This assignment assesses your creativity and knowledge in developing leadership strategies to implement radical change to improve business situations. The unit learning outcomes that would be assessed through this assignment are:
6.2 Evaluate the various leadership styles for radical change.
6.3 Apply radical change concepts to a case study.
In business scenarios when the "radicalness" of the planned change increases, more revolutionary change tactics needs to be implemented. Business Process Redesign (BPR) is one of the tactics of revamping the businesses at an accelerated pace by reengineering business process, organization structure and use of IT in the organization.
The article 'Business Process Redesign: Tactics for Managing Radical Change' discusses cases of three different organization. The tactics and initiative used to implement BPR in these three organizations differ in their approaches and need for change. Read the article and address the following points.
1. Compare and contrast the BPR initiatives of the three cases discussed in the paper touching upon its suitability in various scenarios.
2. Identify a situation in your workplace where you see a need for radical change in the business process.
Discuss the situation, the scope and depth of change required. As a leader, what tactics and BPR initiative would you use to implement the change (or changes if there are many).
Business Process Redesign: Tactics for Managing Radical Change DONNA B. STODDARD AND SIRKKA L. JARVENPAA DONNA B. STODDARD has been an Assistant Professor in the Harvard Business School Management Information Systems area since 1991. She teaches in the first year of the M.B.A. program and as part of the faculty for the executive education course entitled Managing the Information Systems Resource. Her research focuses on man- aging change in business process redesign. SIRKKA L. JARVENPAA is an Associate Professor of Information Systems at the University of Texas at Austin. She served as a Marvin Bower Fellow at Harvard Business School during the calendar year of 1994. Dr. Jarvenpaa has published over thirty articles and a number of case studies in academic and practitioner journals. Her current research projects focus on global information technology, electronic com- merce, and the use of information technology in radical organizational transforma- tions. ABSTRACT: By definition, business process redesign (BPR) represents radical change in today's bureaucratic functionally structured and managed organizations. The radi- cal change theorists predict that to accomplish radical change requires the use of revolutionary change tactics. We propose that as the "radicalness" of the planned change increases, more revolutionary change tactics are used. We analyze the change tactics of three organizations' BPR initiatives to understand whether and how revolu- tionary tactics were used. The initiatives evinced a varied amount of revolutionary tactics depending on the scope and depth of planned change. The use of revolutionary tactics also varied by the phase of the initiatives. The frequency of revolutionary tactics was highest in the early phases of the initiatives and decreased as they approached implementation. We explore the reasons for reduced deployment of revolutionary tactics. We conclude by implications to BPR practice and research. KEY WORDS AND PHRASES: business process redesign, case study, change manage- ment, evolutionary tactics, implementation phases, radical change, revolutionary tactics. MANY ORGANIZATIONS ARE IN THE MIDST OF planned revolutions to respond to the turbulent business environment. Organizations that prospered in the 1980s as contrac- tors to the U.S. military are a good case in point. Many of these firms are transforming Acknowledgment: This work was funded by Harvard Business School Division of Research and Ernst and Young Center for Business Innovation. Journal of Management Information Systems / Summer 1995, Vol. 12. No. 1. pp. 81-107 This content downloaded from 220.158.159.38 on Sat, 25 Feb 2023 09:48:04 UTC All use subject to https://about.jstor.org/terms82 STODDARD AND JARVENPAA themselves into commercial competitors. They are redefining their products, people, structures, systems, and culture to compete in the commercial sector. For example, over 50 percent of the revenue of Rockwell International came from the defense sector in the late 1980s: in 1993 only some 20 percent came from that sector. The organization has undertaken massive conversion of not only its assets, but also its culture, work processes, thought patterns, and so on, to become a major player in telecommunica tions, automobile parts manufacturing, factory automation, and commercial electron- ics. Rockwell is accomplishing so-called organizational transformation "Profound fundamental changes in thought and actions, which create an irreversible discontinuity in the experience of a system" [1, p. 278]. Business process redesign (BPR), also known as reengineering [12] or process innovation [5], is offered as an enabler of organizational transformation [6. 29]. Organizations embrace a BPR approach when they believe that a radical improvement can be achieved by marrying business process, organization structure, and IT change. Former defense contractors and traditional commercial sector companies, such as IBM Credit Corporation and Ford [12], alike have embraced BPR to speed up slow or "broken" business processes. Others, such as Taco Bell [13], have embraced BPR to enable the redefinition of their business. Information technology is usually a necessary but insufficient factor in achieving business process redesign. IT has been described as both a strategic catalyst and an enabler of BPR [5, 12]. Yet, the absence of needed IT capabilities can be a major inhibitor to BPR. For example, a manager described how the data architecture that a company's London office had established in the late 1980s made it relatively easy to develop new applications to support a process that had been redesigned. The lack of such a well-defined data architecture in the firm's U.S. operation meant that signifi- cantly more resources had to be committed to accomplish applications of similar scope. A systems planning or data-modeling project may provide the genesis for BPR as the organization wakes up to the fact that a planning process that focuses on technology may not deliver the business solutions it needs. For example, when asked why BPR had become a major agenda item, the chief information officer (CIO) of a major insurance company noted: In the late 1980s, I began to look at how technology was linked to our overall corpo- rate strategy. I tried to assess how new applications impacted the enterprise-my intu- ition was that we were investing a lot but not getting the desired productivity. As I began to focus on what we were doing, it was clear that, generally, we did not change the processes that were being automated. Rather, we took sophisticated applications and layered them onto an old organization. I began to envision a need to reengineer. Further, in all of our years of focus on the technology. it was as if we had been look- ing through the wrong end of the telescope. Reengineering is reportedly radical change. "Process innovation involves stepping back from a process to inquire as to its overall business objective, and then effecting creative and radical change to realize orders-of-magnitude improvements in the way that objective is accomplished" [5, p. 10]. In their book, Reengineering The Corpora-BUSINESS PROCESS REDESIGN 33 riot-t. Hammer and Champy [12] note: Rcengineering can't be carried out in small and cautious steps. It is an all-ornothing proposition that produces dramatically impressive results. Most companies have no choice but to muster the courage to do it. For many. rcengincering is the only hope for breaking away from the ineffective, antiquated ways of conducting business that will otherwise destroy them. Unc manager explained. \"EFF. is about changing the engines of a ying airplane.