UNIT 2: MANAGING ORGANIZATIONAL KNOWLEDGE & PROCESS

REENGINEERING

Contents:
2.0 Introduction
2.1 Objectives
2.2 Managing organizational Knowledge
2.2.1 What is knowledge management
2.2.2 Getting started in knowledge management
2.2.3 why have knowledge management
2.2.4 what knowledge management is not about?
2.2.5 Knowledge markets
2.2.6 Drivers of knowledge management

2.3 Business process re-engineering (BPR)

2.3.1 Why have reengineering
2.3.2 Characteristic of BPR
2.3.3 Other areas of changes
2.3.4 Identifying the reengineering opportunities
2.3.5 Process design approach
2.3.6 Reengineering common mistakes
2.3.7 components of activities and the process
2.3.8 who will reengineered?
2.4. Checklist
2.5. Summary
2.6. Check your progress exercise

2.0 INTRODUCTION

Knowledge management is the process of capturing distribution and utilization of

organization knowledge. Knowledge management initiatives are composed of prospects

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successful projects result in growth of knowledge content and usage of repositories.
knowledge has been the staple sources of competitive advantage for some classic
companies as a number of tasks grew, however, the overall process of producing a
product or delivering a service inventory become increasingly complex, complicated, and
managing such process became more difficult. Business process reengineering helps to
redefine mission statement, analyze critical success factors, redesign organizational
structure and reengineer criticize process to improve customer satisfaction. This unit will
discuss the basics of knowledge management and business process reengineering.

2.1 OBJECTIVES

After reading this unit you will be able to

 Define knowledge management
 Explain how to get started in knowledge management
 Clarify the major driver of knowledge management
 Understand the reason of considering reengineering of organization or business
Describe the characteristics of business process reengineering

2.2. MANAGING ORGANIZATION KNOWLEDGE OVERVIEW

Overview:
Knowledge management helps organization to gain advantage by outperforming the
competition by leveraging its knowledge: to improve performance at all level of the
organization. In this section you will be made to appreciate the management of
organizational knowledge.

Objectives:
After reading this section you should be able to

 Explain the definition of knowledge management

 Describe knowledge market
 Spell out the drivers of knowledge management

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2.2.1. What Is Knowledge Management?

The idea that people in organizations are effective because of their ability to seek, use,
and value knowledge is not new. What is new is the movement in management thinking
from an implicit to an explicit awareness that knowledge is a strategic corporate asset.
Unlike traditional assets of land. Labor, and capital that decrease with use knowledge
assets grow when shared. It is an insight that accords with what academic and business
strategists refer to as a competency-based or resource-based theory of the firm. This
view holds that companies different themselves on the basis of what they know and how
well they create new knowledge. In a deep sense. Knowledge actually is the
organization. Therefore, gaining a knowledge advantage means that a firm can
outperform the competition by leveraging its knowledge to improve performance at all
levels of the organization. Knowledge management is the recognition that what matters
most to mangers today is an understanding of what is known in their organizations and
how they can use that knowledge most effectively.

Knowledge management (KM) might be "hot" as of today, but successful mangers have
always realized its value. Long before terms such as expert systems, core competencies,
best practices, learning organization, and corporate memory were in vogue, these
mangers knew that their company's key asset was not its buildings, its market share, or its
products, but it lay in its people, their knowledge, and skills. After having tried
everything else-- form the greatest products and the best technology to virtual
monopolies-- in their respective markets, more businesses have finally come to the
realization that the only sustainable source of competitive advantage is their knowledge.
As Drucker fittingly warns us, "those who wait until this challenge indeed becomes a
hot" issues are likely to fail behind, perhaps never to recover."

A Working Definition of Knowledge. Knowledge and knowledge management are lofty

concepts --debated by academics and managers and even doubted by some analysts--one

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that only a few businesses have mastered. Before we continue, here is a working
definition of knowledge suggested by Thomas Davenport and Laurence Prusak.

"Knowledge is a fluid mix of framed experience, value contextual information, expert

insight and grounded intuition that provides an environment and framework for
evaluating and incorporating new experiences and information. It originates and is
applied in the minds of knower. In organizations, it often becomes embedded not
only in documents or repositories but also in organizational routines, process,
practices, and norms"

So What's Knowledge Management?

In the simplest terms it means exactly management of knowledge. "Management of
organization knowledge for creating business value and generating a competitive
advantage," Knowledge management enables the creation communication, and
application of knowledge of al kinds to achieve business goals. Kirk Klasson
elucidates, "Knowledge management is the ability to create and retain greater value
from core business competencies." Knowledge management addresses business
problems particular to your business-- whether it's creating and delivering innovative
products or services managing and enhancing relationships with existing and new
customers, partners, and suppliers: or administering and improving work practices
and processes.

Understanding basic differences among data, Information, and knowledge is essential to

doing knowledge work. Data is a set of discrete facts about an event. For example when
a customer buys a gas at a gas station, the transaction (price of gas, time of visit, number
of gallons, and so on) can be recorded as data. The data do not tell us why the customer
went to the gas station in the first place, or whether that customer is likely to return.
Information adds meaning to data. Literally ”gives shape to” or provides a context for
why the receivers of data should change their perceptions. It not only shapes data in an
organized way, but also shapes the understanding of the people who receive it.
Information may be data that makes a difference. Knowledge is a fluid mix of experience,
values, shared context, and expert insight that provides a framework for evaluating and
incorporating new experiences and information. It derives form individual minds, but it
can be embedded in documents, technology, and organizational processes. Knowledge is
deeper and richer than information and is sometimes divided into explicit and tacit

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knowledge: whereas explicit knowledge can often be written down or codified, tacit
knowledge such as human expertise is often too complex to be modified, which is why
knowledge management is not simply a variation of information management or data
management.

Knowledge management is the capture. distribution, and utilization of knowledge.

Knowledge management initiatives are composed of projects. These can be divided into
three broad types:
 Creating knowledge repositories: these “ stores” of knowledge are
built to capture external knowledge (such as competitive intelligence),
structured internal knowledge (such as research reports and design
specification), and informal internal knowledge (such as discussion
database).
 Improving knowledge access: These types of projects focus on
connecting via technology the possessors and prospective users of
knowledge.
 Enhancing the knowledge environment: some projects attempt to
establish a culture and climate conducive out knowledge management,
including measuring the value of knowledge capital and improving its
value.

Knowledge management is a set of practices in evolution. Successful projects result in

growth of knowledge content and usage of repositories, an integration of local knowledge
projects with larger organizational initiatives, and some indirect evidence of financial
return. Studies of different knowledge management projects, the following success
factors were identified:
 Knowledge-oriented culture: A positive view of creating and
sharing knowledge:
 Technical and organization infrastructure: Having appropriate tools
and roles:
 Senior management support: Executives who set the tone and
provide resources:

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  A link to eon comics or industry value: Some measurable benefit or
value:
 A process perspective: A sense of how organizational learning
occurs:
 Clarity of vision and language: clear definitions of knowledge and
mission
 Rewards and incentives: Motivational approaches to encourage
knowledge work:
 Some degree of structure: A purposeful balance between structure
and fluidity; and
 Multiple channels: Several ways to reinforce interaction and
knowledge

2.2.2. Getting started in knowledge Management

Knowledge management projects are going on in every organization, though they may
not be recognized as such knowledge management represents a shift in perspective that
coexists well with initiatives in business strategy. Process improvement. Customer
relations, human resource management information systems management and son on.
Leveraging existing management efforts in quality best practices, reengineering,
technology strategy, intellectual capita, and organizational learning is a pragmatic way to
build understanding and support. A wise approach suggests the following:
 Begin first with high-value knowledge.
 Start with a focused pilot project; let demand drive new initiatives
 Work along multiple fronts at once, such as technology, process, and
culture
 Do not put off the most difficult hurdles until it is too late
 Get help throughout the organization as quickly as possible.

Managing knowledge should be the job of everyone in the company,. Whether a

dedicated executive is necessary to integrate a company’s culture and technology, such as
a chief knowledge officer, or whether knowledge management should be decentralized

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throughout the organization depends on many business factors. Although the motivation
to share knowledge comes form the individual employee, often the commitment and
initiative must come from the top in order to design a knowledge infrastructure,
standardized codification methods, create new roles and positions. Lead a knowledge
strategy, and allocate organizational resources.

Knowledge management is not rocket science. (In fact, an executive at the Jet propulsion
Laboratory once said that even rocket science is not that hard anymore) It is sound
management principles and good sense presented in a way tat is philosophically robust.
Though pitfalls exist, knowledge management suggests a future of progressive business
practice that embraces new technologies. But before embarking on new programs,
mangers should remember that just as people should not take action without thinking
about what objectives are desired, knowledge management initiatives should always
serve the larger goals of the organization.

2.2.3. Why have knowledge management?

The ability of companies to exploit their intangible assets has become far more
decisive than their ability to invest and mange their physical assets. As markets
shift, uncertainty dominates, technologies proliferate, competitors multiply, and
products and services become absolute rapidly, successful companies characterized
by their ability to consistently create new knowledge_ quickly disseminate it, and
embody it in their new products and services. In the postindustrial era, the success
of a corporation lies deeply embedded in its intellectual systems, as knowledge-
based activities of developing new products, services, and processes become the
primary internal function of firms attempting to create the greatest promise for a
long-term competitive advantage. Kirk Klasson suggests that companies can reap an
immense payoff when a knowledge management solution makes it easier for
practitioners to each out to other practitioners who share common problems or have
experience to share, why all this noise about knowledge management and why now?
There are nine reasons for this:
1. Companies are becoming knowledge intensive. Knowledge is rapidly
displacing capital monetary prowess, natural resources, and labor as the
quintessential economic resource.

