Business Process Redesign, Tactics for Managing Radical Change

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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 SchoolManagement Information Systems area since 1991. She teaches in the first year ofthe M.B.A. program and as part of the faculty for the executive education courseentitled M anaging the Information Systems Resource. Her research focuses on man-aging change in business process redesign.

L. JARVENPAA is an Associate Professor of Infonnation Systems at theUniversity of Texas at Austin. She served as a Marvin Bower Fellow at HarvardBusiness School during the calendar year of 1994. Dr. Jarvenpaa has published overthirty articles and a number of case studies in academic and practitioner jou m als. Hercurrent research projects focus on global information technology, electronic com-merce, and the use of infonnation technology in radical organizational transforma-tions.

ABSTRACT: By definition, business process redesign (B PR) represents radical chan gein tod ay's bureaucratic functionally structured and managed organizations. The radi-cal change theorists predict that to accomplish radical change requires the use ofrevolutionary change tactics. We propose that as the radicalne ss of the plannedchange increases, more revolutionary change tactics are used. We analyze the changetactics of three organ izations' BPR initiatives to understand whether and how revolu-tionary tactics were used. The initiatives evinced a varied amount of revolutionarytactics depending on the scope and depth of planned chan ge. The use of revolutionarytactics also varied by the phase of the initiatives. The fi equency of revolutionary tacticswas highest in the early phases of the initiatives and decreased as they approached

implementation. We explore the reasons for reduced deployment of revolutionarytactics. 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, revolutionarytactics.

MANY ORGANIZATIONS ARE IN THE MIDST f planned revolutions to respond to theturbulent business environment. O rganizations that prospered in the 1980s as contrac-

tors to the U S military are a good case in point M any of these firms are transforming



8 S TO D D A R D A N D J A RV E N PA A

themselves into comm ercial competitors. They are redefining their produc ts, people ,structures, systems, and culture to compete in the commercial sector. For example,

over 50 percent of the revenue of R ockwell International cam e from the defense sectorin the late 1980s; in 1993 only some 20 percent came from tha t sector The organizationhas undertaken massive conversion of not only its assets, but also its culture, workprocesses, thought patterns, and so on, to become a major player in telecom mun ica-tions, automobile parts manufacturing, factory automation, and comm ercial electron-ics. R ockwell is accomplishing so-called organizational transformation —^ Profoundfundamental changes in thought and actions, w hich create an irreversible discontinuityin 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 em brace a BPR approach w hen they believe that a radical improvem entcan be achieved by m arrying business process, organization structure, and IT change.Former defense co ntractors and traditional com mercial sector com panies, such as IBMCredit Corporation and Ford [12], alike have embraced BPR to speed up slow or broke n business processes. Others, such as Taco Bell [13], have embraced BPR toenable the redefinition of their business.

Infonnation technology is usually a necessary but insufficient factor in achievingbusiness process redesign. IT has been described as both a strategic catalyst and anenabler of BPR [5, 12]. Yet, the absence of needed IT capabilities can be a majorinhibitor to B PR. For exam ple, a manager described how the data architecture that acom pan y's London office had established in the late 1980s made it relatively easy todevelop new applications to support a process that had been redesigned. Th e lack ofsuch 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 similarscope.

A systems planning or data-modeling project may provide the genesis for BPR asthe organization w akes up to the fact that a planning process that focuses on technologymay not deliver the business solutions it needs. For example, when asked why BPRhad become a major agenda item, the chief infonnation officer (CIO) of a majorinsurance company noted:

In the late 1980s, I began to look at how technology w as linked to our overall cor po-rate strategy. I tried to assess how new applications impacted the en terprise—my intu-ition wa s that we w ere investing a lot but not getting the desired productivity. A s Ibegan to focus on what w e were doing, it was clear that, generally, we did not c hangethe processes that were being automated. Rather, we took sophisticated applicationsand layered them o nto an old organization. I began to envision a need to reengine er.

Further, in all of our years of focus on the techno logy, it was as if we had been look-ing through the w rong end of the telescope.



BUSINE SS PROCESS REDESIGN 8

tion Hammer and Champy [12] note:

Reengineering can't be carried out in small and cautious steps. It is an all-or-nothingproposition that produces dramatically impressive results. Most companies have nochoice but to muster the courage to do it. For many, reengineering is the only hope forbreaking away from the ineffective, antiquated ways of conducting business that willotherwise destroy them.

One manager explained, BFR is about changing the engines o f a flying airplane.BPR is one approach to organizational transformation.

Is BPR radical change? W hat are the necessary tactics to accomplish radical chan ge?In this paper, w e contrast change tactics that promote radical change with tactics thatpromote incremental change. We then analyze three BPR efforts to understand

whether, how , and why revolutionary tactics were used or not used. We conclude withimplications to practice and research.

Overall, the three initiatives differed in terms of the scope and planned depth ofchang e. The use of revolutionary tactics varied across the initiatives, but also by thephases of the initiatives. The three cases suggest that BPR may be a revolutionaryapproach to design. The realization of the design m ight take a long time and involvean evolutionary approach.

Change Outcomes: Determining the Degree of Planned Change

THE PLANNED OUTCOMES OF CHANGE CAN BE DESCRIBED IN TERMS OF SCOPE AND

DEPTH. Scope includes the breadth of change. Depth involves the nature of change.Radical change is high on both scope and depth.

Scope of Change

The scope of change denotes the organizational reach of change—^for example,whether the impact of change will be contained w ithin one fiinction, one organization,or will cut across organizational boundaries [3]. Although BPR by definition 12,25,29] spans functional boundaries, there seems to be a wide disparity in how narrowlyor broadly a process is viewed from one BPR initiative to another—this results indiffering d egrees of cross-functional scope. The much-ce lebrated Ford Motor Com-pany accoun ts payable BPR project was largely limited to one fiinctional area— ac-counting [11]. By contrast, IBM Credit Corporation collapsed a number of functionalareas with its BPR initiative [12]. Singapore Tradenet illustrates the transformation ofrelationships across a num ber of trade-related coordinating bod ies [16].

