Rapid Reengineering

Rapid Reengineering

John A, Principal, CEO Counselors LLC © 1995 – All rights reserved.

Everyone wants to deliver better customer service, develop new products faster and reduce operating costs. Every business is striving to create value for shareholders and to produce products and services that deliver value to customers. Some companies are already leading the way in these areas and have established a culture that encourages accomplishing these goals. However, there are a number of companies where this represents a radical departure from the current mode of operations.

Reengineering as a solution

For those companies that require a dramatic shift, Business Process Reengineering (BPR) has been touted as the solution. To summarize, BPR is the name given to the project effort that dramatically redefines the way work is done. Work includes business activities that create the product or service of the business, handle transactions and process information about both transactions and business activities. Transaction and information processing activities consume up to 90% of the human resources of financial services firms. A surprisingly small percentage of these efforts create value for either shareholders or customers.

Why is it that most businesses spend a vast majority of their resources on activities that are not directly in line with servicing customers, developing product or generating revenue? We find the answer in the way business processes are structured. Most business processes are structured by paper and the movement of paper through business functions. Paper is the medium used to propose contracts, accept applications, capture basic data, record underwriting analyses and decisions, claim benefits and pay both insurer and beneficiary.

Transition from paper to electronic media

Electronic media offer an alternative to paper. Electronic media include displays on personal computers, storage devices on all computers, and telecommunications that link those machines together. Electronic media offer many advantages that include:

•  Doing work closer to the customer

•  Developing proposals faster

•  Capturing data at its point of origin

•  Delivering information instantly to decision-makers

•  Making payments electronically.

In general, moving from paper to electronic media permits accessing information wherever stored, linking individuals who have a question with others who have an answer and shortening processes to include only value-adding elements. Electronic media can not only replace paper but also enable entirely new processes that are beyond the possibilities of paper. It is this transition from paper to electronic media that allows businesses to reengineer themselves. In turn, reengineering changes existing power structures and introduces new ones.

Power changes

Electronic media can facilitate a radical shift in the flow of information, in the nature of work and in the structure of the organization that does the work. In most companies, the transition from paper to electronic media changes both external relationships with customers and internal relationships among employees and between employees and their bosses. These changes reconstruct the power structure within the business. As with all major changes in power, BPR projects require exceptional skill in execution to prevent normal human reactions to change of fear, resistance and negative attitudes.

Time is also a critical factor. We have found changing in small increments at frequent intervals easier to accept than large changes at long intervals. In either case, change must be addressed as a specific factor and managed as a component of BPR.

Challenges of Change

The tactics of change management have become well known over the past decade. Key to minimizing resistance to any change are understanding the need and plans for change, and speaking honestly about its impact on individuals. Frequent and repeated communications are required to create understanding and minimize resistance. Demonstrating results through small, frequent changes also makes changes less threatening and relieves anxiety about an uncertain future. Including information on the business strategy and its goals is generally needed to put the change process in context.

Problems with current approach

By opening up the opportunities to redesign the way business is done, BPR gives a business the chance to question all its hidden assumptions, to eliminate work that adds no value and to stop activities that are done only to move, store, retrieve and keep track of paper. In many cases these activities consume over half the labor and up to 90% of the time required to process a transaction.

However, even with these opportunities, the sponsoring executives have rated most BPR projects as unsatisfactory or worse. What is the difference between success and failure in BPR projects? We think the answer is time. The activities to initiate most BPR projects take 6 to 12 months (and hundreds of thousands to even millions of dollars) to produce the concept and justification for the investment. During this period, a team of several to many members works to capture data on an existing process, invent a new one and gain approval of the investment needed to acquire technology and build the new structure.

This approval is often based on a series of assumptions about untested, unproved conceptual models of a new process and needs for new technology that may require many months or several years to develop. Executives are put in the difficult position of approving a high-risk, “bet the business” proposal, to commit major resources and to wait long periods before the concept goes into production.

Alternatively, speed and technique that captures essential information while building confidence and minimizing resistance can have a rejuvenating effect on organizations that have been frustrated by inability to achieve desired improvements.

