Chapter 6. From Reengineering to X-Engineering

James A. Champy

When Mike Hammer and I wrote Reengineering the Corporation in 1992, we argued that there were compelling forces that required companies to change. We called those forces the three Cs: customers, competition, and change itself. Today, those forces are still at work, more powerful than ever. In response, they require a sort of reengineering on steroids—the fundamental redesign of work, not just within the walls of a company, but now between a company and its customers, suppliers, and partners. I call this next generation of process change X-engineering. The X denotes the crossing of organizational boundaries.

Back in 1992, customers were already gaining the upper hand. They had more choices, their loyalty was fleeting, and they were becoming more sophisticated. They wanted products of consistent quality, attentive service, and just-in-time delivery; and they wanted all this at a low price. Companies could no longer be just product-driven. The catchwords of the day had become “customer driven,” although many companies thought that just meant having a pleasant voice answering the customer service line.

At the same time, competition was increasing, thanks to globalization. No market was safe from a new competitor who either changed business rules or had a dramatically lower cost structure. Wal-Mart was reinventing discount retailing; Japanese automobile manufacturers were delivering quality cars at low prices (and making money); and a few banks had figured out how to process a mortgage application in days, rather than months. And because markets were becoming increasingly open, these new competitors were showing up everywhere, from Anchorage to Ankara.

And the rate of business change itself seemed to be accelerating. Companies that had been market leaders one year were floundering the next. The need to change became a constant. Size was not a clear advantage—certainly if it slowed down a company's ability change. Nimbleness became an important corporate quality.

Our answer in 1992 was as follows: Fundamentally redesign work, not around traditional departments or functions, but around processes. Companies had become slow to respond, mired in their own bureaucracies, and overly fragmented. Work was passed from department to department, with no one in charge. Customers were often confused as to where to go if they had a problem. And just applying more automation to bad processes wasn't the answer. That just seemed to make things worse.

We called our approach reengineering. The idea caught on as companies fought to regain their competitiveness. Across the globe, companies sought to reduce cycle times, lower costs, and improve quality by looking at such processes as new product development, order fulfillment, and materials procurement. Few workplaces were untouched by these changes.

Today, however, I see the reengineering of the last decade as only a beginning. In this decade, the nature of work will change even more dramatically. And the corporation, once a closed enterprise, will become part of a much larger network of customers, suppliers, and collaborators, all working in concert to perform their work at new levels of efficiency. Companies like Dell, Intel, and Cisco have been leading the way, fundamentally changing how they do business with their customers and suppliers. The current slowdown in technology spending and the resultant challenge to these companies should not be confused with what is going on within their network of relationships: whole new levels of operating efficiencies are being achieved.

The drivers of this next phase of business change are still the three Cs. Today, however, these forces are intensified by information technology—particularly the Internet. Customers have endless choices just a click away. Almost every product or service appears at risk of becoming a commodity. Competition increases as companies become more transparent and information becomes more available to customers. And the Internet accelerates almost all processes. Business seems breathless.