Special Report: Business Processes Book Excerpt

FRAMINGHAM (03/03/2000) - The Social Life of Information By John Seely Brown and Paul Duguid Harvard Business School Press, Boston March 2000, $25.95.

In The Social Life of Information, published later this month (March 2000), authors John Seely Brown and Paul Duguid argue that the gap between digerati hype and end user gloom in our companies is largely due to the tunnel vision that's bred by information-driven technologies. We need to look beyond our obsession with information and individuals to include the rich social networks that add meaning to all forms of work. Drawing on experience from Xerox Corp.

PARC (where Seely Brown is director) and other organizations, the authors reveal that without an understanding and accounting of the important role sociability plays, success of such movements as the automated home office, knowledge management and the digital university will be limited at best. In this excerpt, the authors explain why disregard for the sociable "practice" of work has undermined the success of process- dominated reengineering efforts in many companies.

One of the many virtues of "business process reengineering" was that it was clear, direct and consistent. Michael Hammer and James Champy developed reengineering in response to "the crisis that will not go away." It presented a clear antidote to organizational inconsistency, inertia and gradualism.

Reengineering manifestos assumed that business organizations were similar to other bureaucracies. Over time, they come to serve themselves first, customers and investors next. As a consequence, established businesses are rife with divisions and diversions that drain resources but, from the customer's point of view, add no value. Taking "a clean sheet of paper," reengineering teams were told to reorganize their organizations around the processes that did add value, making these the center of the new organization.

With this sharp distinction between value-adding and non-value-adding processes, reengineering insisted on sweeping away old practices. "Forget all you know," managers were told. "Don't automate, obliterate." Like all organizational fads, it also puffed itself up with some grandiose claims.

Hammer and Champy, for instance, insisted they were transcending Adam Smith, one of the most enlightened thinkers of the 18th century and a pervasive influence on modern economics.

Slogans aside, there was enough substance for reengineering to acquire an impressive following. AT&T, Ford, Hewlett-Packard, IBM, Nynex, Seagram, Xerox and a host of other corporations great and small reengineered. Soon, 50 percent of Fortune 500 companies had vice presidents of reengineering. Results, too, were impressive. Reengineering seems to have been behind the transformation of several dinosaurs of the industrial age into phoenixes for the digital age.

Nonetheless, by the mid-1990s, reengineering's stock was plummeting. Some critics claimed that this "pernicious panacea" never came close to the results promised (such as a 75 percent drop in overheads). Moreover, while the changes in output were often trumpeted, they were not always set against the costs of input. Other critics claimed that reengineering was obsessed with technology, to which reengineered firms became subservient. And for many people, reengineering was little more than a euphemism for downsizing.

SUCCESSES AND FAILURES As reengineering stumbled, reengineering consultants themselves began to be downsized. They received little sympathy from those who had seen reengineering as a consultant's mint. (A senior partner in Andersen Consulting apparently intoned, "God bless Mike Hammer," as company revenues reached $700 million.) They probably needed little sympathy, for many moved swiftly across the hall to the suites reserved for the next fashion, knowledge management.

This succession strikes us as particularly interesting. Was it merely a case of a new fad fortuitously and fortunately succeeding an exhausted old one? Or was there, perhaps, more than chance to the sequence? Did the focus on process, perhaps, overlook the increasing demand for knowledge in modern organizations?

We suspect it did. Consequently, looking at reengineering in the light of knowledge, as we do here, may help reveal both the strengths (often hidden behind catcalls) and the weaknesses (equally hidden behind cheerleading) of reengineering.

PERFECTING PROCESS It is perhaps significant that many of the celebrated cases of business process reengineering come from a fairly narrow band of operations.

Procurement, shipping and receiving, warehousing, fulfillment and billing are favorites. These generally account for the most impressive results, with inventories transformed into just-in-time delivery, fulfillment and billing accomplished in days rather than weeks.

In these areas of work, processes are relatively well defined. They usually have clearly measurable inputs and outputs. And, as we might expect from a process-oriented view, they emphasize a linear view of how organizations work.

To complete a process, something passes from A on to B ending with C--from, for example, receiving to manufacturing to shipping. In such well-defined processes, it is the "longitudinal" links between each stage that appear to matter. Lateral ties among people doing similar tasks--among, for example, the people in shipping--appear at a heavy discount from a process-based perspective. They are generally regarded as non-value-adding.

