Reengineering

What it does:
Reengineering maximizes the performance of organizations through radical redesign.

Its other names:
Business Process Reengineering.

Where it comes from:
Reengineering is described in various pieces by Michael Hammer and James Champy, including Reengineering the Corporation: A Manifesto for Business Revolution (HarperBusiness).

Summary:
Hammer and Champy write that corporations should not necessarily be structured around functions like marketing, production and distribution. Instead, they should be reengineered as a series of linked processes that are efficient and better able to respond to the marketplace.

Reengineering was created to respond to problems like these:
- When companies are organized around functional divisions, those divisions can function efficiently at the expense of the whole. Example: The assembly line can produce products faster than they are needed, so it shuts down while demand catches up. Often, management is too focused on other priorities to bring such operations in line.
- When several divisions must cooperate, overall performance plummets because no systems are in place to coordinate their work.
- Profit opportunities are overlooked because people are too busy doing other things to notice them.

The reengineering process corrects such problems by:
- Identifying inefficient processes that need to be improved or, in some cases, combined.
- Deciding which of these processes should be reengineered first.
- Developing measurable criteria that can be used to evaluate change later on.
- Developing specific business objectives for processes that will be changed.
- Designing and testing changes before they are implemented.
- Making the changes.
- Monitoring the revised processes against objectives and fine-tuning them as needed.

What else you need to know:
Once a company begins to reengineer, a "throw out the baby with the bathwater" mindset can take over as proven processes are discarded for the sake of change. Employees and the knowledge they possess can be marginalized. Yet if an organization attempts to capture knowledge, not discard it, strategic reengineering can bring new efficiency and performance.