\" BPR is one approach to organizational transformation. [s BPR radical change? What arcthe necessary tactics to accomplish radical change? In this paper, we contrast change tactics that promote radical change with tactics that promote incremental change. We then analyze three BFR efforts to understand whether, how. and why revolutionarytactics were used or not used. We conclude with implications to practice and research. Overall, the three initiatives differed in terms of the scope and planned depth of change. The use of revolutionary tactics varied across the initiatives, but also by the phases of the initiatives. The three cases suggest that BPR may be a revolutionary approach to design. The realization of the design might take a long time and involve an evolutionary approach. Change Outcomes: Determining the Degree of Planned Change THE PLANNED DUTCDMES OF CHANGE CAN BE DESCRIBED IN TERMS 0F SCGPE ND DEPTH. Scope includes the breadth ofchange. Depth involves the nature ofchange. Radical change is high on both scam and depth. Scope of Change The scope of change denotes the organizational reach of changefor example, whether the impact of change will be contained within one function, one organization. or will cut across organizational boundaries [3]. Although EFF. by denition [12, 25. 29] spans functional boundaries. there seems to he a wide disparity in how narrowly or broadly a process is viewed from one EPR initiative to another-this reSults in differing degrees of cross-functional scope. The much-celebrated Ford Motor Com- pany accounts payable EFF. project was largely limited to one functional areaac- counting [l I]. By contrast. IBM Credit Corporation collapsed a number offunctiortal areas with its BPR initiative [[2]. Singapore Tradcnet illustram the transformation of relationships across a number of trade-related coordinating bodies [I ti]. Planned Depth of Change The nature of change is dependent on the strategic intentions as well as the contest of change [24], BPR efforts often start with the following intentions: to dramatically reduce cost. to dramatically improve customer service or employee quality of life. or to reinvent the basic rules of business. For example. [BM Credit Corporation sought 84 STODDARD AND JARVENPAA to reduce the turnaround time for quotations to customers. The focus of its initiative was efficiency, attempting to cut costs by cutting time per quotation and by improving the number of deals handled with the existing staff [12]. At Procter and Gamble, management hoped to increase customer service effectiveness when it worked with Wal-Mart to reengineer the order-management/inventory process for Pampers diapers [12]. When Taco Bell management recognized that they were in the fast-food business, not in the Mexican-food business, BPR was used to transform the organization into the newly redefined business [13]. To transform an organization, a deep change must occur in the key behavior levers of the organization: jobs, skills, structures, shared values, measurement systems, and information technology [10]. The greater the extent of planned change to the change levers, the deeper the planned change. For example, Otis Elevator [26] changed its work procedures for managing service requests, employee roles, culture, IT, and measurement and control systems in an effort to improve customer service. BPR is commonly facilitated by information technology [5, 12]. IT-enabled out- comes, in turn, have been described in terms of organizational efficiency, effective- ness, or whether the application transforms the organization [9]: Applications in the efficiency category allow users to work faster and often at measur- ably lower cost. Applications in the effectiveness category allow users to work better and often to produce higher quality work. Applications in the transformation category change the basic ways that people and departments work and may even change the very nature of the business enterprise itself. This classification of change is consistent with the depth of change. When the only change lever used is IT (i.e., IT-enabled change), mere automation of manual tasks occurs, resulting in efficiency gains. Effectiveness, in turn, requires changes not only in technology, but also in skills, job roles, and work flow. Transformation in turn assumes a major change in most of the change levers of the organization, including structure, culture, and compensation schemes. Automation is the least deep; the transformation is the deepest form of change. In addition to BPR accomplishing cross-functional and transformational changes, it is also expected to change the organization fast. For example, Hammer and Champy [12, p. 212] note that "Twelve months should be long enough for a company to move from articulation of a case for action to the first release of a reengineered process." Change Process: Determining the Tactics of Change THE PACE OF CHANGE IS DEPENDENT ON THE PROCESS that is, tactics, or tech- niques-used to encourage an organization's members to accept and to enact a proposed change [23]. A change process that complies with current organizational values and norms, skills, structures, and incentive systems is inherently evolutionary. By contrast, change that challenges or undermines the status quo, creates a new vision, and accomplishes fundamental change in values and norms, work practices, and structures is revolutionary change [24]. Our basic supposition for managing change in BPR is simple: different initiatives require different change management tacticsdepending on the type of change. Radical change (a transformational change in a short period of time) usually necessitates revolutionary change tactics; likewise, increment tal change suggests evolutionary change tactics. Evolutionary Change Evolutionary change models assume that change is adapted to the pace and capabilities of people and widespread, frequent, and open communication is a key tactic to enable incremental change [7, 15, 17]. Evolutionary models also assume that change cannot be fully planned at the outset and those who will be affected by the change must lead and participate in the change process [17]. Broad participation from various levels usually means that the pace of change is adapted to the capabilities of the least changeable element or group in the organization. As such, evolutionary change models suggest a gradual, staged sociotechnical change approach. The change tactics derived from this view reflect two basic assump- tions about change: (1) change takes time and is best accomplished in small increments at a time, and (2) change is a recursive adaptation process between the technology and the user environment. Although this incremental, cumulative view of change has a long tradition in various facets of science (for example, biology [7] and social science [20]), new theories challenge these underlying assumptions of change. Revolutionary Change According to radical change theorists [e.g., 9, 27, 28], a fundamental organization change cannot be accomplished piecemeal, gradually, or comfortably. Rather, the change must unfold rapidly. The creation of new forms and processes requires difficult compact revolutions. Although revolutionary change theories acknowledge the exis- tence