Time as the critical factor in BPR

One week appears to be the critical unit of time. It is long enough to achieve a significant piece of work and short enough for a business to release its best human resources from routine activities to work on BPR. What can you expect to accomplish in a week?

A week is time enough to scope the key processes of a multi-product business, estimate the impact that reengineering and technology can have, develop the approach for implementing change and project the time and cost for doing the work.

A week is also time enough to take one line of business through the full definition of existing processes, to reengineer them, to capture the scripts for each key job and to scope organization, technology and change management efforts. In this mode, quick hits are usually identified that can be implemented while the major development tasks are accomplished.

In well-structured projects, implementation efforts are segmented and installed in small, frequent steps that allow the organization to learn the practical implications of the conceptual design and refine it. If defects occur, they can be addressed and resolved before they become major disasters that doom the entire effort and require scrapping years of development effort.

Alternative approach

How is it possible to accomplish this level of effort in a week when reputable consultants from major firms are proposing projects that take up to 100 times as long and cost proportionately more? What the author did was apply the principles of BPR to BPR itself and produced a new process for reengineering business processes. Our work is based on the following principles:

•  Quickly capture information on existing value chain and processes

•  Ask senior management to set performance targets for key processes

•  Assemble team of best resources to reengineer processes

•  Use best practice videos to stimulate creative thinking

•  Actively facilitate teamwork activities

•  Use modeling tools to define new processes and measure their impacts

•  Let the team assemble results and make recommendations to management.

Advantages of Rapid Reengineering

Time is a critical factor in every business we have seen. By designing the Rapid Reengineering activities to fit within a week, the managers of each segment of the business can release the best employees to work on the reengineering activities. These are the individuals who really understand what is critical to the essential segments of the value chain. Working together in an intensive workshop for a week also builds a team that is capable of selling the solution to the enterprise.

During the course of the workshop, an evolution occurs in the team that is reengineering the business. This evolution begins with the facilitator acting as the major driving force. By the end of the week, team leaders have evolved and they have developed both the concepts and the presentation to management. They are committed. They become the major force for change within the enterprise.

Details of the approach

Prior to starting the BPR, all the executives in the target business are interviewed to identify the mission of the business and its critical issues. From this work, a value chain is constructed with the processes that connect each segment to the customers. Additionally, interviews identify the key individuals who will participate in the workshop. An agenda for the Preliminary Analysis follows:

Preliminary Analysis

Key results from the Preliminary Analysis are identification of the individuals who will be assigned to the workshop and an assessment of the attitudes of senior managers toward the BPR process.

The workshop itself is a tightly scripted set of activities that begin with the senior management team joining workshop participants for a half day to review the interview results, outline the value chain to be redesigned and to set the objectives to which the reengineered processes should perform. After the first half day, the senior managers depart to return on the afternoon of the fifth day to get a presentation of the results, given by members of the workshop team.

BPR Outline

Active facilitation is key to the workshop activities. In about a day, the facilitator helps the group capture the activities of one process that links the business to its customers. Capture, redesign and analysis of the impact on those activities consumes another two days. Videotapes of world-class performance for representative value chain segments promote fresh thinking about alternatives to present modes of doing business. Another half day is sufficient to address organization issues and estimate time and cost to build the new processes and to develop new technology required. Prior to the senior managers returning, the team builds the presentation and practices delivering it.

Elements of the solution

Most businesses assume everything they do is unique. The truth is that only a few activities of any business distinguish it from its competitors. By using “Building Codes” that have been developed over a number of reengineering activities, each new BRP can start with a template. These can be tested for the value they add against the objectives set by management. Where the objectives are easily met by use of standards, no new invention is required. This permits critical time to be focused on the few key activities that distinguish this business from others.

Conclusion

Business Process Reengineering can be an avenue for achieving lower costs, better service and faster development of new products and services. Or, it can be a dead-end. We have found the key difference is time. By doing everything in small, fast segments, both problems and opportunities are found quickly. Problems can be fixed and opportunities exploited. Change becomes a way of life. Learning is built into the fabric of the enterprise.

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