All ethics so far evolved rest upon a single premise: that the individual is a member of a community of interdependent parts. His instincts prompt him to compete for his place in that community, but his ethics prompt him also to cooperate (perhaps in order that there may be a place to compete for).
-Aldo Leopold, The Land Ethic

Change occurs at many levels within an organization. Some change takes place on a grand scale, some on a small scale. Some change is gradual, some radical. Employees come and go, teams morph and take on new roles, existing processes evolve, new processes are introduced and the company responds to the market by honing its products and services to expand its market share. Change is everywhere.

But what about the process of entering brand-new markets, or shifting business models 180 degrees, adding new lines of business, or other forms of truly radical business model change? The costs and difficulties involved in such strategic change, if it is to be accomplished with reengineering, are well known. Companies have to deal with new channels almost as new businesses, transferring core competencies with superior process design so that the company can attract, motivate and retain the right people. The unfavorable cost/benefit curve of traditional reengineering precludes a good number of the desirable strategic options to achieve this. And reengineering focused on improving processes one by one, mostly inside a single company. There is another way.

What if a company could reinvent itself without painful reengineering? Instead of reengineering its existing processes and building new processes from scratch, what if it could simply acquire the best practice and best-in-class business processes it needed to transform its business to the extent of radically redefining what the company is and does? What if a company could use plug-and-play business processes to aggregate completely new lines of business-to establish new market channels, to cross-sell new goods and services that complement their current line, to expand their product line without additional capital investment and what some have called "competition by outguessing links in the supply chain"? Business process management makes a whole new world of business process outsourcing (BPO) not only possible, but also practical, manageable and cost effective.

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In a world of end-to-end, customer-focused processes, what matters in the marketplace is the cost of entire processes, regardless of who owns which part of the chain. Tracking this cost requires end-to-end visibility and value management. Cost advantages are the way newcomers enter and dominate mature markets. Almost always, these newcom-ers succeed by bundling superior processes and associated technologies to form a new "killer value chain." As Peter Drucker notes in Management Challenges of the 21st Century: "Executives need to organize and manage, not only the cost chain, but also everything else-including strategy and product planning--as one economic whole, regardless of the legal boundaries of individual companies. This is the shift from cost-led pricing to price-led costing." The very same point can be applied to outsourcing, alliances and joint ventures.

The flipside to the outsourcing and value-chain integration advantages is that the associated business models rest on complex commercial and financial arrangements. Such financial engineering will also have to be fully transparent and accountable. Fortunately, end-to-end process control will help. As Drucker pointed out, achieving this outcome once depended on establishing uniform systems of accounting management, along with their associated IT systems, and required participants to share competitively sensitive information. This is no longer the case. Now, companies can create and deploy the processes required to share, har-monize and manage the controlled flow of accounting information across the value chain, made secure by the use of process level firewalls. A standard process language replaces a standard process or standard system.

Companies with a BPM capability will be able to serve their customers better and faster. They will be able offer higher quality at a lower cost with greater economies of scale, increasing their profitability. They will be able to respond to new marketplace opportunities more readily by bundling or unbundling business relationships in both demand and sup-ply channels. In its various forms, business process outsourcing, enabled by process management, changes the rules of engagement on the battleground of business competition.

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