“Reengineering the Corporation” challenges the conventional wisdom of incremental improvement and instead calls for a fundamental transformation of the way organizations operate. Through a series of chapters, the authors take readers on a journey to understand the principles, strategies, and practical steps behind successful reengineering efforts.
With an authoritative voice and a data-oriented approach, Hammer and Champy outline the seven key principles of reengineering, providing practical guidance on how to initiate and implement transformative change within organizations. They emphasize the importance of a clear vision, end-to-end process focus, strong leadership, and employee empowerment. The authors also delve into the critical roles of the reengineering team, mapping existing processes, designing the future state, and overcoming obstacles along the way.
What sets “Reengineering the Corporation” apart is its ability to strike a perfect balance between theory and practice. The authors not only share their insights and experiences but also back them up with real-world examples and case studies, making the book a valuable resource for practitioners, managers, and leaders seeking tangible solutions and results.
Throughout the chapters, readers are encouraged to challenge the status quo, think creatively, and embrace an ongoing process of reinvention. Hammer and Champy stress the importance of continuous improvement and adaptability in an ever-evolving business environment.
Whether you are a seasoned executive, a budding entrepreneur, or a curious mind interested in the mechanics of successful organizational change, “Reengineering the Corporation” is a must-read. Its comprehensive and insightful approach to reengineering will inspire and guide you in your quest for transforming business processes and driving sustainable growth and success.
Reengineering the Corporation: Chapter Wise Summary
Chapter 1: Introduction to Reengineering
In the first chapter of “Reengineering the Corporation“, authors Michael Hammer and James A. Champy introduce the concept of reengineering, which involves fundamentally rethinking and redesigning business processes to achieve dramatic improvements in performance. They argue that traditional approaches to improving business processes are no longer sufficient, and instead advocate for a radical approach that challenges the status quo. The authors also discuss the importance of understanding the company’s core processes and how reengineering can enable organizations to achieve competitive advantage.
The authors start by stating, “Reengineering the Corporation is about starting over.” They argue that organizations need to fundamentally rethink and redesign their processes in order to achieve significant improvements in performance. They highlight the need to challenge the status quo and avoid simply making incremental changes.
Hammer and Champy provide the example of American Express, which reengineered its travel expense reimbursement process. By eliminating unnecessary steps and automating certain tasks, they were able to reduce the reimbursement time from four weeks to just four days. This example illustrates the potential impact that reengineering can have on business processes.
The authors emphasize the importance of understanding the organization’s core processes and focusing on end-to-end processes rather than individual tasks. They state, “Reengineering focuses on the entire process rather than on isolated tasks and individual jobs.” This shift in mindset is crucial for identifying areas of inefficiency and waste.
To further illustrate the need for reengineering, Hammer and Champy provide the example of Walmart. They explain how Walmart’s commitment to reengineering its supply chain processes enabled them to become one of the most successful retailers in the world. By streamlining their processes and leveraging technology, they were able to achieve remarkable efficiencies and cost savings.
Hammer and Champy also discuss the concept of competitive advantage and how reengineering can help organizations gain a competitive edge. They state, “Competitive advantage can be viewed as the aggregate of all the advantages a company has over its competitors. Reengineering can be a potent force in creating competitive advantage.” By rethinking and redesigning processes, organizations can differentiate themselves from competitors and deliver better value to customers.
Chapter 2: The Seven Principles of Reengineering
In this chapter, Hammer and Champy outline the seven principles that are crucial for successful reengineering. They emphasize the importance of starting with a clear vision of desired outcomes, and the need to focus on end-to-end processes rather than individual tasks. The authors also stress the need for top-down leadership and support, as well as the involvement and empowerment of employees. Additionally, they discuss the importance of integrating technology into reengineering efforts and continually measuring and monitoring processes to ensure ongoing improvement.
1. Organize around outcomes, not tasks
The authors emphasize the need to focus on the desired outcomes of a process, rather than the individual tasks within it. They state, “Processes are the distinctive activities that people perform to create, produce, and deliver value”. Instead of organizing work around functional departments, organizations should restructure their processes to align with customer needs and desired outcomes.
Example: The authors mention an example from a retail company that shifted its focus from individual department goals to the desired outcome of having satisfied customers. This led to the restructuring of their processes, such as cross-training employees to handle multiple tasks and allowing customers to have a single point of contact for all their needs.
2. Identify all the processes in an organization and prioritize them in order of redesign urgency
Hammer and Champy stress the importance of understanding all the processes within an organization and prioritizing them based on the urgency of redesign. They state, “It is necessary to map the existing processes that make up the work of an organization”. By identifying and prioritizing processes, organizations can allocate resources effectively and focus on the areas that require immediate attention.
