The most fundamental phenomenon in the universe is relationship.
-Jonas Salk

Change came slowly in the '20s, when the first Standard and Poor's index of ninety important U.S. companies was formed. In the '20s and '30s the turnover rate in the S&P 90 averaged about 1.5% per year. A new member of the S&P 90 at that time could expect to remain on the list, on average, for more than sixty-five years. In 1998, the turnover rate in the S&P 500 was close to 10%, implying an average lifetime on the list of ten years, not sixty-five! By the end of the 1990s, we were well into what Peter Drucker calls the "Age of Discontinuity."
-Richard Foster and Sarah Kaplan, Creative Destruction, 2001.

The Rise and Rise of Business Process Management

Two articles, one published in the Sloan Management Review in June of 1990 by Thomas Davenport and another in the Harvard Business Re-view in July of 1990 by Michael Hammer reported on the growing wave of process innovation and radical business process change. Back then established companies were feeling great pain. They were besieged by better, faster and cheaper competitors from emerging markets. Global-ization had been set in motion and there was no turning back-change was brewing but few could envision a solution that did not involve abandoning the past. "Don't Automate, Obliterate" became the clarion call of those who set out to reengineer business. The prophets of process kissed the sleeping princess that was Corporate America and awoke her from her "functional" slumber. On the receiving end it felt more like being hit by an atomic bomb. Feelings that had found no previous expression boiled over into a tidal wave of change that saw companies downsize, rightsize, outsource and restructure their work.

American companies had turned to reengineering in response to an unprecedented abundance of customer choice, which had given rise to a shift from producer-controlled markets (supply push) to customer-ruled markets (demand pull). Before the storm broke in that crucial summer of 1990, companies had been less attuned to the significance of business processes and their management. Before the "great awakening," many of them naïvely equated process design with the writing of policy and pro-cedure manuals-painstaking transcriptions of the rigid rules governing the narrow behavior of individual departments-that got tucked away in vaults. Although functional silos still exist in some organizations, the majority of companies have replaced the division of labor with the concept of process at the center of their business strategy. Those that have not done so yet will do so soon. Companies no longer trace their roots back to the factory models Adam Smith described in the Wealth of Nations, published in 1776. What Hammer defined as the "task-based" organization of work-the fragmentation of human endeavor into its simplest components and their assignment to specialist workers has finally been extinguished. That which had influenced the design of companies for the last two hundred years has been replaced by the supremacy of the business process.

Companies that survived the turbulent era of reengineering may be tempted to feel that they have already reengineered, reinvented, mapped, analyzed and improved every aspect of their operation. The stark reality is that they know, deep down, they have barely started. The reengineer-ing prophecy-"we've not done reengineering"-is coming true. Now, we are in uncertain times again.

Today, companies are experiencing not one broad based economic reality, but a multitude of process problems. But reengineering illuminated only the general outlines and common patterns of necessary change, such as the reduction of hand-offs and the shifting of work to the supplier or customer, and, critically, it offered no explicit method for execution that could be applied to many problems simultaneously. In practice, it tended to create discontinuity between "as is" processes and "to be" forms of the company, and could be completed only by means of expansive and intensive projects of organiza-tional change and new systems implementation. Even if companies were prepared to submit themselves once again to the dislocation and distrac-tion of one-time change, they can no longer afford to fix processes and IT systems one at a time, as the reengineering gospel prescribed. Discontinuous change at the cusp between tradition and novelty is no longer an option for today's companies, and yet change they must.

Excerpts from Business Process Management: The Third Wave, Howard Smith and Peter Fingar, ISBN 0-929652-33-9 Off-press November 2002, Meghan-Kiffer Press