, 1997); †¢ content, context and operation (Dawson, 1994); †¢ content, context, process and outcome (Pettigrew, 1987; Okumus, 2001); †¢ framework and process components (Skivington and Daft, 1991); †¢ context and process (Schmelzer and Olsen, 1994); †¢ contextual, system and action levers (Miller and Dess, 1996). Four areas of groupings emerge from an analysis of the above categories. Considering the role and characteristics of each implementation factor, those 11 implementation factors identified earlier can further be grouped into four categories: strategic content, strategic context, process and outcome. †¢ Strategic content includes the development of strategy. †¢ Strategic context is further divided into external and internal context. The former includes environmental uncertainty and the internal context includes organizational structure, culture and leadership. Operational process includes operational planning, resource allocation, people, communication and control. †¢ Outcome includes results of the implementation process. [pic] Figure 7: Framework for strategy implementation (Okumus, 2001) 2. 7 Factors related to implementing reengineering The following analyses the reengineering implementation process by reviewing the relevant literature on reengineering efforts. They are categorised into a number of subgroups representing various dimensions of change related to reengineering implementation. These dimensions are: Factors relating to change management systems and culture Change management, which involves all human- and social-related changes and cultural adjustment techniques needed by management to facilitate the insertion of newly-designed processes and structures into working practice and to deal effectively with resistance, is considered by many researchers to be a crucial component of any reengineering efforts (Carr, 1993). Effective communication throughout the change process at all levels and for all audiences, is considered a major key to successful reengineering -related change efforts (Davenport, 1993). Discontinues in leadership, and lack of communication contributed the reengineering failure at Teleco (Example 19) As reengineering results in decisions being pushed down to lower levels, empowerment of staff and teams to establish a culture in which staff at all levels feel more responsible and accountable and it promotes a self-management and collaborative teamwork culture is critical for successful reengineering (Mumford, 1995). Empowerment was at the heart of reengineering Honeywell (example 20) when they reengineered. Training and education in reengineering -related concept, skills, and techniques as well as interpersonal and IT skills, are an important component of successful reengineering implementation (Zairi and Sinclair, 1995). FixCo (example 21) carried out a number of workshops for training the staff about their reengineering process. Factors relating to management competence Sound management processes ensure that reengineering efforts will be implemented in the most effective manner (Bashein et al. , 1994). The most oticeable managerial practices that directly influence the success of reengineering implementation are top management support and commitment, championship and sponsorship, and effective management of risks. Organisational culture influences the organisation’s ability to adapt to change (Hammer and Champy, 1993). It helps in understanding and conforming to the new values, management processes, and the communication styles (Bruss and Roos, 1993).. Corporation ABC (example 22) needed to create an organizational culture ready to change as they had to redesign their quality systems. Commitment and leadership in the upper echelons of management are often cited as the most important factors of a successful reengineering project (Rastogi, 1994). Sufficient authority and knowledge, and proper communication with all parts in the change process, are important in dealing with organisational resistance during reengineering implementation (Hammer and Champy, 1993). Top level commitment was the key for successful implementation of reengineering in Blue Shield California (example 23) Factors relating to organisational structure As reengineering creates new processes that define jobs and responsibilities across the existing organisational functions (Davenport and Short, 1990), there is a clear need to create a new organisational structure which determines how reengineering teams are going to look, how human resources are integrated, and how the new jobs and responsibilities are going to be formalised. Mobil Oil (example 24) had a rethink of there organizational structure in their reengineering. Cross-functional reengineering teams are a critical component of successful reengineering implementation (Johansson et al. , 1993). Teams should be adequately composed (Hagel, 1993). Team members should be experienced in variety of techniques (Carr and Johansson, 1995). Teams should be made up of people from both inside and outside the organisation (Hammer and Champy, 1993). Liberty Mutual (Example 25) used cross-functional teams and loss prevention expert to implement the reengineering process Factors related to reengineering project management Successful reengineering implementation is highly dependent on an effective reengineering programme management which includes adequate strategic alignment, effective planning and project management techniques, identification of performance measures, adequate resources, appropriate use of methodology, external orientation and learning, effective use of consultants, building process vision, effective process redesign, integrating reengineering with other improvement techniques (Zairi and Sinclair, 1995), and adequate identification of the reengineering value (Guha et al. 1993). Honeywell (example 26) would be a prime example in their execution of redesigning their quality measures. As corporate strategy determines objectives and guidance on how organisational capabilities can be best utilised to gain competitive position, reengineering strategy (Hammer, 1990). Therefore, a consideration of the strategic context of growth and expansion (Bashein et al. 1994), creating a top-level strateg y to guide change (Carr, 1993), and careful alignment of corporate strategy with reengineering strategy (Jackson, 1997) are crucial to the success of reengineering efforts. Mitsibushi Electric Corp (example 27) took immense heed in this factor. Factors related to IT infrastructure Factors related to IT infrastructure have been increasingly considered by many researchers and practitioners as a vital component of successful reengineering efforts (Brancheau et al. 1996). Effective alignment of IT infrastructure and reengineering strategy, building an effective IT infrastructure, adequate IT infrastructure investment decision, adequate measurement of IT infrastructure effectiveness, proper IS integration, effective re-engineering of legacy IS, increasing IT function competency, and effective use of software tools are the most important factors that contribute to the success of reengineering projects. Connecticut Mutual Life (example 28), reengineered their complete IT infrastructure in order to increase productivity. Figure 8: Factors related to the implementation of reengineering (Al-Mashari and Mohamed, 1999) 2. 