ORGANIZATIONAL

TRANSFORMATION
CIS 654
OVERVIEW AND COURSE
REQUIREMENTS
Why include a class in Organizational
Transformation (OT)
Change is a key organizational component
When the rate of change inside an
organization is slower than the rate of
change outside an organization.
The role of information technology (IT) is
key in any transformation
A Language of Change
Re-engineering
Re-invention
Re-building
Re-making
Re-organization
Re-designing

Impact on Employees
In the past five years, have you or any
member of your family been laid off,
downsized, or otherwise lost a job through
no fault of your/their own?
Did employers have more loyalty to their
employees ten years ago? Twenty years
ago?
Definition of Reengineering
The fundamental rethinking and radical
redesign of business processes to bring
about dramatic improvements in
performance.
Four key words in the definition
1. Dramatic (improvement)
A. Reduced cost
B. Increased speed
C. Greater accuracy
D. Greater quality
E. Etc
2. Radical
A. Radical means going to the root of things.
B. Instead of fixing what you have and what you are currently
doing by imagining that your company doesnt even exit today
then create it new?
C. In other words, start from a clean slate
Four key words in the definition
3. Process
A. A business process is a set of interrelated work
activities with inputs and value-added tasks that
produce outputs.
B. Horizontal work flows that cut across
departments or functions
C. Evolution leads to Isolated Islands of Activity
D. Sub-optimization might not be good!

Four key words in the definition
4. Redesign
A. How the work is done to produce the product
or service and deliver it to the customer.
B. The starting point for organizational success
is well-designed processes.
Why Reengineering? Three Cs
Customers:
More sophisticated and demanding on the products they
want.
Competition
Has become global vs. local, so now instead of just a
few, we now compete with thousands!
Change
Instead of the focus on being on how well we operate,
but how well we supply the needs and wants of the
customer. Customer Satisfaction!!!
BPR Requires a Questioning of
the Status Quo
the continuity of time sequence
Procedures have a habit of arranging
themselves into structures, institutions, and
concepts and becoming virtually immortal.
Simple example: QWERTY
Examples
GTE (local phone service provider)
Maintenance and repair process
Then--Repair clerk, line tester, central office
technician, service technician. (Slow)
NowCustomer care advocate handles it all!
Customer focus
1/2% thennow 70% solved by the person they spoke
with originally
40% resolved while still on line


Examples
Federal Mogul (makes car parts)
To get contracts from car manufacturers they:
Sales rep visits customer to get specs. Hand off specs. to engineer
who designed from scratch, Pick a place to manufacture this design
and use that toolroom, Design sent by mail, Design sent to toolroom,
the part then was sent to customer
This process typically took 20 weeks. Their worst competitors took
only 10 weeks and the best 6 weeks
The auto manufacturer gave feedback as soon as they got the parts, so
Federal was losing out.
Nowengineer goes to customer, designs based on previous similar
parts and a computer program reconfigures the old parts to the new
specs. 3 days to 1 minute. Instead of mail it is all done electronically.
Use any toolroom that is available.
Twenty-week to 18 days, win rate on new proposals 4 times better,
profitability more than double.


BPR Focuses on Specific
objectives
Reverse-design process. Figure out what
you want, then work backwards until you
get it!
Backward chaining
GTE faster repair (customer satisfaction)
Federal Mogul faster design (customer
satisfaction)
BPR Focuses on Breakthrough
Results
Inherent Slack
Inventory
Production capability
Manpower
Working capital

BPR Focuses on Significant
Cultural Change
Social Change
Typically involves eliminating, consolidating, and
otherwise altering work activities.
Layoffs and early retirement programs
Not downsizing or restructuring
Or doing less with less
But, doing more with less
What are the negative effects on employees?

