Championing the Enterprise with Business Process
Jim Champy first achieved international acclaim for co-authoring Reengineering the Corporation, a mid-1990s study that anticipated the arrival of the Information Age and advised companies on how to adjust their business processes to accommodate it. Now, Champy, the Boston-based chairman of Perot Systems’ consulting practice, returns with Outsmart! How to Do What Your Competitors Can’t.
It’s the first of four planned books focusing on the search for new business models. The other three are Engage! (due out in early 2009), which will look at how to attract and maintain customers; Inspire! which will examine how companies manage people; and Deliver! which will offer advice on business execution issues.
Champy sat down with Baseline to discuss how companies can benefit from the principles and ideas covered in the first two books.
Baseline: How did you find the companies you write about in your books?
Jim Champy: I looked at high-growth companies, ones growing at double- or triple-digit rates over a two-to-three-year period. I found about a thousand of them; most are medium-scale companies. I was trying to look at new companies that haven’t been written about as much as Google, Oracle and Microsoft, etc. I’ve found that there’s not much new in management, but there’s a lot new in business.
How can companies apply the principles in your books?
Champy: Information technology is the great enabler of business change. The companies profiled in my books offer real products and services, but they could not operate without IT—particularly the Internet.
Peter Drucker had a great expression: “Go walk in the marketplace.” Companies today can walk electronically in the marketplace. A young executive told me that he could compete with 50-year-olds who in theory knew more than he did because the Internet is such a great equalizer. It wasn’t just his technology skills; it was his ability to get to market fast, learn what customers liked and didn’t like, and adapt quickly in changing his products, services and business model.
I’d advise companies to do the same thing: Look at the Internet as a source of learning and quick adaptability.
How well do companies do that?
Champy: Not nearly as well as they could. The best new businesses are a combination of high tech and high touch. They have very sophisticated business processes, but they don’t leave it to technology alone to solve all their problems. Too often, companies and people in IT make naïve assumptions about how customers can provide their own services, but in a world where IT is changing pretty quickly, that doesn’t always work. In fact, it doesn’t work most of the time.
One of the companies I wrote about, Partsearch Technologies, built its business around cataloging 8 million replacement parts for electronics. The company’s managers learned early on that most people looking for replacement parts get it wrong the first time, so they had to build a very sophisticated customer service function.
Another firm, SmartPak Equine, provides supplements and vitamins for horses. Its call center is staffed by people who understand veterinary medicine, and they’ve become a source of knowledge behind a very intricate technology infrastructure. So IT people must recognize that the answers to a lot of business problems don’t necessarily lie in technology.
There’s often a disconnect between what IT managers know about their technologies and what the people who use them understand. How can these two groups meet in the middle?
Champy: You should always try to lean more toward the users’ culture. IT people often don’t understand how the users experience their products and services because the tech staffers are too internally focused. That’s why they keep having the same problems all the time. There’s almost an inverse relationship between the degree of technology sophistication in a company and the degree of user sophistication, and I’m struck by how the IT people repeat the same errors time after time.
The companies in my books are driven from the outside in by unmet user needs. They’re not focused internally or on their competitors; they’re focused on what the users and customers are telling them. When someone is telling me about a new product or service—particularly if it’s a new technology—I always caution him or her not to underestimate the adoption time: It will be longer than you think.
Would IT managers be better served by retraining their people to think more like users?
Champy: I don’t know if you have to go that far. It just takes a strong user voice from inside the company. You don’t change a company’s culture easily, but one of the ways you do institute change is by requiring IT staff to be involved in discussions with users for some regularly prescribed amount of time.
I’ve seen this start to change cultures inside companies. When organizations change, it’s usually because there’s a really strong executive voice speaking on behalf of the user.
How should companies think about buying IT?
Champy: A lot of good ideas get incubated in IT companies—very sophisticated ideas for things like network security or automated process redesign—but very few of them survive because they don’t fit the way companies really work or make decisions. So no matter how ingenious a new technology is, it will work for you only if it fits the way you do business.
How would you advise a company that has soared and then tanks? How can IT execs help a company respond to that kind of market challenge?
Champy: It’s a very tough business issue. When you ride a market phenomenon and do nothing else, and then a competitor steps in and does it better, faster and cheaper, you’re in trouble. I’m not sure even IT can help that.
IT might make you efficient enough to keep you in the game for a while, but ultimately, what you need is a different business model or a different business focus. To the tech folks I say again: By watching the marketplace, you may be able to contribute to the next big trend, but the unfortunate, hard fact for [some companies] is that they need a new business.
How do you feel about the economy in general and how companies can respond to it?
Champy: I really believe these tough times provide opportunity for aggressive companies. You have to be careful and manage your resources more closely, because adoption times might get even longer, but what companies have to do is almost counterintuitive. If you develop a bunker mentality, you will shrink. You have to be out looking for new markets—sometimes new products and services, but mostly new geographies.
Also, in times like this, everybody is looking for a better deal, so there’s a chance to unseat your competitors. It just means you have to be smarter and more aggressive. But if you go into a siege mentality, you’ll be smaller by the time the world comes out of this economic turmoil—and it will come out of it.