Business Process Improvement &

Innovation
Total Quality Management & Business Process Reengineering

T.S. Lee, Ph.D.

Professor & Dean
Faculty of Business Administration
The Chinese University of Hong Kong
BPR– Prof. T.S. Lee 1
 Agenda
 Business Process Reengineering
 An Integrated Framework
 Total Quality Management
 BPR Implementation Steps
 Impact of BPR on Working Environments
 BPR Failures
 References
 Michael Hammer & James Champy, Reengineering the Corporation,
Harper Business, 1993.
 Michael Hammer & Stephen A. Stanton, The Reengineering
Revolution, Harper Business, 1995.

BPR– Prof. T.S. Lee 2

 A Story … Nobody

BPR– Prof. T.S. Lee 3

 This is a story about 4
people:
 Everybody
 Somebody
 Anybody
 Nobody

BPR– Prof. T.S. Lee 4

 There was an important
job to be done ....

BPR– Prof. T.S. Lee 5

  Everybody was sure that Somebody would
do it.
 Anybody could have done it but Nobody did
it.
 Somebody was upset because it was
supposed to be Everybody’s job.

BPR– Prof. T.S. Lee 6

  Everybody thought Anybody could do it.
 But Nobody realized that Everybody would
not do it.
 It ended up that Everybody blamed
Somebody when Nobody did what
Anybody could have done.

BPR– Prof. T.S. Lee 7

  Division of Labor
 Professionalism
 Functional departments of an
organization
 Contributing to efficiency
 Lacking holistic view

BPR– Prof. T.S. Lee 8

 Business Process Reengineering

BPR– Prof. T.S. Lee 9

 Business Process Reengineering

Holistic View
Dramatic

BPR– Prof. T.S. Lee 10

       
Home KCR  F.L. T.W. T.P.  Univ.  KKL (BA)
(SS) (SS)

 Walking 15 5   20   5 5 50
 Minibus 10 5   20   5 5 45

 Taxi  S.S. 5 5   20   5 5 40


 Taxi  KKL       30      30

BPR– Prof. T.S. Lee 11

       
Home KCR  F.L. T.W. T.P.  Univ.  KKL
(SS) (SS)

 Can we cut the cycle time to 15

minutes?

 Move Home----Reengineering Approach

BPR– Prof. T.S. Lee 12

 Multiple Assessment Criteria for Multiple
Performance Measures
      
Home KCR  F.L. T.W. T.P.  Univ.  KKL(BA)
(SS) (SS)

 Walking Slower but may be healthier

 Taxi  KKL  Faster but costs more

 Multiple Performance Measures: cycle time, costs, health, stress

 Assessment Criteria: Mean, Mean-Variance, Stochastic Dominance

BPR– Prof. T.S. Lee 13

 Reengineering

It is the fundamental rethinking and

radical redesign of business
processes to achieve dramatic
improvements in critical, contemporary
measures of performance, such as
cost, quality, service, and speed.
Michael Hammer & James Champy. Reengineering the Corporation. Harper
Business, 1993.

BPR– Prof. T.S. Lee 14

 Key words:
 Fundamental
 It ignores what is and concentrates on what
should be.
 Radical
 It is about business reinvention - not business
improvement, business enhancement, or
business modification.
 Dramatic
 It asks for dramatic improvement, not marginal
improvement.
 Process
 It is process-based instead of task-based
thinking.

BPR– Prof. T.S. Lee 15

 IBM – Credit’s Process Flow for Financing (Original)
Field Salesman Office Staff Credit Dept

Fill in request Key in computer

Request for Check credit
financing form Write result

Business Practice
Input info in
computer
Attach terms to
request form

Field Salesman Clerical Group Pricer

Administrator turn Input in computer
Receive all info into Estimate interest
financing quotation letter rate
Deliver by Federal Write rate on paper
info Express Attach with other
forms
BPR– Prof. T.S. Lee 16
 IBM – Credit’s Traceability Problem
Field Salesman Office Staff Credit Dept

Fill in request Key in computer

Request for Check credit
financing form Write result

Business Practice
Input info in
computer
Attach terms to
request form

Field Salesman Clerical Group Pricer

Administrator turn Input in computer
Receive all info into Estimate interest
financing quotation letter rate
Deliver by Federal Write rate on paper
info Express Attach with other
forms
BPR– Prof. T.S. Lee 17
 IBM – Credit’s Cycle Time Reduction Project
Field Salesman Office Staff Credit Dept

Fill in request Key in computer

Request for Check credit
financing form Write result

Business Practice
Input info in
computer
Attach terms to
request form

Field Salesman Clerical Group Pricer

Administrator turn Input in computer
Receive all info into Estimate interest
financing quotation letter rate
Deliver by Federal Write rate on paper
info Express Attach with other
forms
BPR– Prof. T.S. Lee 18
 IBM – Credit’s Process Flow for Financing
(Reengineered)
Field Salesman Deal Structurer
Co-ordinate
Request for
entire process
financing
New
New
Sophisticated
Sophisticated
No
computer
computer
Complicated system
Problems?
system(DSS)
(DSS)

Yes

Field Salesman Specialists

Decision by
Receive expertise
financing
info

BPR– Prof. T.S. Lee 19

 Results:

