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		BPR and Organisational Culture

2. BPR

This chapter defines what BPR is, relates it to the organisation using McKinsey's 7 S model, and draws conclusions as to the impact of BPR on organisations, and in particular, on organisational culture.

2.1 Definition

Whilst BPR is a relatively new overall concept, already various practitioners and commentators have created their own definitions. To start, the definition given by Hammer & Champy (1993), who have perhaps done the most to popularise the concept within the ranks of western management, is given:

"Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed".
(Hammer & Champy, 1993, p32)

Hammer & Champy's definition, and indeed their whole book, emphasises new single processes handling all the activities in order to meet customer needs. Hammer & Champy use an analogy of a "clean sheet of paper" to highlight the "rethinking" and starting afresh aspects of BPR.

Obeng and Crainer also emphasise this starting anew concept. They define BPR as:

"It's about changing anything which provides a block to improving today's business performance, even if it means going back to the drawing board." (their emphasis)
(Obeng and Crainer, 1994, p20)

They regard BPR as just common sense but highlight a number of hurdles that must be overcome in-order to implement it. In their "Rules for the Revolution" (p74) they talk of discarding yesterday's thinking and yesterday's solutions for today's goals.

Johansson et al define BPR by relating it to some other contemporary initiatives:

"Business Processing Reengineering (BPR), although a close relative [of JIT & TQM], seeks radical rather than merely continuous improvement. It escalates the efforts of JIT and TQM to make process orientation a strategic tool and a core competence of the organization, BPR concentrates on core business processes, and used the specific techniques within JIT and TQM 'toolboxes' as enablers, while broadcasting the process vision."
(Johansson et al, 1993, p6)

These writers analogy is of "breaking the china" and "then putting the pieces back together again in a new way" (p6). Their emphasis is very much an operations approach with all other functions, including those "upstream and/or downstream" with customers or suppliers, merged into one integrated operation, so that "a sense of inescapability and/or symbiosis is generated" (p7).

Davenport prefers the term "business process innovation":

"Reengineering is only part of what is necessary in the radical change of processes; it refers explicitly to the design of the new process. The term process innovation encompasses the envisioning of new work strategies, the actual process design activity, and the implementation of the change in all its complex technological, human, and organisational dimensions."
(Davenport, 1993, p2)

He also has an operations leaning especially using IT for completely new ways of undertaking business, different not only to the organisation but to the industry.

Andrews & Stalick highlight the importance of the organisational integration aspects of BPR, defining it as:

"radically changing how people work - changing business policies and controls, systems and technology, organizational relationships and business practices, and reward programs".
(Andrews & Stalick, 1994, p xiii)

They too emphasise destroying "old ways of thinking and operating", and the "key role" of information technology (p xiii).

These definitions, from some of the pioneer writers and practitioners, are sufficient to pick out the common threads. One key aspect of BPR is that it defines completely new and radical ways of how an organisation undertakes its activities. Often they will innovative. Because these new ways cut right across an organisation, and even outside it, affecting all parts they are seen as revolutionary. BPR is at a high level within an organisation and driven by external and strategic demands. It should be differentiated from process improvements, which is defined as incremental changes to existing processes. Successful implementations of BPR bring order of magnitude improvements in business benefits.

2.2 Impact on the Organisation

Because it encapsulates the key components of an organisation and because it has Shared Values (or Culture) at its centre, McKinsey's 7 S model will be used as a framework to assess the impact of BPR on the organisation (figure 2.1).

McKinsey's 7 S Model (3K)

Figure 2.1 McKinsey's seven S diagram (Henley, 1991, p33)

First, each of these elements will be defined.

2.2.1 Systems

"Systems are codified knowledge, organised in a logical sequence." (Henley, 1991, p47). They are the processes, methods, procedures, rules, techniques, technology, manuals, etc. that ensure that work is undertaken efficiently and accurately. They are the instructions that guide staff and management in their daily tasks.

All the BPR definitions either explicitly or implicitly refer to these attributes of Systems as the following examples of BPR implementation demonstrate. Rohm, in his review of BPR at the Principal Financial Group Inc., gives an example from its field support transaction. Called Licensing and Contracting, the impact on processes was significant:

"Under the old system, this was a sixteen-step process requiring input from nine people stationed in different areas and on different floors of the home office. The new structure enabled this process to be cut to six steps, requiring the work of only three people".
(Rohm, 1992)

As a result, customers were provided with a single contact person who could execute and manage the whole process.

