Reaction to the change in business realities, it provides solutions that allow combating: the challenges imposed by customers, the barriers posed by competition and above all the risks implied by the deep and fleeting change in business reality.
Background
Western organizations have been implementing "World Class Excellence" in their agenda since the early 1980s. The impetus comes from the apparent lack of quality vision in Japanese manufacturing exporters. The stimulus to adopt Total Quality Management (TQM) that includes Business Process Reengineering (BPR) (Schonberger, 1994). It starts first in the manufacturing sector, and later spreads to all sectors.
Introduction
Process Reengineering, or BPR (Business Process Reengineering), can be considered as one of the aforementioned management tools. In fact, it is one of the most recent since it appeared at the end of the eighties, by the hand of two authors: Michael Hammer and James Champy. In later chapters we will see that BPR is by no means the only one of these management tools that enjoys importance and practical application, but that there are others of certain relevance, among which TQM (Total Quality Management) stands out, or which is the same, Total Quality Management. In fact, we will see that there are many more management assistance mechanisms crystallized in doctrines of various characteristics and fields of application.
The BPR, as one more of the new management tools, must be understood as a reaction to the change in business realities. It aims to provide solutions that allow combating: the challenges imposed by customers, the barriers posed by competition and, above all, the risks implied by the deep and fleeting change in business reality.
Definition of Process Reengineering
In order to arrive at a valid definition of Process Reengineering we must start from a previous situation in which we ask ourselves a question: “If we had to re-create the company from scratch, taking into account what I already know and the available technology, would we What would my new company look like? Although there is a general consensus that BPR necessarily undergoes a radical redesign of the company's processes to achieve drastic improvements in management, there are very different definitions, among which we highlight:
"Analysis and design of workflows and processes within and between organizations" (TH Davenport)
"Reconsideration, restructuring and rationalization of business structures, processes, work methods, systems management and external relations, through which we create and distribute value…" (R. Talwar)
Of all these we will stay to analyze in depth each of its terms with the definition of the parents of the concept of Process Reengineering, Hammer and Champy:
"Reengineering is the fundamental overhaul and radical redesign of processes to achieve dramatic improvements in contemporary and critical measures of performance, such as cost, quality, service and speed."
Going deeper into this definition we observe that it contains four concepts
- Fundamental: Once it has been decided to proceed with Reengineering in a business, the individual must ask himself the most basic questions about his company and its operation. Why do we do things this way? Isn't there a better way to do them? These questions force the entrepreneur to question the most basic assumptions on which his business is built. A review of all the pre-established rules is carried out, which until now were unquestionable. Reengineering initially determines what the company should do and, later, how it should do it. A very common mistake occurs when those responsible for implementing BPR focus exclusively on how to do things, without ever considering the possibility of leaving what they are doing and starting completely new activities.The BPR focuses on what a company “should be” and not on what “is.” Radical: The proposed redesign must be radical in the most literal sense of the word, since it must get to the root of things. It is not about making superficial changes or trying to fix what is already installed, but rather that the old must be abandoned. BPR involves discarding all existing structures and procedures to come up with absolutely different ways of getting the job done. We are facing a process of complete reinvention of the business and not before an attempt to improve or modify it slightly Spectacular: As a third key concept of the definition, the improvements that the Process Reengineering implies must be spectacular and not marginal or incremental (typical of processes improvement or slight modification).We must associate the concept of BPR with gigantic leaps in performance. A company analyzing its usual results can come to intuit, at least, whether or not it needs to undertake Process Reengineering. For example, if a company needs to achieve quality increases of 10%, cost reductions of 15%, increases in market share of 5%, etc. it makes no sense to decide to introduce BPR into the company. In this type of situation, it would be enough to apply other measures such as: employee incentive programs, incremental quality improvement systems. Processes: The last of the key concepts in the Hammer and Champy definition is “processes”. Without a doubt, this is the most important word in the definition and, therefore,the one that deserves the most reflection on the part of those in charge of carrying out the BPR in the company. Until the appearance of the concept of Reengineering of Processes, the culture and the ways of most of the companies, especially as the size of the company increased, was focused on tasks, jobs, positions, managers, organizational structures, but never in processes.
We call a process the set of activities that receives one or more inputs and creates a product of value for the customer. This concept implies that within each process one or more tasks converge. These individual tasks within each process are important, but none of them are important to the customer if the overall process is down. Therefore, companies must realize that the importance of the tasks, which is the object of study in most companies, is conditioned by the overall vision that the process implies.
Another equivalent definition of a business process is that of Professor Michael Kutschker, "a specific ordering of activities, over time and space, with a beginning and an end and with inputs and outputs."
Three types of companies that start Reengineering
According to Hammer and Champy, there are three types of company that BPR undertakes.
In the first place, there are companies with serious subsistence problems, those in desperate situations where the continuity of economic activity is at risk.