Consequently, with regard to information, reengineering directs attention to the information that flows across longitudinal links. This information helps to coordinate the complementary activities that make up a company's critical process. So, for example, the sociologist Charles Sabel stresses how just-in-time processes both require and generate "a rich flow of precise and targeted information about what was happening throughout the production process."

Such a focus is undoubtedly invaluable for organizations. Nonetheless, focusing on longitudinal process and the information that goes with it may lead to tunnel vision. Although reengineered organizational charts may happily represent organizations in terms of these types of process, neither linear processes nor charts encompass all that goes on in organizations.

It is not surprising, then, that business process reengineering has had less success in the parts of organizations that are less linear and less clearly defined by process and information. Management, for example, has proved notoriously hard to reengineer. So has research and development. In such areas, life is less linear; inputs and outputs are less well defined; and information is less "targeted." These are, rather, areas where making sense, interpreting and understanding are both problematic and highly valued--areas where, above all, meaning and knowledge are at a premium.

MEANING AND ENDS Process perspectives are not necessarily indifferent to meaning. James March, one of the preeminent figures in organization studies, sees a close link between the two. "It is," he argues, "process that gives meaning to life, and meaning is the core of life." For March, however, "Outcomes are generally less significant...than process." Curiously, reengineering tends to see things the other way around. It focuses most heavily on the input and output of the stages in a process. It is relatively indifferent to the internal workings of these stages--to the particular practices that make up a process and the meaning they have for those involved.

Given this indifference, it is not surprising that studies of workplace practice, of the internal life of process, often reveal tensions between the demands of process and the needs of practice. Nor is it surprising that these tensions are often the result of struggles over meaning. These struggles, furthermore, are not confined to the "thinking" parts of organizations. They occur throughout, pitting the process-focused need for uniform organizational information against the practice-based struggle for locally coherent meaning.

Etienne Wenger, formerly of the Institute for Research on Learning, revealed this tension, for example, in his study of the comparatively "lowly" and well-defined process of claims processing. He found that many of the problems faced by the health-insurance claims processors he studied could be traced to clashes over meaning and sense making--over such things as what a form signifies, why similar claims elicit different reimbursements, and who does or does not qualify for reimbursement. In the end, these problems for the claims processors create problems for the company.

To do their job, processors need to be able to make sense of what they do. The company offers explanations. But, from the processors' point of view, the organization's information and explanations are difficult to use. They explain things in terms of the company's overall goals and processes, but they take little account of the immediate practicalities of the claims processors' work.

Indeed, many of the company's explanations have the ring of those parental imperatives that skip explanation and simply say, "Do it this way because I say so." Such imperatives make life easier for the company but difficult for the processors, who need to understand what they do to do it well and also must justify their actions to customers.

Wenger's work reminds us that, while process is clearly important to the overall coherence of an organization, in the end it is the practice of the people who work in the organization that brings process to life, and, indeed, life to process. Organizations, then, should not attend to the process and process-related explanations only. They must also attend to practice. By practice, of course, we do not mean the sort of rote exercises people associate with phrases like piano practice. Rather we mean the activity involved in getting work done--the sort of activity that lies at the heart of medical practice or legal practice, for claims processors are practitioners of their own craft just as doctors and lawyers are practitioners of theirs.

LOOKING THE OTHER WAY These two aspects of organizations, one process-based and the other practice-based, not only look from different directions--from outside a process and from within--they also look in different directions for the resources for understanding. From outside, people find meaning in functional explanations. They rely on process-based, cross-functional, longitudinal accounts of why things are done. From inside, people take a lateral view. The claims processors, for example, look less to their superiors or to the people to whom their work goes next than to their peer group for explanations of what they do and why. For them, knowledge comes more from fellow practitioners than from cross-functional connections.

These contrasting sources of meaning and understanding present business process reengineering and process views of organization with difficulties for several reasons. First, business process reengineering tends to be somewhat monotheistic. There is not much room for variation in meaning in its camp. The process view is expected to explain all.

Second, despite talk of rebuilding from the bottom up and empowerment, business process reengineering tends to be relentlessly top down. Indeed, some suggest that it is of necessity a top-down, command-and-control procedure. (It is not surprising that one of the most enthusiastic and successful reengineers has been the Army.) Together, these two biases of business process reengineering make it hard to see and harder to understand the needs of people whose practices make up processes.

Third, the top-down view tends to give a bloodless account of businesses.

Reengineering begins with processes into which people are then inserted as needed. "Process owners," as Hammer puts it, "are focused on process, not on personnel." Personnel, for their part, seem to face the option of getting on board or getting out. Opportunities for them to craft, change, own or take charge of process in any meaningful way are limited. While lip service is paid to them, improvisation and "local" knowledge have little place in these schema, particularly if they challenge the coordination of process.