Often, as Davenport highlights, new processes are enabled by new technology. As an example, he mentions Federal Mogul, an auto parts manufacture, who is using technology so that many designers can work on a new prototype design simultaneously (p99). Thus, both the new technology and the new multi-function positions demand employees learn new techniques.

2.2.2 Structures

Henley (1991) defines these as "How an organisation breaks down its activities into distinct elements and how these elements are co-ordinated" (p34). Henley goes on to identify 6 distinct type of organisation:

"Simple structure (the one man band)
machine bureaucracy
professional bureaucracy
divisionalised form
adhocracy
cult organisation"

(Henley, 1991, p35-37)

Having redefine the key processes within an organisation, the next step within BPR is to restructure the organisation along process lines. Process organisations introduce a new form of organisation that aims to break away from many of the above traditional types, particularly the bureaucracies and divisional forms. Hammer & Champy recommend "a move to much flatter structures organised around the processes" (Chap. 4), whereas Davenport recommends "a multidimensional matrix structure, with process responsibility as a key dimension" (p 160). To achieve this, Johansson et al (1993) states: "the new organisation must accommodate a balance between functional expertise and process involvement" and goes on to say it is essential to remove functional barriers (p191). Andrews & Stalick (1994) emphasise "even the boundaries between your customers and your suppliers and you must be redefined." (p219).

In the Principal Financial Group Inc. example given above:

"Like many other organizations in financial services, the Individual Insurance Department at that time was structured mainly along product lines. ... there were many management layers, ... "
and then, after BPR:
"From now on, it was agreed, virtually every worker would become part of a multi-functional team, .... To increase responsibility and accountability at the lowest levels, the number of management layers would be reduced to three"
(Rohm, 1992)

Still, whilst a process orientation is a new organisational structure it will incorporate attributes of the adhocracy: "Employees do not need to be supervised; ...They are adults who are willing to take accountability for their work products" (Andrews & Stalick, 1994, p220).

2.2.3 Staff

Henley defines Staff as "the quality and quantity of people employed" but also adds the management issues of "motivation, reward systems, the structure of jobs and team work" (Henley, 1991, p44).

The quality issues will be noted in the Skills section that follows. BPR is often linked to new rewards systems. Davenport (1993) refers to "gain-sharing" (p110), "lateral promotion" and a move from "role title to process title" (p111), and variety through "work role rotation". "Life time employment", he believes "encourages employees to redesign the processes to eliminate their own job". Pagoda (1993) sees "significant implications for managers and staff":

"The role of managers is transformed ... and the number middle managers usually reduced. At the same time, staff at all levels have new, more responsive roles, and specialist roles change fundamentally".
(Pagoda Associates Ltd, 1993, flyer, p3)

Team work and the structure of jobs is mentioned by Stevens' account of BPR at Sun Life:

"In implementing BPR, Sun Life moved from a functional hierarchical approach, via a team-based operation as an intermediate step, to a situation where a single multi-skilled individual took responsibility for an entire process from beginning to end".
(Stevens, 1994)

BPR has certainly made some significant impact on the number of staff. An Economist article states:

"At least in its initial phase, re-engineering usually means heavy layoffs and substantial job reorganisation. Nynex, an American telephone company, for example, cut its workforce by almost a quarter, while an American insurance company saw the number of job demarcations reduced from 40 to four."
(Anon, 1993a)

BPR has certainly become associated with down-sizing and right-sizing, and in such circumstances it is difficult to square with Davenport's assertion above, that employees should have the confidence to redesign themselves out of the process.

2.2.4 Skills

Skills is defined as "The competences the organisation needs in its people in order to perform difficult tasks to a high standard" (Henley, 1991, p42).

The word 'empowerment' is invariably associated with BPR. Examples help to illustrate what is meant by this over used word. Bambarger illustrates employee involvement in the decision making. He quotes one of OSRAM Sylvania's BPR team;

"Then we get together with the plant staff to brainstorm potential solutions" and later they are asked: "If this were your candy store, how would you run it?"
(Bambarger, 1993)

The impact at Dominion Insurance was more operational:

"marketing staff were empowered by IT to make quick decisions based on rapid access to meaningful information from the field. Suddenly presenting sales and marketing staff with a lot of information they didn't have before can be as daunting as it is exciting".
(Anon, 1993b)

Hammer & Champy talk about the "New World of Work" where "jobs change from simple tasks to multi-dimensional work". This means "job preparation changes from training to education, from rule following to exercising judgement" and "managers change from supervisors to coaches" and "executives change from scorekeepers to leaders". (Hammer & Champy, 1993, Chap. 4).