of incremental changes during periods of stability (i.e., equilibrium), they argue that any major change can only come as a result of revolutionary upheaval (i.e., "big bang"). In the vocabulary of radical change theorists, fundamental change requires a deep structure or paradigm shift change [8], that is, the basic assumptions, business practices, culture, and organizational structure change. The existing deep structure persists and limits change during stable periods but must be dismantled and reconfig- ured in periods of revolutionary change. Unless the deep structure is changed, the behaviors migrate back toward the status quo once the formal change program is declared to be over. Some level of identity crisis, disorder, and ambiguity usually precedes a deep structure change [24]. Radical change outcomes (i.e., broad and deep changes) require revolutionary change processes, particularly when the time frame is short (see figure 1). The reverse is not, however, true. A process can be revolutionary without the outcomes of change being radical [8]. Radical change theorists have proposed a number of revolutionary tactics to accom- plish radical change [9, 22, 27, 28]. A new vision is needed to free existing members86 STODDARD AND JARVENPAA Process Evolutionary Revolutionary Incremental Incremental improvement Little benefit for risk and pain Outcome Continuous incremental improvement over a long Radical change in a short Radical period period of time Figure I. Process and Outcome of Change of the legacies of the past, allow them to see alternatives, and build confidence and capabilities for the future. New managers are needed to accomplish "frame-breaking" change. Current employees should be excluded because of cognitive, motivational, and obligational barriers to change. Existing managers and employees, many of whom are comfortable with the status quo, may have difficulty performing "out-of-the-box thinking." Also, existing employees may fear losing control, opportunities, or power, and that they cannot accomplish the new tasks. Existing employees might be further constrained because of legions to stakeholders inside and outside the organization who prefer the status quo. Tushman et al. [27] found that "externally recruited executives are three times more likely to initiate frame-breaking change than existing executive teams. Frame-breaking change was coupled with CEO succession in more than 80 percent of the cases." Hall et al [10, p. 124] reported that in four of the five successful BPR initiatives, "new chief executives were brought in before or during the projects." Moreover, revolutionary change must start in populations that are small and isolated before the change is spread further [8]. Isolation helps the group avoid having its focus and energies diluted by the surrounding inertia. Some existing organizational members might also have to be removed in order to communicate that resistance will not be tolerated. An organization that holds onto its promise of no layoffs violates the basic tenet of revolutionary change: people must qualify for change rather than have change adapted to people. Proponents of revolutionary models argue that a failure, or a crisis, is required to set the stage for revolutionary changes. Gersick [8] similarly argues that people appear most capable of creating and accepting new solutions when they face insurmountable problems that cannot be solved with the current deep structure. Crises help provide decisive breaks in systems' inertia and can tap major sources of energy for creating the new rules for the workplace. A crisis is particularly necessary to generate receptivity to changes in a wider population. Communication about the change should be first targeted to a small group of gatekeepers and spread only after the change has taken a hold in that group. Kanter etBUSINESS PROCESS REDESIGN 87 al. note, "Too often, communication translates into a unilateral directive. Real com- munication requires a dialogue among the different change makers" [14]. Radical theorists do not refute that an anticipated crisis might be a sufficient motivator for radical change. That is, management can "create a crisis" and a sense of urgency to motivate organizational members to get on board with a change program [14]. They do, however, caution that "only a farsighted minority of firms initiate upheaval prior to incurring performance declines" [27]. In addition, the "old" organi- zation might have to be dismantled and left disorganized for some periods of time before fundamental changes take hold. Gersick [8] believes that successful radical change requires the creation of temporal milestones. Temporal milestones occur when people become acutely aware that the time is finite and they have to move on. She maintains that if organization members begin to realize that a particular era has ended, then they may accept that the approaches that they had previously chosen might no longer be appropriate. Temporal milestones help to create the sense of urgency, and make people reevaluate past choices and take new steps. Evolutionary and Revolutionary Change Tactics A comparison of the evolutionary and revolutionary change models suggests some similarities and some major differences. Both evolutionary and revolutionary models advocate having senior executive support or sponsorship of any large-scale change initiative. Both argue for clear objectives and vision. However, the revolutionary models call for leadership from outside the organization, and the evolutionary models for leadership from the existing senior management. The evolutionary tactics call for broad participation of the current process owners and contributors in the design and implementation. The revolutionary tactics call for the exclusion of the current process owners and users. While the evolutionary models advocate broad, organization-wide communication, the revolutionary models suggest more selected and focused, face-to- face, one-on-one communication. The evolutionary model advocates flexible milestones; the revolutionary model advocates rigid milestones. The evolutionary model proposes that change can be driven by a desire for self-improvement; radical change proposes that people must believe cognitively and sometimes experience emotionally the crisis state of the organization. In summary, to accomplish deep structural change, the radical models suggest that people cannot be assumed to be capable of change; rather, they have to be qualified for change. The evolutionary models argue for adapting change to people. IT and Models of Change The revolutionary and evolutionary perspectives also prescribe different sequencing of technology changes. Under evolutionary change, a gradually staged sociotechnical change occurs. Either a social-system- or a technical-system-first strategy is followed. Revolutionary change assumes simultaneous change of both technical and social systems (i.e., the all-at-once strategy).Liker et al. suggest four alternative approaches to managing technology paced change based on the pace and scope of sociotechnical change: all-at-once, technical- system-first, social-system-first, or gradually staged sociotechnical change [19]. The all-at-once strategy assumes that an organization would attempt to make rapid, radical change in its technical and social systems concurrently. The technical-system-first approach suggests a more gradual change; IT changes are expected to induce social changes. The social-system-first approach calls for "getting your house in order" before making major technological changes. It assumed unfreezing and changing [18] the social system before installing