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 2. Unstable markets necessitate "organized abandonment." Your target
markets might under go radical shifts, leaving your company in a disastrous
position of being with the wrong product, at the wrong time, and in the
wrong place.
3. KM lets you lead change so change does not lead you. KM is no
longer needed by service-based businesses and consultants alone.
4. Only the knowledgeable survive. "The survival of the fittest firm" is an
outmoded thought in the knowledge-based economy. The ability to survive
and thrive comes only from a firm's ability to create. Acquire, in the face of
complexity, uncertainty, and rapid change
5. Cross-industry amalgamation is breeding complexity, uncertainty, and
ambiguities are the hallmarks of today's production and business systems
irrespective of the nature of business or type of industry. Knowledge
management has allowed many companies such as Bay Networks to turn
this complexity to their advantage.
6. Knowledge can drive decision support like no other. Providing
effective decision support by making knowledge about past projects,
initiatives, failures, successes. And efforts readily available and accessible
can make a significant contribution toward convalescing this process.
7. Knowledge requires sharing. IT barely supports sharing. KM requires a
strong culture of sharing hat information systems do not inherently support.
8. Tacit knowledge is mobile. Too often when someone leaves your firm, his
or her experience leaves too. This knowledge. Skills, competencies,
understanding, and insight then often go to work for a competitor.
Knowledge management can save your company from losing critical
capability when that happens.
9. Your competitors are no longer just on the West Coast. We are
becoming increasingly global, drunker notes. Keeping up with developments
and ensuing threats or opportunities in other countries is a tedious, time -
consuming, and difficult process. Knowledge management technology, when
given the right source feeds, can deliver relevant and timely knowledge.
2.3.4. What knowledge Management Is not About
Knowledge management is not solely a technology problem: it is partly a
management problem. Only by aligning the two can you build knowledge
management technology that will truly enable effective knowledge management. To
cleanse you of vendor sales pitches, let us first clarify what knowledge management
is not.

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Knowledge management is not knowledge engineering. Knowledge
engineering has been a vital part of computer science but is barely been related to
knowledge management. Knowledge management is a business problem and falls in
the domain of information systems and management, not in computer science.
Knowledge management needs to meld information systems and people in ways that
knowledge engineering has never been able to.
Knowledge management is about process, not just digital networks.
Management of knowledge has to encompass and improve business processes.
Knowledge management is not about building a "smarter" intranet. A
knowledge management system can use your company's intranet as its front end,
but one should never be mistaken for the other.
Knowledge management is not about a one-time investment. Knowledge
management like any other future-oriented investment, requires consistent attention
over a substantial period of time even after it begins to deliver results.
Knowledge management is not about enterprise-wide "Infobahns" While
enterprise interaction helps, the primary focus of KM is on crating, getting.
Importing, delivering, and most importantly helping the right people apply the right
knowledge at the right time.
Knowledge management is not about "capture." Document management
vendors would have you believe otherwise, but knowledge management is not about
capturing "knowledge."
Knowledge for action The reason why knowledge is more valuable than information or
data is that it is more closely linked to action. Knowledge is evaluated by the decisions
that are made based on it, and is revised based on the outcomes of those decisions. Better
knowledge can lead to measurable efficiencies in product development and marketing,
for example. So whereas information and data may be evaluated on its accuracy and
completeness. Knowledge is evaluated on its relevance in decision making.

2.3.5. Knowledge markets

Because knowledge is often embedded deep in the organization and can be extremely
difficult to find and control. The key to effective knowledge management is to create and
nurture knowledge markets. Like markets for goods and services, a company’s
knowledge market allows “buyers” and “sellers” of knowledge to negotiate a mutually

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satisfactory “price” for the exchange. People often gather informally in hallways to
converse about organizational issues. Some mangers assume that such socializing is a
waste of time, not understanding that in a knowledge-based economy, dialogue is the real
work.

A. Knowledge market Characteristics

Three kinds of players are involved in a knowledge market:

Knowledge buyers; people who seek ideas and insights to solve their problems:
Knowledge sellers; people who gold process knowledge (how things are done) or are
experts on a particular subject: and
Knowledge brokers: people who connect buyers and sellers; people who are not domain
experts themselves but who know where to find the right people in
the organization.

In a knowledge market, these players exchange knowledge for “currency” that takes one
of three forms:
1. Reciprocity
2. Repute
3. Altruism
A knowledge seller will devote the time and effort needed to share knowledge if the
seller expects to be a buyer of knowledge at some point in the future. Reciprocity
depends mostly upon the seller’s self-interest and builds up one’s own “favor bank.”
Repute can be valuable to a seller if he or she wishes to build a reputation as an
individual with demonstrable skills and competencies. In consulting firms, for example,
repute is often tied directly to bonuses. Altruism is the motivation for people who
genuinely like helping others. Mentoring is based in part on altruism. For currency to
flow, knowledge markets must be established on trust. Trust must be visible, ubiquitous,
and start at the top.

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B. Core process: To make knowledge markets work, companies must take a systematic
approach to encouraging the three core processes of knowledge management: knowledge
generation. Knowledge codification, and knowledge transfer.

i. Knowledge Generation Organizations create new knowledge markets in several ways.

The common factor for all these efforts is adequate time and space devoted to knowledge
generation:
Acquisition: The most direct method for getting new knowledge into an
organization is to buy it, either by purchasing firms with complementary
competencies or hiring good people.
 Rental: Outsourcing and hiring consultants are examples of renting knowledge.
Although temporary arrangements. Some knowledge is likely to stay with the firm
when the rented knowledge source leaves.
 Dedicated resources: Resources dedicated specifically to knowledge generation,
such as in-house research and development (R&D), are accomplished by
separating R&D from other internal pressures. It is a risky investment that takes
time to recoup but ensures that most of the knowledge will remain with the firm.
 Fusion: In contrast to the R&D approach. This methods brings together people
with different skills, ideas, and values from across the company to work together.
 Adaptation: Firms that survive through adaptation to their business environment
are constantly creating new knowledge: learning is continuous and mandatory.
 Networks: informal and formal communities of practice share expertise and
solve problems. Allowing people to network is indispensable to knowledge
generation.
ii. Knowledge codification The purpose of codifying knowledge is to put an
organization’s existing knowledge into a useful format and make it easy to access. For
mangers, the main goal of knowledge codification is to explicate knowledge without
losing its distinctive qualities as knowledge. Often much of the knowledge that has the
greatest value to an organization is the most difficult to codify. To capture tacit
knowledge, the value of narratives should not be overlooked. Human beings learn best
form stories, and a good story is often the most effective way to convey meaningful
knowledge.

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Knowledge may also be embedded in a company’s products and services, processes and
technology. Embedded knowledge has some independence: A technology or process
expert can exit an organization and leave behind his knowledge. In practice, it is difficult
to find the line where embedded knowledge ends and where tacit knowledge begins.
However, codified knowledge is extremely useful as it lends stability to an organization
and provides new employees a basis form which to learn.

The four basic principles for knowledge codification are as follows:

1. Managers must decide what business goals the codified knowledge will serve.
(For example, marketing divisions may want to codify knowledge about customer
relationships)
2. Managers must be ale to identify knowledge existing in various forms appropriate
to reaching their business goals.
3. Managers must evaluate knowledge for usefulness and relevance.
4. Manages must identify an appropriate medium for codification and distribution.

iii. Knowledge Transfer Knowledge transfer is the transmission, absorption, and use of
knowledge. The best way for mangers to transfer knowledge form the heads of people to
the heads of other people is to get them to talk to one another. Studies have shown that
mangers get two-thirds of their information and knowledge form face-to face meetings or
phone conversations, and only one-third comes form documents. There is no shortage of
bright ideas in organizations, but the people that have them are often isolated or too busy
for in-depth conversation.

People transfer knowledge every day, such as when a new sales representative asks a
more seasoned sales rep about the needs of a particular client or when an engineer asks a
colleague if he or she has ever dealt with a particular problem. Although examples
abound of successful knowledge transfer, employees tend to go to the most convenient
source rather than the best source in the company. As the size of an organization grows,

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there is both a greater likelihood that needed knowledge exists somewhere in the
organization and a correspondingly lower likelihood that it is easy to find.

To encourage spontaneous knowledge transfer and disseminate it broadly, organizations

should develop strategies for knowledge transfer. The following three suggestions are
designed to encourage face-to face dialogue-the richest form of knowledge transfer.

Corporate culture can encourage or inhibit knowledge transfer. The “frictions” that
erode the free flow of knowledge include a lack of trust, cultural conflict, lack of time,
narrow perspectives of work. Incentives to horde knowledge, intolerance for mistakes,
and a belief in a knowledge hierarchy (the people at the top know the most). Theses
obstacles can be overcome through education, building trust, job rotation, flexibility,
performance appraisals that reward knowledge sharing and learning and encouraging
nonhierarchical interaction and collaboration.

C. Technologies for knowledge management

There is no single tool or “right” technology for knowledge management. Yet a principal
reason knowledge management is important today is because of the new tools and
technologies that have emerged to enable knowledge generation. Codification, and
transfer. Dozens of information technologies can be cited as knowledge management
tools. The most visible today are Web-base intranet applications and Lotus Notes. Notes
excels at database management and group work management. The Web is ideal for
publishing material across multiple system platforms, for multimedia, and for linking
knowledge through hypertext. These capabilities will soon be available as integrated
packages to install across technical, functional, and business lines.

For both Web-and Notes –based applications, the primary purpose is to allow users to
search and retrieve documents form a knowledge repository. However, other
applications are useful for doing knowledge work, such as an expect locator, designed to
find people instead of documents. For decision support, case-based reasoning (CBR)
involves extracting knowledge form narratives of cases, and scripts are then developed

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tot lead users through problem solutions. Unlike expect systems, which require rules to
be well structure, CBR can reflect the fluid thinking that was needed to resolve an issue
in the first place. Constraint-based systems are useful for narrow problem domains by
modeling the consternates that govern complex decisions. Neural net and artificial
intelligence represent the future of knowledge technology, and these are intended to
replicate some of the higher cognitive functions. Grape VINE, used at HP, Andersen
Consulting, and Ford, searches external databases for knowledge relevant to the
organization. Some knowledge tools for facilitating communication are as simple as e-
mail, desktop video on ferencing, or just the telephone. Individual tools can be integrated
into enterprise-wide solutions.