2.2.5 Strategy

Johnson & Scholes define Strategy as:

"the direction and scope of an organisation over the long term: ideally, which matches its resources to its changing environment, and in particular its markets, customers or clients so as to meet stakeholder expectations"
(Johnson & Scholes, 1993, p10)

Johnson & Scholes go on to characterise strategic decisions as being "complex in nature, ..., involve a high degree of uncertainty, ... involve major changes ... " (p10).

Johansson et al definition of the BPR drivers are of a strategic nature: "Customers; Competition; Cost; Technology; Shareholders; Politics; Economics, Legislation, and Regulation [i.e. Environment]" (headings in pp 37-49). One can see these relate to the Strategy definition given above. Johansson et al first task is to "Discover" the companies strategy and "of what drives competitive advantage in a particular industry; the industry's value chain and the basis for competition, and how a particular company seeks to gain competitive edge" (p87). Hammer & Champy talk about the "three Cs: Customers, Competition and Change" (p17). Davenport (1993) advocates a "Process Vision" that is driven by "Business Strategy" (p127).

BPR decisions, like Strategy decisions, are complex and involves a high degree of uncertainty ("[BPR] is a complex undertaking and carries significant risk" (Carey, 1993), and as noted under Systems and Structures, BPR involves major change.

2.2.6 Style

Style is "the philosophy, values and shared beliefs adopted by managers in their use of power" (Henley, 1991, p46).

As noted above, Hammer & Champy's "New World of Work" causes "managers [to] change from supervisors to coaches" and "executives [to] change from scorekeepers to leaders". (Hammer & Champy, 1993, Chap. 4). Davenport also highlights the significant behaviour changes:

"Change incurred by process innovation is not only broad, but deep, extending from the visions of managers to the attitudes and behaviours of the lowest level workers. ... Its significant behavioural component makes process innovation based change qualitatively different from other forms of large scale restructuring"
(Davenport, 1993, p174-5)
"process innovation involves massive change, not only in process flows and the culture surrounding them, but also in organisational power and controls"
(Davenport, 1993, p13)

2.2.7 Shared Values (or Super-ordinated Goals)

These are "the basic values and mission of the organisation" (Henley, 1991, p49). As Henley puts it: "they rise above profit targets and growth objectives by relating the goals of the firm to deeper human needs and principles".

Andrews & Stalick (1994) assert that in "successful reengineered business operations, individual belief systems become aligned with the stated beliefs of the organisation" (p115). Hammer & Champy, again under his "New World of Work", sees a belief in customers as key:

Reengineering entails as great a shift in the culture of an organisation as in its structural configuration. Reengineering demands that employees deeply believe they work for their customers, not for their bosses"
(Hammer & Champy, 1993, p74)

Johansson et al see the new process teams "linked by common values" (p202) and there is an implication in their writings that individuals must believe in self-management, self development, and rewards based on skills used (p202-3).

2.2.8 All Elements of the 7 S Model

Using the quoted examples from the BPR literature, the descriptions of BPR closely match the definitions of each of the elements of McKinsey's 7 S organisational model.

Summary

BPR then is "the fundamental rethinking and radical redesign of business processes" that results in "dramatic improvements" especially in meeting customer needs and other external strategic demands. Using McKinsey's organisational model it was shown that a full BPR programme impacts 6 of 7 of the organisational dimensions, and that it is driven by the 7th element, Strategy. One can infer then, that a full BPR programme will involve significant organisational change.

Because McKinsey places Shared Values at the heart of an organisation one can also infer, in particular, that a full BPR programme will involve significant organisational culture change. To more fully understand this implication, the next chapter will explore the literature on culture and organisational change.

To Chapter 3 Culture

[Front Page] [Executive Summary] [Abstract] [Content] [1 Introduction] [2 BPR] [3 Culture] [4 BPR & Culture]
[5 Preliminary Research] [6 Findings] [7 Summary] [8 Conclusions] [Appendices] [Bibliography]