Barriers to Business Reengineering Success

TABLE OF CONTENTS

Detailed Table of Contents

List of Figures

List of Tables

Chapter 1: Introduction

Chapter 2: Business Reengineering Projects

Chapter 3: Barriers to Business Reengineering Implementation Success

Chapter 4: Change Management Intervention Models

Chapter 5: A Framework for the Identification and Removal of Barriers to Business Reengineering Success

Chapter 6: Case Study

Chapter 7: Summary and Implications

References/Bibliography

Vita

DETAILED TABLE OF CONTENTS

List of Figures

List of Tables

Chapter 1: Introduction
1.1. Obj ectives and As sumptions
1.2. Rep ort Structure

Chapter 2: Business Reengineering Projects
2.1. Definitions
2.2. The Development of Business Reengineering
2.3. The Principles of Business Reengineering
2.4. Business Reengineering Project Management
2.4.1. The Hammer/Champy Methodology
2.4.2. The Davenport Methodology
2.4.3. The Manganelli/Klein Methodology
2.4.4. The Kodak Methodology
2.5. Conclusion

Chapter 3: Barriers to Business Reengineering Implementation Success
3.2. Risks Associated With Business
Reengineering Projects
3.3. Business Reengineering Implementation Barriers
3.3.1. Hard Implementation B arriers
3.3.2. S oft Implementation B arriers
3.3.3. Relationships Betweeen Hard and
Soft Barriers
3.4. Areas Generating Barriers to Business Reengineering Implementation
3.4.1. Project Related Causes
3.4.2. People Related Causes
3.4.3. Organization Related Causes
3.4.4. Environment Related Causes
3.5. Examples for Root Causes to Implementation
Barriers
3.5.1. Root Causes to Information Technology
Barriers
3.5.2. Some Root Causes of Internal Individual Resistance
3.6. Conclusion

Chapter 4: Change Management Intervention Models
4.1. Change Management Interventions
4.2. Change Management Literature Review
4.2.1. Psychology of the Individual Change Approaches
4.2.2. Social Psychological Change Approaches
4.2.3. Cultural Change Approaches
4.2.4. Innovation Approaches
4.2.5. Global Change Approaches
4.2.6. Practitioner Approaches to Change
4.3. Selected Intervention Models
4.3.1. Selected Individual Change Interventions
4.3.2. Selected Social Psychological Change Interventions
4.3.3. Selected Cultural Change Interventions
4.3.4. Selected Innovation Interventions
4.3.5. Selected Global Change Interventions
4.3.6. Selected Practitioner Interventions
4.4. Conclusion

Chapter 5: A Framework for the Identification and Removal of
Barriers to Business Reengineering Success
5.1. The Framework
5.1.1. Project Management
5.1.2. B arrier Management
5.2. Search for and Identity Barriers
5.3. Identity Root Causes
5.4. Intervene at Ro ot Cause Level
5.5. Control Intervention Success
5.6. Conclusion

Chapter 6: Case Study
6.1. About IPNCorp
6.2. The Triggers for Change
6.3. The Project Plan
6.4. Project Responsibilities
6.5. Design Step 1.1.: Assessment of the Current Situation
6.5.1. Executing Step
6.5.2. Presentation of the Results to Management
6.5.3. Barriers Identified, Root Causes, and Interventions
6.5.4. Intervention Success
6.6. Design Step 1.2.: Redesign
6.6.1. Executing Step
6.6.2. Criteria for the Process Redesign
6.6.3. Preliminary Design
6.6.4. Dialogue about the Proposed Design
6.6.5. Barriers Identified, Root Causes, and Interventions
6.6.6. Intervention Success
6.7. Design Step 1.3.: Broad Agreement to the Change
6.7.1. Executing Step
6.7.2. Sample Questions and Answers
6.7.3. Barriers Identified, Root Causes, and Interventions
6.7.4. Intervention Success
6.8. Implementation Step 2.1.: Adapt Technically
6.8.1. Executing Step
6.8.2. Noted Implementation Events
6.8.3. Barriers Identified, Root Causes, and Interventions
6.8.4. Intervention Success
6.9. Implementation Step 2.2.: Adapt S o cially
6.9.1. Executing Step
6.9.2. Barriers Identified, Root Causes, and Interventions
6.9.3. Intervention Success
6.10. Conclusion

Chapter 7: Summarv and Implications

References/Bibliography

Vita

ABSTRACT

Managing Barriers to Business Reengineering Success^[1]

Wolf D. Schumacher

Business Reengineering is on the agenda of many Companies in different industries. Striving to improve business processes to better meet customer requirements, Business Reengineering initiatives also aim at revolutionizing key performance criteria, such as cost, delivery, and quality. Recently however it is being discussed, whether Business Reengineering in reality is just another „management fad“, not having lived up to high expectations. Trade magazines and managers talk about failing Business Reengineering projects, consequently tuming some Companies away from Business Reengineering, towards other management initiatives, which promise better bottomline results. What goes wrong with Business Reengineering ?

This practitioner's report highlights, that Business Reengineering is an important concept towards customer orientation, and concentrates on the obstacles to Business Reengineering project success. It defines hard and soft (people) barriers and traces these to their underlying causes.

The available vast literature on change management is consulted to identify intervention methods and techniques which help to treat causes of people barriers. A framework is presented, which helps to manage barriers during the course of a Business Reengineering project. The framework is applied to a real project, the author oversaw as a change agent. It tums out, that organizational cultural aspects play a pivotal role in project success. Reviewing the implications of barriers to Business Reengineering succces, this report proposes, to tum away from a control oriented culture towards a collaboration culture, which not only yields less resistance to change, but also helps to focus all members of an Organization towards its future. A short discussion of the instruments search Conference and participative design concludes this report.

ACKNOWLEDGEMENTS

I thank W. Brenner, for his Suggestion to study the barriers to Business Reengineering success. This opened a new world to me: People's behaviors in complex change situations. My Consulting practice has changed ever since; from a technical perspective to a socialtechnical perspective of introducing major organizational change in corporations.

I thank Maria Wagenblast, my dear colleague and partner for life, for her deep understanding and encouragement.

I thank my clients and colleagues, in particular P.U. Schwörer, R. Kuch, B. Müller, S. Schiebel, Dr R. Foerster, and Dr W. Hinz for taking the time to discuss the concepts of identifying and removing barriers to Business Reengineering success.

I thank all colleagues on the Internet Business Reengineering list, the Learning Organization list and the Organization Development list for uncountable ideas and true leaming experiences. One day I would like to meet you in person.

WolfD. Schumacher

Herrenberg, Germany

LIST OF FIGURES

Figure 2.1./1 Example of Business Processes in a Firm

Figure 3.3./I Relationships Between Potential Barriers and Potential Causes of Barriers

Figure 3.5.2. /1 Five Roles of Resisting Behaviour

Figure 4.3.1./1 States of the Seif of a Person

Figure 4.3.2./1 Transition and Forces of Change

Figure 4.3.272 Beckhard's Resistance Formula

Figure 4.3.3. /1 Single-Loop and Double-Loop Leaming

Figure 4.3.571 Change Arena

Figure 4.3.671 Polarity Dynamics

Figure 5.171 Relationships Between Business Reengineering Project Management and Barrier Management

Figure 5.471 Root Cause Analysis Applying the Stream Analysis Technique

Figure 5.571 Impact of Interventions on Change Domains

Figure 5.671 Core Cultures of an Organization

Figure 6.371 Project Phases and Steps at IPN Corp

Figure 6.6.171 IPN' s Obj ectives for the Redesign of the Order Management Process