The Top Ten Ways to Fail at
Reengineering
1. Dont reengineer but say that you are.
2. Dont focus on processes.
3. Spend a lot of time analyzing the current situation.
4. Proceed without strong executive leadership.
5. Be timid in redesign.
6. Go directly from conceptual design to implementation.
7. Reengineer slowly.
8. Place some aspects of the business off-limits.
9. Adopt a conventional implementation style.
10. Ignore the concerns of your people.
1. Dont reengineer but say that you
are.
Abraham Lincolns riddle: If you call a horses
tail a leg, how many legs does the horse have?
Just because the term reengineering is popular
and used often, doesnt mean that is what they are
actually doing! This can hurt future
implementations when you really decide to do it
right.
For example, just because you are putting in a new
computer system, doesnt mean that you reengineered
what you do, you may have only automated the process
you are currently doing. Not a dramatic improvement!
2. Dont focus on processes.
You cant reengineer an organization only
processes in that organization.
You should be able to describe specific inputs and
outputs for each one
Each process should cross a number of organizational
boundaries.
There should be a focus on goals and ends rather than
actions and means.
The processes, their inputs, and their outputs should be
easily comprehensible by anyone in the organization.
ALL the processes relate to customers and their needs,
either directly or as contributors to other processes.
3. Spend a lot of time analyzing the
current situation.
You should understand the process, but
dont spend too much time on it, because
you already know its not good and we are
looking for dramatic improvement.
Look for the What and the Why not the
How because the how is going to change.
Waste of time
Can inhibit change
4. Proceed without strong
executive leadership
Only a senior executive who deeply
believes in the reengineering cause can
actually make it happen.
Reengineering is a top-down phenomenon.
Leadership support is a must because
change is hard and resistance from within
will kill it once implementation begins.
5. Be timid in redesign.
Reengineering requires bold and imaginative
thinking about process design and how work is
done.
There may already be great ideas lurking in the
minds of your employees just waiting for you to
ask.
Create an environment so people can share their
radical ideas without fear of ridicule.
On company offered cash for people that came up
with a too radical idea, otherwise, they adopted it!
6. Go directly from conceptual
design to implementation
It never goes as one plans, so instead try it out in a
safe environment.
Go through a series of intermediate steps and put
out the fires as you proceed.
You could try out a new concept by developing a
prototype.
You want to catch the major flaws before they
actually happen.
It can also help you with refining the actual
implementation.
7. Reengineer slowly
You should see at least some major improvements
in 12 months or you are sure to fail.
Executive management will lose faith and funding will
dry up.
Resistors will gain power
Employees will exhausted from all the change without
anything to show for it.
You can lose focus
Dont increase the size without very good reason.
Continually increasing the scope will cause you many
delays and therefore failure.

8. Place some aspects of the
business off-limits.
If you radically redesign your processes but
refuse to change the compensation plan, the
structure of the organization, or job titles,
then you will certainly fail.
Everything must be on the table with no
limits for change.
9. Adopt a conventional
implementation style.
The old way of planning an implementing
must be thrown away.
Be sure of what you want, figure out how it
will be done, then go full steam ahead.
Make the decision to change and then do it!
More like a prototyping.
10. Ignore the concerns of your
people.
Employees will ask themselves, What is
in it for ME?
No matter how great your idea is, if you
dont have the support of your employees
you will be in trouble.
Empowerment
Involvement
Compensation
Leadership: Primary Ingredient
Unyielding top management support is a must to
see the reengineering through.
Middle management have made a career of the
current system and will resist because they have
the most to lose.
If the leader isnt the top dog, make sure the top
dog isnt biting the leader in the leg.
They must have the power and ability to get it
done.
Characteristics of the Leader
Passion for the project and company
Be able to inspire trust
Be able to inspire confidence
Exhibit an unusual combination of impatience
with the current system and patience when dealing
with obstacles and setbacks (perseverance).
Charisma to get it done.
See the need for change early.

Responsibility of the Leader
Make the decision to reengineer.
Make the reengineering succeed.
Appoint process owners and specific tasks and provide
them with the resources they need.
Measurement
Making sure everyone follows through by being
involved.
Create an environment where it can succeed.