a new technology. Studies on the implementation of production technologies underscore an interactive, staged approach to change [17]. Highly successful technology transfers habe been found to require the mutual adaptation of the organization and technology. Change emerged slowly and gradually as large and small recursive cycles bridged the gaps and misalignments between technology and the rest of the organization. Much of this change process could not have been planned in the beginning. Several others describe technology-based change as an emergent process: the users and consequences of information technology emerge unpredictably from complex social interactions [21]. For example, a study on the introduction of CT scanners in radiology describes how changes to the structure of the radiologists' work emerged unplanned over time from their interactions with the technology [2]. In a study of eighty-five public libraries, the highest-performing libraries implemented a balanced level of both technological and organizational changes rather than one or the other [4]. However, the sequencing of these innovations also affected performance. Libraries that adopted organizational innovations first were ultimately the best performers. Table 1 contrasts the change tactics for the evolutionary and revolutionary change models in seven areas: leadership, employee involvement, the strategy for communi- cation, the motivation for BPR, milestones, organization structure/culture and IT. We next analyze the use and more importantly the context of use of the revolutionary and evolutionary change tactics in three BPR initiatives. We start by outlining the research approach. Research Approach A CASE STUDY METHOD WAS DEPLOYED TO EXPLORE HOW AND WHY different change management tactics were used. A multiple-case design involved three BPR initiatives in three different companies. The three cases varied in terms of the expected change outcomes. The BPR initiative was the unit of analysis. A BPR initiative could be one project or a set of interrelated projects. The first author's organization had an established relationship with the three companies resulting from previous research and educational activities. At the time of the study, one of the BPR initiatives had been completed and hence represented a retrospective case study. The other two initiatives were in the phases of pilot and initial field implementation. Hence, the design phases represented retrospective research; theBUSINESS PROCESS REDESIGN 89 Table 1 Evolutionary and Revolutionary Change Theories: A Comparison of Tactics Evolutionary Revolutionary Leadership Use insiders Use outsiders Employee Use current managers and Exclude current managers involvement employees who are and employees where possi- representative of the ble. Involve only "best of the population of employees breed" and those who are dissatisfied with the status quo. Employ employees full-time. Isolate the reengineering team Communication Broadly communicated One-on-one communication plans to key stakeholders only Motivation Self-improvement Crisis or failure Milestones Flexible Firm Culture/structure Adapt to existing Qualify employees for change seekoldwe change who fit with new culture and organizational structure IT change Process or social system Simultaneous change of first. Alternatively, gradual, technology and social staged implementation of systems technology and social systems pilot and implementation phases represented concurrent data collection involving contact between the researcher and the organization every three to five months over an eighteen-month study period. Both researchers (or a researcher and a research assistant) were present in all key interviews, allowing cross-checking of facts and impressions. In each case study, retrospective data were collected on what practices and organi- zational interventions triggered the organization to initiate the efforts. The data collection involved primarily semistructured interviews with open-ended questions. Site visits were supplemented with telephone interviews. An interview guide was used in most of the interviews (see appendix). The number of people interviewed per case study varied from eight to twenty-five; most were managers and employees involved in the BPR initiative. In all cases, the business process owner, the IT director, and members of the BPR team were interviewed. The company executive management was interviewed in two companies. The interviewees were supplemented with the reviews of memos and project reports and observations of new technology and work procedures.90 STODDARD AND JARVENPAA Background on Three Reengineering Initiatives TABLE 2 OUTLINES THE ORGANIZATIONAL CONTEXT OF THE INITIATIVES and describes the planned changes in tasks, structure, systems, and culture at the three organizations: FinanceCo, DefenseCo, and FoodCo. FinanceCo is a large financial services company. One of the main divisions of the firm began BPR in late 1980s with an attempt to transform the company from a mass marketer to a personalized services company. The division had experienced declining margins because of problems with persistence and higher costs to acquire customers. The BPR initiative was aimed to result in significant improvements in overall profitability and growth. DefenseCo was a large manufacturer of industrial equipment. The BPR initiative occurred in the largest business that primarily sold military equipment to the U.S. government. Because of the restructuring and the downsizing of the U.S. defense industry, the company faced the challenge of maintaining a profitable division with a significant reduction in demand. Cost cutting and downsizing had become the order of the day. The new competitive environment had already resulted in major cycle-time reduction in submitting proposals to the government from six to twelve months to three months. Further, the time between the award of the manufacturing contract to the delivery of the equipment was cut from twenty-four months to twelve. All this put pressure on purchasing to reduce its cycle time and hand-offs. FoodCo was a large food retailer and manufacturer. The BPR effort was undertaken in the manufacturing unit of the firm that had nearly forty manufacturing plants all across the United States. The head of the unit had previously implemented an integrated manual manufacturing system in one of the plants in the 1960s and now envisioned implementing a standard computer-based MRPII system in all of the plants in order to enhance each individual plant's effectiveness, enhance overall control, and allow the unit to leverage its size with customers and suppliers. Scope of BPR Initiatives The scope of BPR varied across the three initiatives. At FinanceCo, the scope included the entire organization of more than 2,000 people. The initiative was expected to take seven to ten years. In 1992, FinanceCo had over twenty BPR implementation teams in progress. In early 1993, they had eight teams in progress and in the summer of 1993, six teams. At FoodCo, most of the manufacturing unit's 3,500 employees would be affected. The initiative was estimated to cost $40 million, with savings of $200 million over ten years. The initiative was expected to take 6.5 years to complete. At Defense- Co, the scope was limited to the purchasing department of 165 people; the initiative was completed in three years from its inception (see figure 2). Planned Depth of BPR Initiatives The most radical outcomes were sought after at FinanceCo, followed by FoodCo. At FinanceCo, the BPR was initiated as a result of redefining the company's strategy;Table 2 Overview of Reengineering