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REENGINEERING THE
CORPORATION
Champy show how some of the world's premier
corporations use the principles of reengineering to
save hundreds of millions of dollars a year, to
By Michael Hammer & James Champy
achieve unprecedented levels of customer
satisfaction, and to speed up and make more
Reviewed by Ying Zhao
Why does a corporation need reengineering?
When I first picked out this book from hundreds of
other bestsellers, I was instantly impressed by its
alluring name “Reengineering the Corporation”. I
realized that this book must be closely related with
what I have learned in the MBA program of NAU.
This international bestseller is the pioneering book
on the most important topic in business circles
today: reengineering--the radical redesign of a
company's processes, organization, and culture to
achieve a quantum leap in performance. Neither a
quick fix nor a plan for incremental improvements,
reengineering is a radical corporate redesign that
discards the accumulated business wisdom of the
past 200 years, replacing it with a brand new model
and an associated set of principles. We should
realize that today's workers and managers are
flexible all aspects of their operations.
Reengineering the Corporation offers nothing less
than a brand-new vision of how companies should
be organized and managed if they are to succeed indeed even survive - in the 1990s and beyond.
Reengineering does not seek to make businesses
better through incremental improvements - 10
percent faster here or 20 percent less expensive
there. Business reengineering isn’t about fixing
anything. Business reengineering means starting all
over and starting from scratch. Business
reengineering means forgetting how work was done
in the age of the mass market and deciding how it
can best be done now. The aim of reengineering is a
quantum leap in performance - the 100 percent or
even tenfold improvement that can follow from
entirely new work processes and structures.
The problem with American business is that it is
prisoners of antiquated theories about
entering the 21st century dragging behind it an
organizing work - theories that date back to
outdated and cumbersome set of corporate
the beginnings of the Industrial Revolution.
principles formulated in the 1800s. Although
These ideas - the division of labor, the need for
these principles may have served us well in the
elaborate controls, the managerial hierarchy -
past, the time has come to retire and replace
no longer work in a world of global
them if we are to survive the 1990s and beyond.
competition and unrelenting change. In their
Examining the firsthand experiences of companies
stead, the authors introduce the notion of process
that have reinvented themselves for success,
orientation, of concentrating on and rethinking
Hammer and Champy present their revolutionary
end-to-end activities that create value for customers.
blueprint for creating a new kind of company for
In this book we are told that it is time to adopt new
the brave new world of business. The book also
principles and abandon those outdated ones which
provides numerous examples and in-depth case
were deeply embedded in our minds and
studies of how leading organizations are achieving
significantly shaped the structure, management,
significant competitive gains through reengineering:
and performance of American businesses
How Ford Motor reduced the size of its North
throughout the nineteenth and twentieth centuries.
American accounts payable organization by 80%
Building on their firsthand experiences, two
while improving the process; how IBM is leasing
respected management consultants Hammer and
subsidiary cut its deal-making process from seven
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days to four hours; and how Taco Bell used a new
reengineering. That is why the dominant ERP
set of production and management processes to fuel
software giants such as SAP, Oracle have imposed
a six-fold growth in revenue.
tremendous impact on the reengineering process of
most premier corporations. The implementation of
Integration and Information System
ERP software can sparkle an innovative thinking
and initiate revolutionary reengineering process
After reading through this book, I found that my
perception of a corporation reached a higher level.
which can generate unpredictable value to a
corporation.
In the past most multinational companies tended to
establish a very hierarchical structure and
Teamwork and Process
artificially fragment business process into
indivisible segments. People are scattered all over
The fragmented processes found in traditional
the company in functional silos and are not
companies lead to narrowly specialized jobs and
organizationally integrated. This traditional
organizations based on functional departments.
structure has seriously impeded the further
This fractionation creates numerous problems, but
improvement in efficiency and productivity when
in particular it promotes incongruent goals among
those multinationals are entering a new
the different people involved. One person might
information era. The modern enterprises should be
care about inventory turns while another is focused
lean enough to make a quick response to the
on delivery time. That is why teamwork is so highly
changing business world, flexible enough to satisfy
valued in American companies. Everyday MBA
the dynamic needs of customers, innovative enough
students work on group projects in the form of a
to face various competitions. Integrated processes
team because everyone can get cross-functional
give rise to multidimensional jobs that are best
training from each other. Process team workers,
organized into process teams. The development of
who are collectively responsible for tasks, have
information system which is one of the most
process results rather than individually responsible
efficient approaches to implement reengineering
for tasks, have a different kind of job. They share
strategy has greatly facilitated the reengineering
joint responsibility with their team members for
process for various organizations. I always wonder
performing the whole process, not just a small piece
why the unblocked information flow in real time is
of it. They not only use a broader range of skills
crucial to the survival and success of a corporation.
from day to day, they have to be thinking of a far
With the powerful support of high-performance
bigger picture. Moreover, everything an individual
information system, the previously fragmented
does is imbued with an appreciation for the process
functional areas can be integrated together to
as a whole.
achieve its maximum efficiency through
information sharing. For most people, the
Create more value to customers
implementation of information system is a process
of automation and computerization which
Another important apocalypse I got from this book
undoubtedly can improve efficiency, but IS contains
is how to redesign the business process which is
far more connotations than merely automation and
more value-added to customers. Reducing cost to
computerization. By computerizing the process, the
improve competitive advantages in pricing is always
company might have achieved 10 percent
a main concern of modern companies. We should
performance improvement instead of the more than
try to eliminate those processes which consume
90 percent improvement it attained through
tremendous energy and money to a company but
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add little or no value to customers. Customers don’t
care about how many steps taken to produce final
products and also care little about the strict internal
monitoring process and elaborate quality control.
Their main concern is how to get their desired
functionalities at the minimum cost. Therefore the
design of business process should focus on either on
reducing unnecessary cost or improve desired
functionalities. This customer-oriented focus can be
best elaborated by the principle we’ve learned “target costing” in marketing class.
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