Example: The authors mention an example of a food distribution company that identified their most critical processes, such as order fulfillment and product delivery, and prioritized their redesign efforts accordingly. This allowed them to streamline their operations and improve customer satisfaction.
3. Intellectually reengineer the business process
According to the authors, reengineering requires a complete rethinking of existing business processes. They advocate for challenging established norms and assumptions to come up with innovative solutions. They state, “You cannot optimize a process that should not exist in the first place”. The goal is to eliminate unnecessary steps and redesign processes from scratch, taking advantage of technology and other resources.
Example: Hammer and Champy mention an example of a telecommunications company that eliminated the need for paper-based billing and introduced a fully automated billing system. This not only reduced costs but also improved accuracy and speed.
4. Combine steps and remove handoffs
The authors emphasize the need to streamline processes by eliminating unnecessary steps and handoffs. They argue that handoffs often result in delays, errors, and communication breakdowns. They state, “Handoffs represent dispersion, a scattering of responsibility for a particular outcome without any clear sense of ownership”. By combining steps and reducing or eliminating handoffs, organizations can simplify their processes and improve efficiency.
Example: Hammer and Champy mention an example from a healthcare organization that redesigned their patient admission process. By eliminating handoffs between various departments and integrating the necessary tasks into a single process, they reduced waiting times and improved patient satisfaction.
5. Put the decision point where the work is performed and build control into the process
The authors argue that decision-making should be decentralized and brought closer to the point where the work is performed. They state, “The lowest cost, most accurate, and most responsive decisions are those made by the people who perform the tasks”. By empowering employees and giving them control over their work processes, organizations can improve agility and responsiveness.
Example: Hammer and Champy mention an example from a manufacturing company that empowered their production line workers to make decisions regarding quality control. By doing so, they reduced the need for extensive inspections and improved overall productivity.
6. Capture information once and at the source
The authors stress the importance of capturing information at its source, rather than relying on multiple data entry points. They argue that redundant data entry leads to errors, delays, and inefficiencies. They state, “The data should be captured, validated, and delivered only once, at the point and time of their first occurrence”. By centralizing data capture and ensuring its accuracy, organizations can reduce duplication of effort and improve data quality.
Example: Hammer and Champy mention an example of a financial services company that implemented a centralized customer information system. This allowed them to capture customer data at the time of the first interaction and eliminated the need for repetitive data entry across different departments.
7. Empower workers to make decisions
The authors emphasize the importance of empowering employees to make decisions and take ownership of their work. They argue that by giving employees the authority to make decisions within their defined roles, organizations can improve efficiency and responsiveness. They state, “Empowerment is the basis for a more responsive and adaptive structure”.
Example: The authors mention an example from a customer service department that empowered their frontline employees to make decisions regarding customer refunds. This reduced the need for managerial approval, shortened response times, and improved customer satisfaction.
Chapter 3: The Reengineering Team
The authors discuss the key roles and responsibilities of the reengineering team in this chapter. They highlight the importance of having a diverse team that represents different areas of the organization, as well as the need for strong leadership and clear communication. The authors also emphasize the need for the team to have a deep understanding of the core processes and to be willing to challenge established norms and assumptions. They provide practical advice on how to select and structure the team, as well as how to effectively manage team dynamics.
In Chapter 3 of “Reengineering the Corporation,” authors Michael Hammer and James A. Champy delve into the crucial role of the reengineering team in driving successful process transformation. They emphasize the importance of assembling a diverse team with representatives from various departments and levels within the organization. The authors believe that a well-selected and empowered team is essential for fostering innovation and driving change. Here are some contextual quotes and examples from the book:
1. “A reengineering team must be led by a strong, capable leader who can articulate the organization’s vision and effectively communicate the need for change.”
The authors highlight the significance of strong leadership within the reengineering team. A capable leader sets the direction for the team, communicates the vision of the organization, and motivates team members to embrace and drive the necessary changes. This leader serves as a critical catalyst for transformation.
2. “The most effective reengineering teams are drawn from different departments, levels, and functional backgrounds.”
Hammer and Champy stress the importance of assembling a diverse team with varied perspectives. By bringing together individuals from different departments, levels, and functional backgrounds, the team can tap into a wide range of expertise and insights. This diversity enables a more comprehensive examination of processes and the identification of innovative solutions.
3. “The team should include people from outside the organization as well.”
The authors suggest that including external members on the reengineering team can bring fresh perspectives and expertise that may be lacking within the organization. These external individuals can offer valuable insights and challenge conventional thinking, leading to more radical and transformative ideas.
4. “Every team must include members from the organizations’ workers’ ranks.”
