Who Has the Next Big Idea?

In the beginning (of the new economy) , there was reengineering. And it was good. Then it was big. Then it got scary.

The tale goes like this: In the early 1990s, many American businesses had lost their way and began seeking salvation. Prophets appeared with the answers. Beware incremental improvements, they warned. Redemption -- and higher share prices -- depended on fundamentally rethinking and radically redesigning the core processes of every business.

The sacred text of these seers was Reengineering the Corporation: A Manifesto for Business Revolution (HarperBusiness, 1993). Written by Michael Hammer and James Champy, who were then-unknown consultants in Cambridge, Massachusetts, Reengineering the Corporation became a surprise international best-seller. And reengineering corporations quickly became a $50 billion industry. The craze turned Hammer, a former MIT computer-science professor, into a rock star of the then-fledgling new economy. His bearded face began appearing at corporate conferences, inside boardrooms, and on lists of America's most influential people. He scolded CEOs for not zeroing in on first principles. He exhorted them to repent. Some of his warnings verged on the apocalyptic: "Reengineering," he wrote, "is the only thing that stands between many U.S. corporations -- indeed, the U.S. economy -- and disaster."

But, as so often happens with tales of biblical proportions, inviolable axioms mixed with doomsday warnings and produced zealousness -- which, in turn, produced overzealousness. And for all the wise and necessary emphasis on such things as the basics of business processes, the reengineering juggernaut overlooked one of life's most basic laws: the law of unintended consequences.

During the economic downpour of the early-to-mid-1990s, many business leaders tried to huddle every activity under the reengineering umbrella. If they streamlined their company's product-development process, yes, that was reengineering. But so, it seemed, was cleaning out the company supply closet. Worst of all, reengineering quickly became a synonym for firing thousands of workers. Fast Company called it "The Fad That Forgot People" in our inaugural issue in 1995. If you lost your job in the 1990s -- as so many Americans did -- you probably remember reengineering. Your boss might have wrapped your pink slip in the word.

"Some people think reengineering means downsizing because some vulgar morons decided to apply it to their downsizing efforts because they were too embarrassed to call it downsizing," says Hammer, 53. "I lay awake at night worrying about that." Hammer is a devout Orthodox Jew and the son of a synagogue cantor. "I ask myself, What could I have done to prevent this?"

Reengineering was never about reducing head count or throwing people out of work, he says. It was -- it is -- simply "the radical redesign of business processes for dramatic improvement." Then he adds, "As a brand name, it's about as attractive as 'painful rectal itch.' "

But the brand name, "reengineering" -- as well as the Brand Called Hammer -- is back. In October, Hammer will publish a new book, immodestly titled The Agenda: What Every Business Must Do to Dominate the Decade (Crown Business, 2001).

Hammer's main idea: We're not done reengineering. Processes are even more critical today than they were 10 years ago -- and more urgent now that the economy is slumping. His other ideas are a grab bag of insights and proposals that range from mundane to profound -- some bristling with promise, others fraught with huge possibilities for unintended consequences.

Be afraid. Or redeemed. Or both.

Under the Tent: Corporate Revival

Have you ever glimpsed original sin? Hammer has. And he's drawn it on Slide 1 - 6. Now he's glaring at that slide, his body swelling with outrage as the image gleams on a screen at the front of a windowless hotel ballroom crammed with 330 of his disciples.

Original sin, Hammer explains, begins with a woman. She works in sales for an auto-parts company. Her customer, an automaker developing a new vehicle, wants some new components. She asks the customer for specs.

Original sin continues with a man. He works in engineering. He gets the specs from the woman. He designs the components from scratch. When he's done several days later, he mails the designs to a plant for tooling. But the plant is swamped. It doesn't get to the components until work slows down. Eventually, it sends them to another plant for manufacturing. Then the manufacturer sends the finished components back to the woman, who brings them to the customer.

Not quite right, says the customer. We need some changes. And the woman begins the cycle again.