Secondly, there are companies that are not yet in difficulties but whose administrative systems allow anticipating possible crises, so that the appearance of problems is detected in advance.
Finally, the third type of companies that decide to immerse themselves in the BPR are those that are in optimal conditions. They do not present visible difficulties either now or on the horizon, which is not contradictory to the fact that his administration has aspirations and the capacity to go even higher.
As a summary of this classification of the Hammer and Champy companies, they highlight that a good way to distinguish the main features of each of the three types of companies, depending on how they deal with Process Reengineering is the following: those in the first category are those who are in a desperate situation have hit a wall and are injured on the ground. Those in the second category continue to run at high speed but the light from their headlights allows them to see an obstacle that is approaching them imminently. They still have time to distinguish what kind of obstacle stands in their way and thus try to avoid it in time. Finally the companies of the third category went for a walk on a clear and clear afternoon,without any obstacles in sight and they decided that it was a perfect day to build a wall that would prevent the passage of others who tried to follow in their footsteps.
The 13 Fundamental Concepts of Reengineering
1. It consists of starting from scratch, on a blank page.
It is considered that practically everything that we did before as people, companies, institutions or government would seem to be badly done, considering the results obtained.
2. It consists of radical, brutal, spectacular changes.
Reengineering is the enemy of gradual, moderate and inconsequential changes. We speak of 100% changes, not 20 or 30% incremental changes.
3. It is focused on processes.
Not to departments or areas, jobs, people or structures. The old principles of the administration that fragmented the work in several units no longer work, now there are new principles. A process is defined as a collection of activities that receive one or more inputs and generate an output that is of value to the customer.
4. Have a holistic view.
Observe all processes from a comprehensive perspective. See the whole and not the parts. It has a global perspective.
5. The division of labor no longer works.
The division of tasks that was key to the industrial revolution (linear thinking) is now obsolete. Today it is no longer necessary to work in series, but in an integrated and dynamic way. We have to reintegrate the processes. Reengineering actors must be able to play more than one role.
6. It is the enemy of specialization. It is multispecialty (generalist).
Reengineering is anti-specialization. The specialty has virtues but its defect is the loss of flexibility. In reengineering what you need the most is flexibility.
7. It is based on the principle of uncertainty (Chaos Theory).
In reengineering everything is "pulse and sight." Pure intuition but not blind. Part of the assumption that determinism does not exist and therefore there is nothing established or predetermined. You have to learn to manage or handle uncertainty. You have to have a tolerance for vagueness, as there are no guides or precision. It is building a bridge to the void without knowing the other shore.
8. Your main tool is creative destruction.
The previous thing no longer works and therefore it is necessary to destroy it, but in a creative way, building the new processes. It is based on the principle that in a space only one building fits, to build the new it has to be done on the ruins or ashes of the old. You have to destroy your company or your old "me" or your organization to make a new one from scratch, but this destruction has to be done in a systematic way based on the principles of organizational transformation.
9. There is no "reengineering model." There is no pre-established plan.
The model is that there is no model. Everyone has to do their own reengineering project. The moment you break with the above, you stay in the air, so you must have a tolerance for ambiguity until you recompose the processes. However, you must be aware that to carry out reengineering you would need external advice or consultancy. You can only advance in half of the reengineering, the other half must have external supervision, because otherwise there is a risk of falling into complacency, into self-deception. Only an external audit will prevent you from doing the same thing as before with a new name. Not just any change is reengineering, just a change that complies with and respects all the concepts and its methodology.
10. The most important thing is a change in mindset or focus. Metanoia.
We should not think about isolated tasks, but about integrated processes. If you keep seeing the world as it was before. If you think that there is nothing new under the sun and that you should not change your attitudes, your behaviors, the way you work or if you are not willing to face uncertainty or vagueness, then reengineering is not for you. The day you change your mind, the day you have a cultural change, a Metanoia, that day you can do reengineering. A fundamental concept is that you will not be able to reengineer a company or an organization or any institution if you do not first reengineer yourself. If you don't change your mind, you're not ready to go into the future.
11. At first it must be done from top to bottom.
It must be initiated by the leader of the organization ("transformational leader"), because if there is no will and decision, if power and resources are not channeled, it will not prosper.
12. Second, reengineering requires a push in the reverse direction, from the bottom up.
If you don't involve all the members of the organization, you will fail, because they will boycott you, sabotage you, or slow you down. The involvement should be done out of conviction or out of "love of the shirt."
13. If one is not convinced it is better not to reengineer.
The results can be disastrous, as what worked in the past would be dismantled and new processes would not be fully installed. We would be left in the worst of both worlds: everything bad from the past without the good from the future.
If you are convinced of the benefits of reengineering, its concepts and its methodology, don't wait any longer, put it into practice as soon as possible. The world has already changed, now it is necessary for you or your company or your organization to change.
