November 26, 2008

After many years of consulting I’ve become a stalwart supporter of keeping things simple which means really focused and very brief.  That view puts me among a really small minority of experts and consultants because organizational processes keep getting more and more complicated, inclusive and difficult.

This was brought to mind this week because of two newspaper articles.  One dealt with the transformation of the financial status of San Diego County, the seventh largest county in the country.  A little more than ten years ago the county was on the brink of financial catastrophe; last week Standard and Poors raised the county’s credit rating from AA to AAA, its highest rank and the only county in California with that grade.

How was the turnaround accomplished?  The county’s board of supervisors imposed strict financial and operational discipline, transparency and accountability.  Specifically, what does that mean?  The county has used technology to increase efficiency which allows more people to be served with fewer employees.  They only use one-time funding for one-time expenses; in other words they pay cash.  Ongoing costs are funded by ongoing funding.  They have built substantial reserves and most of all, they say “No” when they don’t have the money.  That’s it.  That’s what they did to turn the whole thing around.

Mike Hammer died on July 31, 2008.  That probably doesn’t mean much to members of GenX and GenY who are too young to have lived through the reengineering revolution in the 1990s.  In 1993, co-authors Mike Hammer and Jim Champy published Reengineering the Corporation:  A Manifesto for Business Revolution.  The book sold over 2 million copies and its authors catapulted to the forefront of management consultants.  In 1992 Forbes cited Reengineering the Corporation as the third most influential business book of the preceding two decades. 

I remember the impact of reengineering very well.  When you visited most large corporations you’d find a huge room dedicated to the process.  Along all four walls there’d be a very detailed map and thousands of measurements of every process the organization used.  Those were the data which the reengineering process required.

Despite large scale layoffs suddenly we had vice-presidents of reengineering who headed whole departments dedicated to making and analyzing the huge number of required measurements.  Reengineering had moved from a process or method of reaching the goal of increasing productivity while driving costs down – to one where taking the measurements had become the goal.

The outcomes were generally terrible.  In my book, In Praise of Good Business, I summarized the results in this way:

• Only one in five reengineering efforts succeeded in improving a company’s competitive position.
• In a study of the results in 100 companies, even when processes were improved, usually business results declined.
• Between 50 and 70 percent of reengineering or process redesign efforts fail to achieve process improvement goals.
• Only 23 percent of all reengineering initiatives in North America and Europe achieved significant results.
• Jim Champy and Mike Hammer found that three-fourths of the reengineering efforts were carried out inadequately.

Why were reengineering initiatives generally unsuccessful?  There are a lot of possibilities:  One reason, that Champy and Hammer later acknowledged, was the measurements were of data the computer could easily handle but were irrelevant to what employees believed really mattered.  In other words, Re-engineering ignored what people wanted, believed or felt which was a catastrophic error of omission.

As Mike Hammer and Jim Champy later said, they never paid enough attention to the people.  Hammer specifically said, “I wasn’t smart enough about that.  I was reflecting my engineering background and was insufficiently appreciative of the human dimension.  I’ve learned that’s critical.”

An equally important contribution to Re-engineering’s failures was the sheer weight of the number of numbers which increased the perception of complexity and decreased anyone’s ability to clearly see what really mattered, if anything did, in the data. 

• Whether it’s a complex interactive model of the universe or it’s a simple listing of every imaginable data point, it’s very difficult to keep one’s focus on what really matters when the process is very detailed and the goal is inclusion – nothing is omitted! – and the result is so many measurements that no one can see the forest for the leaves.
• When process improvement becomes the goal, people concentrate on doing the process perfectly and lose sight of the real problem that was the reason to seek improvements.
• Spending more money on improving the process becomes an easy mark of progress instead of better business results.
• A long and detailed causal chain acts like the childhood game of “Telephone.”  Each part of the chain may be accurate but the end result is far from where the analysis began.

I guess the take-away is beware of trying to look good.  Processes, arguments, books and plans…that are inclusive, complicated and lengthy – are usually impressive.  But things that are simple, brief and focused on the critical outcomes – are usually effective. 

After many years of leading organizational change efforts, I’ve decided that the strategic plan has to be extremely brief, no longer than one page because the operational efforts are always complicated by people’s human motives.  Ambition, competitiveness, pride, ignorance, arrogance and fear can be depended on to compound everything...So as the phrase has it, keep it simple, stupid, and remember that if you do that, you have a real shot at succeeding.