The three Ss of Reengineering
Leadership
Signals: Explicit Communications
Communication must be relentless.
Communication must be simple.
Communication must be dramatic.
Symbols: Personal Behavior
If behavior supports the talk, then it is believed,
otherwise, it is dismissed.
Systems: Measurements and Rewards
If you dont change what you measure the rewards for
improvement, you will not change behavior.
The Reengineering Team: Second
Ingredient
Reengineering is not a one man show, so we
must create a team from the best and the
brightest individuals that fit the job.
The kinds of people picked must reflect the
nature of the endeavor itself.
Lets look at what they will do in terms of
content, context, and style.
Content (the task at hand)
Understanding the old process and customer
requirements.
Inventing a new process design that shatters
long-held assumptions.
Constructing the new process, including
fleshing out full details of its operations.
Selling the new way of working and living
to the organization as a whole.
Context (environment)
Uncertainty: the old way is wrong, and we
dont yet have a new way.
Experimentation: iterative experience. It
must be tried in reality, not on paper.
Pressure: Usually needed yesterday so they
operate under conditions of great urgency
and intensity.
Style
Reengineering is a journey into the unknown.
It is about exploration and discovery rather than
analysis and knowing.
The reengineer lives in a stream of options,
alternatives, possibilities. Ideas must be
formulated before all the facts are in, tested before
the environment is stable, and evaluated fore the
results are conclusive.
Stumbling forward and being comfortable with it.
The Profile of a Reengineer
Process-orientation
Holistic perspective
Creativity
Restlessness
Enthusiasm

Optimism
Persistence
Tact
Team player
Communication skills
To wrap it up, the perfect member would be a female
engineer who has changed jobs frequently and has a
background in sales. Why?
Team members share dedication to
three things.
These three things should come first for all
team members and the management needs
to create the environment that it can happen.
The process that is being reengineered.
The needs of the customer of that process.
The team itself.


Team Building
Caring: having an environment that allows
open and honest communication.
Daring: encouraging everyone on the team
to be innovative and adventurous, and to
ask the hard questions.
Sharing: Common objectives, there are no
winners on a losing team.
Avoid Commonplace Dysfunctional
Behaviors by making them known
Not listening
Idea killing
Personal attacks
Silence
Over sharing
Team management
Career paths: So, they know what will
happen to them when the job is done.
Compensation: Bonus for job well done.
Celebration: fun time.
Communications: the more the merrier.
Care and compassion: Take care of them!
Do You Need Help with the
Reengineering Process?
1. What do consultants do?
A. Heads: Bring knowledge and brain power
B. Hearts: Deal with the motivation and
perseverance of getting the job done.
C. Hands: Actually do some of the jobs of
reengineering.
Pros and Cons of Consultants
Pros
More experience that will help you avoid pitfalls.
Getting access to essential skills
Third-party objectivity
Cons
Become dependent on them.
Cost $
May take you down the wrong road. Not accountable.
Assumption Busting for Fun and
Profit
Rule of Whacko: Any valuable new process
design will at first appear to be whacko. That is, if
someone approaches you with a proposal for a
new process design that strikes you as interesting
and plausible, our advice is: Throw it away.
Breaking Assumptions: surfacing and questioning
the underpinnings of the old process, the reasons
why it was designed to work the way it did.
Assumption Busting: continued
Ford accounts payable example:
Purchase order from purchasing, receiving document from the
receiving dock, and an invoice from the vendor: checked to see if
they all match and if they did, issue a check.
Now, the person on the receiving dock takes possession of the
goods, checks to see if they match against an order, and if so,
authorizes payment, if not they dont accept.
Why wasnt this done all along?
The old way was never designed, it just happened.
Didnt have the technology to do it the new way.
Based on assumptions: such as, dock workers cant or shouldnt
authorize payments! Etc.

Assumption Busting: continued
GTE:
one individual couldnt do it all, deal with
customers, test the lines, and dispatch service
technicians.
Federal Mogul:
every design was unique
that engineers couldnt interact with customers
that a part had to be tooled in the same plant
where it was to be made.
Assumption Busting: continued
How do we go about identifying faulty
assumptions from ones that are still valid?
Problem: First identify the problem that you are
currently having, such as Fords accounts payable being
too slow.
Rule: Then identify the rule or rules that allow that
problem to occur. Ford example, too labor intensive.
Assumption: the ideas we take for granted that caused
the rules to happen. Ford example, dock workers cant
authorize payment because they dont have the
information or authority.
Assumption Busting: continued
IBM Credit Corporation example:
One person checked the applicants credit
rating
Another decided what interest rate to charge
A third person put together the lease agreement
And a fourth prepared the response to the
customer.
What is the underlying assumption here?
Assumption Busting: continued
Example, a consumer goods maker distributed its
products to retailers through a network of route
drivers.
A driver would come to a store, see what was missing
from the shelf, go back to the van to pull inventory,
bring it into the store, fill out a manifest for the store
managers signature, and then send the form to
headquarters for processing and billing. All of this
depended on what was inventoried in the truck, which
was hard to manage and very expensive to keep.