And fourth, business process reengineers tend to discourage exactly the sort of lateral links that people pursue to help make meaning. Focused on longitudinal cross-functionality, they dislike, and often try to discourage or even disempower, occupational groups, job categories and local workplace cultures.

Encouraging cross-functional links between occupations, business process reengineering tends to see the contrasting links within occupational groups as non-value-adding. Here, then, we see in another form the problems that beset the worker at home alone. Focusing on individuals, process accounts overlook social resources that people in similar occupations provide one another.

Tunnel-visioned process accounts rarely understand the importance of these resources. (In an exemplary piece of partial blindness, for example, British Telecom did notice the damaging isolation of its home workers. As a remedy, however, it decided to pipe the sound of canned background chatter into their home offices.) These four biases, as we said, make it difficult for business process reengineering to deal with practice. Yet the tensions between process and practice, between the structure provided by one and the spontaneity provided by the other, are key structuring forces in an organization. Consequently, you can't redesign process effectively if you don't understand practice.

Reprinted by permission of Harvard Business School Press. Copyright 2000 by the President and Fellows of Harvard College. All rights reserved.

HAMMER RESPONDS: PROCESS MAKES PRACTICE BETTER Over the past decade, I have read innumerable simplistic, misinformed and simply wrong critiques of reengineering. It is therefore a pleasure to encounter John Seely Brown's and Paul Duguid's intelligent analysis of reengineering and its limitations. They may be surprised to learn that I largely agree with their central points.

Nonetheless, I do take issue with some of their assertions, and we also diverge on some issues of priority and emphasis.

Seely Brown's and Duguid's piece revolves around the difference and the conflict between process as defined by the company and practice (that is, the ways that individuals apply those process rules to their specific jobs). They submit that successfully redesigning work requires serious attention to practice and that reengineering overly emphasizes process to the detriment of practice. With their first point I have no argument; but on the second I must demur. While reengineering's central focus is indeed on the redesign of processes, it does not regard practice as irrelevant. A high-performing process requires both a high-performance design and high-performance execution of the design; without the latter, the potential of the former will never be realized.

Far from seeing the lateral links between people as non-value-adding, reengineering sees them as essential. A unidimensional organization, focused solely on processes, cannot succeed any more than can a purely functional organization. People need to affiliate with others of their profession, for purposes of both personal development and practice sharing; the mechanism for this is what I have called the "center of excellence." (This has much in common with Seely Brown's "community of practice.") Everyone in a reengineered organization should be a member of a center of excellence, led by a coach, as a complement to their role in a process that is led by a process owner.

The authors' assertion that reengineering has largely focused on highly structured processes, such as procurement and fulfillment, and less on more knowledge-intensive processes, such as management and research and development, is partly true and mostly misleading. In the early days of reengineering, companies did indeed concentrate on back-office processes, but not because of some bias against knowledge and practice. They did so because these were the processes that were in most dire condition, and where improvements would most quickly be seen and impact the bottom line.

However, over the last few years, reengineering has broken out of the back-office box and is now being widely applied to more knowledge-intensive, front-office processes, such as demand creation (marketing), order acquisition (sales) and product development. Applying reengineering and the discipline of process in these domains has not meant deprofessionalizing salespeople, marketers and scientists, stripping them of their affiliations and turning them into automata following the iron rules of process. It has meant putting their work in the context of the big picture and ensuring that all necessary tasks are done in the right order. The more attention that is paid to such processes, the more importance that practice assumes. While I do recognize the criticality of practice, I plead guilty to putting process first. Without a well-defined and well-designed process, people's talents are wasted and unleveraged. Process provides the structure into which practice fits; without process, practice can spiral into random improvisation and inconsistency.

I also have a different take on one of the most interesting points in the piece, the discussion of finding meaning in work. We are agreed that meaning is what transforms work from drudgery into a transcendent experience; however, we disagree on the primary source of this meaning. Seely Brown and Duguid maintain that it comes from community, from the social connections that people make with others.

While not minimizing the importance of community, I suggest that it is secondary to customer. What truly imbues work with meaning is the sense that one's work has a larger purpose, that one's individual activity fits together with the work of others to create a result for a customer, an individual or enterprise that values the result. There is as much community in process as there is in practice. For the individual and the enterprise, fulfillment requires a blend of these two axes. -Michael Hammer

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