Planned Depth of Change




to reduce the turnaround time for quotations to custom ers. The focus of its initiativewas 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,managem ent hoped to increase customer service effectiveness when it worked withW al-Mart to reengineer the order-managem ent/inventory p rocess for Pamp ers diapers[12]. When T aco Bell managem ent recognized that they were in the fast-food busine ss,not in the Mexican-food business, BPR w as used to transform the organization intothe newly redefined business [13].

To transform an organization, a deep change must occur in the key behavior leve rsof the organization: job s, skills, structures, shared va lues, measurement system s, andinformation technology [10]. The greater the extent of planned chan ge to the ch ange

levers, the deeper the planned change. For example, Otis Elevator [26] changed itswork procedures for managing service requests, employee roles, culture, IT, andmeasurem ent and control systems in an effort to improve customer service.

BPR is commonly facilitated by information technology [5, 12]. IT-enabled out-com es, in tum, 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 c tegory allow users to work betterand often to produce higher quality work Applications in the tr nsform tion category

change the basic ways that people and departments work and may even change thevery nature of the business enterprise itself

This classification of change is consistent with the depth of chan ge. When the onlychange lever used is IT (i.e., IT-enabled change), mere automation of manual tasksoccu rs, resulting in efficiency gains. Effectiveness, in tum, requires change s not onlyin technology, but also in skills, job roles, and work fiow. Transformation in tumassumes a major change in most of the change levers of the organization, includingstructure, culture, and compensation schemes. Automation is the least deep; thetransformation is the deepest form of change.

In addition to BPR accomplishing cross-functional and transformational changes, itis also expected to change the organization^a^^ For example. Hamm er and Ch ampy 12, p. 212] note that Tw elve months should be long enough for a compan y to movefrom articulation of a case for action to the first release of a reengineered proc ess.

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 aproposed change [23]. A change process that complies with current organizationalvalues and norms, skills, structures, and incentive systems is inherently evolutionary.



BUSINES S PROCESS REDESIGN 8

depending on the type of change. Radical change (a transformational change in a shortperiod of time) usually necessitates revolutionary change tactics; likewise, incremen-

tal change suggests evolutionary change tactics.

Evolutionary Change

Evolutionary chan ge models assum e that change is adapted to the p ce and capa bilitiesof people and w idespread, frequent, and open com munication is a key tactic to enab leincremental change [7, 15, 17]. Evolutionary m odels also assume that change cann otbe fully planned at the outset and those who will be affected by the change must leadand 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 leastchangeab le element or group in the organization.

As such, evolutionary change models suggest a gradual, staged sociotechnicalchange approach. The change tactics derived from this view reflect two basic assum p-tions about change: (1) change takes time and is best accomplished in small increm entsat time, and (2) change is recursive adaptation process between the technology andthe user environment. Although this incremental, cumulative view of change has along tradition in various facets of science (for examp le, biology [7] and social science[20]), new theories challenge these underlying assum ptions of change.

Revolutionary Change

According to radical change theorists [e.g., 9, 27, 28 ], a fundamental organizationchange cannot be accomplished piecemeal, gradually, or comfortably. Rather, thechange must unfold rapidly. The creation of new forms and processes requires difficultcompact rev olutions. Although revolutionary change theories acknowledge the exis-tence of incremental changes during periods of stability (i.e., equilibrium), they arguethat 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, businesspractices, culture, and organizational structure change. The existing deep structurepersists and limits change during stable periods but must be dismantled and reconfig-ured in periods of revolutionary change. Unless the deep structure is changed, thebehaviors migrate back toward the status quo once the formal change program isdeclared to be over. Some level of identity crisis, disorder, and ambiguity usuallyprecedes a deep structure change [24].

Radical change outcomes (i.e., broad and deep changes) require revolutionarych ngeprocesses, particularly when the time frame is short (see figure 1). The reverse




Process

Evolutionary Revolutiotiary

Incremental improvement

ontinuous incrementalimprovem ent over a long

period

Little be nefit for risk and pain

Radical change in a shortperiod of time

Incremental

Outcome

Radical

igur L Process and Outcome of Change

of the legacies of the past, allow them to see alternatives, and build confidence andcapabilities for the future. New managers are needed to accomplish frame-breakingchange. Current employees should be excluded because of cognitive, motivational,and obligational barriers to change. Existing managers and employees, many of whomare com fortable with the status quo , may have difficulty performing out-of-the-box

thinkin g. Also, existing employees may fear losing control, opportunities, or power,and that they cannot accomplish the new tasks. Existing em ployees m ight be furtherconstrained because of legions to stakeholders inside and outside the organization w hoprefer the status quo. Tushman et al. [27] found that externally recruited executivesare three times more likely to initiate frame-breaking change than existing exec utiveteams. Frame-breaking change was coupled with CEO succession in more than 80percent of the case s. Hall et al [ 10, p . 124] reported that in four of the five successfulBPR initiatives, new chief executives were brought in before or during the projec ts.

Moreover, revolutionary ch ange must start in populations that are small and isolated

before the change is spread further [8]. Isolation helps the group avoid h aving its focusand energies diluted by the surrounding inertia. ome existing organizational m emb ersmight also have to be removed in order to communicate that resistance will not betolerated. An organization that holds onto its promise of no layoffs violates the basictenet of revolutionary chan ge: people must qualify for change rather than have c hangeadapted to people.

Proponents of revolutionary m odels argue that a failure, or a crisis, is required to setthe stage for revolutionary cha nges. Gersick [8] similarly argues that people appearmost capable of creating and accepting new solutions when they face insurmountable

problems that cannot be solved with the current deep structure. Crises help providedecisive breaks in system s' inertia and can tap major sources of energy for creating




al . note, Too often, comm unication translates into a unilateral directive. Real com-munication requires a dialogue among the different change ma kers [14].

