Back to basics

PUBLISHED : Saturday, 19 February, 1994, 12:00am
UPDATED : Saturday, 19 February, 1994, 12:00am

Reengineering the Corporation by Michael Hammer and James Champy Nicholas Brealey $288 IF American business is in crisis, a point on which at this distance I express no opinion, then there is one group which is still working flat out on solving it: the theorists.

I had lost count of the number of suggestions for saving management from whatever ails it, but there is a list in this book: ''management by objectives, diversification, Theory X, zero-based budgeting, value chain analysis, decentralisation, quality circles, 'excellence', restructuring, portfolio management, management by walking around, matrix management, intrapreneuring, or one-minute managing . . .'' The American manager is buried in books. An interesting symptom of this is the flourishing market in ''abridged versions'' for those who want to say they have read everything. Also a company will sell you business books on tape so you can listen while driving.

Hammer and Champy say (and who will argue?) that the results of all this are disappointing. American businesses in general do not appear to enjoy any particular advantage over those in places where more is left to instinct and guesswork.

So they look deeper. The problem is not in management skills as such; it is in the basic structure: the way the work is organised.

This goes right back to Adam Smith and the legendary pin factory in which a few could out-produce many by specialising in one task each.

This pin factory was the great paradigm of modern industrial society. Output could be increased by dividing up the work. Cars were produced by having 1,000 people add one part each.

This mode of organisation involved sacrifices in work satisfaction - because each worker performed one task over and over again - and also in quality because there was no time to work on anything which didn't fit right.

This did not matter for 100 years, in which the defining problem was to increase output. Selling the resulting products was not difficult. They were all in short supply.

Times have changed, say our authors. Consumers are no longer prepared to think themselves lucky if they can buy a shoddy product mass produced by bored zombies. They want the bespoke, the up-to-date, the fashionable. Also they want quality and personal service.

These are just the things which the traditional corporation has trouble with.

Co-ordinating the divided work also requires an ungainly organisation to supervise and control. This is based on the military model in which the general talks to the colonel, the colonel to the major the major to the captain and so on down to the humble private who actually goes out and gets killed.

This is a good way of getting 50,000 people to march simultaneously in the same direction. Flexibility, detail, swift decisions and unique solutions do not come so easily.

So what this book proposes is that the whole structure should be scrapped. All modern management traditions belong to the age of the pen anyway - you can probably do something unprecedented and ingenious with computer technology.

Reengineering involves looking at the company operation, or some part of it, from scratch. All bets off, all traditions questioned, all cows profane.

The usual question will be something along the lines of: ''What is the basic process and what is it supposed to deliver?'' This is likely to be a painful and disturbing process. Hammer and Champy make no attempt to conceal the fact that unless a good deal of determination is deployed then nothing much will happen.

On the other hand, the results can be very dramatic. Consider some examples given here: an IBM subsidiary (no book of management advice is complete without IBM) cut processing time from seven days to four hours and increased throughput 100 times. An accounting department at Ford reduced its personnel requirements from 500 people to 150. Kodak cut the time required to design a camera by nearly half.

Any approach which offers possibilities like that ought to be worth exploring and I do no doubt that this book will enjoy a large and well-deserved readership.

It is stimulating, realistic and written in good plain English.

No doubt the authors are compulsive consultants; I imagine their reports make fascinating reading as well.

Readers should be prepared to feel a bit frustrated at the end if they are not in a position to change the way their company operates.

Three chapters into the book you will be mentally reengineering your employer. Best not to mention this. Just leave the book lying around the office and hope . . .


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