Reengineering - a necessary artifact from the Twentieth century - but what is the meaning of Reengineering in our modern world of management?

Since the 1993 debut of Michael Hammer and James Champy’s book Reengineering the Corporation, the reengineering movement has gained currency in a broad set of industries from manufacturing and aerospace to health care and financial services. Reengineering provided an entire ethos for organizing a corporation around the kind of processes that produce value, like distribution, and production. In this way the reengineering movement served as a catalyst to break down the barriers between previously compartmentalized departmental organizations.

In this way, reengineering was able to overturn much of the post-World War II thinking around industrial organization. Interestingly enough, it is now widely accepted that the corporate organizations of the 40s, 50s and beyond served American business well due to their focus on production. In an economic cycle predominated by household formation and the rapid rise of consumerism, the business enterprise that could out-produce its competition in terms of sheer numbers, while capturing additional economies of scale along the way, could emerge the winner. Many of these organizational models were offshoots of the need for massive volume production of aircraft, tanks, ammunition, ships and vehicles for the war effort of the early 40’s. A departmentalized structure with tightly defined functional responsibilities, where ambiguity was reduced to a minimum, facilitated volume production.

So from a reengineering perspective, it is at one level remarkable that the post-war form of organization served American business so well for so long. It may also be argued that the reengineered enterprise advocated by Hammer and Champy was the early emergence of a set of structural alternatives, and a fundamental way of analyzing a corporation, that put a premium on flexibility. Philosophically, the proponents of reengineering operated on a belief that flexibility itself had value, beyond the issue of in what direction the organization might have to flex.

This flexibility for its own sake allowed a sort of “contingency capability” for business to respond to as yet unforeseen circumstances. The value of this capability is of course, inherently in proportion to our beliefs about just how dynamic an environment we’re likely to face. For many, even those who adopted reengineering wholeheartedly, this basic principle of flexibility was a subtlety that was lost on them.

One of the downsides of reengineering was that it became associated with substantial layoffs through “downsizing”, which in many cases became a direct byproduct of reengineering. While this was not the intent of the reengineering movement, it may in retrospect be a case where reengineering became a pretext for layoffs and workforce reductions that were likely coming under any circumstances.