Initiatives FinanceCo 1993 DefenseCo 1993 FoodCo 1993 Company context Mail order insurance. Industrial equipment Food manufacturer Revenue in excess manufacturer whose with revenue in ex- of $600 million, defense segment cess of $1.5 billion employs 2,000 people had revenue of and 3,500 employees approximately $1.3 billion Reengineering Sought to transform Refined work in the Implementation of an initiative description company. Eight to purchasing area in MRPII system in forty ten reengineering one of the companies plants ranging from initiatives underway. in the defense bakeries and milk- Three initiatives systems segment. processing plants to were testing new nonfood plants. ways of doing busi- ness. The others were reengineering work flow in opera- tions areas. Changes to tasks Jobs to be completely Jobs were completely Jobs, processes, redefined. A process- redefined as buyer and information flow based vision and a and planner position to be redefined and new strategic busi- was combined into a standardized across ness model were commodity the plants. developed for the administrator role. company. Structural changes Moving toward a Eliminated a number Headquarters func- management of middle-manager tions redefined to through team positions. enable structure and a flatter implementation. organization. Information Moving from main- Installed Macintosh To replace three PC- systems changes frame systems and computers in an envi based manufacturing toward a client- ronment that had tra- control systems server/Windows ditionally been only plants had imple- environment. BM. Also, intro- mented in nonstan- duced prototyping dard ways. Installing with users in an envi MRPII and IBM ronment embracing AS400 computers, traditional systems new technologies for development life the company cycle approach to de- velopment. Cultural changes Cultural audit sug- A more participative Many plant employ- gested need to culture was intro ees would have to in- significantly change duced as employees terface with the culture. were involved in the computers for the first design and develop- time. Interdepend ment of the new sys- ence between plant tem. departments would in- crease dramatically.'92 STUDDARD hND JARVENPAA Scope of Change Functional lfitness-Iiinetionai Organizadon-wide Figure 2. Planned Dutcomerc A Comparison of Cases management sought to transform the organization, which was losing market share and experiencing declining protability. The functional work processes, structures. and values cemented with information technology would have to be changed to enable a new business strategy. FirmnceCo expected both to offer new and innovative products and to be able to support its customers in new and innovative ways. For example, the customer would be served by a dedicated crossfunctional team that handled both sales and service transactions for the company's varied products. or DefenseCo. the BPlt initiative waste improve the flow of work while doing more with less. The redesigned process was also expected to provide management with better metrics to measure how well the department was doing. Customers (cg, manufacturing} had traditionally viewed the sen-ice level of the purchasing depart ment as poor. The department was inundated with paper. and it was not unusual for purchase orders to be misplaced or to get lost in soineone's in-basket. The BPR effort was to move away from aunctional viewto a process view. Two job categories would he collapsed to one and one-third of the department's staff would be eliminated. or FoodCo. the expectations were more of effectiveness. followed by efciency. The senior vice president for manufacturing explained. For a number of years 1 have envisioned implementing a standard computer-based sysr tern in all of our facilities, that would not only enhance our ability to manage individ- ual plants but would provide the information we need to leverage our size when we deal with suppliers and customers. The challenge that we face as we try to accomplish this is that there are vast differences in the characteristics and life cycles of the prod- ucts produced in our 40 plants. Yet. if we are successful at implementing a standard process and system. the opportunity is enormous. In the late 193th: the head of the business unit had established a team to compare the unit's manufacturing systems with those of competitors. The team found that FoodCo's systems and processes were highly inadequate. Hence. the need for BPR. BUSINESS PROCESS REDESIGN 93 Table 3 Hammer's Reengineering Principles: Mapping of Three Cases FinanceCo DefenseCo FoodCo Organize around outcomes not Yes Yes No tasks Have those who use the output of Yes Somewhat Somewhat the process perform the process Subsume information-processing Yes Yes Yes work into the real work that pro- duces the information Treat geographically dispersed re- NA NA Yes sources as though they were cen- tralized Capture work once and at the Yes NA Yes source Link parallel activities instead of in- Yes Yes Phase 3 tegrating their result Put the decision point where the Yes Yes Yes work is performed and build control into the process Adapted from Hammer [1 1] and Hammer and Champy [12]. was developed based on senior management's vision and the knowledge of what other organizations had been able to accomplish as a result of redefining their processes. Management expected the BPR to yield major savings from reduced plant losses, reduced per-unit purchasing costs, inventory value reduction, potential increases in public sales, and overall improvements in productivity. Other benefits were expected from better-organized information, improved customer service, improved perfor- mance visibility, availability of instant standard-based productivity variances, im- proved costing/pricing, and full integration of product and business functions. In all three initiatives, the firm's management believed that they had undertaken BPR. Table 3 maps the three initiatives to Hammer's [1 1, 12] principles of BPR. In two of the organizations, management called the initiatives business process reengin- cering; in the third case, the organization referred to the initiative as business process optimization. In the next section, we analyze the use of the evolutionary and revolu- tionary change tactics in the three initiatives. Change Tactics Observed in BPR Initiatives NO INITIATIVE SOLELY USED EITHER REVOLUTIONARY OR EVOLUTIONARY TACTICS. Rather, the initiatives sampled both types of tactics although to a varying extent by the phase of the initiatives. The more frequent use of revolutionary change tactics'34 STDDDARD AND JARVENPAA occurred during design than during implementation at FinanceCo and FoodCo. FinanceCo and FoodCo exhibited a revolutionary approach to design. but an evolu tionary approach to change during implementation. DefenseCo deployed both revo lutionary and evolutionary tactics duiin g design and implementation. Hence. the more radical the planned change. the more the organizations employed revolutionary change tactics durin g dcsi gnI but not necessarily during implementation. This nding is somewhat paradoxical given that the majority of actual change occurs during implementation. Table 4 compares the change tactics used for each BPR initiative. Table 5 summarizes whether the use of revolutionary tactics decreased or increased during the initiati ves' pilot and implementation phase from that of the design phase. Leadership The leadership change tactics used at FinanceCo and FoodCo were revolutionary during design, but evolutionary during implementation. At DcfenseCo. the approach to leadership was a mix of evolutionary and