Re-engineering The Corporation

Re-engineering the Corporation  Motivation to re-engineer • Organizational Reasons • Financial Reasons • Technology Reasons  Re-engineering Vs. Organizational Change • Change - Change of Strategy, Business Vision • Re-engineering can be focused on specific processes vs. change broader Evolution and Revolution as Organizations Grow  Why organizations need to change (internal drivers) • Age of the organization • Management problems are rooted in time • Re-engineering improves operational efficiency • Institutionalization of management practices • Size of the organization • Coordination issues are different • More Hierarchical - More levels • Formalized processes - for control Change Drivers   Industry Growth Rate • Technology newness • Profitability • Speed of Evolution and Revolution Stages of Evolution and Revolution • Evolution • Minor modifications • Times of Relative Stability • Revolution • Serious Upheaval of Management Practices • Times of Turbulence Organizational Growth Cycle   Five phases - organization’s growth cycle Organizational priorities – different in each phase Within each phase - comes a time of reckoning of a crisis of some sort  Phases of Growth for an Organization  Creativity Phase • Creating a product and a market • Communication is frequent and informal • Long hours rewarded by modest salaries and promise of ownership through stock options • Problems • Little Structure and no focus on efficiency • How do you motivate additional employees who may not be as involved • How and Where do you secure additional capital • Conflict among leaders • Crisis of Leadership Next Two phases  Direction phase • Functional structure to increase specialization and efficiency • Systems need to be set up for inventory control, accounting, order processing • Incentives, budgets and work standards • More formal communication • Crisis of autonomy (empowerment)  Delegation phase • Divisional structures • Greater empowerment of managers • profit centers and bonuses used to motivate employees Last two phases  Coordination phase • Strategic Business Units - decentralized units are grouped together • Formal planning procedures • Growth of the headquarters - to review initiatives of the line managers • Capital allocation decisions are carefully reviewed and analyzed • Conflict between the line and staff • Red Tape Crisis - Procedures take precedence over problem solving  Collaboration phase • • • • Matrix structure to handle the right teams for right problems Economic rewards towards team performance Real time information systems into the decision making process Crisis to find alliance partners New phase  The Networked organization • Emphasis on the market vs. hierarchy • Alliances for learning, and access to complementary resources • Company may choose between keeping activities in house and outsourcing • Identification of a core competencies   Dilemma between dis-aggregation and vertical integration Dilemma between creativity and efficiency • Where is your organization in development sequence? • Limited range of solutions • Current solutions may create problems in the future How to make Reengineering Really Work  What outcomes is reengineering supposed to impact • Reduces Cost • Increases Sales Revenues • Improves Quality • Increases Response Speed Dimensions to measure the process • Breadth of process - No. of activities that are altered • How many functions, activities or processes are affected? • Organizational Levers which help the process succeed • • • • • • Roles and Responsibilities Culture Skills Information Technology Measurement of Incentives Organizational Structure Committing leadership to the Change Effort  Eight Step Change Effort (Kotter) • • • • • • • Establishing a sense of urgency Forming a powerful coalition Creating a vision Communicating the vision Empowering others to act on this vision Planning for and creating short-term wins Consolidating improvements and producing more change • Institutionalizing the new approaches Reengineering effort   BAI (Redesign of Service Delivery) Diagnosis • Paperless organization • Broke all transactions into 10 kinds of processes • Studied the flow of activities • Redesigned from scratch   AT&T (Improve performance of GBCS) Diagnosis   Preparing for Change • Key Organizational Drivers the success of redesign • Develop the actual system Rollout Phase • Phased introduction • new Positions • Blueprint for action  Preparing for Change  Rollout Phase Seimens Nixdorf  Problem: Increased labor costs resulting in losses  Diagnostic: • • • •  HQ too many people Too many fully staffed field stations 30 Support Centers Lower profit margins – increased competition Preparing for change • Pilot at Frankfurt • International pilot in Brussels and Frankfurt  Rollout • Support Centers -30 to 5 (20% reduction in employee headcount) • Redesigned structure (Profit and Cost improvements) Keys to Redesigning  Five Keys to Success • Aggressive Targets • Commit at least a fifth to a half of the CEO’s time • Conduct review of customer needs and market trends • Additional Senior executive for implementation • Comprehensive pilot of new design  Four Likely Missteps • Assign average performers • Measure only the plan but not the post implementation performance • Settle for status quo vs. radical redesign • Overlook communication Building a learning Organization  What is a learning ? (Meaning) • • • • Just information processing Using experience to alter behavior Detecting and correcting errors Shared insights, knowledge and mental models based on past experience, knowledge and memory  How do you create a learning organization? (Management) • Steps that organizations undertake to facilitate learning behaviors • Sources that organizations look to, to gain new knowledge  Is the organization learning ? (Measure) • What are learning outcomes? • How do we measure learning outcomes ? Five building blocks • Systematic problem solving • Relying on scientific method of information collection rather than just intuition and guess work • Insisting on data rather than guesswork – Need to train employees at brainstorming, surveying , interviewing – Make choices -Gantt Charts, Rating forms, Weighted Voting • Experimentation - Systematic searching for new knowledge – Ongoing internal experiments – Send employees to other companies for training programs – Incentive system to favor risk taking – Demonstration projects How do you build a learning organization  Learning from own experience and past history • Record lessons in an open and accessible fashion • Study and understand reasons for failure • Matrix structures can transfer the learning from one product to the next  Learning from “best practices” • Sending employees to other organizations to study what they do and improve an organization’s practices • Benchmarking • • • • Systematic visits to and interviews Analysis of results Development of recommendation Listening to customers How do you build a learning organization  Transferring Knowledge • Reports • Tours and site visits ( to sites that implement new approaches) • Building Knowledge bases and using them (Consulting organizations) • Incentives and rewards for implementing new knowledge Measuring Learning  Improvement in performance • Cost of production • Learning and Experience curves • Economies of scale • Half-life Curve • 50% improvement on a performance measure • Steeper slopes - Rapid learning • Three-Step learning progression • Cognitive learning • Behavioral learning • Performance Improvement