What is Reengineering?

There are books and blogs on reengineering by academics and experts. I have my own view based on my years of reengineering and my background in engineering, finance, and strategy. Dispensing with the theory, in practice, I think of reengineering as going back to first principles, and asking some fundamental questions:

1. What are the firm’s goals and objectives?
2. What are its competitive advantages? The things it can genuinely do better than its rivals?
3. Given those goals and advantages, what processes does the firm actually require?
4. What would the ideal version of those processes look like, built today, with no obligation to preserve anything that currently exists?
5. How do you transform the current company into that ideal state?

The point is to understand what work the company should be doing, the best processes for doing it, the ideal company structure to do it, and a plan to get from the current structure to that new ideal structure. This last step is where employee headcount and potential layoffs enter the picture.

This is the difference between reengineering and restructuring. Restructuring starts with goals like “cut 10% of the employees” or “cut 10% of the managers” or similar statements. Restructuring asks how to do the same work with fewer people. Reengineering asks what work the company should be doing, and is there a better way to do it. Eventually that might lead to restructuring the organization, but for the reason that the company found a better way to deliver value with fewer employees.