Figure 6.6.371 Preliminary Design for the New Order Management Process

LIST OF TABLES

Table 2.l./l Factors that Differentiate Winning from Losing Teams

Table 2.371 The Principles of Business Reengineering

Table 2.4.1/ Classification of Business Reengineering Projects

Table 2.472 Selected Business Reengineering Methodologies

Table 2.4.171 The Hammer/Champy Methodology

Table 2.4.172 The Davenport Methodology

Table 2.4.173 The Manganelli/Klein Methodology

Table 2.4.174 The Kodak Methodology

Table 2.571 Comparison of Selected Business Reengineering Methodologies

Table 3.171 Achievements of Thirty Business Reengineering Projects

Table 3.271 Business Reengineering Project Risk Categories

Table 3.5.171 Typical Root Causes to Information Technology Barriers

Table 3.5.271 Typical Root Causes of Individual Resistance

Table 3.671 Traditional Approach to Business Reengineering

Table 4.271 Classification of Change-Management Approaches

Table 4.2.171 Relevant Authors of Individual Change

Table 4.2.271 Relevant Authors of Social Psychological Change

Table 4.2.371 Relevant Authors of Cultural Change

Table 4.2.471 Relevant Authors of Innovation Change Approaches

Table 4.2.571 Relevant Authors of Global Change Approaches

Table 4.2.671 Relevant Authors of Practitioner Approaches to Change

Table 4.3 71 Selected Intervention Models

Table 4.3.1./1 Tuming Stress into Energy

Table 4.3.1./2 Compass Points of Coaching

Table 4.3.2./I The Impact of Fear

Table 4.3.272 Conducts, Superiors Need to Avoid

Table 4.3.571 Intervention Path Characteristics

Table 4.3.671 Workshops Designed to Introduce the Work-Out Change Model

Table 4.3.672 Questions for Understanding Change

Table 4.3.673 Reducing Barriers to Understanding

Table 4.3.674 Classification of Interventions to Resistance

Table 4.3.675 Basic Criteriafor Pay Systems

Table 4.471 The Un-Traditional Approachto Business Reengineering

Table 4.472 The Ladder of Leadership Skills

Table 5.271 Typical Symptoms of Resistant Behaviour

Table 5.471 List of Questions Aimed at Possible Interventions

Table 5.5 72 List of Questions Pertaining to Interventions in the Transition Period

Table 5.5 73 The Impact of Intervention Techniques on Domains of Root Causes

Table 5.571 Indicators for Cultural Change

Table 5.671 Characteristics and Differences of Core Cultures

Table 6.371 Project Steps WithintheDesignPhase

Table 6.372 Project Steps Withinthe Implementation Phase

Table 6.5.171 Order Management Problems at IPN Corp

Table 6.5.172 Problems RegardingProducts, Structure and Leadership

Table 6.5.371 Barrier Management Düring Step

Table 6.6.2./1 Criteria for the Process Redesign at IPN Corp

Table 6.6.5./1 Barrier Management Düring Step

Table 6.7.2./1 Sample Questions Posed by Employees and Answers by the Project Team

Table 6.7.3./1 Barrier Management Düring Step

Table 6.8.3./1 Barrier Management Düring Step

Table 6.9.2./I Barrier Management Düring Step

Table 6.10./I How IPN Measures Up to Change Requirements

CHAPTER 1

INTRODUCTION

It is not true, as a good many industrial psychologists assert, that human nature resists change. On the contrary, no being in heaven or earth is greedier for new things. But there are conditions for man's readiness for change.

The change must appear rational to him; man always presents to himself as rational even his most irrational, most erratic changes. It must appear an improvement And it must not be so rapid or so great as to obliterate the psychological landmarks which make a man feel at home; his understanding of his work, his relations to his fellowworkers, his concepts of skill, prestige and social standing in certain jobs and so forth.

Peter Drucker, 1992

Business Reengineering combines the adoption of a process view and the application of advanced Information Technology in planned organizational change efforts. Due to the potential impact on key performance criteria such as delivery speed, low cost per output unit, and high process quality, Business Reengineering is on the agenda of many large and midsized Companies in many industries; manufacturing and banking/finance being the predominant sectors. The overall objective is to attain permanent customer satisfaction, as a secure basis for future growth.

As a topmanagement issue, Business Reengineering projects are typically initiated from the top down and implemented from the bottom up, within the hierarchy of a given Corporation. Business Reengineering -if implemented successfullynot only transforms processes, but ensures that the structure, the workplace contents, the Information technology in use and the culture of the Organization successfully assimilate the improved processes.

Due to the amount of potential change affecting people and their work environments, Business Reengineering projects are often accompanied by a considerable amount of resistance from the Organization's members and outside forces. Additionally technical obstacles may prevent Business Reengineering's implementation success. In the worst case the barriers to Business Reengineering implementation may cause a failure of the

whole effort. Sources talk about high failure rates of Business Reengineering projects, some ranning as high as 80% (Schumann/Hoch, 1996).

Examyle of a Faileil Business Reengineering Project

The CEO of a 2000+ people Company, long a leader in its market, initiated Business Reengineering as a method to rejuvinate key business processes. While the people chosen to Start the effort, were high level, they were not regarded by many people in the Organization as innovative enough. They had little practical experience in Organization or process change. So much so, that getting involved with the project began to be seen as as filier by people, who were dislocated or between assignments. Worse yet, the Company spent money only on new Computer equipment and Software, but not on broad employee education and motivation. The initiative failed.

The lesson is, that the right people have to be leading the project. Such people will insist on Business Reengineering being a learning experience for the whole Organization. Information Technology is an important enabler for Business Reengineering, but will not by itselftake the project to success (Cody, 1996).

This is one of the rare published cases for Business Reengineering failure, the reason being, that Companies admitting project failures, might fear to admit their own management failures. In organizations, failure is often not tolerated and people avoid, being associated with failure of any kind (Berg, 1986). A 1995 study undertaken in the U.K. found, that out of the total 120 known Business Reengineering projects finished or in progress, none reported a failure (Cooper, 1995). Yet, we need to study failures and underlying reasons for failure, to leam, how to manage right. Readers of this report may accept the descriptive approach the author is taking, because of the narrow empirical base on Business Reengineering failures available.

1.1. Objectives and Assumptions

This report proposes an enhanced approach to working with barriers to Business Reengineering implementation. The main objective is to help practitioners to steer their projects clear of problems which prevent them from reaping the results expected ffom their Business Reengineering efforts. To academics it offers some new areas for further research. This report is based on the assumption, that project success is more dependent upon preventing or working with barriers as opposed to reinforce existing positive factors.

1.2. Report Structure

Chanter 2 defines what Business Reengineering projects are about and reviews representative Business Reengineering project methodologies.

Chapter 3 defines barriers to Business Reengineering. The barriers presented cover hard and soft obstacles from the viewpoint of the project iniatiators and project team. Then some typical barriers (resistance to change and technical obstacles) are traced to their underlying causes within the domains of project content and management, people, Organization and environment.

Chapter 4 reviews the Change Management literature for intervention methods and techniques, applicable to Business Reengineering projects.

Chapter 5 presents a Barrier Management framework, serving as a Supplement to traditional Business Reengineering project management. The framework, developed by the author, addresses the Steps of search for barriers, the identification of root causes, intervention, and the control of intervention success. Several checklists are presented for practical use. The framework can be applied to forecasting implementation Problems, as well as to the analysis of barriers during or after the project's execution.

Chapter 6 describes the case of a Business Reengineering project at a german manufacturing Company, the author was Consulting with. The framework, described in chapter 5 had been applied to this project.

Chapter 7 summarizes the findings of this report and presents some implications to fellow Consultants and managers, who are considering or executing a Business Reengineering project. The report ends with a bibliography.

CHAPTER 2

BUSINESS REENGINEERING PROJECTS

The very radicalism of reengineering, that is, its utopian essence, is simultaneously what makes it so difficult to achieve and, when achieved, makes its productivity achievements so high.

Keith Grint, Management Sociologist, 1995

2.1. Definitions

- Organizational Change

Organizational Change is not „happening“, but intentional, usually triggered by external events to the Organization. Planned change can be effected incrementaly, or revolutionary. The action roles in the change process are: (1) The Initiator, usually, though not always the responsibility of topmanagement; (2) The Change Implementers, the project team or change agent, often represented by middlemanagement and extemal Consultants; (3) The Change Recipients or Change Targets, all people affected by the change (Kanter/Stein/Jick, 1992). Organizational change is effected through projects.

- Project

A project is a wellorganized development of a tangible or intangible endproduct that has a discrete beginning, a discrete end, and a discrete deliverable (Knutson/Bitz, 1991).

- Business Reengineering Project

A Business Reengineering project effects revolutionary change to an Organization. The project deliverables are radically improved business processes, which satisfy customer requirements much better than before, and which achieve drastic improvements to the operational results of a Company.

- Project Management

Project management is the discipline, that cultivates the expertise to plan, monitor, track, and manage the people, the time, the budget, and the quality of the work on projects. Project management is the means by which to fit the many complex pieces of the project puzzle together (Knutson/Bitz, 1991).

Project management of a Business Reengineering project is a set of principals, methods, tools, and techniques for the effective management of the introduction of new or drastically changed business processes in a Corporation (Hammer/Champy, 1993).