Radical theorists do not refute that an anticipated crisis might be a sufficientmotivator for radical chang e. That is, managem ent can create a crisis and a sense ofurgency to motivate organizational mem bers to get on board with a change program[14]. They do , how ever, caution that only a farsighted minority of firms initiateupheaval prior to incurring performance dec lines [27]. In addition, the old organi-zation might have to be dismantled and left disorganized for some periods of timebefore fundamental changes take hold.

Gersick [8] believes that successful radical change requ ires the creation of temporalmilestones. Temporal milestones occur when people become acutely aware that the

time is finite and they have to move on. She ma intains that if organization mem bersbegin to realize that a particular era has ended, then they may accept that theapproaches that they had previously chosen might no longer be appropriate. Temporalmilestones help to create the sense of urgency, and make people reevaluate pastchoices and take new steps.

Evolutionary and Revolutionary Change Tactics

A comparison of the evolutionary and revolutionary change models suggests some

similarities and som e major differences. Both evolutionary and revolutionary mo delsadvocate having senior executive support or sponsorship of any large-scale changeinitiative. Both argue for clear objectives and vision. However, the revolutionarymodels call for leadership from outside the organization, and the evolutionary mo delsfor leadership from the existing senior management. The evolutionary tactics call forbroad participation of the current process owners and contributors in the design andimpleme ntation. The revolutionary tactics call for the exclusion of the current p rocessowners and use rs. While the evolutionary models advocate broad, organization-widecommunication, 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 thatch nge c n be driven by a desire for self-improvement; r dic l change proposes that peoplemust believe cognitively and sometimes experience emotionally the crisis state of theorganization. In summary, to accomplish deep structural change, the radical modelssuggest that people cannot be assumed to be capable of change; rather, they have to bequalified 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



STODDARD AND JARVENPAA

Liker et al. suggest four aitemative approaches to managing technology pacedchange based on the pace and scope of sociotechnical ch ange: all-at-once, technical-

system-first, social-system-first, or gradually staged sociotechnical change [19]. Theall-at-once strategy assum es that an organization w ould attempt to make rapid, radicalchange in its technical and social systems concurrently. The technical-system-firstapproach suggests a m ore gradual change; IT changes are expected to induce socialchang es. The social-system-first approach calls for getting your house in orderbefore making major technological changes. It assumed unfreezing and changing [ 8]

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. Changeemerged slowly and gradually as large and small recursive cycles bridged the gapsand m isalignments between technology and the rest of the organization. M uch of thischange p rocess could not have been planned in the beginning.

Several others describe technology-based change as an emergent process: theusers and consequences of information technology emerge unpredictably fromcomp lex social interactions [21]. For example, a study on the introduction of CTscanners 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 librariesimplemented a balanced level of both technological and organizational changesrather than one or the other [4]. How ever, the sequencing of these innovations alsoaffected performance. Libraries that adopted organizational innov ations first w ereultimately the best performers.

Table contrasts the change tactics for the evolutionary and revolutionary changemod els in seven areas: leadership, employee involvement, the strategy for com mu ni-cation, the motivation for BPR, m ilestones, organization structure/culture and IT. Wenext analyze the use and m ore importantly the context of use of the revolutionary and

evolutionary change tactics in three BPR initiatives. We start by outlining the researchapproach.

Research Approach

A CASE STUDY METHOD WAS DEPLOYED T EXPLORE HOW AND WHY differe nt ch an ge

managem ent tactics were used. A multiple-case design involved three BPR initiativesin three different comp anies. The three cases varied in terms of the expected changeoutcom es. The BPR initiative w as the unit of analysis. A BPR initiative could be oneproject or a set of interrelated projects.

The first author's organization had an established relationship with the three




Table Evolutionary and Revolutionary Change Theories:A Comparison of Tactics

Leadership

Employeeinvolvement

Communication

Motivation

Milestones

Culture/structurechange

IT change

Evolutionary

Use insiders

Use current managers andemployees who arerepresentative ot thepopulation of employees

Broadly com municatedplans

Self-improvement

Flexible

Adapt to existingemployees

Process or social systemfirst. Alternatively, gradual,staged implementation oftechnology and socialsystems

Revolutionary

Use outsiders

Exclude current managersand employees where possi-ble. Involve only best of thebreed and those who aredissatisfied with the statusquo. Employ employeesfull-time. Isolate thereengineering team

One-on-one communicationto key stakeholders only

Crisis or failure

Firm

Qualify employees forchange who fit with newculture and organizational

structure

Simultaneous change oftechnology and socialsystems

pilot and implementation phases represented concurrent data collection involving

contact between the researcher and the organization every three to five months overan eighteen-month study period. Both researchers or a researcher and a researchassistant) were present in all key interviews, allowing cross-checking of facts andimpressions.

In each case study, retrospective data were collected on w hat practices and organi-zational interventions triggered the organization to initiate the efforts. The datacollection involved primarily semistructured interviews with open-ended questions.Site visits were supplemen ted w ith telephone interviews. An interview guide was usedin most of the interviews see appendix). The number of people interviewed per case

study varied from eight to twenty-five; most w ere managers and em ployees involvedin the BPR initiative. In all cases, the business process owner, the IT director, and




Background on Three Reengineering Initiatives

TAB LE 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 inancial services company. One ofthe main divisions ofthe firmbegan BPR in late 1980s with an attempt to transform the company fiom a mass marketer toa personalized services company. The division had experienced declining margins becausof problems with persistence and higher costs to acquire customers. The BPR initiative wasaimed to result n 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.Sgovernment. Because of the restructuring and the downsizing of the U.S. defenseindustry, the company faced the challenge of maintaining a profitable division with asignificant reduction in demand. Cost cutting and downsizing had become the ordeofthe day. The new competitive environment had already resulted in major cycle-timereduction in submitting proposals to the government from six to twelve months tothree mon ths. Further, the time between the award of the manufacturing contract tothe delivery ofth e equipment was cut from twenty-four months to twelve. All this putpressure on purchasing to reduce its cycle time and hand-offs.