The main companies in the world have already done or are doing reengineering, to move from the era of industrialization to the new era of information-communication. The world will not stop its march as it did not stop in the leap from feudalism to capitalism. In 20 or 30 years, all the companies that survive will have reengineered or founded on its principles. Get ahead of change, before change changes you or makes you obsolete!
Study cases
Tecnológico de Monterrey
It is convenient to point out that the use of Reengineering as a tool to design new educational management systems has already occurred in the private sector, particularly at the Tecnológico de Monterrey where it was applied a few years ago, and the results were favorable, but not as spectacular as the authors of the matter claim, to the extent that this institute is already in the implementation of the tools of the sixth generation of quality processes: the re-architecture of the organization and the breakdown of market structures, whose The basic principle is: quality is aimed at developing the intellectual capital of the organization, reengineering the administrators' mentality and breaking the market structures, in order to find new ways to reach the customer (Valdes, 1997).
Conalep
The project to apply Reengineering to Conalep is good, but it shows once again the inertia and tortuguism of public institutions to face change and that when they do it they arrive late, as is the case with the application of this tool. that in areas such as the private sector, it has already been exceeded and that in many cases it has not corresponded to the expectations created. Certainly there is a need and desire for change in the way the government operates, but given its restrictions, government organizations cannot adopt the radical approaches of Reengineering, as was demonstrated by the case of Conalep, where it had to be implemented under very forced situations and in a very sui generis way, due to the serious problems of rigidity of regulations and centralism.It is for this reason that the most necessary changes in government organizations must be made with great clarity in their change objectives and the approaches to achieve them. (Davenport, 1994).
The new management tools were used gradually, waiting for the staff to adapt and change their work habits to the extent that they trusted in the effectiveness of these tools. In addition to the above, an important obstacle is the little flexibility of the regulations and excessive regulation of the public sector, for which reason it was sought to promote programs to reward entities that demonstrate their efficiency and effectiveness in the exercise of the budget, and not only in compliance with regulations, which represents a stimulus to improvement initiatives.
An important learning for the institution is that managers are no longer seen as having the panacea to solve all difficulties, but must allow the interaction of specific interests and different views on problems and opportunities. For this, effective work teams were formed, which allows addressing the problems of the institution from different perspectives, solving more problems and being more assertive in the formulation and implementation of change strategies.
This also helped to create a conducive and stimulating work environment, based on communication, collaboration and the delegation of responsibilities.
- Another relevant aspect is that which refers to the redesign of the processes in the institution: most of the literature recommends redesigning only the essential processes and making partial modifications to the others to avoid chaos. However, due to Conalep's high degree of centralization, all levels had to work simultaneously, which led to different levels of development in each of the areas with the consequent delay in the next stage. An example of the benefits of The implantation of this program is the Cortazar Campus, which obtained the Quality Award of the state of Guanajuato in the category of Higher Secondary Education, demonstrating the importance of the strategies promoted by the institution when this recognition was granted by an independent body.
The Ford Motor problem
Within the first group of the Hammer and Champy classification of companies that are preparing to start the BPR we find the case of Ford, which twenty years ago went through a brutal crisis that almost ended its activity. This practical case helps us to illustrate how Reengineering was applied in said company, analyzing one of the areas on which it acted.
At the beginning of the eighties, Ford was in a situation in which it saw how its administrative and internal management expenses of the company were overflowing. To try to reduce these costs, the accounts payable department, which at that time consisted of more than 500 people, was studied. Executives thought that using computers would reduce staff by at least 20%, according to their initial forecasts.
As we have pointed out, this cost reduction cannot be considered Reengineering, since spectacular results are not achieved. However, Ford executives thought that 20% was more than enough until they visited Mazda, a Japanese company whose 25% had recently been acquired by Ford. Ford executives watched in amazement as Mazda serviced its accounts payable through just five employees. These managers had obviously taken into account the fact that Mazda was much smaller than Ford. However, the difference of five to five hundred had to lie in some other factor besides size.
Once the reengineering was undertaken, Ford redefined the “accounts payable” process, which became “supply”. That process took a purchase order from a plant and provided that plant with purchased and paid goods. Therefore, sourcing includes the accounts payable function but also includes purchases and receipts.
The new process considerably reduced the amount of documentation generated in each order, redirected efforts towards the necessary steps in each purchase order, eliminating some useless procedures. This reengineering process ended with very rigid rules that had always been observed.
Sometimes single word changes can radically change processes. This is the case of Ford, which, for example, went from “paying when the invoice is received” to “paying when the goods are received”. To carry out this entire process, Ford had to deploy a powerful plan for the conversion and introduction of computer equipment.
Bibliography
www.gsi.dit.upm.es/~fsaez/intl/capitulos/5%20-Reingenier%EDa%20_I_.pdf