Assumption Busting: continued
Problem: the company is carrying lots of
inventory on the trucks.
Rule: the drivers decide what is needed after they
arrive at the store.
Assumption: The company doesnt know what is
missing from the shelf until the driver checks.
Instead, use prediction models to predict what will
be needed, pack it all up and shrink wrap the items
for each store, load the trucks in proper order and
have preprinted invoice to drop off with retailer.
More efficient and reduced inventory.
The Hardest Part of Reengineering
CHANGE!
Getting people to let go of their old ways and embrace
new ones. All deal with people in the organization and
the ultimate goal of customer satisfaction.
Jobs
Organizational structure
Measurement and rewards
Career path
Management roles
Interpersonal relationships
Value systems
Principles of Change
Resistance to change is natural and
inevitable.
Resistance doesnt always show its face.
Resistance has many motivations.
Theres no one way to deal with resistance:
Manage it!

Dealing with change the 5 Is are all
based on communication!
Incentivespositive and negative
Informationdispel uncertainty and fear
Interventionone-on-one connections
Indoctrinationmake change seem
inevitable
Involvementmake people part of the
effort


Impediments to Communication
Disbelief: Trustworthy? Actions speak loud.
False familiarity: Got the T-Shirt already!
Fear of Layoffs: Fear of the unknown.
The rumor mill: real source, NO SECRETS!
Sloppy execution:
incomprehensibility,
Abstraction
Complexity
clichs
Sloppy execution
Incomprehensibility: Speak Plain non-
technical
Abstraction: Be specific and use stories.
Complexity: Dont be too specific, you will
bore them to death!
Clichs: We are in a win win situation!
Dont be trite! Dont over communicate!
Ten Principles of Reengineering
Communications
1. Segment the audience
2. Use multiple channels
3. Use multiple voices
4. Be Clear
5. Communicate, communicate, communicate
6. Honesty is the only policy
7. Use emotions, not just logic
8. Heal, console, encourage
9. Make the message tangible
10. Listen, listen, listen
Ten Principles (continued)
1. Segment the audience:
A. Divide large diverse markets into smaller and
more homogeneous segments.
B. All reengineering messages must be tailored
to the specific characteristics and
requirements of each constituency.
C. Micromarketing is the name of the game.

Ten Principles (continued)
2. Use multiple channels of communication.
A. Use a mix of presentations, articles, comic
strips, videos, design simulations, logos, etc.
B. Variety counts and so does originality.
C. Have a reengineering motto, give out hats, t-
shirts, etc.