revolutionary during design and imple mentation. All three initiatives used new management talent in the beginning. This inow did not, however. continue overtime. Financei'le made the most use of outside managers in the beginning. at new president and a new seni or vice president of operati onstcusto- mer marketing were hired1 and EFF. emerged as a way to prototype and implement the ideas that surfaced from the new strategic planning process. The new president of the organization regularly endorsed the reengineering initiatives and was actively participating in the communication to the broader organization. The senior vice president was seen as the owner and champion of the reengincering effort. a: DefenseCo and FoodCo. the momentum for BPR was established by managers who had been part of the organization for a number of years. However. in both cases. new managers were brought in to provide day-to-day project leadership aer the initiatives had been tnded. Pit DefenseCo. a manager came from another part of the company. The new manager scrutinized the proposal and was initially quite skeptical about the need for the initiative: Since 1 had been a customer of the purchasing area. i knew there was an opportunity to make changes that Would result in better service to customers and reductions in headcount. I was initially skeptical of the EPR initiative and. quite frankly, almost pulled the plug on the initiative. 1til-"hen the EFF. initiative proposal crossed my dealt, we were in a downsizing phase. I knew that I could eliminate people from the purchase ing area and I didn't need a computer system to do that. From November until Janu- ary. the initiative was essentially on hold untii I wariiy agreed to move forward. Even so. I agreed to move forward with the stipulation that the initiative would have to gen- erate headcount savings that were not volume generated. F unher. we would have to he aide to cut cycle times and throughput. FoodCo hired a manager specically to manage the EPR initiative who had implemented an MRPII system at a smaller manufacturer. The manager was promoted Table 4 Change Tactics: A Comparison of Cases FinanceCo DefenseCo FoodCo Pilot Pilot/ Pilot implementation implementation implementation phase Design phase phase Use of tactics Design phase phase Design phase Revolutionary Evolutionary Evolutionary/ Revolutionary Evolutionary Leadership/ Evolutionary/ revolutionary revolutionary management Employee Revolutionary Evolutionary Evolutionary/ Revolutionary/ Revolutionary Evolutionary involvement revolutionary evolutionary Communication Evolutionary Evolutionary Evolutionary Evolutionary Evolutionary Evolutionary Motivation for Revolutionary Evolutionary Revolutionary Revolutionary Evolutionary Evolutionary BPP Evolutionary Revolutionary Milestones Evolutionary Revolutionary Revolutionary Evolutionary Change of Revolutionary Evolutionary Revolutionary Revolutionary Revolutionary Evolutionary structure and culture IT change Revolutionary Evolutionary Evolutionary Evolutionary Revolutionary Evolutionary96 STODDARD AND JARVENPAA Table 5 Increase or Decrease of Revolutionary Tactics in Pilot/Implementation Phase Compared to Design Phase FinanceCo DefenseCo FoodCo Leadership/management New managers and leaders + + -Full-time dedicated No change managers Outside consultants No change Employee involvement -Qualified members (best of + No change breed type) Full-time team members + - Isolated teams from rest of No change operations Communication -Limited (need to know only) No change No change No change Motivation for BPR -Crisis No change No change Milestones Rigid No change No change Culture and structure change -Layoffs of employees No change No change New structures (depart- + ments, teams) New roles + + -New compensation schemes IT change Simultaneity of technology No change and social system changes three times during his first eighteen months with the company, reflecting the need to ensure that he had sufficient resources to carry out the BPR and legitimize the business changes he was attempting. A full-time management team was also initially dedicated to manage the business conversion and training associated with the system. During the pilots and initial implementation, fewer full-time management resources were dedicated to the efforts at FinanceCo and FoodCo. At FinanceCo, an officer of the company who coordinated the reengineering initiatives on a full-time basis during design was assigned additional responsibilities during pilots and implementation. At FoodCo, a dedicated management team decreased over time. For example, a training manager initially working full-time on the initiative also began to perform additional activities. All three companies utilized outside consultants, although the use decreased during implementation except at DefenseCo. At FinanceCo and FoodCo, their roles also changed. Their activities were more strategic in the early phases than in the later phases. At FoodCo, they helped to define the project and validate the business caseBUSINESS PI-lt'JCESS REDESIGN 191 before funding was approved. Fit FinaneeCo. the consultants helped to develop the new business strategy and provided the tools and methods for BPR. Darin g imple- mentation. the consultants' role was limited to one of performing audits of the initiatives and assisting in software development. By contrast. at. Defensetlo. the consultant played a major role through design and implementation. The consultants package inspired a vision for BPR and new roles. The consultant assisted with modications to the package that was purchased. The consultant managed the implementation to new processes including the training of employees. Employee Involvement Employee involvement tactics were revolutionary at FinanceCo and FoodCo during design. but evolutionary during implementation. At DefenseCo. the employee in- volvement was somewhat more revolutionary in implementation than in design. an FinanceCo and FoodCo. employees selected to work on the design of the new processes were considered to be \"best of breed." At FoodCo. the design team included two managementlevel people from each plant type. At FinanceCo. a crossfunctional. multilevel team of sin. employees worked with oumide consultants to develop a new strategy that guided the work of the specic implementation initiatives. in both FinanccCo and FoodCo. employees assigned to design and test the new proceeses were dedicated fulltime to the effort and were physically separated from those who were using traditional work approaches. They were also constantly re- minded by management that they were embracing the new business strategy, whereas others were \"in the old business." At FoodCo. plant employees were relocated to headquarters to work on the BPR initiative. At both FinanceCo and FoodCo. the numb-er of fulltime people declined as the projects approached the pilot stage. Similarly. more \"representative\" people from the work force were involved. The pilots also occurred in the normal work areas. DefenseCo's approach to employee involvement can be characterized as a some what evolutionary change tactic in design with a revolutionary avor in implementa- tion. in design, the employees were expected to continue to perform their work as it had been traditionally dened. The employees patticipatod part-time in the design activities. The opportunity to participate in the design and testing ot'the new processes was a public acknowledgment that the person was a\"high performer.