Technology alone will not ensure the success of knowledge management and is even less
helpful when it comes to knowledge creation. What is most important is that technology
is used to expand access and ease the problem of getting the right knowledge to the right
person at the right time.

2.2.6. Drivers of knowledge Management

Knowledge has been the staple source of competitive advantage for some classic
companies( such as Coke) for hundreds of years-not exactly a new concept. Turbulently
changing environments, rapidly evolving technologies, and a different breed of
knowledge workers create the demand for an entirely new organizational structure that is
process oriented, team based, brain rich, but asset poor. Except for rare cases of
intangible assets(such as Coke’s formula that do not grow if shared knowledge grows in
value if it is appropriately shared.

1. Knowledge-Centric Drivers

Knowledge-centric drivers for knowledge management emerge from the recognition of

the business value of knowledge. The failure of companies to know what they already
know, the need to improve work processes through improved distribution of knowledge,
the need for overcoming barriers to flow and retention of knowledge, the need to unlearn

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what is no longer valid, and the culture of knowledge hoarding dominant I most
companies are a few of these divers that we discuss next.

a. The failure of companies to know what they already now. Companies often don’t
know what they already know. This is almost always the root cause of companies
reinventing old wheels. The British patent office uses an interesting story that makes this
point. A major British chemicals company was developing a process that had gone
through several iterations in its pilot tests a few years ago. As the company scaled up this
process to its full production level, a flaw in the seemingly perfect solution showed up: A
sludge deposit was produced at the bottom of the process tank. The company, attempting
to salvage its development, invested in further research hoping to eliminate this problem.
Soon, the researchers realized that it was going to be time-consuming and expensive
proposition. As plans for an initiative were being finalized, a junior team member
decided to investigate existing patents just in case some other company had already
encountered a similar problem. Licensing the process, they thought, might be cheaper
than developing it from scratch. The patent office searched through all its patents and
found one that was a perfect fit. You guessed it: The patent belonged to the very same
company! No one in the company knew about it until the parent office clued them in.
Knowledge management can help companies know what they do know.

b. The Emergent Need For Smart Knowledge Distribution. Every day, companies
and their knowledge workers are faced with problems stemming from lack of smart
knowledge distribution. How familiar do these scenarios sound?

 Employees can’t find critical existing knowledge in time. Your consulting

company is asked to tender a quore for a major client. Collating the necessary
information from the company’s records or tracking down your own consultants
with relevant experience becomes an unrealizable task in the allowable time
frame. You do meet the deadline, but your tender documents are far from perfect,.
Your company loses the bid to a competitor.
 Lessons are learned but not shared. You notice that your office in Atlanta is
bringing in far less revenue than your office in Boston, even though they are

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 essentially doing the same job and servicing an identical customer base. Lessons
learned and best practices followed by your Boston office employees are being
learned over again by those in Atlanta. There is neither a sufficient process nor
the requisite infrastructure that allows either sharing or transfer of best practices
across the two offices. Swapping employees for a few months did not help, even
though your company thought it would.
 Your company can’t keep up with competition. Your biggest company. They
also seem to be gaining new customers at a faster rare than your company. They
also seem to be losing fewer customers to you than you lose to them. Your
company does not seem to be learning from its recent mistakes, and your
competitors both about your mistakes and about new opportunities at a faster rate
than you.
These are common problems that almost any manager will aver that he has seen in his
own company. They are typical of companies that have not yet focused on sharing,
distributing, nurturing, and managing their only sustainable asset: their knowledge. even
though our examples are from a knowledge-intensive consulting company, we will soon
see that these service companies are no different from other manufacturing companies
that produce “hard” goods and physical products.

The ability to “smartly” disturbed knowledge across the entire organization is therefore
another compelling driver for knowledge management.

c. Knowledge Sluggishness. Don’t undervalue knowledge gained from failures.

Knowledge management initiatives that support active and complete transfer of
knowledge from successful projects to new ones could reduce the extent of repeated
wasteful expenditure of resources and effort put in to solving problems that might have
already been solved. Failed approaches and decision often provide equally useful insights
into what in to do. Retaining and actively using this knowledge of failures can steer
resource allocation into promising directions. Without learning from failures and their
analyses, workers pursuing current projects might unknowingly repeat past mistakes.

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Lacking a mechanism to find the information they need, people often tend to use
incomplete information that they already possess, with the result that designs are
generated without the benefit of related information and expertise that exists within the
enterprise, or may be even with in the same department. Two detailed research studies
suggest that this often occurs because there is no reliable record of discussion or
deliberation. The problem lies solely in the lack of knowledge or its inaccessibility.
Knowledge is of little value if it can not be found when it’s needed.
Knowledge asset management looks like a promising neutralizer for this rather expensive
exigency.

d. Knowledge Velocity Successful companies develop knowledge velocity, which helps

them overcome knowledge sluggishness, to apply what they learn to critical processes at
a faster rate than their competitors. Underlying this concept is the integration of a
company’s knowledge processes with its business processes to substantially enhance
business process performance. The quality and celerity of decisions are anchored directly
to employees’ ability to access key actionable information.

Effective knowledge management systems allow people to learn from past decisions,
both good and bad, and to apply the lessons learned to complex choices and future
decisions.

e. Tacit Ness Of Knowledge. While a lot of facts about a firm may be documented
in its plans, documents, designs, and data-bases, much of its experience resides in its
employees’ heads. Very often, the largest part of a firm’s intellectual prowess is not in its
organizational intellect, but its human intellect. When the person having that critical piece
of knowledge quits to join a competitor, that knowledge also walks out the door. A study
conducted by KPMG in 1998 showed that in over 40 percent of the cases it examined, an
employee departure caused loss of key clients, suppliers, loss of best practices in his/her
area of specialization, and in many cases, a significant loss of income.

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Knowledge Walks out of the Door. Knowledge professionals play a critical role in the
knowledge economy. They can demand better working conditions, greater freedom,
increased job satisfaction. This means that the knowledge professional will not be easily
bound to one company. Certain as, the idea of employment for life is alien to this new
breed of professionals. They will job-hop un hesitatingly and go where they can achieve
greatest satisfaction.

F. Knowledge =Power. Most of us, because of the limitations of our very human nature,
have a strong knowledge hoarding propensity. Hoarding is symptomatic of old thinking
that does not harmonize in the knowledge based economy and can undermine a
company’s ability to move quickly in to new markets or compete effectively. But
hoarding is a human tendency that can be overcome only by providing an irresistible
incentive to share. Bringing in performance measures and incentives that reward
knowledge sharing strengthens the benefits of sharing knowledge throughout the
organization. Individuals, being task focused, might not have the luxury of available time
even if they want to share knowledge that they possess. The solution to this dilemma
mandates a culture where knowledge workers are also given the time and space needed to
enable knowledge sharing, growth and the interaction that accompanies it.

g. Systemic un Learning Requirements As complex interrelationships within and

between companies evolve, the assumptions, rules of-thumb, heuristics, and processes
associated with the ways of doing business and creating products and services change as
well. Companies are often caught up in the past and continue to apply old practices,
methods, and processes that no longer apply. Companies must learn to unlearn (a term
borrowed from knowledge engineering) what they have learned from past experience if it
does not apply anymore.

The need for such unlearning is difficult to identify in a complex business environment
knowledge management can potentially provide the divisions for recognizing such a
need.

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2. Technology Drivers.

Technology drivers from knowledge management are either motivated by new

opportunities that have arisen for companies to compete through knowledge process
differentiation using technology or through their failure to compete sustainable using
technology: Next, we examine technology’s trials and failures, influence of product, and
service life cycle compression

A. Technology –Trials, Triumphs, And Tribulations. Technological impetus has

revolutionized the way we communicate, store, and exchange data at low cost and high
speed. The proliferation of PCs on every employee’s desktop has made more information
readily available than ever was, far more work-at all levels and in all industries-is now
done in front of computer monitors, keyboards, wireless palm pilots, laptops, an d around
coffee tables rather than in the manufacturing shop.

Knowledge and its effective management hold promise as a robust differentiator, unlike
technology.

b. Compression Of Product And Process Life Cycles. Information, service, and

physical product life cycles in most markets have significantly shortened, there by
compressing the available window for recouping the expenses associated with their
development. Time-to-market is critical factor in the development of both services and
products. The high-technology industry provides, an obvious example of the so-or-die
imperative that a fast time-to marker poses, but other industries are not too far behind.

As complex and often irreversible decisions need to be made fast, accurately, and
repeatedly, knowledge management holds the promise for accelerating this process.

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C. The Need For Perfect Link Between Knowledge Business Strategy, And It. As we
move further in to the information age, the interesting counterintuitive shift that becomes
evident is that of the firms anthropocentricity-dependence on people. While computing
power can move information and data form Boston to Bombay faster than a click on a
keyboard, it’s the people who run that information into good decisions. These people in
turn depend on their intelligence and experience. Drucker points out that “knowing how
a typewriter works does not turn (someone) in to a writer!”. As knowledge replaces
capital as driver of a firm, it’s all too easy to confuse information technology with
information and information with knowledge.

3. Organizational Structure-Based Drivers

The effect of organizational structure changes moderated by technology proliferation and
process changes reverberates a clear need for effective knowledge management. Next, we
examine some drivers grounded in organizational structure including the effect of
functional convergence, a visible shift toward project-centered forms in companies,

effects of deregulation and globalization, and product and service convergence.

a. Functional Convergence. Uncertainties inherent in new product and service

development processes lead to complex dependencies among and between different
functional areas (such as marketing, production, finance, etc.) and require inputs and
cooperation from different departments to accomplish joint objectives. In addition to the
traditional functional barriers that exist between marketing, design, purchasing, and
manufacturing that can be observed in most industrial organizations, the diversity of the
expertise needed for complex projects creates serious barriers for commonly accepted
and agreed-upon shared understanding. Knowledge management can answer questions
about the knowledge assets, trust, and ownership, both before and after the work is done.

