Revitalizing Business Restructuring

The restructuring wave that swept across the business world in the early 1990s has abated. The business process re-engineering (BPR) movement was a conspicuous part of this wave. It may have served a purpose as a survival response by businesses to the economic recession that was occurring at the time, but it has also had its day. There is now an emergence of a complementary approach.

BPR's particular strength was its focus on identifying core processes in a business and examining ways in which these processes could be honed to achieve corporate goals more effectively. The idea was that a process could be made cheaper and more responsive to customer needs by stripping away peripheral activities and bureaucratic layers.

BPR was not about entering new markets or introducing new products. It was about re-arranging existing processes with the help of new technology. The rise of BPR coincided with the widespread adoption of new I.T. systems based on PCs, networks and the Internet. They permitted more decentralization by improving communications, which allowed firms to strip out layers of middle management and cut more costs as the recession took hold.

The advocates of BPR said it required these four basic actions:

• Assess fundamental organizational objectives;
• Identify core processes;
• Clarify objectives and identify associated goals; and
• Achieve reform through reorganization and the incorporation of new technology.

That may have been a reasonable basis for organizational restructuring at the time, but the approach incorporated critical weaknesses.

There are two main conceptual difficulties with BPR. First, it has an inherently high level of disregard for the impact it may have in social and behavioral terms. BPR's cost savings were usually achieved through staff reductions, so the movement became associated with waves of job cuts that were often implemented by consultancy firms brought in for the purpose.

Organizations that survived re-engineering...