FoodCo was a large food retailer and manufacturer. The BPR effort was undertakenin the manufacturing unit of the firm that had nearly forty manufacturing plants allacross the United States. The head of the unit had previously implemented anintegrated manual manufacturing system in one ofthe plants in the 1960s and nowenvisioned implementing a standard computer-based MRPII system in all ofthe plantsin order to enhance each individual pla nt's effectiveness, enhance overall control, andallow the unit to leverage its size with customers and supp liers.

Scope of BPR Initiatives

The scope of BPR varied across the three initiatives. At FinanceCo, the scope includethe entire organization of more than 2 000 people. The initiative w as expected to takeseven to ten years. In 1992, FinanceCo had over twenty BPR im plementation teamsin progress . In early 1993, they had eight teams in progress and in the summer of 1993,six teams. At FoodCo, most ofthe manufacturing unit's 3 500 employees would beaffected. The initiative was estimated to cost 40 million, with savings of 200 millionover ten years. The initiative w as expected to take 6.5 years to com plete. At DefenseCo, the scope w as limited to the purchasing department of 165 people; the initiative

was completed in three years from its inception (see figure 2).




Table 2 Overview of Reengineering Initiatives

FinanceC o 993 DefenseCo 993 FoodCo 993

Company context Mail order insurance. Industrial equipmentRevenue in excess manufacturer whoseof 600 million, defense segmentemploys 2 000 people had revenue of

approximately 1.3billion

Food manufacturerwith revenue in ex-cess of 1.5 billionand 3 500 employees

Reengineeringinitiative description

Refined work in the Implementation of anpurchasing area in MRPII system in fortyone of the companies plants ranging fromin the defense bakeries and milk-

systems segment. processing plants tononfood plants.

Sought to transformcompany. Eight toten reengineeringinitiatives undenway.

Three initiativeswere testing newways of doing busi-ness. The otherswere reengineeringwork 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 flowbased vision and a and planner position to be redefined and

was combined into a standardized across

commodity the plants,administrator role.

Structural changes

Informationsystems changes

new strategic busi-

ness model weredeveloped for thecompany.

Moving toward amanagementthrough teamstructure and a flatterorganization.

Moving from main-frame systems andtoward a client-serverA/Vindowsenvironment.

Eliminated a numberof middle-managerpositions.

Cultura l changes Cultura l audit sug-

gested need tosignificantly changethe culture.

Installed M acintoshcomputers in an envi-ronment that had tra-ditionally been onlyIBM. Also, intro-duced prototypingwith users in an envi-ronment embracingtraditional systemsdevelopment life-cycle approach to de-velopment.

A more participative

culture was intro-duced as employeeswere involved in the

Headquarters func-tions redefined toenableimplementation.

To replace three PC-based manufacturingcontrol systemsplants had imple-mented in nonstan-dard ways. InstallingMRPII and IBMAS400 computers,new technologies forthe company.

Many plant employ-

ees would have to in-terface withcomputers for the first



92 STODDARD AND JARVENPAA

Scope of Chan ge

Functional Cross-functional Organization-wide

PlannedDepthofChange

Efficiency

Effectiveness

Transformation

DefenseCo

FoodCo

Finance Co

igur 2 Planned Outcomes: A Comparison of Cases

management sought to transform the organization, which w as losing market share andexperiencing declining profitability. The functional work processes, structures, andvalues cemented w ith information technology would have to be changed to enable a

new business strategy. FinanceCo expected both to offer new and innovative productsand to be able to support its customers in new and innovative w ays. For exam ple, thecustomer would be served by a dedicated crossfunctional team that handled both salesand service transactions for the com pany s varied produ cts.

At DefenseCo, the BPR initiative was to improve the flow of work wh ile doing morewith less. The redesigned process was also expected to provide management withbetter metrics to measure how well the department was doing. Customers (e.g.,manufacturing) had traditionally viewed the service level of the purchasing depart-ment as poor. The department w as inundated with paper, and it was not unusual forpurchase orders to be misplaced or to get lost in som eon e s in-basket. The BPR effortwas to m ove away from a functional view to a process view. T wo job categories w ouldbe collapsed to one and one-third of the departm ent s staff would be eliminated.

At FoodCo, the expectations were more of effectiveness, followed by efficiency.The senior vice president for manufacturing explained.

For a number of years I have envisioned implementing a standard computer-based sys-tem in all of our facilities, that would not only enhance our ability to manage individ-ual plants but would provide the infonnation we need to leverage our size when wedeal with suppliers and customers. The challenge that we face as we try to accomplishthis is that there are vast differences in the characteristics and life cycles of the prod-ucts produced in our 4 plants. Yet, if we are successful at implementing a standard

d t th t it is



BUSINE SS PROCESS REDESIGN 9

Table 3 Ha mm er s Reengineering Principles: Mapping of Three Cases

FinanceCo DefenseCo FoodCo

Organize around outcomes not Yes Yes Notasks

Have those who use the output of Yes Somewhat Somewhatthe process perform the process

Subsume information processing Yes Yes Yeswork into the real work that produces the information

Treat geographically dispersed re NA NA Yessources as though they were centralized

Capture work once and at the Yes NA Yessource

Link parallel activities instead of in Yes Yes Phase 3tegrating their results

Put the decision point where the Yes Yes Yeswork is performed and build control

Into the processAdapted from Hammer [ ] and Hammer and Champy [12].

was developed based on senior manag em ent s vision and the knowledge of what otherorganizations had been able to accomplish as a result of redefining their processes.Management expected the BPR to yield major savings fiom reduced plant losses,reduced per-unit purchasing costs, inventory value reduction, potential increases inpublic sales, and overall improvem ents in productivity. O ther benefits were expectedfrom 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 managem ent believed that they had undertakenBPR. Table 3 maps the three initiatives to H am me r s [1 1, 12] principles of BPR. Intwo of the organizations, management called the initiatives business process reengin-eering; in the third case, the organization referred to the initiative as business processoptimization. In the next section, we analyze the use ofth e evolutionary and revolu-tionary change tactics in the three initiatives.