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B. Emergence Of The Project Centric Company. Companies rely on ad hoc project-
centered teams for the sole purpose of bringing together the best of their talent and
expertise. While teaming up undoubtedly helps, it also brings other problems. The team
involved in a success is often moved to the next high-profile project(and unsuccessful
teams might be moved to the lowest-profile project). Expertise gained during
development of the product during its evolution.

In a project-oriented, team-based organizational structure, skills developed during the

collaboration process might be lost after the team is broken u and redistributed among
other newly formed teams. When such a team is disbanded, the process knowledge
acquired by the team and needed for tasks such as product modification, service
development, or maintenance is lost for future use. The rapid growth in many skills
markets and the shortage of highly specialized skills are critical factors contributing to
the severe shortage of qualified personnel and high turnover, especially in high
technology and areas o fringe specialization.

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 C. Deregulation. Deregulation increases competition like nothing else can. As firms
shoot for a more varied product line, converge businesses, experiment with a variety of
delivery channels, their margins keep becoming increasingly thinner than razor thin. At a
national level, cost reduction is accomplished through deregulation. Deregulation, not
just a U.S. phenomenon, can have the most profound effects here if it occurs in other
countries. It’s being seen all over the world, from Easter Europe to the pacific rim. If one
of your suppliers is in Korea and your competitor’s supplier in India was just deregulated,
your competitor might have gained an edge over your cost structure just about overnight.
The difference between cost reduction by brute force, such as downsizing, and cost
reduction by brain force, such as knowledge and skills management, is similar to that
between trying all possible combinations of a combination lock and knowing how to pick
a lock!
d. Globalization. As national barriers disappear, managing knowledge is becoming the
key to accessing timely information about international competitive environments,
regional growth rates, economic and cultural issues-information necessary to build a solid
global business portfolio. Telecommuting and the penetration of the internet are catalysts
that are speeding up this process unlike anything witnessed before. Twenty years ago,
who would have expected that India would be a software powerhouse or that Malaysia
would be chock full of semiconductor and hard disk drive factories?

e. Product And Service Convergence. Strategic innovation occurs when a company

identifies gaps in its industry’s positioning map and decides to fill them; and the gaps
grow in to mass markets. Gaps might imply new emerging customer segments that
competition might have neglected, new and emerging needs of old customers, or just new
ways of delivering products and services. This is a risky business in knowledge
management can help keep multiple, and oft-changing objectives in mind when the
product itself is defined by the service that goes with it, i.e., the two converge almost
indistinguishably.

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 4. Personnel-Focused Drivers.
Personnel-focused drivers of knowledge management include the need for improved
knowledge transfer, sharing, and creation in cross-functional teams of knowledge
workers: the need to deal with complex expectations from such workers: and the need to
prevent loss of knowledge as fluid teams emergently form and re-form. Let’s take a look
at some of these personnel focused drivers.

A. Cross-Functional Collaboration. To respond to competitive challenges, other wise-

independent firms have become more closely coupled than in the past, often working in
parallel to complete assignments spanning traditional boundaries and functional areas.
The creation of today’s complex systems of products requires melding of knowledge
from diverse disciplinary and personal skills-based perspectives where creative
cooperation is critical for innovation. Expertise and skills that are needed for project
might be distributed both within and outside the responsible company; therefore. People
from different companies often need to work together to bring in the entire skill set that a
product or service might demand. In the development of complex products and services,
it is a sine qua non to draw needed expertise from a variety of functional areas such as
technical design, engineering, packaging, manufacturing, and marketing.

b. Team Mobility And Fluidity. Fluid “flash “teams or on - the –fly, and hoc teams
formed for specific projects or engagements are often disbanded at the end of the project.
Team members are often assigned to other projects over time and across phases where
their functional expertise is valued more than their knowledge gained during the process
of collaboration with members of other functional areas.

A major threat to the collective knowledge in firms is personnel turnover, since much
tacit knowledge is situated (not stored) in the minds of these individual employees. The
departure of such employees leads to a reduction in the organizational knowledge and
collective firm wide competency. Making employees write a manual or bringing them
back in as consultants might not solve the problem. Manuals can be internally
inconsistent, invalidated, out of date, and difficult to maintain; and what good does an

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external consultant do if she has forgotten a good part of what she was trained for four
years earlier!

c. Complex Expectations. Most businesses today have limited, defined objectives, and
they deliver measurable value within strongly imposed structures and rules, but because
of their close coupling to unstable markets, they are subject to radical change. They
contend with unnatural time scales, unexpected innovations from competitors, shifting
markets, and severe mismatches of internal and external pace.

5. Process Drivers.
Process drivers are focused on improving work processes thorough knowledge
management.

A. Repeated Mistakes And Reinvention Of Solutions. Talk to any management

consultant. It might surprise you how many times companies repeat exactly the same
mistakes. David Teece reported in the California Management review that the annual
aggregate reinvention costs in the United States range between $2 billion and $ 100
billion Learning from the from the past is how things should work, but they rarely do.
Organizations have been disconcerted by reinventing solutions and repeating mistakes
because they could not identify or transfer best practices and experiential knowledge
from one location to another or from one project to another. The level to which this
problem invades daily work was evident in the show of hands in an informal survey of an
incoming graduate business school class that I recently asked, ”Have you worked on a
project only to realize that you did a lot of exactly the something that someone had done
before you?”

B. Predictive Anticipation. The ability to anticipate and respond to market trends is a

critical capability required of any company. To be truly competitive, a company must be
able to see the bigger picture and not just react to trends (reactive) but actually but
actually anticipate them (proactive). It is important to recognize in advance the forces that
will shape the markets in which your company is operating. It is important to recognize in

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advance the forces that will shape the markets in which your company is operating. It is
sometimes too easy for even the best companies to miss a bear here and fall far behind.
Microsoft, for example, did not anticipate the explosive rise of the Internet and soon
found that Netscape, a seemingly insignificant startup company, had entered a market
niche and secured a dominant position.

The ability to integrate external knowledge with internal expertise can provide companies
with the capability to proactively anticipate changing markets and respond ahead of time.

C. Responsiveness Of Competitors. Reacting quickly to market changes is one of the

biggest challenges for companies, and also one of the biggest opportunities. Wal-Mart is
a frequently cited example of a company that has put the just-in-time(JIT) inventory
management system to good use.

6. Economic Drivers
Knowledge defies traditional economics of organizational assets by creating super
ordinary returns and added value as it’s increasingly used. The promise of increasing
returns indeed makes KM a more promising investment than many “hard” assets.

a. Extraordinary Leverage And Increasing Returns. Basic economics theory

suggests that most assets are subject to diminishing returns, but this does not apply to
knowledge. A bulk of the fixed cost in knowledge-intensive products and services usually
lies in their creation rather than in manufacturing or distribution. Once such knowledge-
intensive products have been created, their initial development cost can be spread out
across mounting volumes. In traditional industries, assets decline in value as more people
use them, knowledge assets, in contrast., grow in value as they become a standard used
by more and more people, standards on which others can build. Their users can
simultaneously benefit from this knowledge and increase its value as they add to, adapt,
enhance, enrich, and validate it.

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b. The Quest For A Silver Bullet. Companies must constantly look for ways in which
they can keep their knowledge spiral steadily moving upward. Any competitive
advantage that is not based on knowledge can be , at most, temporary. Achieving the
upward trend largely depends on a company’s ability to create new knowledge. It might
mean using R&D to create new products by using existing knowledge in a new way or it
might mean gaining new knowledge about customers. Customer loyalty programs such as
the many frequent flyer airline clubs or frequent shopper cards given away by grocery
stores provide valuable insight in to the spending habits of major information technology
to transform their raw and untapped data resources in to competitive tools to provide
customers with critical information and value-added services.

2.2.7. Creating the knowledge edge

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a. Competing Through Process. Arthur Andersen is an international accounting, tax,
and business-consulting firm with revenues exceeding $4 Billion. Its employees are
spread across its 400 offices in over 70 countries. When a consultant comes across
a problem that a client is facing, it is often likely that some other client-may be in
some other country-has faced a similar problem in the past. Rather than have
consultants start every new project with a blank slate AA decided to implement a
system called the global Best practices inmid-1992. The system helps employees
share best practices and collaborate as they work with their clients in different parts
of the would. The global Best practices knowledge base is only one component of
the company's knowledge sharing network. It is complemented by highly
specialized knowledge bases and discussion databases resulting from conversations
and network-based discussions.
b. Eliminating The Tradeoffs. Although the concept of knowledge has been around
since Adam and Eve, its business significance has been recognized on a large-scale
relatively recently. While discussing this subject at a philosophical level will
further develop it at a more conceptual level, your company probably can't be run
at a philosophical or conceptual level! Companies desperately trying to implement
a knowledge management system often stray from the business strategy perspective
to either a technologically obsessed strategy or a deeply philosophical perspective,
neither of which does much good in the real world. As a result, either the focus o
their plan is too constricted, often to the advantage of the product vendor trying to
help them build a knowledge management strategy, or is too broad to be actually
implemented. In an ideal would, we would like to have an all-encompassing and
theoretically perfect implementation, in the real world, we end up making choices
and trade offs. Making the wrong tradeoffs could potentially kill not just the
knowledge management initiative but your company as well.

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 c. Beware Of Relabeled Cans Of Worms. Managing the knowledge assets of a
capitalist company is a relatively new and undeveloped area, although research in
adjacent areas such as corporate memory systems, organizational learning and
rationale capture has been going on for decades. The emergence of knowledge
management has opened up a new can of worms, and we try to cluster them in a
smaller number of cans-organizational, technical, managerial, strategic etc-vendors
seem to be pointing only to the original big can. This is no different from the kind
of problem that was rampant in 1970 when two of the founders of is wrote about
similar problems in electronic data processing (EDP). g As companies like
Monsanto, Microsoft, and skandia have started talking more about knowledge
management, companies with products from all related areas such as data
warehousing, intranets, discussion list tools, and object-oriented database systems
have been involved in a relabeing frenzy, touting their products as the ultimate
knowledge management solutions. The fact is , however, that there is no one
single, canned approach to managing knowledge. What you need is good
understanding of your business, and a convincing business case; only then can you
even think of beginning a knowledge management initiative.

d. The Road Ahead. In many service industries, the ability to identify best practices
and spread them across a dispersed network o operations or locations is a key
driver of added value. Such a strategy can create powerful brands that are
continually refreshed as knowledge about, say, how to serve customers better,
travels across the network. This often results in a commonly encountered dilemma:
it may be all but impossible to tell whether value has been created by the brand or
by knowledge. How much does McDonald's brand depend on, say, network-wide
knowledge of how best to cook French fries?

