Trend Letter: March 2007 [Briefings Publications]
Spotlight Interview by Hope Katz Gibbs
Volume 26, Number 3
SPOTLIGHT INTERVIEW WITH JAMES CHAMPY: X-Engineering the Corporation — Reinvent Your Business in the Digital Age
James Champy has been chairman of Perot Systems’ consulting practice since 1996 and in that time has authored four books, including his latest, “X-Engineering the Corporation: Reinvent Your Business in the Digital Age.” It is a sequel to Reengineering the Corporation: A Manifesto for Business Revolution, a title that sold more than 2.5 million copies and spent more than a year on The New York Times bestseller list. Champy also wrote the (critically, acclaimed “The Arc of Ambition. His articles on business and management regularly appear in major newspapers throughout the world.
Trend Letter: What does it mean to “x-engineer” a corporation?
James Champy: X-engineering is the art and Science of using technology-enabled processes to connect businesses with one another, as well as their Customers, to
achieve dramatic improvements in efficiency. X stands for crossing boundaries between organizations. X also marks the spot where intuition joins technique and Solutions emerge. I think there is a lot of work to be done. Re-engineering must now be extended to include all stakeholders, not just an organization’s shareholders.
TL: Take us back a few years to when you and your co-author, Michael Hammer, conceived the first book on the topic, Re-engineering the Corporation. He had written a seminal article for Harvard Business Review called “Reengineering Work: Don’t Automate, Obliterate,” and that ultimately led Business Week to name him one of four pre-eminent management gurus in the 1990s. Tell us more about the premise of that book and how it led to the current one.
Champy: We recognized the economy was going through enormous changes. and businesses urgently needed ways to respond. So our message was that it work has to be redesigned or re-engineered in terms of processes rather than tasks or departments. The impact of re-engineering was internal. In other words, the reforms ended at the organization’s gate. A decade later, the concept still held, but technology had changed things. So I wrote the sequel, X-Engineering the Corporation, to help managers confront the new challenges of connectedness and dependency in the digital age.
TL: How exactly should corporate leaders extend processes outside, integrating them with other organizations?
Champy: X-engineering requires managers to ask who should participate in the creation and delivery of a business propositions—customers, suppliers, partners and competitors—and how far they should go in internal their processes. It isn’t easy for a lot of organizations to do that and the ones that don’t work more fluidly and cooperatively with their business partners are going to have a very tough time. Ford and GM are examples of firms that are missing the boat.
But there are other organizations, Target and Intel for instance, that are doing a beautiful job of x-engineering themselves. Another good example is Solectron Inc., a leader in electronics manufacturing, which has done seamless work across organizational boundaries. It originally made its own products, but by introducing well-honed processes that respond dynamically to the needs and expectations of customers, it now manufactures products for brand names such as Dell and Nortel.
TL: Obviously, the Internet plays a significant role in helping
organizations make those connections.
Champy: Unquestionably, the Internet is the central nervous system of x-engineering. Because we can now gather, analyze and share information with speed and sophistication, organizational intelligence is raised dramatically. Every day, process-savvy organizations use the Internet to exceed performance levels unimagined 10 years ago. Just look at the fact that FedEx found major savings by encouraging its customers to track packages via its Web site. The organization spends $2.14 to track a package if a customer calls its phone center. but only 6 cents if a Customer uses the Web. FedEx receives more than 600,000 such queries a day.
TL: Are you advocating that businesses share information with competitors?
Champy: I am! Connectivity is the hallmark of x-engineering. The future belongs to organizations that recognize the primacy of relationships in the networked marketplace. X- engineering is about harmonizing, relationships so organizations can tap the full sum of the intelligence and experience of all the people in its network of customers, suppliers and partners.
TL: You talk about the “three P’s” of x-engineering. Process is one; what are the other two?
Champy: An organization’s processes, which are all the things it does to create and sell goods or services, include all the methods involved in business dealings with external players. The second P is the business proposition, which is in organization’s best effort to meet a customer’s essential need through products and services. Whatever the proposition may be, it will stand or fall on its ability to create new value for the customer. The third is the extent of participation with others in creating shared processes.
And there’s a fourth P, for x-engineering is a place—not a final destination. It is where innovation is nurtured by a constant flow of information and is supported by an invisible technology infrastructure. It’s a place where information technology improves the human potential and where work has been redesigned to make it less of a burden and more of a joy.
6 TACTICS FOR X-ENGINEERING
In his new book X-Engineering the Corporation, Champy lists the following principles to keep in mind when looking for opportunities to x-engineer:
• Follow the money. Track the flow for not just internal costs, but also those of customers and suppliers.
• Look for opportunities. Reduce capital expenditures for all participants.
• Go broad. Excess costs generally are not attributed to a single activity or process. Look across processes to customer and supplier costs.
• Know what customers are going through. Ask about their realities and challenges rather than their immediate needs.
• Chart breakdown. Talk to customers directly and openly about problems as they occur, and you will gain insight about their expectations.
• Fish upstream. The cost of a product, service or process is substantially determined in its design phase. Try to participate with customers and suppliers in that phase.
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