Change Tactics Observed in BPR Initiatives




occurred during design than during implementation at FinanceCo and FoodCo.FinanceCo and FoodC o exhibited a revolutionary approach to design, but an evolu-

tionary approach to change during implementation. DefenseCo deployed both revo-lutionary and evolutionary tactics during design and implementation.

Hence, the more radical the planned change, the more the organizations employedrevolutionary change tactics during design, but not necessarily du ring imp lementation.This finding is somewhat paradoxical given that the majority of actual cha nge o ccursduring implementation. Table 4 compares the change tactics used for each BPRinitiative. Table 5 summ arizes whether the use of revolution ry t ctics decreased orincreased during the initiatives pilot and implementation p hase from that ofthe designphase.

Leadership

The leadership change tactics used at FinanceCo and FoodCo were revolutionaryduring design, but evolutionary during implementation. At DefenseCo, the approachto leadership was a mix of evolutionary and revolutionary during design and im ple-mentation.

All three initiatives used new m anagement talent in the beginning. This inflow did

not, however, continue ove rtim e. FinanceCo made the most use of outside m anagersin the beginning. A new president and a new senior vice president of operations/custo-mer marketing were hired, and BPR emerged as a way to prototype and implementthe ideas that surfaced from the new strategic planning process. The new president ofthe organization regularly endorsed the reengineering initiatives and was activelyparticipating in the communication to the broader organization. The senior vicepresident was seen as the owner and champion ofthe reengineering effort.

At DefenseCo and FoodCo, the momentum for BPR was established by managerswho had been part ofth e organization for a number of years. How ever, in both cases,

new managers were brought in to provide day-to-day project leadership after theinitiatives had been funded. At DefenseCo, a manager came from another part oft hecompan y. The new manager scrutinized the proposal and was initially quite skepticalabout the need for the initiative:

Since I had been a customer ofth e purchasing area, I knew there w as an opportunityto make cha nges that would result in better service to customers and red uctions inheadcount. I was initially skeptical ofthe BPR initiative and, quite frankly, almostpulled the plug on the initiative. When the BPR initiative proposal crossed m y de sk,we we re in a downsizing pha se. I knew that I could eliminate people from the pu rchas -ing area and didn t need a computer system to do that. From November until Janu-ary, the initiative was essentially on hold until I warily agreed to move forwa rd. Evenso , I agreed to move forward with the stipulation that the initiative would hav e to gen-



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9 S TO D D A R D A N D J A RV E NPA A

Table 5 Increase or Decrease of Revolutionary Tactics in Pilot ImplementationPhase Compared to Design Phase

Leadership/management—New managers and leaders—Full-time dedicated

managers—Outside consultants

Employee involvement—Qualified members best of

breed type)

—Full-time team members—Isolated teams from rest ofoperations

Communication—Limited need to know only)

Motivation for BPR—Crisis

f^ilestones—Rigid

Culture and structure change—Layoffs of employees—New structures depart-

ments, teams)—New roles—N ew compensation schemes

change—Simultaneity of technology

and social system changes

FinanceCo

No change

No change

No change

4

DefenseCo

4No change

No change

t

No change

No change

No change

No change

t

t

No change

FoodCo

No change

No change

No change

No change

three times during his first eighteen m onths with the company reflecting the need toensure that h had sufficient resources to carry out th BPR and legitimize the businesschanges he w as attempting. A full-time management team was also initially dedicatedto manage the business conversion and training associated with the system .

During the pilots and initial implementation fewer full-time manage ment resourceswere dedicated to the efforts at FinanceCo and FoodCo. At FinanceC o an officer of thecompany w ho coordinated th reengineering initiatives on a full-time basis during designwas assigned additional responsibilities during pilots and implementation. At FoodCo a

dedicated management team decreased over time. For example a training m anagerinitially working full-time on the initiative also began to perform additional activities.



BUSINESS PROCESS REDESIGN 9

before funding was approved. At FinanceCo, the consultants helped to develop thenew business strategy and provided the tools and methods for BPR. During imple-

mentation, the consultants' role was limited to one of performing audits of theinitiatives and assisting in software development.By contrast, at DefenseCo, the consultant played a major role through design and

implementation. The consultant's package inspired a vision for BPR and new roles. Theconsultant assisted with modifications to the package that was purchased. The consultantmanaged the implementation to new processes including the training of employees.

Employee Involvement

Employee involvement tactics were revolutionary at FinanceCo and FoodCo duringdesign, but evolutionary during implementation. At DefenseCo, the employee in-volvement was som ewhat m ore revolutionary in implementation than in design.

At FinanceCo and FoodCo, employees selected to work on the design of the newprocesses w ere considered to be best of breed. At FoodCo, the design team includedtwo manag ement-level people from each plant type. At FinanceCo, crossfunctional,multilevel team of six employees worked w ith outside consultants to develop a newstrategy that guided the work ofthe specific implementation initiatives.

In both FinanceCo and FoodCo, employees assigned to design and test the new

processes were dedicated full-time to the effort and were physically separated fromthose who were using traditional work approaches. They were also constantly re-minded by m anagement that they were embracing the new business strategy, whereasothers were in the old busine ss. At FoodCo, plant employees were relocated toheadquarters to work on the BPR initiative.