Leaning Activities 2.2

1. What are the three kind of players of knowledge market?

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_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
2. What does knowledge transfer mean?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________

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2.3. Business process re-engineering (BPR)

Overview:
Reengineering is a fundamental rethinking and radical redesign of business processes to
achieve dramatic improvements is critical area such as cost, quality service and speed. In
this section you will be made to explore the basics of the business process reengineering.

Objectives

After reading thus unit you will be able to

 Clarify the characteristics of reengineering business process
 Identify process redesign approaches

BPR is a management process used to redefine mission statement, analyses critical

success factors, redesign organizational structure and re-engineer critical process to
improve customer satisfaction. BPR is the radical redesign of business as a whole or
individual work processes to maximize business effectiveness. BPR challenges managers
to rethink traditional work methods and commit themselves to a customer-focused
process. BPR uses recognized techniques for improving business result and questions the
effectiveness of the traditional organizational structure.

Rapid technological changes and competitive pressures of modern markets increase

demands for quality, service cycle times and innovation. BPR is designed to help with
these situations. Many outstanding organizations have achieved and maintained their
leadership through BPR (Oakland, 1995).

Unless organizations learn to identify and reform strategic business processes, they will
never be able to exploit changes in the market. Profitability, market share and goodwill
are not bestowed on organizations by some divine right. Instead, the market awards these

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benefits to organizations that listen to and satisfy the voice of the customer. Change will,
ultimately, affect every organization. The ability to change and adapt rapidly is fast
becoming a basic survival skill. Hence, the importance of combining TQM and BPR.

“why do we do what we do at all?” this is the key question for organizations to answer as
they approach the twenty-first century. No longer will “How can we do what we do
faster?” or “How can we do what we do better?” or even, “How can we do what we do at
a lower cost?” succeed as questions on which to focus managerial attention. Most
companies have come to a point where radical changes are required in order to survive.
The change process required is called business reengineering.

“If I were recreating this company today, given what I know and given current
technology, what would it look like?” this question directly expresses the focal point of
reengineering.

The basic premise of reengineering is simple, yet, like most simple prescriptions. It can
be very difficult to swallow. Success in the marketplace requires that companies become
the best in their business at the fundamentals: inventing products and services,
manufacturing or providing them, marketing or selling them and serving customers. To
do this, companies must organize around processes, not individual tasks or functions.
This dramatic approach may virtually require some to recreate their organizations.

2.3.1. Why have Reengineering?

The performance of companies today is suffering for the very same reasons that their
performance used to be so strong. Most businesses are trying to compete in a world that
has changed so drastically that their organization structures and Principles that propelled
these same businesses to the forefront in years past.

The historical patriarchs of today’s companies developed Adam Smith’s eighteenth-

century principle of the division of labor by adding the pyramidal organization or

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bureaucracy, true assembly-line production, decentralized divisions, managing by the
numbers, and elaborate centralized planning.

These once crucial managerial techniques certainly had weaknesses, but those were far
outweighed by the level of control they allowed and the results they achieved. However,
these same techniques are now creating a managerial short sightedness that is leading
businesses toward extinction.

Three forces have been the catalysts for this reversal. They are the three Cs: customers,
completion, and change.

First, customers are taken charge. In the past, customers bought what was offered,
whether or not it was what they wanted or needed. They had limited or no choices.
These days, customers no longer are a mass market. Customers demand and receive
products and services with the features and prices they want at least to a degree never
known before. This force requires a responsiveness and flexibility previously unknown
to the business world.

The second force driving the need for reengineering intensifying competition. In the
past, the best price would obtain the customer. Now, niche marketing has created an
environment where similar products and services sell for entirely different reasons in
different markets. One competitor in almost any part of the world can redefine the
playing field for a whole industry virtually overnight through the introduction of new
features or a different product that satisfies consumers’ needs more effectively.
Furthermore, technology has changed the very nature of competition itself, making
available all sorts of market data previously unavailable and even eliminating whole
segments of industries, such as wholesalers and distributors.

The third force is that change has become constant. The pace of change as accelerated,
and it relentlessly and continuously alters almost every aspect of every segment of every
industry. Life cycles has diminished exponentially. Most importantly, the significant
changes will likely come form totally unexpected directions or sources.

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Reengineering as Defined by Hammer and Champy. As a fundamental rethinking and
radial redesign of business processes to achieve dramatic improvements in critical,
contemporary measures of performance, such as cost, quality, service, and speed. It’s the
search for new models of organizing work and starting over.

However, Reengineering is not automation, which just creates more efficient methods of
doing the wrong things. It isn’t restructuring or downsizing, which only involve doing
less with less. Nor is reengineering similar to reorganizing or flattening out an
organization. These processes only impose a new organizational structures over the same
flawed operational system. Finally, although reengineering shares some of the same
ideas as the various modern quality movements, it seeks breakthroughs, not
enhancements.

2.3.2. Characteristics of Reengineered Business Processes

a. Several Jobs are combined into one formerly distinct and separate tasks are
reunited. Frequently the end result is a caseworker or case team that
accomplished what used to be spread across many departments and people. The
most basic and common feature of reengineered processes is the absence of an
assembly line; that is many formerly distinct jobs or tasks are integrated and
compressed into one.

b. Workers Make Decisions. The creation of a case worker is a form of horizontal

compression. This is vertical compression. Decision making becomes part of the
work. Companies that undertake reengineering, not only compares processes
horizontally by having case teams perform multiple, sequential tasks but
vertically as well. Vertical compression means that at the points in a process
where workers used to have to go up the managerial hierarchy for an answer, they
now make their own decision-making becomes part of the work. Workers
themselves now do that portion of a job that, formerly, mangers performed. The
benefits of compressing work vertically as well as horizontally include fewer

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 delays, lower overhead costs, better customer response, and greater empowerment
for workers. Caseworkers or case teams perform multiple, sequential tasks but
vertically as well. Vertical compression means that at the points in a process
where workers used to have to go up the managerial hierarch for an answer, they
now make their own decisions Instead of separating decision-making workers
they now do that potion of a job tat, formerly, mangers performed.

c. The Steps in the process are performed in a natural order they are no longer
constrained by the artificiality created by the assembly line mentality. In
reengineered processes: work is sequenced in terms of what needs to follow
what. In one manufacturing company, for example, it took five steps to go form
the receipt of a customer order to the installation of the equipment.

a. Determine the customer's requirements

b. To translate them into internal product codes.
c. To convey the coded information to various pants and warehouse
d. To receive and assemble the companies and
e. To deliver and install the equipment. "Delinearizing" process speeds
team up in two ways first, many jobs get done simultaneously.. Second,
reducing the amount of time that elapses between the early and late steps
of a process narrows the window for major change that might make the
earlier work obsolete or make the later work in consistent with the earlier.
d. Processes have multiple versions. Instead of one process that tries to deal with
every possible variable, a “triage” step is used to determine which of several
versions of the process is most appropriate. Common characteristics of
reengineering process of standardization usually begin with a "triage" step to
determine which version works best in a given situation.
e. Work is performed where It makes the most sense. Each department might
purchase its own supplies, vendors might take over inventory management for
their customers, or customers might even become trained repair people for their
vendors (e.g. office copiers). process is the shifting of work across

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 organizational boundaries. It is the customer of a process can perform some or all
of the process in order to eliminate handoffs and overhead costs.
f. Checks and controls are reduced. Frequently the cost of “policing “ a
traditional process outsights the benefits, or the inherent risk has been greatly
exaggerated. Instead of the traditional methods, companies can often enforce the
desired behavior by awarding preferred vendor status with the treat of ending the
relationship if excesses occur. Another kind of none value-adding work that gets
minimized in reengineered processes is checking and control; or, to put it more
precisely, reengineered processes are replete with checking and control steps,
which add no value but are included to ensure that people aren't abusing the
process, reengineered processes often have aggregate of deferred controls these
control systems will, by design, tolerate modest and limited abuse, by delaying
the point at which abuse is detected or by examining aggregate patterns rather
than individual instances.
g. Reconciliation Is Minimized the number of external contact points for a typical
process is greatly reduced, along with the number of chances for errors requiring
reconciliation. Yet another form of no value-adding work that reengineered
processes minimize is reconciliation they do it by cutting back the number of
external contact points that a process has, thereby reducing the chances that
inconsistent data requiring reconciliation will be receive.
h. Hybrid centralized/decentralized operations are prevalent Information
technology allows organizations to operate as though their units were completely
autonomous while still enjoying the advantages of the economies of scale that
centralization creates. In addition, everyone in an organization can know the
details of events happening anywhere in their organization without the meddling
bureaucracy this would normally entail. Companies that have reengineered
process have the ability to combine the advantages of centralization
decentralization in the same process to reengineered business process will display
all of the characteristics we have cited. Indeed, they could not, because some are
conflicting actually creating a new design requires insight, creativity, and
judgment, these ingredients are also needed for designing the jobs and
organizations that support reengineered processes. People's roles change from

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 controlled to empowered companies that gave reengineered don't want employees
who can follow rules: they want people who will make their own rules, as
management invests teams with the responsibility of completing an entire
process, it must give them the authority to make the decisions needed to get it
done.

A case manager provides a single point of contact instead of requiring a customer to

contact for instant the shipping department to check on a lost order, accounts receivable
to adjust an invoice, and sales to place an order, a customer deals with the same person or
team who can take care of everything the typical customer needs.

