Contrary to popular thought, company reorganization or reengineering is not downsizing or cost-cutting in disguise. True reengineering addresses the business processes, strategy, structure, and people that comprise an organization. And it can be a powerful business tool when you need to introduce a new strategy that will differentiate your organization, acquire a new company, or improve long-term productivity and customer responsiveness.

Why reorganize?

In a world of rapid flux, organizations must change their priorities from a traditional focus on planning, control, and managed growth, to an emphasis on speed, innovation, flexibility, quality, service, and cost. It’s virtually impossible to “retrofit” organizations into this new reality, necessitating a move to reorganize and reengineer.

Most business processes today were designed decades ago and have been added to--not replaced--even though most organizations deal with increasingly complex product offerings and demands for better value from the customer. The results of such evolution are mutant processes, not reengineered ones.

What reengineering is and isn’t

Business reengineering doesn’t mean tinkering with what already exists or creating fixes. It means abandoning long-established procedures and starting fresh. It involves going back to the beginning and inventing a better way of doing work. It also requires asking this question, “If I were re-creating this company today, given what I know and taking into account current technology, what would it look like?”

Reengineering is one of the tools organizations must possess and know how to apply as a prerequisite to their long-term success. It demands fundamental thinking about the radical redesign of business processes. Fundamental thinking requires you to ask, “Why do we do what we do?” and “Why do we do it the way we do?” This forces your management to look at tacit rules and assumptions that underlie the way you conduct business.

Radical redesign is key to the process because it requires you to disregard existing structures and procedures and to invent new ways of accomplishing work. Processes are defined as a collection of activities that take one or more kinds of input and create an output that’s of value to the customer. In the end, you’re seeking dramatic improvements, defined as quantum leaps in performance, as opposed to only marginal improvements typically obtained by merely fine-tuning.

The time for change

There are three key times that reengineering is usually appropriate. One, for organizations that find themselves in deep trouble, who have no choice. Two, for organizations that are not yet in trouble, but whose management teams have the foresight to see trouble coming. And three, for organizations in peak condition with no discernible difficulties, but whose management teams are ambitious and aggressive and want to raise the competitive bar.

To determine whether reengineering is right for your organization, begin by asking yourself and your management team two questions: Why do we want to reorganize? What does this effort seek to achieve? If the answers form the basis of a powerful business idea, it’s a realistic option to pursue. Keep in mind that a powerful business idea is the motivating and unifying proposition that, when communicated well, propels an entire reorganization effort to success.

Reengineering and reorganization can be appropriate if you can answer yes to the majority of these questions:

• Are customers demanding more for less?
• Are competitors likely to provide more for less?
• Can you hand-carry work through the process five times faster than your normal cycle time?
• Have your incremental quality improvement efforts been stalled or been a disappointment?
• Have investments in technology not panned out?
• Are you planning to introduce radically new products and services or serve new markets?
• Are you in danger of becoming unprofitable?
• Have your downsizing and cost-cutting efforts failed to turn your company around?
• Are you merging or consolidating operations?
• Are your core business practices fragmented and disintegrated?

Reorganizing and reengineering can be influential factors in achieving long-term success. Keep in mind that the companies most successful in selling change to their employees are those that have developed the clearest messages about the need for reengineering. Such communication begins with the CEO and senior management.