- Process Orientation of Business

Process Orientation is a new paradigm for the Organization of a business. Instead of the traditional inwardbound functional Orientation, which divides the Company into functions like sales, production, procurement, and product development, process Orientation organizes Companies around their processes. The basic idea is, to have everybody in the Company in a systematic way better and directly serve the customer, who is at the receiving end of business processes. Thinking in process management was introduced with the concept of Total Quality Management. Process thinking and managing is at the heart of Business Reengineering. Members of the Organization are no longer looking upward into the hierarchy, but ahead to the Customers, who ultimately drive the Organization. A process Orientation can be assessed in basically two ways depending on the degree of change required: Process simplification and Process Reengineering. Simplification usually results in an incremental rather than a major Step change. Simplification exercises tend to take for granted an existing framework, the limits of installed Information Technology, as well as current attitudes and behaviors. In contrast Business Reengineering aims at fundamental or framebreaking change. A reengineering exercise challenges the existing framework, questions attitudes and behaviors, and might suggest the introduction of new Information Technology. In practice though, simplification and reengineering can overlap and together form the process Orientation of an Organization (Coulson-Thomas, 1994).

- Business Processes

Business processes are sequences and combinations of business activities. They break into extemal customer facing processes, that deliver products and Services of value, management, and support processes. Management processes control and coordinate these activities and ensure that business objectives are delivered. Support processes, as the name implies, provide infrastructural and other assistance to business processes. Business Processes can be further differentiated into knowledgebased and operational processes.

Knowledge Based Processes

Among knowledgebased processes are product development, research activities, advertisement, and management Consulting. These processes typically are of nonstandard nature; instead they rely on the knowledge and creativity of the persons involved. Knowlegdebased processes are not dominant in Business Reengineering projects (Davenport/Jarvenpaa/Beers, 1996).

Operational Processes

Operational processes are at the heart of most Business Reengineering efforts. Operational processes are classified by their relative stability, Standardization and repeatability. Typical operational processes are customer Service, procurement, and manufacturing. Operational processes are further classified into key and secondary processes. Key processes directly Support the mission and the strategies of the Company. Figure 2.1./1 roughly depicts the business processes of a medium sized Company in Austria, which manufactures and markets heating equipment to private households.

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Figure 2.1./1 Example of Business Processes in a Firm

Before this Company adopted a process view, it was organized functionally. The traditional functional Organization gave top management the highest priority, whereas ffom a process viewpoint, the satisfaction of customer requirements now has the highest priority in the Organization. Thus the execution process, i.e. selling, producing and delivering goods and Services to the customer is at the heart of the reengineered Company. Workers who are closer to the customer than managers, and worker development are very important to success. The newproduct-process fuels the execution process, by assessing midterm and longterm customer needs, and technological innovations. The Support process provides Services -not controlfor the execution and newproduct processes. The management process puts topmanagement in a position of facilitating the process executions and providing an environment of vision and trust.

- Teams

Team working is a feature of product and Service delivery to customers. Work teams as opposed to large departments are responsible for as much of a business process as possible. Teamwork is more than friendly people located in a single room. A team is a special group of people with complementary skills, highly dedicated to a common process objective. A functioning team makes management control largely unnecessary; the main reason, why middlemanager positions often become redundant in reengineered organizations with work teams at the execution level. Table 2. l./l shows important factors that differentiate winning from losing teams (Peppard/Rowland, 1995). Chapter 6 will feature a case study where teams are an important part of a Business Reengineering effort at a german special machinery manufacturer.

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Table 2.l./l Factors That Differentiate Winning from Losing Teams

- Information Technology

Information Technology delivers tools to and plays four distinct roles within Business Reengineering projects:

Information Technology Enables New Processes

Information Technology may help to devise innovative business processes, which would otherwise not be attainable. Two examples:

Example 1:

In an early Business Reengineering project the IBM credit Corporation reorganized the crediting function. Just one person (a so called case manager) performs all tasks of a former whole credit department by using a new Computer application System (Hammer/Champy, 1993).

Example 2:

WWW.Amazon.com is the Internet web page adress of the currently largest virtual bookstore in the world. More than one million titles are available. None of these is on störe, but can be searched for and ordered interactively by remote Internet users located as far away as Herrenberg, Germany. The Amazon Company made sure though to locate near Seattle, Washington, to have easy access to the largest physical book warehouses in the U.S. Their web site even offers an alert function, which automatically sends an electronic mail (email), whenever a new book has been published, whose profile (author, title, subject, etc.) the customer is interested in. This Amazon selection and ordering process would not be possible without the Internet technology.

Information Technology Tools Help to Facilitate Project Management

Project management tools help to analyze processes, and define new processes. They can also be used to define the introduction of process oriented application Software packages. (Miers, 1995). According to a recent study, the US$ 100 Million tool market is broadening and rising at 40% per year (Gärtner Group, 1995).

Information Technology Lets People Work Together More Closelv

Traditional mainffameoriented Information Processing was revolutionized in the 1980's by the Personal Computer (PC). Today, PC's are commonplace and mostly part of Local Area Networks (LAN), or even Wide Area Networks (WAN), which electronically link teams, to allow nonphysical collaborative work. Special Software Systems, like E-mail, groupware, workflowmanagement, teleconferencing, etc. are elements of this pervasive role, Information Technology is taking.

Information Technology Helps to Integrate Businesses

The process view of businesses includes the integration of business processes within a Company and also between business partners (Company, and customers, as well as vendors). German Software vendor SAP AG conquered the worldwide market for total enterprise Solutions, even that the Software is not fully compatible with the process viewpoint. Companies are using SAP R/3 client/server and competitive Software (Oracle, PeopleSoft, etc.) products, because these are totally integrated and help to enforce the reengineering process, by concentrating on the Software implementation process: „Chief Information Officers want to complete (Business Reengineering) projects in six months, because they know, how fast the Business is changing“ (Baatz, 1996).

2.2. The Development of Business Reengineering

The creators of Business Reengineering weren't Consultants or academics. They were „real people“ with real problems to fix. At Companies like Ford, Hewlett-Packard, and Mutual Benefit Life, managers were experimenting with new uses of Information Technology to link business processes that cut across boundaries. These real people at the time (1980's) did not call their reorganizational work Business Reengineering. This came later, at the beginning of the 1990' s, as one of the founders of Business Reengineering recalls (Davenport, 1996).

In the United States, later in Europe, Business Reengineering soon became a substitute term for downsizing, i.e. a tool for affecting massive layoffs. Thus Business Reengineering gained wide acceptance with topmanagement, particularly in the manufacturing industry during the business slump era in the beginning of the 1990's up until today. At a recent Boston forum, the most prominent founder of Business Reengineering, M. Hammer, conceded, that Business Reengineering had become a tainted term because of the rough language and associated actions, that are widely associated with Business Reengineering: „ Carry> the wounded, but shoot the stragglers “ is only one example of neglecting people's concems in Business Reengineering projects. Nobody wants to be reengineered and feel like „ a prisoner of war“ (Davenport, 1996).

As Davenport points out, Business Reengineering slipped into a destructive management concept, far away from people centered concepts like Total Quality Management, that also features process improvements (Davenport, 1996).

Yet Business Reengineering is not wrong. Processes are the way people work. Any Company that ignores its business processes or fails to improve them risks its future. But there are several different approaches to process improvement. Business Reengineering not only has to take costcutting measures into consideration that reduces the payroll, but also improvement ideas, that give people a future in their Company, that drive creativity for the sake of the Company and the society. Process Reengineering should not take people's anxieties to loose their job as a sideproduct, but focus on tuming a Company into a selfrenewing Organization. Thus the most vital requirement

for revitalizing businesses is to rejuvenate their people, their behaviors and positive actions towards the future (Bartlett/Ghoshal, 1995).

2.3. The Principles of Business Reengineering

The principles of Business Reengineering emerged during the early 1990's. Table

2.3. /1 lists some important principles (Coulson-Thomas, 1994).

- Externally, focus on end Customers and the generation of greater value for Customers.

- Give customers and users a single and accessible point of contact through which they can hamess whatever resources and people are relevant to their needs and interests.

- Intemally, focus on hamessing more of the potential of people and applying it to those activities which identify and deliver value to customers. This principle tends to be overlooked.

- Encourage learning and development by building Creative working environments. This principle has been almost forgotten in many organizations, the current emphasis being to squeeze more out of people and working them harder, rather than improvingthe quality of work life and working more cleverly.

- Think and execute as much activity as possible horizontally, concentrating on flows and processes (including communication) through the Organization.

- Remove nonvalue added activities, undertake parallel activities, speed up response and development times.

- Concentrate on Outputs rather than inputs, and Unk performance measures and rewards to customer related Outputs.

- Give priority to the delivery of value rather than the maintenance of management control The role of the manager is being redefined and an emphasis on command and control is giving way to empowerment, and the notion of the coach and facilitator.

- Network related people and activities. Virtual corpororations are becoming commonplace in some business sectors.

- Implement work teams and case managers extensively throughout the Organization.