2.3.3. Other changes that occur in a reengineered organization

Work units change. The work of a business will no longer be done by representatives of
its various functional departments but by a process team that replaces departments.

a. Jobs change. a highly specialized task or set of tasks will be transformed into the
performance of a multidimensional role as a member of a team. The once-clear
boundaries between engineering and sales, for example, will be blurred.

b. People’s Roles change. Traditional companies expect employees to follow the rules
and procedures. Reengineered companies expect their employees to use their judgment
to find the best solution in each situation. A bonus is the appropriate reward for a job well
done. Advancement to a new job is not. Advancement to another job within the
organization is firmly drawn, advancement to another job within the organization is a
function of ability, not performance, and it is a change, not a reward.

c. Job preparation change from training to education. Training people to perform a

specific set of tasks is replaced with educating people to figure out what their job really is
and then letting them do it. In companies that have reengineered, the emphasis shifts from

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training to education or to hiring the educated. Training increases skills and competence
and teaches employees the "how" of a job.

d. The focus of performance measures and compensation shifts from activity to

results. When people are assigned specific tasks and are not responsible for the outcome
of the process they’re part of, there is no choice but to pay people solely for their time. In
a reengineered organization the results a person generates can be directly measured, and
compensation can be tied directly to those results. When employees are performing
process work, companies can measure their performance and pay them on the basis of the
value they create. Base salaries in companies with reengineered processes tend to remain
relatively flat after adjustments for inflation. Substantial rewards for outstanding
performance take the form of bonuses. Other compensation assumptions also fall away
after reengineering: paying people based on job rank or seniority: paying people just for
showing up: and giving people a raise just because another year has passed.

e. Advancement criteria change from performance to ability. A person must

demonstrate the required abilities for a new position in order for a job change or a
promotion to be warranted. Exceptional performance in current job is no longer an
acceptable justification. A bonus is the appropriate reward for a job well done.
Advancement to a new job is not. Advancement to another job within the organization is
firmly drawn, advancement to another job within the organization is a function of ability,
not performance, and it is a change, not a reward.

f. Values change from protective to productive. The belief system a reengineered

company reinforces and requires of its people shifts form ideas such a, “No matter what
everybody says, the reality is I must keep those above me happy- they pay may salary,”
to “customers pay may salary- I need to do whatever makes them happy.”
Reengineering entails a great a shift in the culture of an organization as in its structural
configuration. Reengineering demands that employees deeply believe that they work for
their customers, not for their bosses.

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g. Managers’ Roles change from supervisors to coaches. The traditional company
requires mangers to be supervisors who design and allocate work. The reengineered
company requires mangers who act as mentors and coaches. For process teams,
consisting of one person or many, don't need bosses; they need coaches. Teams ask
coaches for advice. Coaches help teams solve problems. Coaches are not in the action,
but close enough to it so they can assist the team in its work. Traditional bossed design
and allocate work, teams do that for themselves, traditional bosses supervise, monitor,
control, and check work as it moves from one task performer to the next. Teams do that
themselves, traditional bosses have little to do in a reengineered environment, and
mangers have to switch from supervisory roles to acting as facilitators, as enablers, and as
people whose jobs are the development of people and their skills so that those people will
be able to perform value- adding processes themselves. This kind of managing is a real
profession. Managing this implies, is more important than working, mangers in
reengineered company need strong interpersonal skills and has to take pride in the
accomplishment of others.

h. Executives change from scorekeepers to leader's. Their perspective and focus has
been primarily financial one. It changes to ensuring that the organization’s performance
measurement and compensation systems motivate the team members to define and
accomplish their jobs. Flatter organizations move senior executives closer to customers
and to the people performing the company's value - adding work. Executives must be
leaders who can influence and reinforce employees' values and beliefs by their words and
their deeds.

I. Organizational structures change- from hierarchical to flat: Pushing decisions

about work down to the people doing it means that the managers' traditional roles are
diminished, all related functional departments are aggregated into a single functional
division: the organizational and determines the decision- making hierarchy. In companies
that have reengineered, however, organizational structure isn't such a weighty issue, work
is organized around processes and the teams that perform those people communicate with
whomever they need. Control is vested in the people performing the process,
consequently, what ever organizational structure remains after reengineering tends to be

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flat, as work is performed by teams of essentially equal people operating with great
autonomy and autonomy and supported by a few managers.

J Reengineering changes all aspects of a company-because all aspects are interrelated.

This fact is represented by the business system diamond. Its focus points are business
processes, values and beliefs, management and measurement systems, and jobs and
structures. If you change one aspect, the others will necessarily adjust, and all focus
points on the diamond must work together to achieve success.

2.3.4. Identifying the Reengineering opportunities

A good way to understand the processes at work in an organization is to give them names
that reflect the work that actually gets done form start to finish. For example, product
development is more accurately named the concept to prototype process; sales becomes
the prospect to order process. Create a process map to illustrate how work flows through
a company and to use as a starting point for discussions on reengineering.

This illustrates how companies identify their business process, suggests techniques for
selecting the processes that should be reengineered and the order of their reengineering,
and stresses the importance of understanding specific processes before attempting to
redesign them. Processes are invisible and unnamed because people think about the
individual departments, not about the processes with which all of them are involved.
Processes also tend to be unmanaged that people are put in charge of the department of
work units, but no are given the responsibility for getting the whole job the processes

a. Choosing the process to reengineer organizations will generally use three

criteria to identify the processes to be reengineered. The method used to decide is
not formal one.

The following will be used to identify and select:

 Dysfunction: which processes are causing the most trouble?
 Impact: which processes have the greatest effect on customers?

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  Feasibility: which processes are the best candidates for a successful
redesign?

The method used to decide among reengineering the opportunities is not a formal one.
The three dysfunction, impact, and feasibility must be used with wisdom to help make
choices.

b. Understanding process Once a process has been selected and a reengineering

team formed, the next step is reach an accurate understanding of the current
process. The best method to accomplish this is to see it form the customer’s
perspective. Literally becoming a customer, in some cases, or at least working
closely with them, is imperative for an accurate understanding.

A reengineering team attempting to understand a process does not accept the existing
output as a given. Part of understanding a process comprehends what the process's
customer does with that output. The best place for the reengineering team to begin to
understand a process is on the customer end,
a. What are the customers' real requirements?
 What do they say they want and what do they really need, if the two are different?
 What problems do they have?
 What processes do perform with the output?
Since the eventual goal of redesigning a process is to create one that better meets
customer needs, it is critical that the team truly understands these needs. Once the team
understands what the process customer might need, the next step is to figure out what the
process currently provides to understand the current process itself.

c. Benchmarking – identifying excellent industry practices-can also be used, but a team

should benchmark the best in the world, not just the best in the industry, to prevent their
company from readopting a different version of the industry’s current paradigm.

It is important to remember that a team should be studying the old process solely to learn
what parts of it are critical for its performance, not because they are considering its
redesign.

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2.3.5. Process Redesign approaches

Teams have used a number of techniques to generate creative redesign ideas. Teams can
apply a reengineering principle to the process. An example of a principle: “as few
people as possible should be involved in the perform of a process. “ use this principle as a
goal, and redesign the process in an attempt to achieve it. Another technique is to
identify and annihilate assumptions. Find the deeply held beliefs about who can do that
or about how things must be done and throw them out or reverse team to observe the
effect that would have on the process. A third technique is to survey the current and
cutting-edge abilities of information technology and find ways to apply them to the
process, seeing what that would allow the company to do.

Embarking on Reengineering. There are two key messages that must be articulated and
communicated clearly, consistently, and repeatedly for reengineering to be a success.
First, all people involved must understand where their company currently is and why it
can’t stay like that. Second, they must understand what their company needs to become.
The process of reengineering is a selling job that is never really over.

2.3.6. Reengineering common mistakes

Successfully reengineered companies know the rules, follow them, and don’t make the
common and avoidable mistakes. The outer report describes that despite the success
stories in many companies that begin reengineering don't succeed at it. They end their
efforts precisely where they began, making no significant changes, achieving no major
performance improvement, and fueling employee cynicism with yet another ineffective
business improvement program. They estimate is that as many as 50% to 70% of the
organizations that undertake a reengineering effort do not achieve the dramatic results
they intended. Nonetheless; while we say reengineering is often unsuccessful, it is not a
high-risk endeavor, this apparent oxymoron isn't oxymoronic at all. The better player can
expect to win; loss results from ability and strategy. The key to success lies in knowledge

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and ability, not in luck. If you know the rules and avoid making mistakes, you're
extremely likely to succeed. In reengineering, moreover, the same mistakes get made
over and over.
Some of the most common errors:
a. Trying to fix a process instead of changing it. Don’t make changes to the
existing process and call it reengineering. Dissatisfied with the partly performance
improvement obtained from automation, the company next attempted a whole
stable of business improvements techniques. It tried using queuing theory and
linear programming techniques to balance the work across the various
departments to minimize wait times. The results proved insignificant. The
company set performance standards for each step in the process; when it later
measured employees' actual results, it found that they were achieving nearly
100% compliance with standards, but turnaround times had grown longer still.
Companies try motivational programs, which use incentives to try to get people to
work harder. Existing processes, even if they are the source of a company's
business problems, are nonetheless familiar; the organization is comfortable with
them. The infrastructure to support them is already in place. Improving them
seems so much easier and more "sensible" than throwing them out and starting all
over. Incremental is the path of least resistance for most organizations. It is also
the surest way to fail at reengineering.

b. Not focusing on business process. By focusing on processes, most other

concerns like empowerment and innovation are addressed. The opposite is not
true. "Team work" and" empowerment" are abstractions and generalities around
which it's impossible to get one's arms. They are consequences of process designs
and they can only be achieved in that context. How is one supposed to begin
working on empowerment if not through the architecture of the work processes?
"innovation" is also the result of well-designed processes, not a thing in itself.

c. Ignoring everything except process design. The management systems,

organizational structures, and job designs associated with the process also
required changes. Job designs, organizational structures, management systems

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everything associated with the process must be fashioned in order to maintain a
coherent business system diamond. A senior manager commissions a
reengineering team to produce break through improvements for a trouble some
process. Some time after the team returns, describes a break through concept. And
shows how it will eliminate 90%of the cycle time, 95% of the cost, and 99% of
the errors. The team usually disbanded and it breakthrough concept never heard
from again. But remaking the company is precisely what reengineering is about.

d. Neglecting people’s values and beliefs. Managers must help their people rise
to the challenges of reengineering by fostering and supporting effective beliefs
and values. Big results require big ambitions. A critical test of ambition occurs at
that point in reengineering effort when someone suggests that a modest change
will make the process work 10% better for practically no cost, in contrast to the
pain and suffering engendered by reengineering. The temptation to take the easy
path and to settle for the marginal improvement is great. In the long run, however,
marginal improvement is no improvement at all, but a detriment. Marginal
improvements, as a rule, further complicate the current process, making it
subsequently more difficult to figure out how things really work.