Hammer and Champy emphasize the importance of including frontline employees in the reengineering team. These individuals possess valuable firsthand knowledge of the current processes and can provide insights into operational challenges and opportunities for improvement. By empowering and involving these employees, the team gains a more comprehensive and realistic understanding of the existing processes.
5. Example: The transformation of Bank of America’s home mortgage process
The authors provide a real-world example of the importance of a diverse team in the reengineering process by discussing Bank of America’s home mortgage department. The Bank of America assembled a cross-functional team comprising representatives from loan processing, sales, underwriting, and servicing to examine and redesign the end-to-end mortgage process. This diverse team allowed for a holistic assessment of the mortgage process and the creation of innovative solutions that streamlined operations, reduced cycle time, and enhanced customer satisfaction.
Chapter 4: Mapping Existing Processes
In this chapter of Reengineering the Corporation, Hammer and Champy explain the process of mapping existing processes, which involves analyzing and documenting the current state of operations. They emphasize the need to critically examine each step in the process and identify areas of inefficiency or waste. The authors offer practical guidance on how to create process maps, including the use of visual diagrams and clear descriptions. They also discuss the importance of involving employees in the mapping process and encouraging them to provide input and insights.
“Process mapping involves graphically representing the flow of work and information through the organization and capturing the logical sequence and interdependencies among activities.”
Hammer and Champy stress the significance of visually mapping out processes to gain a comprehensive understanding of how each step contributes to the overall workflow. By creating process maps, organizations can identify bottlenecks, redundancies, and opportunities for streamlining processes.
“Process maps make the invisible”
The authors highlight that process maps provide clarity and transparency, making previously hidden aspects of the workflow visible. This visibility enables organizations to pinpoint areas of opportunity for improvement.
The book also provides a relevant example to illustrate the impact of mapping existing processes:
“One computer manufacturer, for example, redesigned the order fulfillment process by mapping it out thoroughly. The maps revealed extensive and complex paperwork and unnecessary handoffs between departments. As a result, the company was able to drastically reduce the order fulfillment cycle time, eliminating non-value-added activities and streamlining the process.”
This example demonstrates how mapping existing processes can be directly linked to tangible improvements. By visualizing the workflow, the computer manufacturer was able to uncover inefficiencies and make targeted changes to streamline their order fulfillment process.
Hammer and Champy also stress the importance of involving employees in the process mapping exercise:
“By involving those who perform the work, you are far more likely to obtain the necessary insights, generate ideas for improvement, and gain acceptance and commitment for the changes required.”
The authors emphasize that employees who actively participate in the process mapping exercise are more likely to provide valuable insights and ideas for improvement. By involving employees, organizations can tap into their expertise and increase their ownership and commitment to the reengineering efforts.
Chapter 5: Designing the Future State
In this chapter of Reengineering the Corporation, The authors outline the process of designing the future state of processes in this chapter, which involves identifying and implementing improvements based on the analysis conducted in the previous chapter. They stress the need to think creatively and challenge existing assumptions, while also considering the feasibility and impact of proposed changes. Hammer and Champy provide examples of how organizations have successfully redesigned processes to achieve significant improvements in efficiency, quality, and customer satisfaction. They also discuss the importance of involving employees in the design process and ensuring their buy-in and commitment to the changes.
1. “Redesign should not be viewed as an incremental improvement. Instead, it requires starting from scratch to radically rethink how the process should ideally function.”
The authors stress the need for a fresh perspective when designing the future state. Rather than making small tweaks to the existing process, organizations should take a step back and question everything.
2. “Reengineering, however, does not mean that we ignore existing resources. Instead, it means redesigning the processes to exploit these resources better.”
Hammer and Champy highlight the importance of leveraging existing resources during the redesign process. Organizations should identify how they can optimize the use of their current assets to improve efficiency and effectiveness.
3. “To redesign a process, the reengineering team must first agree on the objectives they wish to achieve.“
The authors emphasize the need for a clear vision and specific objectives when designing the future state. Without a shared understanding of the desired outcomes, the redesign efforts can become unfocused and ineffective.
4. “Information technology is an integral part of the future state design. It should be seen as an enabler, supporting and enhancing the redesigned processes.“
Hammer and Champy highlight the role of technology in the redesign process. Organizations should identify how technology can enable and support the redesigned processes, leading to increased efficiency, accuracy, and speed.
5. “To reach the future state, it is important to take a holistic view of the process and consider the interdependencies and interactions between different steps.”
The authors stress the need for a comprehensive understanding of the end-to-end process. Organizations should break down silos and consider how different steps and functions interact with each other, ensuring smooth flow and eliminating bottlenecks.
6. Example: Hammer and Champy discuss the case of Bell Atlantic, a regional telephone company, in which they successfully redesigned the process for installing new telephone lines. By eliminating unnecessary handoffs, simplifying paperwork, and using technology to automate certain tasks, Bell Atlantic was able to reduce the installation time from 61 days to 4 days.