8 Definition of fad Management fads are defined as â€Å"managerial interventions which appear to be innovative, rational, and functional and are aimed at encouraging better organizational performance. † 2. 9 Characteristics of fads Cost/benefit analysis: One moderator of fad evolution is the cost/benefit of the intervention, although these two variables may significantly differ depending upon whether the organization adopts a short-term or a long-term perspective (Laverty, 1996) as with a long-term perspective may be more likely to sustain and give a fad sufficient time to reap positive benefits, propelling it to trend or collective wisdom status. But short-term gains should also be evident to encourage the resilience needed for long-term rewards to be realized (Chaudron, 1996). Degree of difficulty in implementation: Differences between expected ease of implementation and actual ease of implementation will contribute to an organization’s desire to persist in the courses of action required by the fad. If a fad’s implementation process is no more difficult than expected, it is more likely to evolve into a trend. Effectiveness of the fad: Effectiveness is measured in terms of realized improvement in operational performance. Following adoption of a fad, firms may find themselves â€Å"incapable†, â€Å"effective†, â€Å"efficient†, â€Å"best-in-class†, or â€Å"world class†. Fads which assist organizations in moving upward on this continuum will likely become institutionalized and mature into a trend or collective wisdom. 2. 10 Life cycle of a fad A significant predictor of whether firms will likely adopt fads is the stage at which the intervention is located in the life-cycle of fads. Fads typically progress through an established life-cycle (Ettorre, 1997), although the length of time required for progression to each of these stages varies (Crainer, 1996). offers significant benefits, in terms of both number and strength; †¢ is adaptable to the specific needs of an organization; †¢ addresses the underlying cause of a problem rather than a symptom; †¢ fits with other common interventions and programs in place (for example 29, TQM and MBO programs are antithetical in that their basic tenets are contradictory); and †¢ is supported by key users and proponents, as well as by objective assessments of effectiveness 3. 0 Strategy implementa tion and reengineering in practice The case of Honeywell’s TotalPlantTM paradigm† 3. 1 TotalPlantTM at Honeywell The Honeywell industrial automation and control (IAC) plant designs world-class systems that enable process-control capability. In 1999, senior management decided to implement a solid ISO 9000-certified quality program in order to unify business and control information to enable global customer satisfaction. This program was named TotalPlantTM. Four critical principles The TotalPlantTM paradigm is based on four critical principles of success: (1) Process mapping. Process mapping is crucial for employees to see the â€Å"big picture† as opposed to focusing solely on their role within the procedure. It also creates a common language for dealing with changes to business processes. (2) Fail-safing. While process mapping diagrams the entire flow of a business process, fail-safing is done to diagnose a defect within the process. (3) Teamwork. Teamwork does not occur naturally. Honeywell encouraged teaming through special workshops, by creating a manufacturing vision that fostered teamwork and by endorsing cross-training. 4) Effective communication skills. Communication of the TotalPlantTM vision is paramount to success. Honeywell provided conflict resolution training to teams to help them deal with conflict in a positive way. (Paper et. al, 2001) 3. 2 Application of literature Honeywell learned a number of lessons as a result of their TotalPlantTM program, all of which have implications for any future initiatives. They discovered that: †¢ people are the key enablers of change; †¢ you must question everything; †¢ people need a systematic methodology to map processes; †¢ creating eam ownership and a culture of dissatisfaction ensures more employee involvement; †¢ management attitude and behavior can squash projects; †¢ bottom-up or empowered implementation is most effective; †¢ reengineering must be business-driven and continuous; †¢ setting stretch goals can facilitate greater employee effort; †¢ implementation is the real difference between success and failure. Change is a fundamental aspect of reengineering. Top management needs to communicate to its people why the change is necessary and how it will impact everyone’s current job and future with the company. Sufficient time and resources is dedicated to ensuring that the organization as a whole understood, wanted and supported change. 4. 0 Conclusion and recommendation Implying the term â€Å"fad† with reengineering is apparently a disputable issue. If taken into context of the definition and characteristics a fad has, reengineering does hold a number of features that creates an aura which surrounds a fad. Its pledge of being strategy which improves performance by improving productivity and efficiency and its disguised nature of the ease of implementation does engender staggering semblance to that of a fad. Moreover, there are issues where reengineering would probably fall short when it comes to its exploitation as a trend. Reengineering normally wouldn’t fit into an organization culture, in contrary the management is forced to create new culture where in order to adopt reengineering. Conversely, reengineering does also contain features that are a requisite for being a trend or wisdom. If implemented aptly, reengineering does provide significant benefits that simply can’t be ignored. Its association with improvement in efficiency, productivity, and quality of product or service, is an asset that any company would desire to attain. Furthermore, reengineering does address the underlying cause of the problem and with the support and commitment of top management in its implementation process it can provide a lasting value to a business. Hallmarks, Hewlett-Packard (example 30) are to name a couple of companies who have benefited from reengineering. What really made the difference is proper implementation. 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