- Move discretion and authority closer to the customer, and reallocate responsibilities between the Organization, its suppliers and customers.

- Encourage involvement and participation This requires errortolerant leadership.

- Ensure people are equipped, motivated and empowered to do what is expected of them.

- Where ever possible, people should assume full responsibility for managing and Controlling themselves. This requires planning skills.

- Work should be broadend without sacrificing depth of expertise in Strategie areas.

- Avoid oversophistication. Don't replace Creative thinking with Software tools.

- Keep the number of core processes to a minimum (approx. 12). They all should be directed to external customers. Management processes such as corporate planning processes which deüver too late to have any real impact can lack both internal and external customers.

- Build learning, renewal, and short feedback loops into business processes.

- Ensure that continuous improvement is built into implemented Solutions. Experience of Business Reengineering can reawaken interest in TQM (Total Quality Management) ; both are natural complements. This is widely overlooked.

Table 2.3./1 The Principles of Business Reengineering

2.4. Business Reengineering Project Management

One way to classify Business Reengineering projects is based on their organizational scope (Poncede-Leon/Rai/Melcher, 1995), which can be narrow or broad. Another way is to classify by objective (Johansson/McHugh/Pendlebury/Wheeler III, 1993). Table 2.4./1 combines both views; matrix rows describe the organizational view, columns describe the objectives view.

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Tabie 2.4./1 Classification of Business Reengineering Projects

Most Business Reengineering projects fall into the categories 1.2., 1.3., 2.1., 2.2., 3.1. and 3.2.. The case presented in chapter 6 falls into category 2.2.. Break-Point projects of type 2.3. and 3.3. are rare, due to high implementation risks associated with largescale projects, as well as the aspirations of some project managers for quickly gaining project success as a basis for career advancements. It is questionable, whether the small scope project type 1.1. can by classified as a Business Reengineering project at all. In noting the high failure rate for Business Reengineering efforts, Manganelli/Raspa eite that many programs are poorly conceived and executed, focusing tactically on smallscale functional makeovers and not really well integrated. They maintain, that Business Reengineering can achieve the potential success only if it's deployed strategically and linked to business goals (Manganelli/Raspa, 1995).

There is a large number of different project management methodologies available for Business Reengineering. Some are of a more theoretical nature, others are of practical nature.

Manganelli/Klein list and compare eleven important Business Reengineering project management approaches (Manganelli/Klein, 1994).

Hess/Brecht published a comprehensive study of fifteen Business Reengineering methodologies (Hess/Brecht, 1995). They concentrated on the Information Technology elements of Business Reengineering. They conclude, that next to Information Technology, Teamwork can be considered key to most methodologies. They also concluded, that there is no generally accepted way of analysing and defining business processes. They do not touch the subject of this report, though, barriers to Business Reengineering.

Based on the above studies of Business Reengineering approaches, the author selected the following four representative methodologies ffom the academic, Consulting and user fields for review (Table 2.4./1). Government related approaches, such as the U.S. Department of Defense Business Reengineering ffamework (DoD, 1997) are ommitted.

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Table 2.4./2 Selected Business Reengineering Methodologies 2.4.1. The Hammer/Champy Methodology

Hammer/Champy popularized Business Reengineering. Hammer, a former M.I.T. Professor tumed into a Consultant, and Champy, President of the worldwide Consulting Company CSC Index, define Business Reengineering as a fundamental rethinking and radical redesign of mission critical business processes (Hammer/Champy, 1993). Hammer/Champy see poor management and unclear objectives as the main problems to Business Reengineering success. Only just recently they acknowledge people's resistance as a major obstacle to Business Reengineering's successful implementation (Davenport, 1996). Their Business Reengineering methodology, which was finetuned by Champy's Consulting Company, breaks into six Steps (Table 2.4.1./1).

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Table 2.4.1./1 The Hammer/Champy Methodology 2.4.2. The Davenport Methodology

Davenport puts Information Technology at the heart of Business Reengineering. For Davenport Information Technology possesses the most important role for innovating Business Processes. Despite his emphasis on innovation and technology, Davenport States, that organizational and human resource issues are more central, than technology issues to the behavior issues, that must occur to within a business process. Davenport sees culture as a constraint, when there is a poor process innovation to cultural fit. With regard to managing the change, Davenport emphasizes traditional management functions, like planning, directing, monitoring, decision making and communicating (Davenport/Short, 1990 and Davenport, 1993).

Davenport is convinced, that Business Reengineering should better integrate with the other nonrevolutionary (incremental) process approaches, like Total Quality Management (Davenport, 1996). His methodology covers six Steps (Table 2.4.1./2)

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Table 2.4.1./2 The Davenport Methodology 2.4.3. The Manganelli/Klein Methodology

Manganelli/Klein argue, to only concentrate on those Business Processes, that directly support the Strategie goals of the Company and customer requirements. Product development (a knowlegde process) is such a preferred Business Process. The see organizational impact, time, risk, and cost as obstacles to success. They claim, Business Reengineering to be more successful than incremental change initiatives, which tend to fail more often (Manganelli/Klein, 1994).

The Manganelli/Klein Business Reengineering methodology Rapid-Re (tm), which is supplemented by the Rapid-Re Reengineering Software toolset for Microsoft Windows (tm), breaks into five Steps (Table 2.4.1./3).

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Table 2.4.1./3 The Manganelli/KIein Methodology

2.4.4. The Kodak Methodology

The international Kodak Organization developed a Business Reengineering methodology that is being applied to Kodak facilities around the world. Similar to other practitioner approaches, has the Kodak methodology been influenced by Hammer/Champy. The Kodak methodology breaks into five Steps (Kodak, 1995):

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Table 2.4.1./4 The Kodak Methodology

2.5. Conclusion

The four representative methodologies assume, that Business Reengineering projects are being initiated by topmanagement and carried out by specially formed project teams. Business Reengineering projects are typically not considered collaborative efforts, but rather topdown power driven projects. The General Accounting Office studied all available Business Reengineering methodologies and came to the conclusion, that all of these can be structured into three steps (General Accounting Office, 1995) of Business Reengineering project management (Table 2.5./1).

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Table 2.5./1 Comparison of Selected Business Reengineering Methodologies

The comparison of the four selected methodologies shows many similarities. First, the Overall approach Business Reengineering projects take, is of a linear nature. Further, Business Reengineering projects take a similar route as Information Technology implementation projects. Within the three consecutive steps, the individual approaches differ in the scope of project preparation. Davenport asks for a complete preparation including visioning, whereas the other methodologies contrast by handson approaches right ffom the project Start. Davenport, Manganelli/Klein and Kodak also address the people side of Business Reengineering, but only as far as implementation issues are concemed. Taking the conclusion further, and applying it to the sources of existing methodologies, then Consultants appear to see Business Reengineering as yet another systematic and marketable approach for fast and costefficient implementation of planned change. Technically oriented academics take a broader view, yet shy away from really integrating social psychology into their linear approaches, because this might be

considered nonscientific by colleagues. Users prefer an eclectic approach. They take proven elements both from Consultants and academics and apply them as needed.

CHAPTER 3

BARRIERS TO

BUSINESS REENGINEERING IMPLEMENTATION SUCCESS

One of the biggest mistakes you can make in life is to accept the known and resist the unknown. You should, in fact, do exactly the opposite. Challenge the known and embrace the unknown.

Guy Kawasaki, Co-Founder Apple Computer, Inc., 1996

3.1. Potential Project Implementation Success

The success of Business Reengineering projects is measured by the real attainment of project objectives. Companies undertaking Business Reengineering projects typically look for drastic improvements in business process results.

A recent study of Business Reengineering projects in 30 mexican businesses all front the largest 500 businesses in Mexico demonstrated impressive results (Table 3.1./1). Business Reengineering had impacted mainly in management cost (82 %), production cost (57%) and distribution cost (39%) reductions (Lozano, 1996).

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Table 3.1./1 Achievements of Thirty Business Reengineering Projects

3.2. Risks Associated With Business Reengineering Projects

The flip side of high success potentials is high project risk. Thus the success of Business Reengineering projects is largely dependent on the knowledgeable management of Business Reengineering project risk factors. Table 3.1./2 categorizes these risks (Clemons/Thatcher/Row, 1995).

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Tabie 3.2./I Business Reengineering Project Risk Categories

3.3. Business Reengineering Implementation Barriers

Barriers are severe, unexpected and not planned for problems in Business Reengineering projects. Barriers increase the impact of project risk factors. For example increases middle management resistance against the objective of introducing selfdirected work teams the political project risk.