Settling for Minor Results. Marginal improvements make it more difficult to

figure out how things really work. They discourage additional time and capital
investments because the original return on investment didn’t meet expectations.
They also create a company that lacks courage.

e. Place prior constraints on the definition of the problem and the scope of
reengineering effort: Defining the problem and establishing its scope are steps
in the reengineering effort itself. Reengineering begins with articulating the
objectives that the effort seeks to achieve, not the ways in which these objectives
will be met. It is also common for companies to state that the target is a business
process but then proceed to restrict the reengineering effort to an arbitrary and
small segment of the process that happens to fit neatly within existing

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organizational boundaries, not reinforce them. Reengineering must feel
disruptive, not comfortable.

f. Allow existing corporate cultures and management attitudes to prevent

reengineering from getting started: A company's prevailing cultural
characteristics can inhibit or defeat a reengineering effort before it begins. For
instance, if a company operates by consensus, its people will find the top
down nature of reengineering an affront to their sensibilities. Companies
whose short-term orientations keep them exclusively focused on quarterly
results may find it difficult to extend their vision to automatic that
reengineering never ever happens from the bottom up. There are two reasons:
1. The push for reengineering must come from the top of organization is that
people near the front lines lack the broad perspective that reengineering demands.
Their expertise is largely confined to the individual functions and departments
that they inhabit. They may see very clearly probably better than anyone else. The
narrow problems from which their departments suffer, but it is difficult for them
to see a process as a whole and or recognize its over all design as the source of
their problems.
2. Any business process inevitably crosses organizational boundaries, so no
midlevel manager will have sufficient authority to insist that such a process be
transformed, its scope will inevitably transcend his or her domain of
responsibility. These mangers have much invested in the existing ways of doing
things, and the future of company may be implicitly and dome times explicitly
compromised by their own career interests.

g. Assign someone who doesn't understand reengineering to lead the effort:

Senior management leadership is a necessary prerequisite for successful
reengineering, but not just any senior manager will do so. The leader must be
someone who understands reengineering and is viscerally committed to it. The
leader must also be someone who is oriented toward operations and appreciates
the relationship between operational performance and financial results.

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h. Bury reengineering in the middle of the corporate agenda: We tell
companies that if they don't put reengineering at the top of their agenda, they
should leave it off entirely. If management attention and energy are spread across
many different efforts or programs, of which reengineering is only one,
reengineering will not get the intense of attention that it requires Dissipate energy
across a great many reengineering projects.

Reengineering requires sharp focus and enormous discipline, which is another

way of saying that companies must concentrate on a small number of processes at
any given time.

i. Attempt to reengineer when CEO is two years from retirement: The CEO
or business unit head who is a year or two away from retiring may take a dim and
unenthusiastic view of reengineering. Fundamental changes in business processes
will inevitably have major consequences for the structure of the company and
many of its management systems retirement is the effect that the impending
change at the top is likely to have on other managers. Especially in hierarchical
organizations, contenders for senior post that is about to open up often feel that
they are being watched and judged.

Fail to distinguish reengineering from other business improvement programs one

problem from which many companies regrettably don't suffer is a dearth of
business change programs. The business media are tougher, purported panaceas
proliferate, the business media are brimming over with ideas and programs to
make companies better: quality, improvement, strategic alignment, "rightsizing"
customer- supplier partnerships, innovation, and empowerment, to name a few.
Concentrate exclusively on design, great care must be taken to carefully position
reengineering relative to the other program. Otherwise, confusion will result and
enormous energy will result and enormous energy will be expended on pointless
internecine warfare about which program is superior.

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j. Concentrate exclusively on design: Reengineering isn't redesign; it's also
about translating new designs into reality. The difference between winners and
losers at reengineering doesn't usually lie in the quality of their respective ideas,
but in what they do with them. With the losers reengineering never moves beyond
the idea phase into implementation.

k. Trying to make things happen from the bottom up. Any person not at the
top of an organization lacks the perspective and the authority to transform a
process effectively
Reengineering isn't to everyone's advantage. Some people will lose their jobs, and
some workers may be uncomfortable with their jobs, post-reengineering.
l. Pulling back when people resist engineering’s changes powerful resistance is
to be expected and dealt with without losing momentum. That people resist
change shouldn’t surprise anyone, especially not those in charge of a company's
reengineering effort.
m. Drag the effort out. Reengineering is stressful for every one in a company,
and stretching it over a long time period extends the discomfort take longer, and
people will become impatient, confused, and distracted.

n. Quitting too early. Some companies lose their nerve, while others end the
effort once they have their first success to display. Both lose the huge benefits
that lie further down the road.

o. Skimping on ;the resources Devoted to reengineering Management must

assign the best people and give them plenty of time and other resources to
accomplish the reengineering efforts. Anything less signals a lack of true
commitment that everyone else in the organization will read as an excuse to
ignore and impede the efforts.

p. Dissipating energy across a great many reengineering projects. It requires

focus and discipline, which can’t be achieved if a large number of projects
demand attention.

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 q. Concentrating exclusively on design. Quality ideas are required but are no
less important than active and effective follow-through.

2.3.7. Components of activities and the process

All work activities can be classified into three types: -

1. Value adding work, or work for which the customer is willing to pay
Value-adding work is easy to identify. It consists of all of the activities that
create the goods and services that customers want.
2. Non-value-adding work, which creates no value to the customer but is
Required in order to get the value adding work done.
None value adding is the glue that binds together the value adding works in
conventional processes. The entire administrative overhead, the reporting, checking
etc but it is also the source of errors, delay, inflexibility and rigidity. It adds expense
and complexity to process, and makes them error prone and hard to understand or
change. If your were to take the non-value adding work out of a traditional process,
the process would collapse. Instead, it is necessary to design the non-value-adding
work out buy reorganizing the value-adding tasks into a new and more efficient
process.

If we try to redesign the processes to reduce non value-adding work: -

 Job become bigger and more complex when work is broken into small and
Simple tasks, needs-reviews, managerial audits checks, approvals, etc to put
Them pack together. These leads to departmental as well as personal
Miscommunication, misunderstandings etc.

The only way is to start with bigger jobs. That is the heart of process
centering.

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 3. Waste, or work that neither adds nor enables value
Customer not notices waste work. Producing report no one reads, doing work
erroneously so that it needs to be redone. Waste work needs to be eliminated root
and branch.
In the process centered every one must. The engineer working on product
development must still be an engineer, but, more than that, he or she must also
understand marketing, production, customer service, and everything else associated
with developing a product and how they dovetail.

The new operating principles, if I can tell you precisely what to do, then I don't need
you to do it. I can tell a machine to do it, and the machine is cheaper and doesn't
need vacations. The only work left for humans to do is work that truly requires
human capabilities.

In a process-centered organization self-managed workers are responsible for both

performing work and assuring that is well done. There is no longer a great divide
between doing and managing. Management is no longer an esoteric and
inaccessible skill reserved for a remote and privileged elite. It becomes parts of
everyone's job.

The traditional manager who managed department that is a group of people performing a
particular activity, the manager was to look after the work of the department, assuring
that it was correctly performed. The department was the basic building block of the
organization and the basic unit of managerial attention. All other managerial roles were
layered on top of the departmental manager.

Companies must be designed and focused fit the benefit of customer, the mechanisms
that create and deliver value to them must be the organizations basic units and therefore
the primary focus of managerial attention. These, or course, are the organization
processes. The departmental manager must give way to a new role, that of the process
owner. Process owner is :- an individual concerned with assuring not the performance
of a departments tasks but the successful realization of complete end to end processes.

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The term process owner do suffer from two draw backs

1. Some equate the term with a temporary project manager with short-term
responsibility to address and fix process performance problems. In fact our
definition of a process owner includes those duties but goes far beyond them; we
see the role as permanent and vital.
2. Labeling one individual as the owner of a process might seem to absolve all
others of responsibility for it. As we have seen, all the people performing a
process must have some ownership of it and share responsibility for its successful
out come. It is the person of the process owner, however, that this responsibility
is most precisely located. Perhaps for these reasons, a number of companies are
using other terms process leaders, process managers.

In general, however, we can break down the process owner's responsibility into three
major areas. These are Design, Coaching and Advocacy

i. Design. How shall one perform the process? What are they to do to get a product
developed?

While performers must be autonomous and empowered to proceed without the heavy
hand of a stultifying bureaucracy, it is the process owner's responsibility to provide the
term with the knowledge of the process so they can perform it. The process owner owns
not the performance of the process but its design, sharing it with all the teams who
perform it. Thus the process owner has responsibility for the design of the process and its
documentation, and for training performers in it structure and conduct.

Before the process owner can instruct performers in the structure and design of the
process, this design must exist. Therefore, it is for the owner to find and formulate the
best way of filling orders, developing products, or resolving customer complaints, and
them make sure that it remains the best way.

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Traditionally, design was something associated only with products. It is now critical in
process as well. Process design can fairly be termed an engineering discipline. Like all
branches and techniques as well as a facility for design, for creating well-fashioned
structures, and for recognizing the advantages and flaws of alternative schemes.
Positioning process ownership as serious form of engineering forces us to reposition
management as respectable discipline in which substantive education does make a
difference.
Process design must take place in framework of principles, and the first principle is that
process design must be customer-driven. If process exists to create value for customers
then it follows that they should create the kinds of values that customers want in the ways
that they want them. So process design must begin by formulating a customer-driven,
outside-in perspective on the performance requirements of the process. The process
needs and create a design that meets both. It is also the process owners continuing design
responsibility to see that the process keeps up with dynamic change.