\" Because of the drastic reduction of departmental staff during implementation. proportionately more people were excluded om new work processes at DchiiseCo than in the other two initiatives. Also. during implementation. all employees switched to the new work approaches rather than the organization maintaining both the new and the old ways of doing business. Conununication None of the initiatives followed a revolutionary tactic in communicating about the initiative. Rather. all initiatives emphasized broad oonununication. an evolutionary tactic. from the start. 98 STODDARD AND JARVENPAA At FinanceCo, early in the initiative, the senior leadership met with employees at all levels to explain the new business vision, strategy, and how the BPR would affect employees. A videotape simulating new work processes was shown in small interac- tive round-table discussions. The reengineering teams also prepared numerous articles for the parent company's newspaper and for the organization's own newsletter, and set up a kiosk in a lobby to inform employees and customers of the reengineering initiative. A course that covered the basics of the new strategy was added to the organization's training curriculum. At FoodCo, the plant representatives in the BPR team were expected to keep their plants up to date with the initiative's progress. In addition, the BPR team held weekly meetings, published widely distributed newsletters every two to three months, and offered conceptual and hands-on training on MRPII. The corporate staff was being informed about the initiative primarily through the sponsor of the initiative until his retirement in the fall of 1992. DefenseCo held weekly 6:30 A.M. breakfast meetings open to people from all departments. During those meetings, employees involved in the BPR provided status reports, and both team members and senior management were available to answer questions. But only the same 40 or so employees of the department's 160 employees tended to come regularly to the meetings. In all three initiatives, broad communication continued during the pilot and early- implementation phases; the impact of communication, however, decreased over time. When some of the employees first heard of the initiative (usually in the design phase), they believed that the changes were imminent or already happening. Since nothing was implemented for some time, employees began to question whether change was forthcoming and tended to pay less attention to what was being communicated. Motivation for BPR During design, FinanceCo exhibited a revolutionary tactic to motivating the company for the change; during implementation, the tactic was evolutionary. At FoodCo, the motivation was evolutionary in nature in both design and implementation. At DefenseCo, the motivation was characterized as revolutionary during design and implementation. At the time of approval, management at FinanceCo and at DefenseCo communicated the BPR effort in crisis terminology. FinanceCo's employees were told that financial results were poor and, if they were to stay in business, the company had to change. However, perhaps because of the length of the initiative, the need somewhat changed in the eyes of those conducting pilots. They saw themselves as helping to implement the organization's new customer-focused service and sales strategies rather than trying to turn around the firm's financial performance. At DefenseCo, the declining defense budgets demanded that either DefenseCo employees and managers figure out how to do more with less to compete for the declining defense dollar or, as one manager noted, "None of us will have jobs." The crisis mentality was sustained in implementation, largely because of continuing personnel layoffs.At FoodCo. the BPR was presented as an opportunity for the division to generate more wealth for the company. The BPR's nancial implications represented signicant cost reductions. 8t] percent of which would be due to material cost reductions. Employees were also informed of the benchmark study. that the organization had conducted showing that its information systems capabilities lagged behind those at other food manufacturers. During implementation. the initiative was associated with. as well as suffered from. the need to cut operating costs drastically. The organization had experienced an unexpected \"donut" year followed by some plant closings. consolidations. and organizational downsizing. The nancial situation resulted in the initiative becoming under more nancial scmtiny. The project experienced a reduction in its resources. Milestones At FoodCo and at DefenseCo. a revolutionary approach was deployed for managing milestones during design. The revolutionary tactic was maintained at DefenseCo during implementation. but not at FoodCo. Financet'lo exhibited an evolutionary approach to milestones during design and implementation. Rigid milestones were established at FoodCo and DefertseCo for schedule and benets. DefenseCo adhered to those deadlines. The same applied to FoodCo in the design and pilot phases. to implementation. some slippage occurred because of resources diverted -om the initiative. Flexible milestones were used at FinanceCo. The BPR involved experimenting with new ways of doing business. and an overall tinieframe was developed for the companywidc reengineering initiative. WEE prior organizational experiments sug~ gested a project would yield positive results. milestones were set. For those projects initiated to test \"new\" approaches. the milestones were flexible. Change of Current Structure and Culture The three BPR projects planned revolutionary changes to the structure and culture. The changes can be characterized as evolutionary at FinanceCo and FoodCo [partic- ularly in view of the planned changes}. The changes were most profound at Defense- Co. although contained to one department. Sincethe beginning of design. FoodCo and FinanceCo spent resources on employee training and education for the new required behaviors and values. Maintaining the necessary level of funding for education became a challenge over time. The pace of behavior and value changes slowed down with the decreased educational budgets during pilots and implementation. At FinanceCo. major organizational changes were piloted. but few were seen to he implementable organization-wide because of cost and risk. During the pilot phases. some key managers began to manage across functions and products [i.e.. by pro cesses]. Crossinctional teams were piloted. For example. personal customerservice teams provided a single point of contact for a customer. The organization also 100 STODDARD AND JARVENPM experimented with team-based and skill-based compensation. at senior manager elaborated: Compensation wiil be based on jobs skills, willingness to continue to learn and de- velop, and the ability to function in a team environment. Our new job evaluation sys- tem will motivate people to deyclop a wider array ofskills. Goal-sharing will tie individual rewards to the performance of the team and the corporation as a whole. The proposal for the skill-based compensation was shelved. however. because man- agement was unable to develop a cost-effective and fair transition plan to the new scheme. Most other structurali'cultural changes were scaled down or put on hold. rill FoodCo, relatively little was accomplished in terms of cultural change because of plant resistance, project delays, the reduction of resources devoted to the change. and the focus on systertts rather than on overall processes. For example, the initial planned called for hiring outside consultants not only to design but also to manage the education and training programs. This was ruled out later because of cost. Instead, representatives from plants were groomed to be coaches. Because of their limited time and resources. the training was mostly on PC skills and on the mechanics of the system {\"keyboarding"). Little time was spent on conceptual training for the new processes. Also, the design was revised during the pilot stage because of plant resistance to the new ways of working. Accordin g to a BPR team member, [P]eople felt we were intruding [on] their \"turf.