Barriers hinder implementation efforts such that without intervention the project falters or may even fail altogether. There are other problems which are not considered barriers, because their impact on the project is not as dramatic. They may present obstacles to overcome on a dayto-day basis. These problems may surface in most other organizational projects as well. Among them are illness of project members, malfunction of Computer equipment, etc. These problems are not further considered in this report.

Barriers have to be eliminated, because they take away much needed energy from the project team and the people affected. The energy for and against the barrier is not injected into the project Steps and thus is lost to the project's outcome. It is the author's experience that endless meetings, and associated ffustrations detriment the potential positive results of a Business Reengineering project. Therefore it is highly recommendable not to pitch success factors hard against barriers, but rather to prevent the development of barriers right from the beginning of a project. It is not advisable to perform a Business Reengineering project on high pro and contra energy consumption basis.

The Case of a Business Reengineerins Project Failure

1. The Company

PubliCorp (a pseudonym) was a large civil engineering Organisation owned by a local government in Brazil. The Organization was initially established to act as an inspection body, and later to supply the high demand from the government for construction Services. PubliCorp held a monopoly in its field. A threat, though, started to emerge. It came from the deregulation in the construction industry. The prospect of deregulation called for a radical rethinking and reengineering of PubliCorp's structure and business processes.

2. The Project

PubliCorp hired two large Consulting Companies to join forces in two project teams. One team (OR) tackled the redesign of processes and structure, the other team (IT) was assigned the task of setting up a new Information Technology infrastructure, based on the redesign recommendations of the OR team. The centraüzation of information Systems in the central data processing department (CPD) was one of the problems identified. CPD served as a bottleneck to the many departments processing public bids and coordinating construction projects. The OR and IT teams decided to tackle this problem by downsizing applications from the CPD mainframe to a local area network. This was done within six months despite PublCorp' s staff had been incited by CPD and union members to boycott the new applications. The OR team had its work to reengineer the core processes considerably hinderedbythe Opposition. The team analysed and and modeled several processes with difficulty, which added uncertainty to the subsequent changes. Additionally, two pilot redesign attempts failed in the implementation phase, mainly due to lack of interest from staff. Another problem faced was that some redesign proposals foundered on regulations established by law. The process of setting up public bids for example, was analysed and redesigned several times. Only slight changes in the process could really be implemented, without making the process prone to be contested by lawyers representing Companies that had lost bids to others. Four years after it had started, the reengineering attempt was hailed as a successful Business Reengineering project by some, including the CEO, who believed he had taken over an oldfashioned Organisation and turned it with the help of Information Technology into a modern one. Others regarded the attempt as a failure from a reengineering perspective. No radical changes had been effected, the total Investment being US$ 8 Million. Staff had not been reduced, despite that the number of construction contracts granted to PubliCorp had been reduced. This meant that even the increase in efficiency achieved in some processes, would not be really materialised.

3. Why did this Business Reengineering Attempt Fall ?

The first reason was the leveling, by PubliCorp's CEO, of political interests with objective goals. The second was the gradual shifit of the focus of the OR team from core Business Reengineering to problem solving and automating existing processes. The third reason was the hiding of failure signs. This happened consciously at first, for selfpreservation. Later, though, this became unconscious and was reinforced by social facilitation (Kock/McQueen/Baker, 1996).

The above case of a „successful failure“ demonstrates several barriers and underlying reasons, which are subject of the remainder of this report. The author differentiates barriers to Business Reengineering implementation success into hard and soft barriers. Figure 3.3./1 classifies soft and hard barriers along with areas which contain root causes for barriers to Business Reengineering implementation success.

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Figure 3.3./1 Relationships Between Potential Barriers and Potential Causes of Barriers

3.3.1. Hard Implementation Barriers

Hard barriers are those, which have to do with things and regulations. Soft barriers are people problems. Hard barriers can be further broken into Information Technology Problems, resource problems and legal obstacles.

Information Technology Software and hardware, which are not suited to support a process based Organization can evolve as a barrier. This barrier is typical for organizations that want to keep their high investments in hardware and Software, hoping that the existing legacy Systems will serve the process requirments as well. The Information Technology suppliers on the other hand where overwhelmed by the run for process oriented solution and have only just recently directed their research and product development towards process based Information Technology Solutions. A number of vendors though have not been able to protect their investments and faltered.

One typical resource problem is missing space for a work team to get together on a regulär basis. Teammembers, that are physically separated should have easy access to electronic communication equipment, such as teleconferencing.

Legal obstacles can tum out to be severe barriers, not only in Brasil. In Germany various federal and state regulations hinder several Business Reengineering projects. For example is the Siemens Corporation not able to reap as much success ff om ist reorganisation efforts as it originally planned for, because workplace regulations do not Support work time flexibility (Siemens, 1996).

3.3.2. Soft Implementation Barriers

Soft barriers are people problems. People resist organizational changes. Resistance to Business Reengineering change can be further differentiated into internal individual resistance, internal group resistance and extemal resistance. Depending on the viewpoint, there are two possible viewpoints, one can look at resistance:

Type A Resistance against Business Reengineering Implementation

Resistance of type A describes resistance against reasonable thinking and actions. From the perspective of the initiators and the project team, affected people demonstrate type A resistance (Brem-Gräser, 1993).

Managers need to be aware of the four most common reasons, people resist organizational change. These include: a desire not to loose something of value, a misunderstanding of the change and its implications, a belief that the change does not make sense in the Organization, and a low tolerance for change (Kotter/Schlesinger, 1979).

Type B Resistance against Business Reengineering Implementation

Resistance of type B describes resistance against indoctrination and power usage. Affected people dont't call themselves resisters and consider their resistance mostly as of type B. Resistance is an indirect way for subordinates to say NO to change (Nevis, 1987).

Often initiators and project team member consider resistance as a necessary evil: ,,No change without resistance“ and „Innovations represent a history> of resistance“ Yet experience teils us, that people resist change most, when they haven't been asked. Put in simple terms, when they haven't been told, how the change is going to take place, and how they personnally will be affected by the change. This is too often overlooked by management.

Internal individual resistance describes people behavior in the Organization not accepting the project contents and/or management. This may take covert or overt forms. It is common practice that management shortcuts individual resistance with destructive Personality explanations, instead of checking for underlying reasons for resisting behavior. Further down we will analyse some reasons for individual resisting behavior.

Internal group resistance describes group behavior within the Organization. These groups can be formally or informally organized. A group of electronic specialists for example may resist the plan of being split up into work teams where they have work side by side with mechanical personnel. They consider their Status superior to the mechanics Status.

Extemal resistance is being performed by people outside the Organization. Customers, suppliers, the public may develop considerable resistance against plans which interfere with their interests. If a train Company for example plans to replace Service personnel with teller machines, this might cause severe resistance by the Customers.

3.3.3. Relationships Between Hard and Soft Barriers

It is not always possible to differentiate precisely between hard and soft barriers. Consider the following example:

An application Software package for material procurement may take more than two minutes response time for placing an order online. When the package was selected, two second in average had been expected and written into the contract with the Software supplier. The supplier explains that the attainment of a two second response will not be possible, or if made technically possible, will cost an additional huge amount of money. The budget for this Software addition is not available. The purchasers therefore don't want the Software package to be implemented for live Operation.

The analysis of this problem shows, that the purchasers had an enormous flexiblity before the Software age. There were no restrictions whatsoever regarding their handling of purchase Orders. They find that a purchasing Software potentially puts too many restrictions to their free decision making process. In reality it is not the transaction response time they don't accept, it is their objection against the idea of introducing Information Technology altogether. Defmitely not a hard barrier, but a soft barrier. Obviously it doesn't make sense to pour more money into the Software. Instead the resistance has to be overcome.

The opposite can be true as well. A soft barrier might be in reality a hard barrier in disguise. Consider the following example:

The project plan of implementing selfdirected assembly teams at a machine manufacture asks electric and mechanic assemblers to work together closely. It is also required from the teams, that mechanics perform some electronical tasks, vice versa. Many employees do not accept that, they want to stay by what they have leamed. They resist the implementation of selfdirected work teams. The project manager is planning punishing actions against this form of alleged resistance, yet oversees, that hard barriers prevent people from performing: Mechanics cannot tum into electricians over night. They have to properly trained in the basics of electrical assembly tasks. The soft barrier in reality is a hard barrier.

3.4. Areas Generating Barriers to Business Reengineering Implementation

All barriers to Business Reengineering implementation success are the result of underlying root causes. Sometimes these root causes are not selfevident. This is the reason, why barriers are being attacked headon, only to find out later, that the underlying Problems have not been purged and the barriers keep on building up. Therefore it seems necessesary to study the areas for potential root causes of barriers to Business Reengineering implementation success in sufficient detail.

