The Role of the CIO
Can CIOs lead this effort by themselves? Of course not. CIOs can be agents of change, and CIOs at most companies were the principal agents of reengineering, at least in the first few years. But can you do it alone? Absolutely not. Can you be the leader of the effort to get the message out about how technology can improve efficiency? Yes. But in terms of making things change, probably not. You don't have that authority. There needs to be some other person within the business who really understands the results that can come from X-engineering. It does not have to be the CEO, but it does have to be someone with senior operating responsibility.
As CIO, you can and should seed the organization with ideas about the benefits that could accrue if you X-engineer, and you need to look for people on the business side who have some appetite or pain that they want to addresseliminating costs or speeding production, for example. You help that person, but someone else other than you most likely will be making the final decisions.
That's the general framework, but presenting this in a vacuum probably won't get anything done. What you need is some meaningful cause around which to orchestrate and rationalize the move to X-engineering. It has to be tied to a business purpose: increasing margins or gaining competitive advantage and market share, for example. That call to action could simply be the recession. There is nothing like recessionary pressure to make something like X-engineering extremely appealing.
Once you have an impetus, what do you do? Start inside your company. The principle reason for doing internal reengineering is to enable you to do the important stuff, and the important stuff is external. But if you don't have standards that work inside your firm, they'll never work outside. And by the way, there's a considerable amount of cost benefits that remain on the table, which further strengthens the argument for making sure you're pretty well reengineered. And by considerable, I mean considerable. My guess is that most companies have performed only 10 percent of the necessary reengineering work. There are probably an awful lot of costs you can still take out of your company.
What do I say to the CIO? Start the battle within your own company around standardization. Then move on to others, like your customers. If I go to my customers and I can show them a business benefit, I'll bet I can get them to standardize, and I think I can tell some of my suppliers what they have to do as well.
The final piece of the puzzle is the standardizing of the technology you and everyone else is going to have to do to make X-engineering a reality. And I will tell you that of all the arguments I made in the book, the argument that I make for standardization causes the most upset. That is understandable. Companies have billions of dollars invested in their technology. They don't want to change. But I am seeing, at least within some companies, a willingness to standardize internally.
Then I would try for some easy wins. Pick a couple of sophisticated customers and a couple of sophisticated suppliers and begin the process with themdon't try to do it with all of them at once. I think a lot of X-engineering efforts undertaken in the last couple of years were in some ways too ambitious. They tried to do way too much, and they didn't allow for adoption time. So I say be very realistic about adoption time, and don't try to change your whole industry at once. Start small, and go from there. When you do, you will really be forced to find out what your true distinctiveness is. When you strip away all the redundancies, what will be left will be your core competency. And in the end, you will deliver a much more efficient service.
There is no doubt that X-engineering is tougher than plain-vanilla internal re-engineering. It is tougher on the CIO and tougher on every business figure. But the payoff is so much larger. When an organization's processes are integrated with those of other companies, all the partners can pool their efforts and effectively become a new multicompany enterprise, far stronger than its individual members could ever be on their own. Most businesspeople, I suspect, think of the reengineering movement as a thing of the past. I think it has just begun. X-engineering is reengineering squared.
James Champy, whose Reengineering the Corporation, co-authored with Michael Hammer, sold 2.5 million copies, is chairman of Perot Systems Corp.'s consulting practice. His X-Engineering the Corporation will be published in March. Comments on this story can be sent to firstname.lastname@example.org.