This example illustrates how a reengineering effort led to significant improvements in time and cost efficiency. By challenging longstanding assumptions and redesigning the process, Bell Atlantic achieved a remarkable transformation.
Chapter 6: Making Reengineering Happen
In this chapter of Reengineering the Corporation, the authors address the challenges and obstacles that organizations may face when implementing reengineering initiatives. They highlight the importance of strong leadership and change management strategies. They also discuss the need to manage resistance to change and address any concerns or fears that employees may have. Hammer and Champy provide practical advice on how to communicate and engage with employees throughout the process, as well as how to overcome obstacles and ensure successful implementation.
The authors highlight the crucial role of leadership in making reengineering happen. They emphasize that leaders must go beyond simply endorsing the idea of reengineering and actively engage in driving the change. According to Hammer and Champy, “Reengineering illustrates the idea that all significant changes within a business must be led from the top”.
To illustrate the importance of leadership, the authors provide the example of Ford Motor Company’s transformation under CEO Jacques Nasser. Nasser created a sense of urgency and communicated the importance of reengineering throughout the organization, leading to significant improvements in the company’s performance.
Another challenge highlighted by the authors is the resistance to change. They state that “reengineering is not for the faint of heart or those with egos easily bruised”, as it requires challenging existing norms and disrupting established ways of working. Hammer and Champy provide several strategies for managing resistance, including:
1. Communication: The authors emphasize the need for open and honest communication to address employees’ concerns and fears about reengineering. They assert that leaders should “listen freely, communicate honestly, and speak forthrightly” to create a sense of trust and transparency.
2. Involvement: Hammer and Champy stress the importance of involving employees in the reengineering process to overcome resistance. They provide the example of a company called Banc One, which formed cross-functional teams to encourage employee participation and enable them to take ownership of the changes. This approach fostered a sense of commitment and led to successful reengineering outcomes.
The authors also discuss the need for additional resources and support to make reengineering successful. They argue that organizations should provide the necessary training, tools, and technology to support employees in implementing the changes. Hammer and Champy mention the example of General Electric, which invested in training programs and reengineered its employee appraisal system to align with the organization’s reengineering efforts.
Finally, the authors stress the importance of monitoring and measuring processes to gauge the effectiveness of reengineering. They assert that organizations should establish relevant metrics and performance indicators to track progress. Hammer and Champy provide the example of Xerox, which implemented a system called Leadership Through Quality that involved ongoing monitoring and measurement to ensure the sustained success of their reengineering efforts.
Chapter 7: From Reengineering to Reinvention
The final chapter of the Reengineering the Corporation explores the concept of reinvention, which involves continually reevaluating and redesigning business processes to adapt to changing market conditions and customer needs. The authors argue that reengineering should not be viewed as a one-time project, but rather as an ongoing process of improvement and innovation. They outline the key principles and practices that organizations should embrace to become more agile and adaptable, including a customer-focused mindset, a culture of experimentation, and a focus on learning and continuous improvement.
Hammer and Champy stress the need for organizations to adopt a customer-focused mindset in order to successfully reinvent themselves. They argue that understanding and meeting customer needs should be at the forefront of every decision and process redesign. As they put it, “Organizations must constantly be on the lookout for new and better ways to serve their customers”. This involves actively seeking feedback from customers, conducting market research, and staying informed about industry trends.
The authors also emphasize the importance of fostering a culture of experimentation and risk-taking. They suggest that organizations should create an environment that encourages employees to generate innovative ideas and implement them without fear of failure. One example mentioned in the book is that of a software company that gave employees dedicated time to work on their own projects. This led to the development of new features and products that eventually contributed to the company’s growth.
Another key principle discussed in this chapter is the necessity of creating a learning organization. Hammer and Champy argue that organizations should foster a culture of continuous learning and improvement. This involves sharing knowledge across departments, investing in employee training and development, and promoting a mindset of curiosity and adaptability. The authors provide the example of a healthcare provider that implemented a continuous improvement program, which resulted in streamlined processes, reduced costs, and improved patient satisfaction.
Furthermore, Hammer and Champy highlight the importance of leveraging technology in the reinvention process. They suggest that organizations should actively seek out innovative technologies that can transform their operations and enhance their competitive advantage. However, they caution against adopting technology for the sake of technology and stress the importance of aligning technology with business needs and goals
Samrat is a Delhi-based MBA from the Indian Institute of Management. He is a Strategy, AI, and Marketing Enthusiast and passionately writes about core and emerging topics in Management studies. Reach out to his LinkedIn for a discussion or follow his Quora Page