The following areas are suspicious of generating barriers to Business Reengineering implementation success:

3.4.1. Project Related Causes

The Business Reengineering project Setup may lead to barriers, which have to be dealt with. Project contents and project management can be of such nature, that both hard and soft barriers evolve.

Project contents are represented by project objectives, the selected business processes and the introduction of new Information Technology. The project contents may lead to considerable resistance and hard barriers. For example did employees of a sales Organization at Newark airport resist against the implementation of new Pointof-Sales terminals at the airport, because they feared the loss of jobs (CIO, 1996). A typical example for a hard barrier would be the selection of a functional oriented Software package to Support new processes. The project contents are particularly the source of many barriers, when the haven't been properly and understandably defmed.

Project management can be a source of severe barriers, if the road to travel by, remains unclear to the people affected. If confusion reigns, doubt and sometimes fear develops. Doubt and fear lead to failing projects, because people who doubt or fear, do not take action towards attaining the project objectives. Not recognizing people's issues in project management leads to project failure.

In a number of Business Reengineering projects extemal Consultants are being involved. These often have different attitudes, values and use different methods as their resp. client-System. These differences may yield considerable resistance: „He is not one of us On the opposite, if a Consultant tries to adapt intimately to the client' s culture and be part of the System, she may cause resistance, because she offers not much innovative tension. This is the same Situation, internal Consultants may get into. Yet, there is no perfect answer to the clientrelationship in a Business Reengineering setting. Each relationship is different and has to be established both by the Consultant and management in a subtle way. What may never happen, though, is a Consultant functioning as a manipulation tool towards members of the Organization.

3.4.2. People Related Causes

People affected by the organizational change are the richest source of potential barriers. This is true for people on all levels in an Organization. Managers may resist a change, which jeopardizes their job, workers may fear unemployment by being replaced through a Computer System, etc. People's behavior is based on their personality and norms of the groups they belong to.

Some topmanagers/owners believe that operative people are the worst resisters, yet this is mostly not the case. Managers often resist change more intensively, because sometimes having sacrificed their lives (and that of their family) to their jobs, they have a lot to loose. Thus, many managers in Business Reengineering situations pay lip Service to the change, but behave in old autocratic ways, to not suffer any personal drawbacks from the change. Workers in contrast, mostly want to be told, what is exactly expected from them. They typically do not play with words, and do not engage in micropolitics, as opposed to many managers.

3.4.3. Organization Related Causes

The organizational structure may cause barriers by being unflexible towards a drastic change in operations. In particular large bureaucratic organizations tend to wither changes which potentially destroy the existing structure. The embedded culture of the Organization is another reservoir for potential barriers, in that culture unconsciously influences the thinking, decisions and actions of people working in a given Company. Thus culture may dictate inability to escape the past, and inability to invent the future (Hamel/Prahalad, 1994). A number of Business Reengineering efforts derail because the Strategie context in which the project was positioned changed significantly - rendering the new process design worthless (Nadler/Shaw/Walton, 1995).

3.4.4. Environment Related Causes

The environment of an Organization, which is undertaking a Business Reengineering project may yield barriers to implementation success, by withstanding through the means of laws, regulations, and public resistance. The Organization's business partners , i.e. vendors and customers, may resist consciously or unconsciously the ojectives and contents of a Business Reengineering project the Organization undertakes. Lastly the environment may rapidly change in a way, that makes the Business Reengineering project redundant.

3.5. Examples for Root Causes to Implementation Barriers

Figure 3.3./1 shows the relationships between potential barriers to Business Reengineering implementation success and areas, which hold causes of these barriers. The relationship between barrier and underlying cause are not one on one, but rather several root causes may yield one particular barrier. Vice versa, one root cause may yield several barriers of different nature. We will not cover all relationships between potential barriers and root causes. Using Information Technology barriers and individual resistance as examples, we will explore several root causes. The root cause analysis process presented can easily be applied to other barriers and the root cause domains of individual, groups, Organization and environment.

3.5.1. Root Causes to Information Technology Barriers

Information Technology is an important enabler of Business Reengineering. Only through the introduction of Information Technology, innovative business processes become available. Consider the case of a virtual bookstore. Customer related processes would not be possible without using the capabilities of the worldwide-web. On the other hand, Information Technology can has the potential to evolve as a barrier to Business Reengineering implementation. Information Technology barriers represent severe problems with the Information Technology infrastructure (hardware, Software and networking). These problems typically emerge in the implementation phase of Business Reengineering projects. Table 3.5.1./1 shows typical Information Technology barriers and root causes.

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Table 3.5.1./1 Typical Root Causes to Information Technology Barriers

Barrier 1: Selected Software-Solutions are not Process-Oriented^{[2] [3]} red to support the whole process they are responsible for. Theteam concludes that the Software must have been developped for a different than a process oriented environment.

Underlying causes can be looked for in the areas of project content, project management, and partner (supplier) responsibility:

Root Cause 1: Unsatisfäctory Selection Process

The Software selection process may involve errors of project content and project management. Content errors are given, if it had not been properly defined, what criteria the Software should adhere to. Among the criteria for process oriented Software are workgroup computing and databaseintegration requirements (Tapscott/Caston, 1993). A typical error in project management was, that the selction process was not properly performed. A proper selection would have required front the vendor to respond to the process related criteria. Instead the Company purchased the Software based on the recommendation of another Company. This Company's Organization and requirements could have been different.

Root Cause 2: Delivery> Problems

Depending on the correctness of the RFP (request for proposal) which the Company send to the Software supplier, the supplier eager to book a much needed new Software Order, could have promised Software functionality which in reality was not there. The Company lost time and money by concentrating on a Software not suited to their process needs.

Barrier 2: Users Do not Accept System^[4] 2. Barrier

After the first training hours with the new Information Technology equipment the readers find thatthey will be less productive with the Computer. They fear their income will decrease. The cüppers fear to loose their jobs.

Underlying causes can be looked for in the areas of project content, project management, people, Organization and public.

Root Cause 1: Wrong Information Technology Configuration

The Information Technology Configuration can be faulty. For example too large keyboards could hinder the process of fast reading papers and keying in at the same time. The terminal dialogue could be too slow or too cumbersome. The hardware and network processes could be too slow or not be able to handle the workload. The System might not allow all readers to work in parallel with the new System.

Root Cause 2: Not Enough Test-Runs

A completely new Computer application System has to be tested thoroughly (Lullies/Bollinger/Weltz, 1990). Volumetests, performancetests and availibilitytests have too be planned for carefully. It is necessary to test the entire process. It might well be, that the readers are not satisfied, yet other affected personnel are happy with the new System. The Overall results are important.

Root Cause 3: Knowledge and Skill Level Too Low

Missing knowledge and skills regarding Computers and Computer applications might be severe reasons for nonacceptance. In particular older people might be afraid to touch the keyboard since the fear to demonstrate their missing Computer skills to the younger ones. It is necessary to take away fear by thoroughly explaining the new System to all those affected. Also ample room should be given for unsupervised training sessions.

Root Cause 4: Resistance

Resistance may develop out of missing knowledge or skills. Some people believe that the introduction of new technology is always accompanied by resistance. This may or may not be true, since new technology is often accompanied by curiosity for the new. Connor/Lake trace people's resistance to a lack of understanding, a missing will to accept the change and missing skills (see root cause 3) or resources to carry out the change (Connor/Lake, 1994).

Root Cause 5: MicropoJitics

Micpropolitics describe powergames in an Organization. The introduction of a new information technology often changes the complex power structure in an Organization (Lullies/Bollinger/Weltz, 1990). This is particuarly true for organizations undertaking global Business Reengineering projects, such as Media Partners. Experienced readers may fear to lose the seniority Status to younger, more efficient colleagues.

Root Cause 6: Mistrust

If the System is accessible front outside the Organization, people within the Organization may mistrust the System. Media Partners plan to have her customers to access the clipping database. Errors may immediately be traced back to the individual reader. There is a potential for mistrust.

Barrier 3: Decentralization not attainable

Examyle Tradine Inc.

1. Situation

Trading Inc. plans to replace ist centralized information management System by a decentral client/server Solution. The objective is to give more responsibilities to their störe managers. They are expected to operate as if they were owners of their Stores. This is very different from current processes, where störe managers receive direct Orders and close supervision from Trading Inc. headquarters. For example did the central marketing department decide about local pricing by downloading article prices to the störe PC' s. Now it is expected that störe managers fix their own local prices and improve profitablity at the same time.

