Development: Gearing up for change brings the revolution: Re-engineering can retain an edge in the market

THE greetings card industry does not come across as ripe for a revolution in product development. After all, birthdays, Christmas and other special occasions come around every year, so surely it is simply a question of having products that fit in with general taste.

Not according to Hallmark Cards. To continue growing at the rates that had characterised its 80-year history, the Kansas City-based company needed to expand its market. But new product development was taking three years from initial concept to the store shelf.

The solution was to create teams responsible for different products, composed of representatives from each creative department. As a result, product development time was slashed to less than a year.

To achieve this, the company worked with CSC Index, a Boston-based international consulting firm. James Champy, its chairman, is co-author with another consultant, Michael Hammer, of this summer's soaraway business book success.

Re-engineering the Corporation - A Manifesto for Business Revolution is en route to sales of a quarter of a million in the US. It is widely regarded as the most easily digestible description of what looks like being the biggest thing to hit management thinking since total quality.

But, as Mr Champy admits, the concept of re-engineering has been around for years. The technique of integrated design utilised at Hallmark has even been adopted by some British engineering companies to speed their products to the market.

This is not the only application. The fall in BT prices produced by the regulatory regime and wider competition has led its rival, Mercury Communications, to look for new 'product differentiators'.

To achieve this it is being helped by Andersen Consulting through a re-engineering exercise that impinges on all its business areas. What makes these changes amount to re-engineering is scale. Andersen admits: 'Redesigning processes is neither novel nor revolutionary.'

Indeed, there is a sense in which descriptions of 'business process re-engineering' produce feelings of deja vu. Many of its components really fit into other management fads, such as team working and project management. This is not lost on Mr Champy.

'Everybody says they are re- engineering. But the term is used generically to cover any change programme. What we think needs to be done is real discontinuous change,' he said.

By this he means massive, fundamental upheaval rather than the tinkering that characterises most attempts to respond to the rapidly changing business environment.

During the recession, the concept has come to be associated with 'downsizing'. Mr Champy accepts that organisations that have gone through the process tend to have 'fewer, more highly qualified people who are doing more complex work'.

But it is not just at the lower end of the workforce that the changes are felt. Managers' lives are probably altered more dramatically, he says. With workers taking over many aspects of management, the manager moves from a supervisory role into a more strategic one.

This 'collapse of skills' means highly paid senior managers have to get their heads back into the business and create the operating models that give the company its distinct quality.

. These could be based on issues such as customer satisfaction or innovation. But at a time when customers are becoming more sophisticated and the world economy remains flat, models have to provide a way for companies to improve their performance.

This return to focusing on the business is in marked contrast to the traditional approach, of managers moving steadily away from the work as they are promoted.

As the book's examples demonstrate, the procedure - which Mr Hammer, in the grand manner of the guru, calls 'reversing the industrial revolution' - is applicable to just about any business. Financial services are considered particularly ripe.

But Mr Champy has two warnings. First, re-engineering only happens if a company's top managers believe in the need for change. Secondly, those that do not go through with it in the next five years will be dead.

(Photograph omitted)