Having recognized that the time has come to up date the process, the owner must convene
a redesign effort to change it. Such efforts come in tow flavors. Incremental and radical.

Incremental redesign means modifying the process to solve problems that prevent it
from attaining the required performance level. Eliminating unproductive activities or
changing the means by which a task is performed are typical incremental process changes
that lead to the small improvements in performance that are usually sufficient to keep a
process competitive.

Radical design (Reengineering) - the old design suddenly becomes obsolete, an entirely
new measure becomes important, or a quantum leap is required in an existing one. In
such circumstances incremental change to the process design is not enough, and the
process owner must replace the existing design with an entirely new one.

In the process-centered organization, this program is process improvement is not a

secondary and peripheral activity. It is the essence of management. The process-
centered organization embodies the notion that one manages a business not by managing

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budgets, departments, or people but by managing processes. The notion that people can
and need to be managed is feudal and disrespectful. People need to be treated like the
responsible and autonomous individuals that they are. If they are given the information
and tools that they need to perform, if they are provided with an understanding of
customer requirements and of the big picture of the work, if they are guided by clear
measurement systems, and are treated with respect, then they will do what need to be
done without being managed. It is the processes, the inert design of work, that need
management and oversight not people.

In the context of their design responsibility, process owners also have control of the
automation efforts that support the process. The role of end-to-end order fulfillment
process falls to the process owner, who holds the purse strings and calls the shots on how
technology should be deployed on behalf of the process.

ii. COACHING. Once process performances have been trained in the process design, the
process owner is available to help them through difficult situations. Each performer may
be to help them through difficult situations. Each performer may be an expert in a
particular aspect of the process, but the process owner is the expert in the process as
awhile.

Team breakdowns are a particular source of process performance problem with which the
process owner will have to contend. Since process work is often teamwork, process
owners need to be able to facilitate it. Despite the current popularity of the team concept,
most people in contemporary organization have virtually no experience working in teams.
One does not make a group of individuals into a team simply by declaring them to be
one. It takes training and learning, even then the path is not an easy one.

In coaching, first, the process owner does not hover over the team, checking on their
performance. He or she does monitor their results and investigate if there are problems
but absent such problems the process owner only gets involved if the team members
approach him. He does not check or supervise; he is a resource to be drawn upon when
needed. Second, the relationship between the process owner and the process performers

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is fundamentally different from the old relationship between supervisor and workers.
The process owner and the process performers is supervisor and workers. The process
owner a linker, a facilitator, and enabler of those who actually do the work. It would be
more accurate to say that he reports to the performers-since he is on call, at their disposal
- than to say that they work for him.

If the old managerial structure was the glue that holds the old fragmented organization
together, the process owner in his coaching role can be likened to the oil that lubricates
the performance of process performers to ensure that they are effective. By helping them
in exceptional situations, providing them with the knowledge and tools they require,
assisting them in resolving conflicts, and redeploying resources when necessary, the
process owner ensures that they are free to exercise their skills in making the process
work.

The performers carry out the process, but the owner represents it. It is the owner's job to
obtain the financial resources that the process needs in order to operate. It is these
resources that will found the performers, the tools, and the facilities they require. More
fundamentally, the tools, and the owner has a seat at what is be coming known as the
process council. This group, typically consisting of the leader of the business, the
process owners, and the heads of key support groups provides a context for transcending
individuals process and addressing the needs of the business as a system of processes that
must interact to create all the results customers need.

Thought product development, order fulfillment has nothing to deliver, and without order
fulfillment, the results of product development sit on the shelf. It is critical that
individual processes be integrated, that their boundaries mesh smoothly, that they
cooperate rather than conflict. The process councils the mechanism for achieving this.

Clearly the process owners will have their hands full designing and redesigning the
process, coaching the process teams, and representing it in the corridors of power.
Process ownership is unlikely to be a one-person job. At the very least, the process
owner must be supported by the process performers in the on going improvement effort.

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 The process owner may have perspective but lacks immediacy. There for, the owner
must maintain close communication ties with the performers to know what is happening,
what is working and what is not, and when it is time for a change.

iii. Advocacy. The role of the process owner is easy to describe, but very difficult to fill.
The job requires an individual with an exceedingly diverse set of talents and capabilities.
The process owner must have a broad knowledge of the process, an intuition for the
needs of customers, and a holistic perspective that lets him or her think broadly about the
process rather that about its individual constituents. A process owner must have the
engineering skills to measure, diagnose, and design the process: the interpersonal skills to
coach the performers carrying out the process; and the political skills to advocate for it.

Among other things, the process owner must learn to let people make mistakes so that
they can learn from them instead of immediately intervening to ensure the right out come,
to deflect requests for instructions by asking the petitioner what he or she thinks should
be done, and to take pride in influencing people through knowledge and respect rather
than by controlling them via a reporting structure.

2.3.8. Who will reengineered

A senior executive, who authorizes and motivates the overall reengineering effort, usually no
senior executive, is " assigned" the job of leader. It's a self nominated and self appointed role,
someone with the clout to carry it off becomes the leader of reengineering when he or she is
seized by a passion to reinvent the company, to make the organization the best in the
business, finally to get it completely right. The leader's primary role is to act as visionary and
motivator. The reengineering leader can demonstrate leadership through signals, symbols,
and systems.

 Signals are the explicit messages that the leader sends to the organization about
reengineering: why we are going about it, and what it will take, successful
reengineering leaders have learned that they always underestimate how much
communicating they must do.

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  Symbols are actions that the leader performs to reinforce the content of the signals, to
demonstrate that he of she lives by his or her words. Assigning the company's "best
and brightest" to reengineering teams, rejecting design proposals that promise only
incremental improvement and removing managers who block the reengineering effort
over and above their intrinsic value are important symbolic activities.
 Systems the leaders use management system to reinforce the reengineering message.
These systems must measure and reward people's performance in ways that
encourage them to attempt major change.

(a) Process owner: The process owner, who is responsible for reengineering a
specific process, should be a senior level manger, usually with line responsibility,
who carries prestige, credibility, and clout within the company. Process owners
also motivate, inspire, and advise their teams.

(b) Reengineering team: The actual work reengineering the heavy lifting is the job
of the reengineering team members. These are the people who must produce the
ideas and the plans and who are often then asked to turn them into realities.
These are the people who actually reinvent the business

(d) The reengineering steering committee: it is an optional aspect of the

reengineering governance structure. The steering committee is a collection of
senior mangers, usually including but not limited to the process owners, who plan
the organization's overall reengineering strategy.

(e) Reengineering Czar: The leader has the right perspective but lacks the time for
day-to day management of the reengineering effort, so he or she requires strong
staff support. We call this role the reengineering czar. The reengineering czar
serves as the leader's chief of staff for reengineering. Reengineering czar has two
main functions:

1. Enabling and supporting each individual process owner and reengineering team;
and

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 2. Coordinating all ongoing reengineering activities. The reengineering czar is also
concerned with developing the infrastructure.
Learning Activity 2.3

1. To start down to the road to process reengineering four things are necessary
identify
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________

2. What are the major area of process owner's responsibility?

_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________

2.4 CHECK LIST

Dear Learner, below are some of the important points extracted from the unit you have
been reading, please put a tick mark () in the box in front of the points for those you
have understood well and is there are points you have not understood yet, go back and
reread the unit till you understood well

I can
 Discuss the definition of knowledge mangement
 Explain the knowledge markets and its characteristics

2.5 SUMMARY

Knowledge is a fluid mix of experience, salve shared context and expert in sight that
provides a framework for evaluating and incorporating new experience and information
what is new is that the movement in management thinking from an implement to an
explicit awareness that knowledge is a strategic corporate asset. hence knowledge
management is capture, distriction and utilization of knowledge. Knowledge management

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should be the job every one in the company change affects every organization. The
ability to change and adapt rapidly in fast becoming basic survival skill. Hence, the
importance of coming knowledge management and business process reengineering is key
towards success in realizing meaningful change.

Environmental changes and competitive pressures of modern markets increase demands

for quality, service cycle times and innovation. Business reengineering challenges all
level of mangers to rethink traditional work methods and commit themselves to a
customer-focused process.

2.6. Check your progress exercise 2

Part I: Read each statement write True if the statement is correct and False if
the statement is wrong

1. Effective knowledge management systems allow people to learn from past

decisions both good and bad
2. The mission of a business is to create value for its stockholders only
3. trying to fix a process instead of changing it is common mistakes of
reengineering.

Part II: Multiple choices

Choose the best possible answer from the options given

1. The transmission assorption and use of knowledge refers to

(a) Knowledge interpret
(b) Knowledge transfer
(c) Knowledge intensity
(d) Knowledge market
(e) None of the above
2.which of the following does not belong to the characteristics of reengineering business
process
(a) Workers make decision

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 (b) Checks and control are reduced
(c) Process have multiple version
(d) Reconciliation is minimized
(e) None of the above

Part III: Simple Recall

1. Knowledge management initiatives are composed of prospects divided into three

broad types. Identify
2. How do you identify the reengineer opportunity?

Answer to Learning Activities

Learning activities 2.2
1.(a) Knowledge buyers
(b) Knowledge sellers
(c) Knowledge brokers
2. Knowledge transfer is the transmission absorbation and use of knowledge within an
organization

Learning 2.3
1 (a) The company recognizes and names of its process
(b) the company is aware of these process
(c) Process measurement
(d) Process management
2 (a) Design
(c) Coaching
(d) Advocacy
Answer Check your progress Exercise

Part I : True/ False

1. True
2. False
3. True

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Part II: Multiple Choice
1. B
2. e

Part III:
1 (a) rating knowledge repositories
(b) Improving knowledge process
(c) Enhancing the knowledge environment
2 (a) choose the process to be reengineering
(b) understanding process
(c) benchmarking

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