2. Barrier

182 Stores are switched over to the new decentralized System It is planned to have the old centralized System in Operation as long as the new client/server System is notup and running. Düring implementation a large number of störe managers claim that the new System is not properly thought through. They maintain to having not enough time anymore to pursue their original job of increasing local sales. They express concerns that headquarters puts more pressure onthemby assigning more clerical work to the Stores. Trading Inc's top management considers putting a hold to the project.

Underlying causes can be looked for in the areas of project content, people, and culture.

Root Cause 1: Vague Project Goals

The project has not been properly explained to the störe managers. They believe to be forced to take additional load on to their daily workload. Top management did not share the real intentions with the storemanagers. These call for more individul freedom for decisionmaking, more opportunities for personal development, etc. If the störe managers knew the real project objectives, they would activily pursue project activities on their part.

Root Cause 2: Missing Discipline

In the past, the störe managers were always told what to do. Expect from keeping the störe operations moving, keeping the störe clean and care about personnel, they had no major decisions to take. The new decentralization concept requires more openess from them, more risk taking, more involvement, more training, and more teaching. Those störe managers, who are not accustomed to organizational changes of that nature miss the discipline necessary to make the project a success.

Root Cause 3: Strong Control Culture

The Business Reengineering project requires a new culture within Trading Ine. Away from the strong centralized bureaucracy, whith the virtue of efficient decisions and operations towards a more collaborative culture, with the virtue of situational decision making based on local customer care. There is a large difference between both types of culture (Schneider, 1994). The störe managers may think that headquarters will not really make the move and will eventually retum to law and order thinking and practices. So they may think it is not worth the effort to get too heavily involved in the project. It might even be dangerous for one's own career within the Company, once the old control culture will be reestablished.

3.5.2. Some Root Causes of Internal Individual Resistance

The second area we are looking at is individual resistance (of type A) against project contents and project management. Next to Information Technology problems, this area is most often mentioned by practioners when asked for Business Reengineering Implementation problems. It is also the area of most wrong decisions within a Business Reengineering project. When asked to give a reason for individual resistance, managers responsible for effection Business Reengineering, often act as lay psychologists by reading people's character as being too rigid or too negative. On the other hand, affected people act the same: „This manager will never be able to change himself‘. often prevail misunderstandings and prejudices. There is ample room for improvement in changing the view's of project teams and people affected in the Organization regarding one another. Table 3.5.2./1 shows typical individual resistance and underlying causes. We will discuss these relationships.

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Table 3.5.2./1 Typical Root Causes of Individual Resistance

Firstly, individual resistance can be broadly differentiated into constructive and destructive resistance to Business Reengineering success. Constructive resistance is always positive towards the objectives of the project. Yet there is resistance against the ways and means, and sometimes people's behavior, who ran the project. Destructive resistance is meant to stop the project. Both types of resistance can be overt or covert. Open means, one can hear and see the resistance. Covert means, the resistance is not noticeable ffom the outside. Definitely dangerous for the success of a Business Reengineering project is covert destructive resistance, particularly in tense implementation situations.

Figure 3.5.2./1 shows five roles associated with resisting behavior.

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Figure 3.5.2./1 Five Roles of Resisting Behavior

- The Behavior of the Critic

The critic communicates openly and demonstrates constructive behavior towards the project goals. She is not in line with various aspects of the project approach. She adds ideas to the project contents. Critics are valuable individuals for the projects successful outcome. It is important that the project initiator and the project team take the critic into close consideration.

- The Behavior of the Skeptic

The skeptic demonstrates a similar behavior to the critic. She does not teil everybody though. She is doubtful about various aspects of the project content and project management, yet talks only when asked. She is a valuable source of ideas towards the projects outcome.

- The Behavior of the Terrorist

The Terrorist seems to constantly warn everybody regarding a negative outcome of the project. She demonstrates openly her distaste of the project objectives and the way the project is run. Often the terrorist announces her own actions against the project. These should be taken seriously, since in all likelihood the terrorist makes her announcement true (Watzlawik, 1976).

- The Behavior of the Saboteur

The Saboteur demonstrates an extremely negative behavior. Communication is overt. The project team has to carefully watch out for Saboteurs. Saboteurs should have no chance to covertly destroy the outcome of the Business Reengineering project. Typically only very few people tum out to be Saboteurs.

- The Behavior of the Undecided

The undecided does not show clear signals of being covert or overt, constmctive or destmctive. That makes this behavior dangerous to the projects outcome. When the project tums to the positive side though, the undecided tend to be constructive.

Barrier 1: Constmctive Resistance

Both overt and covert constmctive resistance can be traced back to the domains of project management, the individual person and the culture of the Organization.

Root Cause 1: Project Management Approach

Constructive behavior of affected people is very much based on the way, the project is being managed. If the project team asks for openes and behaves itself in a way that people can communicate withour fear, than it may be expected that people freely discuss their thoughts about the projects content.

Root Cause 2: Personalities of People Affected by the Project

Well educated nondestmctive Personalities, mostly express themselves in ways that truly help a projects outcome. People are often known for their character. They seem to be not easy, yet valuable members of the Organization.

Root Cause 3: Former Experiences

Former experiences with organizational projects forms the behavior of people. If the experience is negative, than the behavior towards the new Business Reengineering project may be negative. If the experience was positive, the behavior towards the project is positive. Thus the behavior of new people to the Organization may collide with behavior of incumbents. Former success may breed resistance in a way that people believe there is no need for change.

Barrier 2: Destructive Behavior

Both overt and covert destructive resistance can be traced back to the domains of project content, project management, the individual person, the groups, and the structure of the Organization, which affects the culture in tum, and the public.

Root Cause 1: Project Objectives

The approach the project team is taking, decides to a large extent about the development of destructive behavior. If the project objectives do not take the people side into consideration, and solely push the project towards technological goals, destructive behavior evolves as a consequence. Psychologically people resist against objectives they do not accept as their own. Therefore it is necessary to align personal goals with the project goals. This is particularly true for those Business Reengineering projects which are set up to downsize the Organization.

Root Cause 2: Missing Change Momentum

A Business Reengineering project changes the way a Company operates on a daily basis. This change forces everybody affected to change her working style. As long as the working style is considered new, management has to keep pressure, to keep the change momentum up. If this is not the case, there is a tendency to go back to the old style.

Root Cause 3:. Destructive Personality

Managers of Business Reengineering projects explain destructive behavior often with alleged destructive personality. Yet, as psychotherapist Erich Fromm pointed out, while on the one hand destructive behavior is increasing in the world of today, on the other hand, only a minority of people has a destructive personality. He Claims it is the society, which for a large part is responsible for destructive actions, people take (Fromm, 1973). Society can allow destructive Personalities under the „right“ circumstances. Therefore, before a person is accused of having a destructive personality, it should be checked, whether circumstances in the Organization Support destructive behavior.

Root Cause 4: Group Pressure

Group pressure may yield destructive behavior. Group norms may force the group member to behave destructively, even if as an individual, the group member would have behaved otherwise.

Root Cause 5: Löss of Power over People

People, who lose power over people, may react with destructive actions. For example lost a Supervisor power, with the introduction of selfdirected work teams. He reacted by covertly sabotizing the team's working results. It is necessary to give the person a new role with a new responsibility, that is not to be identified with a loss of power.

Root Cause 6: Loss of Acceptance

Often the loss of power over people is a loss of Status in the world outside the workplace. This feeling of loss by the affected person can influence her decisions and actions in destructive ways.

3.6. Conclusion

Business Reengineering is an approach to organizational renewal, that begins with Customer needs and then moves to the work itself (Nadler/Shaw/Walton, 1995). As a result it tends to take a reductionist approach, in that proponents of Business Reengineering may believe, everything eise (structure, culture, people's behavior and motivation) will fall in place, once the reengineering has been done. This engineering mentality offers tremendous benefits through crisp and clear cut application of logic to the design of business processes, but also has a down side.

A large majority of Business Reengineering efforts begin with the redesign of processes and focus on the people side (members of the Organization and customers likewise) only to the extent needed to ensure that the technical design can be implemented by humans. This is the same technically oriented approach to change, that Frederic Taylor and his disciples used to implement mass manufacturing at the tum of the Century (Schumacher, 1996). Table 3.6./1 shows typical elements of this traditional approach to Business Reengineering.

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Table 3.6./1 Traditional Approach to Business Reengineering

The management of barriers, in particular regarding resistant behavior, is a new task that should complement the management of Business Reengineering implementation projects. The traditional approach to the management of barriers within Business Reengineering projects, masterminded by a topdown attitude to „people problems“, has to give way to a Change Management oriented approach of recognizing people' s valid concems. Processes, Systems, and structures can be adjusted mechanistically, but it's people who are the critical success factor in making the new business processes work (Burlton, 1995).

