Business process re-engineering was arguably the most debated management concept in the 1990s thanks to the seminal work of respected authors like Thomas Davenport. This was when information and communications technology, trade liberalisation and deregulation were shaking the foundations of many established industries like banking, aviation and retail.
Various management strategy blueprints were proposed to help business organisations reinvent themselves to remain relevant. Total quality management became a standard unit in most business courses. Many wanted to know the secret of how to fight off the competition from new ventures that saw opportunities in the collapse of entry barriers that for decades had seemed unsurmountable.
It is a sobering reality that most business re-engineering projects fail. These failures have impacted both small enterprises, which may lack the know-how on managing change successfully, and large and long-established organisations that never believed that they faced existential challenges.
There is no shortage of academic literature on why some business organisations fail. Those involved in re-engineering a business to ensure that it remains viable in a changing business environment will confirm how what appears easy in change management academic theory is notoriously difficult in implementation.
The main reason for the failures of re-engineering projects is opposition from employees. When a CEO announces a programme of change based on their assessment that the business they lead faces existential threats, employees’ reaction is to resist. Change tends to provoke anxieties and conflicts. In some cases, those who are expected to change resort to tactics of latent and not-so-latent obstruction and hostility.
I cannot deny that some of the blame for failure is attributed to inadequate leadership qualities of those promoting change. To succeed, a reorganisation programme must be based on a simple and motivating business idea that enables both employees and other stakeholders overcome their fear of change and effects on their lives.
A robust business idea is not just about a good strategy. It is a well-defined action plan for achieving specific goals. If communicated well, it helps to motivate and drive the whole reorganisation effort. Often the story that change managers give to the media for public relations purposes can be vague, confusing employees and customers alike.
Too much emphasis on headcount reduction and curtailing services dressed up as a significant reorganisation could condemn a re-engineering project to failure. Of course, cost slashing is often inevitable but an emphasis on new marketing and business development confirms an organisation’s commitment to do what it takes to survive.
Organisations where state influence, if not control, is evident face even more significant obstacles to re-engineer their business processes successfully. Short-term political objectives and endemic political overreach often clash with a business leader vision of what needs to be done to save an organisation from failure and extinction. Strong trade union influence is also an element of an organisation’s toxic culture that serves as a roadblock to change.
Another reason for organisational failure is the wrong timing of a change programme. Unfortunately, most organisations realise that they need to change when their backs are against the wall.
New competitors disrupting the inertia of businesses that for too long have taken their future for granted, new regulations that undermine a business model’s sustainability and threats of a takeover are often the catalysts that force organisations to change.
When these events happen, it is often too late to re-engineer successfully. No amount of academic management training can guarantee success in business re-engineering projects. Change leaders are constrained by social realities such as commitment to people, regulatory requirements, prevailing mindsets formed by traditional practices, and political and trade union undue influence.
Leadership in change management projects demands a different skill set than for other business initiatives. Ability to deal with employee resistance is possibly the most challenging skill to acquire.
In all industries, managers of business units are reluctant to give up the responsibilities, resources and control that come with the jobs. Experience also taught me how strongly some managers jealously fight for their perceived status in the organisation.
A well-planned reorganisation programme should start with a diagnosis and analysis of potential constraints before sitting down at the drawing board. The executive team will then deliberate on these constraints and assess whether they can realistically overcome them. Change leaders must be brutally honest with themselves and decide whether their change programmes have a reasonable chance of success.
Re-engineering a business organisation is always more than copying the organisation charts of successful companies.