At both FinanceCo and FoodCo, the number of full-time people declined as theprojects approached the pilot stage. Similarly, more representative people from thework force were involved. The p ilots also occurred in the normal work a reas.

DefenseCo's approach to employee involvement can be characterized as a some-

what evolutionary chan ge tactic in design with a revolutionary flavor in im plementa-tion. In design, the employees were expected to continue to perform their work as it hadbeen traditionally defined. The employees participated part-time in the design activities.The opportunity to participate in the design and testing ofthe new processes was a publicacknowledgment that the person w as high performer. Because ofthe drastic reductionof departmental staff during implementation, proportionately more people were excludedfi-om new work processes at DefenseCo than in the other two initiatives. Also, duringimplementation, all employees switched to the new work approaches rather than theorganization maintaining both the new and the old ways of doing business.

Communication



9 S TO D D A R D A N D J A RV E NPA A

At FinanceCo, early in the initiative, the senior leadership met with employees atall levels to explain the new business vision, strategy, and how the BPR would affect

emp loyees. A videotape simulating new work processes was shown in small interac-tive round-table discussions. T he reengineering te ms also prepared num erous a rticlesfor the parent company's newspaper and for the organization's own newsletter, andset up a kiosk in a lobby to inform employees and customers of the reengineeringinitiative. A course that covered the basics of the new strategy was added to theorganization's training curriculum.

At Fo odCo, the plant representatives in the BPR team were expected to keep theirplants up to date with the initiative's progress. In addition, the BPR team held w eeklymeetings, published widely distributed newsletters every two to three months, and

offered conceptual and hands-on training on MRPII. The corporate staff was beinginformed about the initiative primarily through the sponsor oft he initiative until hisretirement in the fall of 1992.

DefenseCo held weekly 6:30 A.M. breakfast meetings open to people IVom alldepartm ents. During those meetings, employees involved in the BPR provided statusreports, and both team members and senior management were available to answerquestions. But only the same 40 or so employees oft he depa rtme nt's 160 employeestended to com e regularly to the meetings.

In all three initiatives, broad comm unication continued during the pilot and early-

implementation phase s; the impact of comm unication, however, decreased over tim e.When som e ofthe employees first heard ofthe initiative (usually in the design phase ),they believed that the changes were imminent or already happening. Since nothingwas implemented for some time, employees began to question whether change wasforthcoming and tended to pay less attention to what w as being com mun icated.

Motivation for BPR

During design, FinanceCo exhibited a revolutionary tactic to motivating the com pany

for the change; during implementation, the tactic was evolutionary. At FoodCo, themotivation w as 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 comm unicatedthe BPR effort in crisis terminology. F inanceC o's em ployees were told that financialresults were poor and, if they were to stay in business, the company had to change.How ever, perhaps because ofthe length ofth e initiative, the need somew hat changedin the eyes of those conducting pilots. They saw themselves as helping to implem entthe organization 's new customer-focused service and s les strategies ratherthan tryingto tum around the firm's financial performance.

At DefenseCo, the declining defense budgets demanded that either DefenseCo



BUSINESS PROCESS REDESIGN

At Food Co, the BPR was presented as an opportunity for the division to generatemore wealth for the company. The BPR's financial implications represented

significant cost reductions, 80 percent of which would be due to material costreductions. Employees were also informed of the benchmark study, that theorganization had conducted showing that its infonnation systems capabilitieslagged behind those at other food manufacturers. During implementation, theinitiative was associated with, as well as suffered from, the need to cut operatingcosts drastically. The organization had experienced an unexpected do w n yearfollowed by some plant closings, consolidations, and organizational downsizing.The financial situation resulted in the initiative becoming under more financialscmtiny. The project experienced a reduction in its resources.

Milestones

At FoodCo and at DefenseCo, a revolutionary approach was deployed for managingmilestones during design. The revolutionary tactic was maintained at DefenseCoduring implementation, but not at FoodCo. FinanceCo exhibited an evolutionaryapproach to milestones during design and implementation.

Rigid milestones were established at FoodCo and DefenseCo for schedule andbenefits. DefenseCo adhered to those deadlines. The same applied to FoodCo in the

design and pilot phases. In implementation, some slippage occurred because ofresources diverted from the initiative.

Flexible milestones were used at FinanceCo. The BPR involved experimenting withnew ways of doing business, and an overall timeframe was developed for thecomp anywide reengineering initiative. Where prior organizational experiments su g-gested a project would y ield positive results, milestones were set. For those projectsinitiated to test new approaches, the milestones were flexible.

Change of Current Structure and C ulture

The three BPR projects planned revolutionary changes to the structure and culture.The chang es can be characterized as evolutionary at FinanceCo and FoodC o (partic-ularly in view of the planned changes). The changes were most profound at D efense-Co, although contained to one department.

Since the beginning of design, FoodCo and F inanceCo spent resources on em ployeetraining and education for the new required behaviors and values. Maintaining thenecessary level of funding for education becam e a challenge over time. The pace ofbehavior and value changes slowed down with the decreased educational budgets

during pilots and implemen tation.At F inanceCo, major organizational changes w ere piloted, but few w ere seen to be




experimented with team-based and skill-based compensation. A senior managerelaborated:

Compensation will be based on jobs skills, willingness to continue to leam and de-velop, and the ability to function in a team environment. Our new job evaluation sys-tem will motivate people to develop a wider array of skills. Goal-sharing will tieindividual rewards to the perfomiance 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 newschem e. Most other structural/cultural changes were scaled down or put on hold.

