Reengineering Law and Legal Definition

"Reengineering" as a business battle cry was first heard in the early 1990s. Most commentators cite publication of a 1993 book by consultants Michael Hammer and James Champy, entitled Reengineering the Corporation, as the important moment when reengineering became a movement. The book was reissued in 2003 and is cited below. "Reengineering" functionally resembles planned change and what people have traditionally called "reorganization," but, in its beginnings, it came with a definite flavor of "starting from scratch," "blank slate," and "from the ground up." Its promoters advocated radical approaches, used terms like "the big bang," and generally rendered the process of reengineering in revolutionary terminology—whereas the word itself suggested the rational approach of "engineering."

Functionally reengineering calls for rediscovering the objectives of a business, diagnosing ills and discovering new paths to the objectives, design of a process, and then its implementation. It is supposed to transform not only what is done but how it is done, thus to change the corporate culture. Bloated, sloppy, slow, unresponsive, expensive, unfocused organizations are supposed to become lean, quick, effective, responsive, competitive, agile, and concentrated. Since it could be applied to corporations as a whole or specific processes within the business (purchasing, marketing, production, etc.) it came to be called Business Process Reengineering and abbreviated BPR.

Reengineering came at a time when many other waves of managerial technique had already crashed on the rocky shores of corporate bureaucracy. Thus it was labeled a fad immediately by some but embraced by others. It had its predecessors and competitors in such concepts or techniques as zero-based budgeting (another from-the-ground-up approach), intrapreneuring, visioning, de-massing, de-layering, etc. Much older management approaches tied more directly to operational practices were embedded in the reengineering methodology or used in its implementation, including total quality management (TQM), continuous improvement, and the Toyota-led concept of the "lean corporation" based on just-in-time deliveries, effective operational clustering, and cross-training of employees. It is sometimes associated with Six Sigma, a Motorola-invented but GE-popularized quality control objective.

By the mid-2000s reengineering has largely lost its violent language and radical character. It has become a generic label for making change in organizations. The practice has spread beyond the business sector and is being attempted by nonprofits and governmental entities as well—usually the sign of an aging and possibly fading enthusiasm. Since reengineering—in contrast, for instance, with statistical quality control—is not based on a clearly specifiable operational methodology, it is relatively easy to label any reorganization or attempt at reform as reengineering. For this reason reengineering has also become associated with large restructurings in industry leading to mass lay-offs, off-shorings, and out-sourcings—which has tarnished its image. Based on a Louis Harris & Associates survey, cited by Balachandran Bala in his book on this subject, more than 60 percent of companies surveyed in 1996 had carried out some kind of formal reengineering program. Despite such efforts, the average profitability of companies since the 1990s has not improved by the mid-2000s—indeed, thanks to an intervening recession, profitability somewhat lags the mid-1990s level as reported by the U.S. Census Bureau.

Reengineering has a strong element of reform and, in the energetic terminology that it employed, suggested initially the reaction of a new generation of managers come of age and facing what may have looked like the decaying past. The movement roughly coincided with the maturing of the baby boom generation into managerial positions. Thus, at best, reengineering served, and still serves, some companies as an inspiration to (quoting Hammer and Champy) "achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service, and speed." At worst reengineering was an occasional reform carried out with too much energy and therefore leaving a certain amount of ill-will behind.

THE SMALL BUSINESS PERSPECTIVE

While small business is as prone to fall into decay as large, the small business embrace of major corporate movements has always been cautious and selective—if for no other reason than the absence of the means and time to engage in too much introspection. Rodney McAdam, writing in the International Small Business Journal, confirmed this in a study of small and medium enterprises (SMEs). "Existing methodologies [of reengineering]," McAdam wrote, "mainly assume a large organization setting with large-scale resources dedicated to bringing about the large-scale reengineering changes. The paucity of studies in SMEs is surprising given the current and anticipated future market challenges in the SME environment that increase pressure for organizational realignment and responsiveness and market agility." After looking at the literature, McAdam concluded: "The analysis indicates that the taxonomy and nomenclature of reengineering, as defined by large organization-based studies, has not translated into SMEs, who use much more general terminology."

McAdam's conclusion, put into plain words, is that small businesses engage in similar activities but tend to use practical (what McAdam calls "phenomenological") rather than theoretical ("positivistic") approaches. As McAdam observes, the small business doesn't use reengineering phraseology but does engage in activities of occasionally radical adaptation. This, of course, is very much in line with small business practice when it comes to trendy innovations. A small business tends to pick and choose what will work in its own environment.

Reduced to the "phenomenological" level, reengineering translates into fixing things that do not seem to work. When the analysis of the problem shows that fairly drastic changes are necessary—and these changes are made effectively—results can often be dramatic and the experience occasionally wrenching. The very features of small business—its size; closer contact with employees, suppliers, and the market; and small business's more limited resources—tend to bring problems to the fore sooner. It is less likely for problems to become deeply institutionalized and to acquire large constituencies. For this reason, in usual practice, small business is also likely to take action sooner, more incrementally, and with less drama—one reason, perhaps, why McAdam encountered a "paucity of studies." Perhaps small business is, as so very often, ahead of the curve or immune to the disease.

BIBLIOGRAPHY

Bala, Balachandran. Business Process Reengineering—Its History, Promises, and Problems. Financial Executive Research Foundation, Inc., 1999.

Bruner, Rober F., et al. The Portable MBA. John Wiley & Sons, 2003.

Hammer, Michael, and James Champy. Reengineering the Corporation. HarperCollins, 2003.

Morgan, Jeffrey. Creating Lean Corporations: Reengineering from the Bottom Up to Eliminate Waste. Productivity Press, 2005.

McAdam, Rodney. "Large Scale Innovation—Reengineering methodology in SMEs: Positivistic and phenomenological approaches." International Small Business Journal. February 2002.

U.S. Bureau of the Census. Quarterly Financial Report for Manufacturing, Mining, and Trade Corporations: 2005. April 2006.

                                   Darnay, ECDI