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Consultant opinion
The Crisis That Will Not Go Away
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When should I be worried about the health of my company? This question should appear on a regular basis in the mind of every manager.
We all know that it is easier to prevent a disease than cure it. However, we also know that the majority of us ignore in a very stubborn manner this truism being focused on other "priorities". Unfortunately even more people apply with "success" the same lack of care when it comes to the health of the company which they manage.
One of the factors that can wake us up from this ignorance is Business Process Reengineering (BPR). In the US national bestseller that describes this concept, Michael Hammer and James Champy have started the description of a new "panacea" for the business world with a chapter entitled "The Crisis That Will Not Go Away ".
The parents of BPR were referring to the crisis of American companies which were under an ever increasing competition from Asian companies (especially Japan). From authors' point of view, American companies, which once assured their growth using 200 years old Adam Smith's principles, suddenly woke up in the real world.
Instead of flexible, competitive, efficient, customer focused, and profitable companies as their managers wanted them to be, the reality showed the contrary. The organizations were oversized, clumsy, rigid, slow, inefficient, without any attention towards the customer's needs and unprofitable.
At that time BPR proved to be a popular solution, and more importantly, which also worked. Looking back in time, except several less positive experiences in some companies, BPR initiatives resulted in profit increase of up to 25%, inventory level decrease of almost 60% and 50% reduction of indirect costs .
"But we are in Romania in 2007!" you are going to tell me. Although it might look strange for some people to compare today's Romania with USA in early 1990's, there are still many similar problems that companies have to overcome. The major difference is of course the almost 20 years between their situation then and ours in present which has both - advantages and disadvantages.
The communist past of many companies and the mark which he left on the way of doing business in Romania is unquestionable. Still, things change and once accepted in the EU space, Romanian companies are motivated even stronger to adopt new ways of surviving or business development.
The ever increasing competition from EU companies and from internal players that woke up earlier (with the advantage of an earlier transformation) impose to all those who desire to survive to find:
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Ways to reduce costs; |
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Activities that add value and the way to transfer it to the final customer; |
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Possibilities to establish an effective control and efficiency monitoring systems in order to ensure a development aligned with company's strategy. |
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Ways to ensure human and IT resources according to business process demands; |
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Flexibility to quickly adapt to new market demands. |
Ensight Management Consulting experience brings real examples where these objectives were accomplished by Romanian companies using BPR initiatives.
The companies who registered a decrease or a stagnation of their business activity use this solution led by the surviving instinct, undoubtfully. The most interesting fenomena remains the "mistery" of companies that are doing well, but still desire to innitiate a business process reengineering project.
It seems that the "invincible" logic - if I managed to remain in the business by now, I will do well in the future without changing a thing - does not apply neither for BPR nor for today business world. Then I come back to the question: "Why growing companies think about BPR?"
What have in commun Apa Nova Bucuresti, capital's leader for water supply and sewerage services, and Dial Telecom which is one of over 400 players at national level that offer telecommunication services? What is the reason for which these business players are among the companies that have used Ensight services for rethinking and efficiency increase of their business processes?
Both companies reach a turnover increase of more than 20% per year and a profit which follows the same trend. But the most important rassemblance is companies' management thinking about the future; it's the proactive attitude which is oriented towards finding solutions to avoid future dangers.
Only a quarter of companies involved in BPR initiatives have started such projects thanks to the "visionary leaders". Usually companies think seriously about consulting only when they have serious problems, in other words when "they crashed their heads against a wall".
The high level of competition between Romanian companies and the foreign ones on both local market or abroad, and the ever increasing pace of changes regarding client needs transform today's business world in a continuous crisis. Not even one company can afford sitting on his laurels of a market leader without being involved in the continuous performance growth and innovation of its business processes.
BPR initiatives not only allow for cost reduction, efficiency growth and increase of the value added to the client, but also represent the logical step that precedes the implementation of many instruments and solutions for the management of a modern company (diagram 1).
Diagram 2: types of projects that can use the results of a BPR initiative
All these initiatives are implemented easier and with a greater efficiency if a previous analysis and optimization of the company's business processes is done.
The decision regarding the way of handling this "continuous crisis" is a choice made on his own. Finally, it doesn't matter if tomorrow you decide to initiate or not a project to increase the efficiency of your most critical business processes. The important thing is that now you are aware of its implications on the future of your company.
Ion Ghimbovschi
Ensight Consultant
1 The name of the 1st chapter in "Reengineering the Corporation: a Manifesto for Business Revolution", Michael Hammer & James Champy, HarperBusiness 1993.
2 "Key Management Models", Steven ten Have and others, Pearson Education Limited 2003.
3 According to an international study, "Business process re-engineering: Learning from organizational experience", Yasar F. Jarrar, Total Quality Management, March 1999.
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