At FoodCo, relatively little was accom plished in terms of cultural change becaus eof plant resistance, project delays, the reduction of resources devoted to the c hange ,and the focus on systems rather than on overall processes. For example, the initialplanned called for hiring outside consultants not only to design but also to m anage theeducation and training programs. This was ruled out later because of cost. Instead,representatives from plants were groomed to be coaches. B ecause of their limited timeand resources, the training was mostly on PC skills and on the mech anics of the system( keyboa rding ). Little time was spent on conceptual training for the new proce sses.Also, the design w as revised during the pilot stage because of plant resistance to thenew w ays of working. According to a BPR team member,

[P]eople felt we were intruding on] their turf. They insisted on replicating their oldwork pattems. We lacked the power to offset this resistance. Our progress was depen-dent on cross functional agreements that were very time consuming to negotiate.

At DefenseCo , the structure and culture of the purchasing organization w as signif-

icantly changed. Yet, the fact that the initiative was restricted to one function madethe organizational changes relatively easier than at FinanceCo and Foo dCo. Financialreward structures were revamped to refiect the new expanded job s and responsibilities.Most supervisory-level jobs were eliminated as many controls were automated, andemployees were em powered to make decisions that previously had to be approved by

a superior.

IT Change

At FinanceCo and FoodCo, the approach to IT was revolutionary in design andevolutionary in implementation. DefenseCo's approach was evolutionary in bothdesign and implem entation.

At FinanceCo and FoodCo, IT helped to envision new ways of working. AtFinanceCo , there were a number of host systems that the customer mana gement team shad to access in order to respond to customer requests and to prepare sales propos als.These legacy systems were product-based, not customer-based. The new PC-based



BUSINES S PROCESS REDESIGN 1 1

mem ber of a customer managem ent team) to take information from the customer. T hesystem w ould automatically process simple orders.

At FoodCo, the BPR initiative was to implement a standard information systemacross a heterogeneous set of plants. The system was to push information and decisionmaking down to the plants as well as to allow better integration of plant informationat headquarters. To m aterialize the cost savings from IT investments, business pro-cesses w ould have to be streamlined and standardized.

Similarly, at DefenseCo, the knowledge of available technology had inspired theBPR initiative. A manager elaborated:

The purchasing manager saw an article which described a purchasing system that hadbeen developed and installed by a consultant at another company. The manager con-

tacted the consultant and become further convinced that the system would improve theflow of work within the department. The solution would also equip the departmentwith Macintosh computers that could be used as front ends o host based systems.

None of the initiatives, however, adopted the IT revolutionary change tactic, the all-at-onc e strategy in implementation. At FinanceCo, the pilot teams first leam edtheir new roles; the new T platform and applications were introduced over a three-yearperiod. The delay reflected the lead time to develop the new sys tems. At Foo dCo, atechnical system preceded the social-system chan ges.

At DefenseCo, the process resembled one of gradual adaptation ofthe system andthe new organizational roles. The design and implementation o fthe technology wereiterative. In stage one, the consultant came up with a conceptual design to whichDefenseCo's management agreed. In stage two, the consultant worked with front-lineemployees fVom the purchasing area to design the final roles and system. In the firstrelease, the jobs/role s remained unchanged ; however, buyers and planners were askedto train one another on their respective jobs. The new roles and enhanced IT capabil-ities were introduced in multiple stages.

All BPR efforts experienced problems scaling up from prototyping to pilots andfull-scale implementation. The IT departments were fundamentally challenged insupporting the initiatives. At both FinanceCo and FoodCo, the IT department'scompetency was in host-based systems. The new computer-based system was adistributed system on a platform unfamiliar to the IT organization. FinanceCo hirednew IT personnel as well as training many of its existing staff in new developmenttools and methods. At FoodCo, a group com prised of plant ma nagers, not T personnel,was charged with implementing the new system, roles, and processes. Yet, theimplementation required close cooperation and coordination (i.e., partnership) be-tween the plants and the divis ion's centralized IT group.

Similarly, at DefenseCo, the system chosen by the purchasing department was basedon a platform the IT group had no experience with. The iterative developmentapproach w as also unfamiliar to them. The IT departm ent's skills and knowledge were



1 2 STODDARD AND JARVENPA A

The consultant's proposal threatened our fortitude. The iterative development processwas not in sync with what our staff had been told. People kept asking m e, Ho w co uldit be OK for the user to see the application before it wa s don e?

Status of Initiatives

At the end of 1993, the three initiatives were at the following stages: DefenseCo'sinitiative was successfully com pleted in 1992; the FoodCo and FinanceCo efforts werein the midst of pilot and field implementation phases. At FoodC o and F inanceCo, thepace of implementation had slowed down considerably. t FoodCo, the second releaseof the system initially scheduled for Fall 1993 was rescheduled to Spring 1994. Thethird release was put temporarily on hold until the operational benefits accrued fromthe second release were know n.

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 describedwhether and how they used revolutionary change tactics. None of the cases subscribedreligiously to revolutionary tactics.

The revolutionary tactics were used more in design than in implementation inthe two projects with the most radical planned outcomes. The projects exercisedan evolutionary approach to the pilot and implem entation phases . For example, atFoodCo, the plant manager was given discretion as to when the new process andsystem would be implemented in a particular plant. The implementation teams atboth FoodCo and FinanceCo included increasing numb ers of part-timers and fewer

consultants than in the design teams. One manager at FoodCo remarked on thepace.

This is really nothing new. Long initiatives always tend to lose momentum the longerthey are around. Scarce corporate dollars tend to go for newer better initiatives.

They are many reasons why FinanceCo and FoodCo did not exercise revolutionarytactics in implementation, whereas DefenseCo did. Here we speculate on a fewreasons, 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 ofrevolutionary tactics In large efforts the financial and human costs and risks of the



USINESS PROCESS REDESIGN 1 3

Energyfor

RadicalChange

RevolutionaryTactics Used

EvolutionaryTactics Used

Design Pilot Implem entationProject Pliase

igur 3 Use of Revolutionary and Evolutionary Tactics

The toughest thing is to leave the team alone. In changing environment, you are con-stantly restructuring and regrouping. It is tempting to regroup the team as well. Thissets the team back.