\" They insisted on replicating their old work pattems. We lacked the power to offset this resistance. Gur progress was depenv dent on cross mctional agreements that were very time consuming to negotiate. At DefenseCo, the structure and culture of the purchasing organization was signif- icantly changed. Yet. the fact that the initiative was restricted to one function made the organizational changes relatively easierthan at FinanceCo and FoodCo. Financial reward structures were revamped to re fleet the new expanded j obs and responsibilities. Most supervisorylevel jobs were eliminated as many controls were automated. and employees were empowered to make decisions that previously had to be approved by a superior. IT Change At FinanceCo and FoodCo, the approach to ]T was revolutionary in design and evolutionary in implementation. DefenseCo's approach was evolutionary in both design and implementation. At FinanceCo and FoodCo, [T help-ed to envision new ways of working. At F inanceCo, there were a number of host systems that the customer management teams had to access in order to respond to customer requests and to prepare sales proposals. These legacy systems were product-based. not customer-based. The new F'vaased front-end systems would allow a team member simultaneously to access a number of host systems and build an integrated view of a customer's relationships. Over time, additional distributed customer databases and application systems were to be rolled out. For example, a new order-entry system would allow a noacxpert [such as a member of a customer management team] to take information from the customer. The system would automatically process simple orders. At FoodCo, the EFF. initiative was to implement a standard information system across a heterogeneous set of plants. The system was to push information and decision making down to the plants as well as to allow better integration of plant information at headquarters. To materialize the cost savings from IT investments, business pro- cesses would have to be streamlined and standardized. Similarly, at DefenseCo, the knowledge of available technology had inspired the BPR initiative. A manager elaborated: The purchasing manager saw an article which described a purchasing system that had been developed and installed by a consultant at another company. The manager con tacted the consultant and become further convinced that the system would improve the ow of work within the department. The solution would also equip the department with Macintosh computers that could be used as front-ends to host based system. None of the initiatives, however, adopted the IT revolutionary change tactic, the \"all-at-onee" strategy in implementation. At FinanceCo, the pilot teams rst learned theirnew roles; the new IT platform and applications were introduced overathree-year period. The delay reected the lead time to develop the new systems. At FoodCo, a technical system preceded the socialsystem changes. At DefenseCo, the process resembled one of gradual adaptation of the system and the new organizational roles. The design and implementation of the technology were iterative. in stage one, the consultant came up with a conceptual design to which DefenseCo's management agreed. In stage two. the consultant worked with front-line employeea from the purchasing area to design the nal roles and system. in the rst release, the jobsrrcles remained unchanged; however. buyers and planners were asked to train one another on their respective jobs. The new roles and enhanced [T capabils ities were introduced in multiple stages. All BPR e'orts experienced problems scaling up from prototyping to pilots and full-scale implementation. The [T departments were Fundamentally challenged in supporting the initiatives. At both FinanceCo and FoodCo, the lT department's competency was in host-based systems. The new computer-based system was a distributed system on a platform unfamiliarto the IT organization. FinanceCo hired new IT personnel as well as training many of its eatsting staff in new development tools and methods. At F oodCo, a group comprised of plant managers, not H personnel, was charged with implementing the new system, roles, and processes. Y\The consultant's proposal threatened our fortitude. The iterative development process was not in sync with what our staff had been told. People kept asking me, "How could it be OK for the user to see the application before it was done?" Status of Initiatives At the end of 1993, the three initiatives were at the following stages: DefenseCo's initiative was successfully completed in 1992; the FoodCo and FinanceCo efforts were in the midst of pilot and field implementation phases. At FoodCo and FinanceCo, the pace of implementation had slowed down considerably. At FoodCo, the second release of the system initially scheduled for Fall 1993 was rescheduled to Spring 1994. The third release was put temporarily on hold until the operational benefits accrued from the second release were known. Discussion of Findings OUR PROPOSITION WAS THAT ACCOMPLISHING RADICAL CHANGE requires revolution- ary change tactics: the more radical the change outcomes (see figure 3), the more revolutionary the tactics. We discussed three reengineering initiatives and described whether and how they used revolutionary change tactics. None of the cases subscribed religiously to revolutionary tactics. The revolutionary tactics were used more in design than in implementation in the two projects with the most radical planned outcomes. The projects exercised an evolutionary approach to the pilot and implementation phases. For example, at FoodCo, the plant manager was given discretion as to when the new process and system would be implemented in a particular plant. The implementation teams at both FoodCo and FinanceCo included increasing numbers of part-timers and fewer consultants than in the design teams. One manager at FoodCo remarked on the pace, This is really nothing new. Long initiatives always tend to lose momentum the longer they are around. Scarce corporate dollars tend to go for newer, "better" initiatives. They are many reasons why FinanceCo and FoodCo did not exercise revolutionary tactics in implementation, whereas DefenseCo did. Here we speculate on a few reasons, including the size of the initiatives, motivation, senior management involve- ment, and lead times for IT development. Another set of reasons relate to the benefits that accrue from the use of evolutionary tactics. The narrow scope of the DefenseCo initiative appeared to facilitate its use of revolutionary tactics. In large efforts, the financial and human costs and risks of the revolutionary tactics appear to be unpalatable. For example, the larger the initiative, the more dedicated full-time labor power is needed. However, it is difficult to sustain large teams of full-time members. Several managers remarked on how restructuring and reorganizations easily undermined teams' efforts. Noted one:Energy Revolutionary Evolutionary for Tactics Used Tactics Used Radical Change Design Pilot Implementation Project Phase Figure 3. Use of Revolutionary and Evolutionary Tactics The toughest thing is to leave the team alone. In a changing environment, you are con- stantly
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