Ten Principles (continued)
3. Use Multiple Voices:
A. By using different people to deliver the
reengineering messages, you will enhance
your ability for understanding. Some people
relate better to others.
B. Make sure they are not just giving the same
message. They need to give their own
perspective so the information will be richer.
Ten Principles (continued)
4. Communicate Clearly:
A. Sizzle helps to sell, but its not enough
B. Reengineering has the four Ps.
A. Purpose (Why)
B. Process (How)
C. Progress (Keep the momentum going)
D. Problems (Humility helps with relationships)
Ten Principles (continued)
5. Communicate TIMES 3
A. Repetition works well.
B. Do so with many ways, through many channels, and
by many people.
C. Rule of seven times seven: The same thing must be
communicated 7 times in 7 different ways before
anybody will believe it.
D. Rule of the fifties: The first fifty times you say
something, people dont hear it; the second fifty
times, they dont understand it; and the third fifty
times, they dont believe it.
Ten Principles (continued)
6. Honesty is the only policy:
A. Lies about reengineering are not only unethicalthey
are foolish and counterproductive.
B. If a mistake is made, admit it. If something is
unknown, acknowledge it. If something is painful,
face it.
C. Truth, no matter how hard it is, is always better than
leaving it up to their imagination.
D. Complete honesty has to happen consistently to build
trust. Just one lie or attempt to deceive by leaving out
information will destroy ALL trust.
Ten Principles (continued)
7. Use Emotions, Not Just Logic:
A. Communicate passion!
B. Fear
C. Greed
D. Joy
E. Hope
F. Playfulness
Ten Principles (continued)
8. Communicate to Heal:
A. Reengineering affects real people with real
lives and cause real pain.
B. Use communication to minimize the stress
and trauma that it causes.
C. Messages of hope, consolation,
encouragement, or appreciation.
D. We must value our employees!
Ten Principles (continued)
9. Communicate Tangibly: Use Gimmicks.
A. Tear it up. printed on paper that cant be torn.
Things are not what they seem, find a new way of
doing it.
B. Shake it up. Hand warmer that wasnt warm until
it was shaken up. You cant be passive.
C. Break it up. Silly putty wont break until
refrigerated. Be resourceful.
D. Were going to have a ball. Give them a tension-
relieving soft rubber ball.
Ten Principles (continued)
10. Listen, Listen, Listen:
A. Communication is not just talking, it must be
two-way.
A. It gives you feedback on how well your
communications are going.
B. Opportunity for employees to vent and express
their feelings.
C. Use focus groups, suggestion forms,
questionnaires, surveys, interviews, open
discussion, etc.
Reshaping an Organizations Values
Organizational values represent peoples most
basic beliefs about their work; inevitably, they
shape peoples behavior and how they perform
that work.
As intangible as they may seem, as difficult as
they may be to define, as slippery as they may be
to grasp in conversation, values really lie at the
heart of any successful attempt to reengineer.
Making new values a reality
Ensure they are reflected in process designs
If you say you want to care about the customer, but dont have a
way to interact with them, hot air.
Have executives demonstrate them through personal
behavior
Example isnt the best, it is the only way! If we are suppose to
care about the customer, the manager needs to show it first!
Use them in difficult situations
Tylenol example. Pull or smoke and mirrors?
Incorporate them into measurement and reward systems
If customer satisfaction is key, thats what we measure!
State them clearly and uniquely


Combating the
Counterrevolutionaries
1. Newtons Third Law asserts that every
action has an equal and opposite reaction.
2. Every revolution spawns a
counterrevolution.
3. Counterrevolutionaries are usually
motivated by the beliefthings were
better as they were before.
4. The following are typical arguments.
Reengineering does not work (false).
1. Reengineering has a 70% failure rate: Out
of context. No reengineering project will
fail if it is done correctly.
2. The organizations need to have the will,
intelligence, and passion. Those will
succeed.
3. Give examples of those companies where
it did work and show the great results!

Reengineering is nothing new.
Different from automation:
Automation adapts technology to processes,
reengineering totally reconfigures processes to
exploit the full potential of technology.
Its just total quality management. TQM is
incremental, reengineering is radical.
It doesnt really matter if it is new or not, we
are looking for dramatic improvement!
Reengineering is not radical enough.
One way to contend with reengineering is to
try and say it doesnt go far enough.
Since the reengineering we plan to do is
going to change everything we do, how can
it not be radical?
Radical change is dangerous and
inhumane.
The organization cant survive such change.
Yes, reengineering does create some turmoil
and real pain, it is not fatal. No pain, no gain.
Dramatic improvement has to be paid for in
some way.
What is the alternative? If we go out of
business, how traumatic will that be?
Reengineering isnt for us because
we are different
Reengineering is not about project, size,
routine, or the back office. Reengineering
is about changing the way work is done.
Reengineering applies equally to processes
that are creative and to those that are
routine.
Work is Work, no matter the organization.
We cant afford it
Good for you!
If you cant come up with the resources,
reengineering must not be vital for your
organization.
Contentment and complacency are
dangerous feelings.
Weve already been doing
reengineering for years
They could be true.
Keep up the good work!
Make sure you keep current with
reengineering techniques and practices.

Just another name for downsizing,
and downsizing doesnt work
Half true, the second part.
Eliminating people without eliminating work may
lead to short-term payoff but definitely leads to
long-term disaster.
Reengineering is not about getting rid of workers,
it is about getting rid of work, especially work that
doesnt create value for the customer.
Downsizing doesnt work, but reengineering does!

Reengineering is just a cost-cutting
tool, but we need growth
It can cut cost, but it can also deal with
cycle time, accuracy, quality, etc.
Cost-cutting may just be a benefit of finding
out a better way of doing things, but it is not
the reason we do them.
Customer focus on what we want to do.
Reengineering is just common sense
Thank you very much!
An idea that is simple, readily
understandable, and consistent with
peoples intuition is likely to be accepted
and to work.