BOOK REVIEW / Breaking the mould

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The Independent Online
'Re-engineering the Corporation - A Manifesto for Business Revolution' - Michael Hammer and James Champy: Nicholas Brealey Publishing, 16.99 pounds; 'Benchmarking, A Tool for Continuous Improvement' - Kathleen Liebfried and C J McNair: Harper Business, dollars 29; 'Process Innovation - Re-Engineering Work Through Information Technology' - Thomas Davenport: Harvard Business School Press, 25.95 pounds; 'Business Process Re-Engineering - Breakpoint Strategies for Market Dominance' - Henry Johansson, Patrick McHugh, John Pendlebury and William Wheeler III: John Wiley & Sons, 24.95 pounds

PUBLISHERS have an insatiable appetite for new ideas that will capture the minds of the global business community. Yet few titles will achieve big sales and fewer still will change anything.

Occasionally an idea demands close attention and a rigorous test of 'why not implement?'. Two in one season borders on the miraculous. Watch out for 'business process re-engineering ' and 'benchmarking'. They are going to be around for some time.

Genius is sometimes described as the ability to marry two (or more) well-established ideas in an entirely original way. So far, benchmarking and business process re-engineering do not appear to have been united in one book, although leading consultancies, such as the PA Consulting Group, CSC/Index and Bain, have developed ways to harness the potential of both approaches.

Benchmarking adds a new dimension to competitive performance analysis. Most businesses conduct comparative studies of how well they perform against their rivals, but few do so with businesses outside their sector. Too often, analysis is confined to output; products, market share, financial results and share price.

This misses the point. Benchmarking is also about breaking down the business into coherent process stages and evaluating those against exemplars wherever they may be.

Thus the skills that Virgin Atlantic deploys in passenger management are transferrable to hospital outpatient departments as well as British Rail passenger services. Telemetry used for water pollution monitoring can be valuable for remote diagnostics in office copiers.

The central idea behind benchmarking is the ability to break down the business into its key processes, look for exemplars of best practice, and be able to transfer the key lessons. The case is argued with intensity by Kathleen Liebfried and C J McNair in Benchmarking, A Tool for Continuous Improvement.

With plenty of well-researched cases and enough aphorisms to keep the most jaded intellect entertained, they drive an inexorable wedge into the complacency of received wisdom.

But there is a serious snag. Implicit in benchmarking is the notion of improving existing business processes rather than asking whether those processes should be there at all.

This challenge forms the basis of business process re-engineering. Here the argument centres on whether management ought to tinker with existing systems and processes or ditch the lot and start again.

In 1990, research published in The Sloan Management Review demonstrated that information technology had helped manufacturing to achieve a 15 per cent gain in productivity over the previous decade but had thrown banking productivity into reverse.

In analysing this gulf, the research concluded the engineering attitude prevalent in manufacturing had avoided the pitfall of independently redesigning each stage of the production process. It had redesigned the process flow from start to finish, incorporating new IT solutions. The bankers simply tinkered with the most accessible process stages, such as clearing systems or statement printing, and let the bottlenecks move elsewhere.

In a refreshingly approachable style, Michael Hammer and James Champy charge relentlessly onwards with this challenge to management vision in Re-engineering the Corporation - a Manifesto for Business Revolution.

They demonstrate, through searching analysis of this approach in several US corporations, that the re-engineering methodology can work. Every board needs to be asked: Why do we do what we do?

When this and a host of related questions have been answered, turn to benchmarking. Take a blank sheet of paper, redesign your total business process (armed with the luxury of 20:20 hindsight) and benchmark each component.

Bearing in mind Hammer and Champy's statement: 'The alternative is for corporate America (and presumably everywhere else?) to close its doors and go out of business', additional perspectives and insights come from Thomas Davenport's Process Innovation - Re-engineering Work through Information Technology and Business Process Re-engineering - Breakpoint Strategies for Market Dominance by Henry Johansson, Patrick McHugh, John Pendlebury and William Wheeler III.

Business process re-engineering and benchmarking stand out as big contributions to the definition of what businesses must do beyond such well-recognised (though not yet fully delivered) concepts as quality and project management.