 Cut down lead time to 4 hours

 Increase no. of deals for 100 times

A dramatic performance
breakthrough by making a radical
change to the process as a whole

BPR– Prof. T.S. Lee 20

 BPR Implementation Steps
STEP NAME
1 Frame the Project
2 Create Vision, Values &
Goals
3 Redesign Business
Operations
4 Conduct Proof of
Concept
5 Plan the Implementation
6 Get Implementation
Approval
7 Implement the Redesign
8 Transition to a
Continuous
Improvement
Environment
■Source : Dorine C. Andrews and Susan K. Stalick, Business reengineering : The Survival Guide,
Yourdon Press, Prentice - Hall, 1994.
BPR– Prof. T.S. Lee
OUTCOME ELAPSED TIME
Framework 2 weeks - 6 months
Statement
Vision, Values & 1 day - 2 weeks
Goals Statement
Blueprint 1 month - 2 months
Benefits Statement 2 weeks - 6 months
Implementation Plan 2 weeks- 4 weeks
Funded Resource 1 week - 2 weeks
Request
Measurement 6 months - 3 years
Results
Higher Performance Ongoing
Standards
21
 Integrated Framework For
Business Process
Improvement\Innovation
Pace of Change
Fast Measured
Degree of Change

Focused Process Continuous

Tactical Improvement Improvement

Strategic Focused Business Process

Restructure Innovation

BPR– Prof. T.S. Lee 22

 Total Quality Management
(TQM)
TQM is a management philosophy
with the following characteristics:
 Process for continuous improvement
 Team approach
 Involving business partners – customers
& suppliers
 Applying statistical quality control

BPR– Prof. T.S. Lee 23

 TQM

The essential concepts of quality management

What is quality?
How important is quality?
Is there trade-off between quality and poductivity?
Does it cost to raise quality?
Is there universal model for implementing TQM?

BPR– Prof. T.S. Lee 24

 Typical TQM model can be represented by
Malcolm Baldrige National Quality Award.

ISO9000 series are the infrastructure of

quality assurance systems of TQM.

BPR– Prof. T.S. Lee 25

 Baldrige Award Criteria Framework:
A Systems Perspective

Customer and Market Focused

Strategy and Action Plans

(2) (5)
Strategic Human Resource
Planning Development &
(1) Management (7)
Leadership Business
(3) (6) Results
Customer & Process
Market Management
Focus

(4)
Information and Analysis
BPR– Prof. T.S. Lee 26
 1997 Award Criteria – Item
Listing
1997 Categories / Items Point Values
1 Leadership 110
1.1 Leadership system 80
1.2 Company responsibility & citizenship 30
2 Strategic Planning 80
2.1 Strategic development process 40
2.2 Company strategy 40
3 Customer and Market Focus 80
3.1 Customer and market knowledge 40
3.2 Customer satisfaction and relationship 40
enhancement
4 Information and Analysis 80
4.1 Selection and use of information and data 25
4.2 Selection and use of comparative information and 15
data
4.3 Analysis and review of company performance
BPR– Prof. T.S. Lee 40 27
 1997 Award Criteria – Item
Listing
1997 Categories / Items Point Values
5 Human Resource Development and Management 100
5.1 Work system 40
5.2 Employee education, training, and development 30
5.3 Employee well-being and satisfaction 30
6 Process Management 100
6.1 Management of product and service processes 60
6.2 Management of support processes 20
6.3 Management of supplier and partnering processes 20
7 Business Results 450
7.1 Customer satisfaction results 130
7.2 Financial and market results 130
7.3 Human resources results 35
7.4 Supplier and partner results 25
7.5 Company-specific results 130
Total Points 1000
BPR– Prof. T.S. Lee 28
 Impact of BPR on
Working Environment

BPR– Prof. T.S. Lee 29

  Working unit
 Change from functional unit to project
team
 Characteristics of work
 Change from simplicity & focus to
multiplicity
 Role of staff
 Change from passive to proactive

BPR– Prof. T.S. Lee 30

  Human Resources Development
 Change from training to educating
 Appraisal Criterion
 Change from activity based to
performance based

BPR– Prof. T.S. Lee 31

  Promotion Criterion
 Change from performance to
competence based Value system
 Manager’s role
 Change from supervisor to coach
 Organization structure
 Change from vertical to horizontal

BPR– Prof. T.S. Lee 32

 Why BPR Fails?

BPR– Prof. T.S. Lee 33

  Not fundamental enough
 Not focused on process
 No respect to common values and beliefs
 Compromise
 Give up
 Bottom up approach
 Leadership not strong enough
 Lack of resources
 Takes too long
 Fail to handle resistance

BPR– Prof. T.S. Lee 34

 An Approach to Enlightenment

BPR– Prof. T.S. Lee 35

 The Verse of Monk Shen-hsiu

 This body is the Bodhi-tree;

 The mind is like a mirror bright.
 Be diligent to constantly keep it clean,
 Thus let no dust alight.

BPR– Prof. T.S. Lee 36

 The Verse of Hui-neng

 There is no Bodhi-tree,
 No stand of mirror bright.
 Since all is void,
 Where can the dust alight?

BPR– Prof. T.S. Lee 37

 Q&A

BPR– Prof. T.S. Lee 38

 Thank you very much!

BPR– Prof. T.S. Lee 39