Re-Engineering 2.0


Byline: Daniel McGinn

When it comes to using technology to re-invent how companies do business, Michael Hammer wrote the book on the concept. His 1993 best seller "Reengineering the Corporation" (with coauthor James Champy), launched thousands of corporate reorganizations--and nearly as many "Dilbert" strips. Eleven years later companies are still hiring Hammer, an engineer and former MIT professor, to teach them to become more efficient. Why is it taking so long to learn these lessons? Partly, Hammer tells NEWSWEEK's Daniel McGinn, because it takes time for companies to learn to use today's whiz-bang technology to streamline their operations. And partly because "for many organizations, re-engineering has become a way of life." Excerpts:

Re-engineering was celebrated at first, but later it was demonized for driving layoffs. Why?

Hammer: Every new business concept has a life cycle. At first it's overhyped, and then the counterreformation sets in--you start to see criticisms of it. Being criticized is fine, but being criticized for espousing layoffs was frustrating because it was based on a misunderstanding. The work I've done never has been about downsizing. Some re-engineering does lead to reductions in force, but that's not the point. Re-engineering is about improving performance, most often by speeding things up--speed is the critical issue because customers are more demanding. But I don't have a guilty conscience. At a lot of organizations, if they hadn't re-engineered, they simply would have gone out of business and then everybody loses their job.

How is technology driving the way businesses reinvent themselves today?

The technologies that are really most important to business are not usually in the public consciousness. The most important technology of the last few years isn't cell phones or personal digital assistants--it's software called "enterprise resource planning systems" that lets different parts of a company share information. A lot of companies were buying these systems in the early 1990s and weren't getting much return. Then people started to figure out it's not really the technology that's important, but how it allows companies to change processes. Consider General Mills, which makes Cheerios.

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