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In his article "Re-engineering Work: Don't Automate, Obliterate", which appeared in the July-August 1990 edition of the Harvard Business Review, Michael Hammer wrote:

"Despite a decade or more of downsizing, many U.S. companies are still unprepared to operate in the 1990s. In a time of rapidly changing technologies and ever-shorter product life cycles, product development often proceeds at a glacial pace. In an age of the customer, order fulfillment has high error rates and customer inquiries go unanswered for weeks. In a period when asset utilization is critical, inventory levels exceed many months of demand.

The usual methods of speeding up performance - process rationalization and automation - haven't yielded the dramatic improvements companies need. In particular, heavy investments in information technology have delivered disappointing results - largely because companies tend to use technology to mechanize old ways of doing business. They leave the existing business practices in tact and use computers simply to speed them up.

But speeding up these processes cannot address their fundamental performance deficiencies. Many of our job designs, workflows, control mechanisms, and organizational structures came of age in a different competitive environment and before the advent of the computer. They are geared toward efficiency and control. Yet the watchwords of the new decade are innovation and speed, service and quality.

It is time to stop paving the cow paths. Instead of embedding outdated processes in silicon and software, we should obliterate them and start over. We should "re-engineer" our businesses: use the power of modern information technology to radically redesign our business processes in order to achieve dramatic improvement in their performance.

Every company operates according to a great many unarticulated rules. … Reengineering strives to break away from the old rules about how we organize and conduct business. It involves recognizing and rejecting some of them and then finding imaginative ways to accomplish work. From our redesigned processes, new rules will emerge that will fit the times. Only then can we hope to achieve quantum leaps in performance."

During the decade of the 1990s, many companies have successfully reengineered themselves, but few have aligned their organizations with their processes. In a follow-on article, "How Process Enterprises Really Work", which appeared in the November-December 1999 edition of the Harvard Business Review, Hammer and his co-author, Steven Stanton describe this phenomenon.

"Although reengineering has in some circles become a euphemism for mindless downsizing, it has in fact done a world of good. It has enabled companies to act faster and more efficiently and to use information technology more productively. It has improved the jobs of employees, giving them more authority and a clearer view of how their work fits into the operations of the enterprise as a whole. It has rewarded customers with higher-quality products and more responsive service. And it has paid big dividends to shareholders, reducing companies' costs, increasing their revenues, and increasing their stock values.

Most of all, though, reengineering has changed the perspective of business leaders. No longer do executives see their organizations as sets of discrete units with well-defined boundaries. Instead, they see them as flexible groupings of intertwined work and information flows that cut horizontally across the business, ending at points of contact with customers. Reengineering, in other words, has allowed executives to see through the surface structure of their organizations to the underlying purpose: the delivery of value to customers in a way that creates profits for shareholders.

But this new process view of organization has not yet been fully realized. Many companies have integrated their core processes, combining related activities and cutting out ones that don't add value, but only a few have fundamentally changed the way they manage their organizations. The power in most companies still resides in vertical units - sometimes focused on regions, sometimes on products, sometimes on functions - and those fiefdoms still jealously guard their turf, their people, and their resources. The combination of integrated processes and fragmented organizations has created a form of cognitive dissonance in many businesses: the horizontal processes pull people in one direction; the traditional vertical management systems pull them in another. Confusion and conflict ensue, undermining performance.

That's not he way it has to be. In recent years we've seen many companies make the leap from process redesign to process management. The have appointed some of their best managers to be process owners, and have given them real authority over work and budgets. The have shifted the focus of their measurement systems from unit goals to process goals, and they have based compensation and advancement directly on process performance. They have changed the way they assign and train employees, emphasizing whole processes rather than narrow tasks. And they have made subtle but fundamental changes to their culture, stressing teamwork and customers over turf and hierarchy. They have emerged from all those changes as true process enterprises - companies whose management structures are in harmony, rather than at war, with their core process - and they have reaped enormous benefits as a result."

In the remainder of the article, Hammer and Stanton describe how companies like IBM, Texas Instruments, Owens Corning and Duke Power have redesigned their organization around their core processes. They summarize how business reengineering has evolved during the last decade, but they do not provide a prescription for solving today's corporate maladies. A business transformation methodology has been created and is called OPTAS® - Organization, Process and Technology aligned with Strategy.

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