3B Limo

When the Atlanta-based rock band REM. went on tour in 1995, the first time the supergroup had played so extensively in five years,
much of the promotional effort was focused on the Internet. The dates for the North American portion of the band’s tour were posted on the World Wide Web (WWW) in Januaiy, just days before the first concert in Perth, Australia. Fans could look in the REM. folder created by MW News not only for the schedule but also for audio and video interviews with band members, as well as concert footage. Want more? Well, just tap into the WWW for the entire list of R.E.M. bootleg records, band photographs, all the song lyrics, and even the sounds from some of their famous guitar riffs.
And coming soon? Click on your favorite hit from any singer, sit back, and enjoy the video. The marketplace for R.E.M. is an electronic one— Na! Can it be long before R.E.M.’s distribution system is the Net as well? What will happen to their current publisher, Warner Brothers Records? What is the role of a record store in this new world? Or what will happen to the radio station when REM’S music can be accessed from the Net with the push of a button from the digital radio in your car? What will happen to MW itself when you can say to your television, “Play me the first cut from REM’S new album?”
In music, and in everything, the times they are a-changing. A new age is upon us and no one can halt its progress. Unlike revolutions of the past, however, the opportunity to share more fully in the largesse of this revoluHon is huge. Aspects of this new age already exist; the rest is being born daily. Amid the apparent chaos of change, there are rhythms at work, and patterns are beginning to appear.
We are at the dawn of an Age of Networked Intelligence—an age that is giving birth to a new economy, a new politics, and a new society. Businesses will be transformed, governments will be renewed, and individuals will be able to reinvent themselves—all with the help of the new information technology.
There is a vast new promise but also new perils. A looming dark side holds the potential for severe social stratification, unprecedented invasion of privacy and other rights, structural unemployment, and massive social dislocation and conflict. The future will depend on what we as businesses and as a society do—on our decisions and our actions.
Look at what happened in April 1995 immediately following the blast at the federal government building in Oklahoma City. The Net became a focal point for all sides of the debate. Some messages went so far as to allege that the FBI was to blame. Others, posted by extremist gun cults, exhorted fellow members to more rebellious acts. But the Net was also the focal point for helpful information. The FBI, using its Home Page, quickly posted descriptions of the suspects. And the Net was used to spread pleas for heavy equipment that could be used in the rescue operation. The promise and the peril.
Even Newt Gingrich, the Georgia Republican who became speaker of the House of Representatives in 1995, made the disruptions of the new age a major theme upon taking office. “The most accurate analogy to what is happening to us now is to look at the period between 1770 and 1800, when America was changing from a rural to a manufacturing society,” said Gingrich in a speech. “What is happening to us now—the transition from the industrial era … is forcing us to ask very similar and profound questions about ourselves.” But how can companies transform themselves for the new economy? In the 1980s, the main management tool for change was quality. The total quality and continuous improvement movement helped many companies respond to the newly emerging global situation.
In the 1990s the attention shifted to business process reengineering (BPR), a management technique that swept through corporations and governments around the world. It is true that the old business processes, management practices, organizational structures, and ways of working have become inappropriate for the new volatile, global, competitive business environment. Clearly, many large companies needed to reengineer to reduce their cost base.
However, by all accounts, BPR is in trouble. A survey by Systems Reengineering Economics, a newsletter published by Computer Economics Inc., of Carlsbad, California, found that companies will spend $52 billion on business reengineering by 1997. Of that, $40 billion will go to information technology. Will corporations be satisfied? According to Inform.ation Week, two-thirds of such projects fail. According to management consulting firm Arthur D. Little Inc., only 16% of companies are “satisfied.” Of the rest, 45% are partially satisfied and 39% are dissatisfied. Other companies have simply wasted money; Citibank has frankly admitted that the $50 million it spent on reengineering produced no results.
The idea behind BPR seems to be a good one. So, what’s the problem? The number one culprit on everyone’s list is resistance to change. A study by Deloitte & Touche listed 60% of respondents as indicating resistance to change as the main factor behind the failure of BPR. Among the top five reasons, three were variants on resistance—lack of executive consensus; lack of a senior management champion; and unrealistic expectations.
Old business processes die hard. They have built-in resistance to their own transformation. But scratch the surface and you’ll find that much of this so-called resistance is rational—at least from the perspective of the human subjects who are reengineered. Notwithstanding the lofty stateinents of BPR theorists about improving customer service, the real goal of most reengineering projects is to streamline processes and reduce costs— specifically head count. People, having heads, reflect that theirs might be one of those to be counted, and decide to resist. They openly resist. They passively resist. Or they superficially comply rather than buy in. But resist they do. And such resistance is basically rational.
Don’t get me wrong. All companies need to control or reduce costs. )ld 1tocesses, from the old economy and old enterprise, are an obstacle to competitiveness. They need to be reengineered for efficiency and high performance. This becomes especially clear when your customer calls on Friday and says that you must reduce prices by 10% by Monday or they will no longer do business with you. The 10% isn’t going to come from reducing margins, which are already razor thin.
But increasingly BPR will not be adequate for success. Although downsizing may be laudable in some situations, it is not a strategy for the future. A vision for transformation beyond “neutron bombing” your enterprise is required. Success in the new economy will require inventing new business processes, new businesses, new industries, and new customers— not rearranging old ones.
For the 1990s and the next millennium, corporations need to get beyond reengineering to the transformation of the corporation enabled by information technology (IT). The goal should not just be cost control but the dramatic and profound transformation of customer service, responsiveness, and innovation.
Business process reengineering does not a strategy for the new economy make. Like quality, reengineering is a necessary but insufficient condition for competitiveness. The reason is that the world, the economy, and all the rules of business are changing.