Therefore it is necessary to review the people and culture oriented Change Management literature for intervention models, applicable to Business Reengineering projects. In Chapter 6 we will incorporate the findings in a framework of barrier management, that should be added to or replace the linear and technically oriented traditonal approaches to Business Reengineering project management.

CHAPTER 4

CHANGE MANAGEMENT INTERVENTION MODELS

Any single change in the existing System affects all parts of the System; a complex change, such as may be needed to meet competitive challenges, has virtually unümited ramifications.

Any program that seeks to introduce change into an Organization will fail if it is not grounded in this systemwide view of the Organization.

Mink/Esterhuysen/Mink/Owen, Change at Work, 1993

4.1. Change Management Interventions

Change involves moving from the known to the unkown (Cummins/Worley, 1993). Because the future is uncertain and may adversely affect people's competencies, worth, and coping abilities, organizational members generally do not support change, unless compelling reasons convince them to do so. Similarly, organizations tend to be heavily invested in the Status quo, and they resist changing it in the face of uncertain future benefits. Consequently, a key issue in planning for action is how to motivate commitment to organizational change, such as Business Reengineering. This requires management attention to two related tasks: creating readiness for change and overcoming resistance to change. Change Management focuses on these two tasks by proposing, designing and subsequently executing effective interventions at individual, group, organizational and environmental levels. It should not be overlooked, though, that the environment often is more powerful than the Organization itself, while the psyche, the most personal category, is too deepseated to extemal change initiatives. All other categories between these macro and micro aspects are directly controllable by managers and Consultants (Kilman, 1988).

Interventions refer to a set of planned change activities performed by internal or external people, intended to help an Organization increase its effectiveness. Interventions, which assist in improving productivity and the quality of work life have three characteristics: (1) they are based on valid information about the Organization's functioning; (2) they provide organizational members with opportunities to make free and informed choices; and (3) they gain member's internal commitment to these choices. Valid information is the result of an accurate diagnosis of the frrm's functioning. It must fairly reflect what organizational members perceive and feel about their primary concems and issues. Free and informed choice suggests that organizational members are actively involved in making decisions about the changes that will affect them. It means that they can choose not to participate and that interventions will not be imposed upon them. Internal commitment means that organizational members accept ownership of the intervention and take responsibility for implementing it. In fact, if interventions are to result in meaningful changes, management must be commited to implementing them (CumminsAVorley, 1993).

4.2. Change Management Literature Review

Business Reengineering methodologies do not take people much into consideration, even that there exists a vast amount of literature on Change Management (Davenport, 1996). Business Reengineering is dealing more with Information Technology aspects of reorganizing the way corporations work. Change Management deals with how people are being affected by an organizational change of any kind, and what interventions have to be undertaken to make the change effort a success for the customers, the Company owners and the people working for the Company. The large number of Change Management approaches available can be classified into six categories (Table 4.2./1).

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Table 4.2./1 Classification of Change Management Approaches

The black blocks in Table 4.2./1 indicate the potential impact of the respective interventions (rows) on the domains (columns) individual, group, Organization and environment.

4.2.1. Psychology of the Individual Change Approaches

Psychology of the individual deals with the individual person. The character and the process of individual change are at the heart of psychological research. Individual psychology is relevant to Business Reengineering, since project initiators, project team members and affected people in the Organization are individual people with individual characters and behaviors. Dr Johnna Shamp, a licensed organizational psychologist remarks, that most Consultants focus on organizational change, but don't pay enough attention to the impact change has on the individual worker. She encourages Consultants to intervene atthe level of the individual affected by change (Shamp, 1997). Relevant authors to the field of individual change are listed in Table 4.2. l./l.

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Table 4.2.l./l Relevant Authors of Individual Change 4.2.2. Social Psychological Change Approaches

Social psychological change is a wide field of study. It is based on the works of Kurt Lewin, who fled Nazi Germany to become the founder of field theory, action Science, group dynamics, sociotechnical Science, and organizational development. Lewin himself was influenced by Gestalt-Psychology. Lewin's basic idea was, that the individual person is more shaped by her social environment (groups) than by her genes. Relevant authors to the field of social psychological change are listed in Table 4.2.2./1.

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Table 4.2.2./1 Relevant Authors of Social Psychological Change

4.2.3. Cultural Change Approaches

Cultural approaches look at change from the perspective of the culture of an Organization. Organizational culture is a muchdiscussed topic and will emerge as a pivotal frame of reference for many leaders or managers in any Organization. Culture of an Organization or group of people can be defined as:

,,A pattem of shared basic assumptions that the group learned as it solvedproblems of external adaption and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, andfeel in relation to those problems “ (Schein, 1992).

Culture is mostly unconscious to the members of the Organization and is able to control the behaviors of organizational change, even when the project plan calls for new behaviors. This is one of the reasons, why new leaders introducing change in an Organization sometimes replace key positions with new people, external to the Organization.

Relevant authors to the field of cultural change are listed in Table 4.2.3./1.

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Table 4.2.3./1 Relevant Authors of Cultural Change 4.2.4. Innovation Approaches

Innovation approaches look at change from the perspective of the diffusion of a new idea or practice. Diffusion is a process by which an innovation is communicated through various channels over time among the members of a social System (Rogers, 1983). Resistance to process innovation can be defined as late or no adoption by members of the Organization undertaking a Business Reengineering project. Relevant authors of innovation change approaches are listed in Table 4.2.4./1.

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Table 4.2.4./1 Relevant Authors of Innovation Change Approaches 4.2.5. Global Change Approaches

Global Change approaches look at organizational change from a very broad perspective. They focus on global transformations, based on lifethreatening changes dictated by the whitewatertype changes happening in an Organization's environment. Not only processes, but structures, strategies, values and basically all variables of a business are subject to change.

Relevant authors of global change approaches are listed in Table 4.2.5./1.

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Table 4.2.5./1 Relevant Authors of Global Change Approaches 4.2.6. Practitioner Approaches to Change

Practitioners (consultants and managers) typically take an eclectic approach to organizational change. They combine various aspects of the available theoretical approaches they know about, as well as add practical experiences with real change processes. Practitioner Approaches typically intervene at all levels. Relevant authors of practitioner approaches are listed in Table 4.2.6./1.

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Table 4.2.6./1 Relevant Authors of Practitioner Approaches to Change 4.3. Selected Intervention Models

From the vast amount of available approaches the author has selected several models which suit the practical requirements of Business Reengineering projects regarding interventions to change, targeting the individual, the group, the Organization, and the environment (Table 4.3./1).

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Table 4.3./1 Selected Intervention Models

4.3.1. Selected Individual Change Interventions

IM 1: Turning Stress into Energy

Obiective

This Intervention technique helps the individual affected by an organizational change to help herseif to positively cope an upcoming unpleasant and unclear Situation, which otherwise may lead into fear or fight (Aaroz/Sutton,1994).

Intervention

This Rational-Emotive-Therapy (Ellis, 1988) based Intervention technique breaks into seven Steps, which a person affected by a change, can apply to herseif (Table 4.3.1./1).

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Table 4.3.1./1 Turning Stress into Energy

Applicabilitv to Business Reengineering Proiects

This intervention method requires, that the person affected has been thoroughly trained before the change event. The basic idea is, to apply logical thinking to personal Problems, which otherwise would be handled purely emotionally. The technique is not applicable in a change Situation though, where there is already an unusual high stresslevel. For further individual intervention techniques it is advisable to study the work of Albert Ellis, the founder of Rational Emotive Therapy (RET).

IM 2: The Flow Concept

Objective

[...]

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^[1] © WolfD. Schumacher, 1997

^[2] Examyle Manufact Ine.

^[3] Situation Manufact Inc. produces and sells cituation Manufact Inc. produces and sells custom plastic injection machines. The Company Starts a Business Reengineering project. The main objective is to increase customer satisfaction by setting up selfdirected work teams. These work teams are responsible for the delivery of plastic injection machines of high quality, low cost and fast delivery speed. The teams are supplied with an application Software package meant to help in performing the new processes better than in the past. The chief information offtcer of the Company selected the package, based on recommdations of other manufacturing Companies.

^[4] Situation Media Partners produce printmedia clippings. They observe german and swiss papers and magazines on a daily basis, using key words provided by their Customers. The Company employs ninety readers that scan the print media, as well as ten clippers, that clip the traced articles with scissors. Forty percent of their income is based on the number of clippings they produce monthly. All clippings are sent to the Customers by mail on a daily or weekly basis. All business processes are done manually. Media Partners plan to change that They plan to introduce Information Technology to support the reading process and replace the manual clipping process through an electronic clipping Service. The Company expects additional revenue by setting up an externally searchable clipping database.