The use of revolutionary tactics appeared to require a true crisis in an organization.It was not sufficient to communicate an anticipated crisis. FoodCo and FinanceCoexperienced declining profitability, but neither was in a true fmancial crisis. By

contrast, DefenseCo's survival was a daily topic in management and employeediscussions.

The use of revolutionary tactics also required active top-managem ent involvement.The champion had to be personally involved in the design and implementation teamactivities, and had to serve as cheerleader, coach, and referee. Keeping the sponsor

and champion intact appeared to be m ore challenging the greater the scope and planneddepth of change. For example, at FoodCo, the sponsor retired. Later, the initiative'schampion was promoted and stepped further away from the day-to-day activities of

the initiative. The team began to feel detached from the organization's leadership.Without strong and visible management support, the team migrated toward morecomfortable evolutionary tactics.

Althou gh IT was a critical enabler of new visions and designs in all three initiatives,the absence of needed IT capabilities and skills set the initiatives back, particularly in

the case of Finan ceCo. Poor infrastructure and poorly defined data architectures meantthat significant resources had to be comm itted to accomplish applications that sup

ported a process perspective. This meant that a simultaneous change of technology



1 4 S TO D D A R D A N D J A RV E N PA A

None of the projects used a revolutionary tactic to communication. All projectspracticed open communication. Some managers felt that secrecy around initiatives

early on would have led to even more resistance and reduced potential buy -in inimplementation.

In addition, broad communication resulted in some positive unanticipated conse-quences. One manager remarked: People begin to implement the changes on theirown, without being part of the formal change effort. Broad communication alsohelped to get new champions and sponsors to step in when the original reengineeringleaders began to redirect their attention.

Yet, the three initiatives we studied suggest that effectively communicating to abroad audience was a major challenge. All three reengineering initiatives received

feedback that much more com munication w as necessary than had been done to keepthe rest of the organization sufficiently abreast of he progress. One leader comm ented:

You always underestimate the amount of communication you have to do. Always tri-ple what you think it takes. Most communication is needed at the management level,particularly the middle management. The front ine group is much quicker to seize theopportunity.

Flexible milestones appeared to increase creativity and out-of-the-box thinking.They w ere also seen to decrease senior mana gem ent's tendency to micro-manag e theteam, to focus the team on strategic rather than tactical objectives. The lack of rigidmilestones also helped the teams to spend more time communicating to those notdirectly involved what had been accomplished so far.

In none of the BPR initiatives did the organization take advantage of new businessopportunities, new facilities, or newly opened locations. So-called greenfield im-plementation means engaging in enginee ring a new business rather than reengin-eering or renova ting an existing business. None of the firms had the option to divesttheir current business w holesale and invest in a new one. One executive remarked:

To use the clean slate approach to reengineering means new business and new entre-preneurs; yet most corporate boards are intolerant of new entrepreneurial ventures.

Conclusion

OUR ANALYSIS OF THREE REENGINERRING INITIATIVES SUGGESTS that BPR does notalways result in radical change in a short period of time. Although the FoodCo andFinanceCo initiatives had radical objectives, the progress slowed down in implem en-tation as evolutionary tactics were used. None of the projects used a clean slate, orgreenfield, type of implementation. The findings of the current study go counter to

Hammer's definition of reengineering:When someone asks us for a quick definition of business process reengineering, we



BUSINESS PROCESS REDESIGN 105

In other w ords, our analysis suggests that although reeng ineering can deliver radicaldesigns, it does not necessarily promise a revolutionary approach to change. More-

over, a revolutionary chan ge process m ight not be feasible given the risk and cost ofrevolutionary tactics. Sustainable incremental improvement via an evolutionarychange process might be what companies should sometimes expect as success fromBPR. Companies need to tailor the expectations and change management tactics ofBPR to the initiative s scope, depth, and available implementation time.

The current findings a re, of course, highly preliminary . They are based on three casestudies. The findings m ay not be generalizable to initiatives with different mo tivationsand contexts. We invite other researchers to replicate and expand on the currentfindings. We also call for more research attention to m anaging change in BPR. BPR

is not just about envisioning new ways of work ing. It is about imp lementing tho se newways. Work is particularly needed on the contingency factors for the successfulmanagement of BPR change. Such work should take multiple viewpoints, includingthe organization, work group, and individual. One might assess the risk propensity ofBPR champions who are willing to use revolutionary tactics in implementation andcom pare their attitudes to change with an organ ization s overall clima te towardchange. Sim ilarly, m uch w ork remains on developing m easures to assess the magni-tude of change accomplished in processes, behaviors, values, and so on. The role ofinformation technology in BPR needs clarification. IT researchers might add ress the

transformation that intemal IT groups must undergo to support BPR initiatives.

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APPENDIX A: Interview Guide

1. What were the responsibilities ofthe person being interviewed in general andin terms ofthe current reengineering initiative?

2. How did reengineering get started? Why was it started?

3. How were consultants used on the initiative?

4. What did the organization do to get ready for reengineering?

5. When did the initiative get formally launched? When was the team formed?

6. What have been the major events and milestones ofthe initiative?

7. What events and milestones are forthcoming?

8. What were the objectives ofthe initiative at the beginning, at the end of design,

at the end of pilot? How were the objectives established and communicated?

9. Who was involved in the initiative? Were they full-time/part-time? Who was



BUSINE SS PROCESS REDESIGN 1 7

ground? What did they do for the initiative?12 How was the initiative communicated to those not involved? When did the

communication take place? What was the form and medium?13 What type of milestones did the initiative have? Were they flexible or rigid?14 What type of training was provided?15 What was done to prepare the organization for behav ior and attitude changes?16 How has the organization changed to accommodate the new processes?17 What w as the role of S function and information systems applications?18 How else has the change been managed on the initiative?19 What were the m ain lessons from the initiative?

Business Process Redesign, Tactics for Managing Radical Change

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