Reengineering: A Fast Track to Nowhere?

Article excerpt

University of Texas professor Thomas Davenport reports that through the activities of a variety of consulting firms, reengineering has become a $51 billion industry in the United States.

Unfortunately, however, reengineering is developing into an intriguing paradox. For example, many theorists are touting reengineering as the latest salvation for competitive advantage, while recent benchmarking data indicates 70 percent of reengineering efforts fail to produce their desired results.

Not only should reengineering be great for the performance of individual companies but ultimately, according to many economists, reengineering should bring about faster economic growth, greater international competitiveness, higher real wages, and improved living standards.

Nevertheless, there is bad news associated with reengineering. The Business Competitiveness Center at the University of Wisconsin estimates that reengineering has wiped out 25 million jobs. The resulting dislocation of all those people whose current jobs have disappeared is a tragedy for many families; and absorbing the displaced workers, a serious problem for the economy.

Davenport states that reengineering has become a tainted and ugly word for too many change programs that have failed. Recent articles in The Wall Street Journal suggest that 1) reengineering has become an approach for "dumbsizing" rather than one for rightsizing or downsizing, and 2) reengineering is creating a form of corporate anorexiafirms become thin and frail rather than lean and mean. So, what is really wrong with reengineering? Is the concept flawed or is some other factor contributing to its failures?

Reengineering: the Concept

The reality that firms have to confront is that the old ways of doing business simply don't work anymore. In today's environment, nothing is constant or predictable-not market growth, customer demand, product life cycles, the rate of technological change, or the nature of competition. The overall process of producing and delivering a good or service has become increasingly complicated, and managing such processes has become more difficult.

Business reengineering is the radical redesign of business processes to achieve major gains in cost, service, or time. The process of reengineering begins by asking "if we could start from scratch, how would we do this?" After receiving feedback, the answer is "then, do it that way and throw away everything else. …