The Fad That Forgot People

Reality Bites

Around 1994 reality began to intrude. With so many claims being made for reengineering and so many companies calling every change program a reengineering project, there were bound to be train wrecks. One West Coast pharmaceutical company went through two major consulting firms before canceling its whole reengineering effort. A large telecommunications company laid off a massive number of people - calling it reengineering - but alienated many of the organization's brightest people by its almost purposeful insensitivity.

Even some of the success stories went awry. Take, for example, Capital Holding's (now Providian) Direct Response Group, a company that was held up as a model in "Reengineering the Corporation."

DRG is best known as the insurance company that used to run late-night television ads featuring Art Linkletter and Roger Staubach. In the late 1980s, the company launched a broad-scale reengineering effort, involving simultaneous change in organizational structure, business processes, information systems, and corporate culture. The story in Hammer and Champy's book, as told by Pamela Godwin, then DRG's senior vice president, reads like this: "All together we have about ten separate reengineering projects under way right now, and they and the people operating them constitute what I call Company B. Company B is the new company that we're designing and building. Company A is the existing company. The interesting thing is that the people in Company A aren't waiting for their turn to get into the new stuff... .Change breeds change, and we're finding that people want to jump on board because they see what's happening in Company B as the wave of the future."

That was in 1992. In 1995, as it turns out, Company B was not the wave of the future. In 1993, DRG's parent deposed Norm Phelps, the division president, and installed Shailesh Mehta. He dismantled the process-oriented organization, stopped the cultural change effort, and shut down the team-based prototype operation, saying that he believed in "individual accountability." One year later Pamela Godwin left the company. She and Phelps had tried to create a human-oriented version of reengineering - but simply ran out of time despite being profitable.

Reflecting on the reengineering movement, she says, "Reengineering regressed into the old industrial engineering and that regressed into the big scare. People think they're going to be reduced to rubble by reengineering. Organizations forget to remind them that they have skills they can apply to a changed work environment and they can learn new ones."

Other featured companies fared just as poorly or even worse. Mutual Benefit Life is basically out of business. Hallmark, which sought to shorten its new product development cycle from a painfully slow two years, still can take a full year to create a single new greeting card. And despite reengineering, the company still clings to its bureaucratic "Okay Committee," and continues to watch its market share slip.

In late 1995, reengineering isn't dead; it is effectively over. Growth markets for reengineering today are outside the United States, in Latin America, southern Europe, and Australia - where they haven't "caught up" to U.S. management yet.

Salvage from the Ruins

As is always the case with any fad, there was a kernel of truth to reengineering. Over time, that truth got lost. But that doesn't make it any less true.

The most profound lesson of business process reengineering was never reengineering, but business processes. Processes are how we work. Any company that ignores its business processes or fails to improve them risks its future. That said, companies can use many different approaches to process improvement without ever embarking on a high-risk reengineering project.

For technologists, the lesson from reengineering is a reminder of an old truth: information technology is only useful if it helps people do their work better and differently. Companies are still throwing money at technology - instead of working with the people in the organization to infuse technology.

Finally, reengineering's enduring lesson is that the bigger the hype the greater the chances of failure. Before reengineering became The Reengineering Revolution, innovators were experimenting with a variety of change practices. With the exaggerated promises and heightened expectations came faddishness and failure. The lesson: companies should underpromise and overdeliver. The time to trumpet change programs is after results are safely in the can.

When the Next Big Thing in management hits, try to remember the lessons of reengineering. Don't drop all your ongoing approaches to change in favor of the handsome newcomer. Don't listen to the new approach's most charismatic advocates, but only to the most reasoned. Talk softly about what you're doing and carry a big ruler to measure real results.

And start with a question: "Would I like this management approach applied to me and my job?" If the answer is yes, do it to yourself first. You'll set a great example.

Thomas H. Davenport (tdav@notes.bus.utexas.edu) is the Curtis Mathes Fellowship professor and director, Information Management Program, at the Graduate School of Business, University of Texas at Austin.