Reengineering is a risky business, and the risks result both when companies try to do too little in their reengineering efforts and when they try to do enough. They may make the wrong or inadequate changes to systems or processes, or they may make radical changes that lead to political backlashes. To manage the risks of reengineering, according to the author, it is essential to anticipate a company’s future environmental and operational uncertainties and to achieve consensus on the changes that need to be made. Scenario analysis provides a way to avoid the obstacles to “revisioning” — overconfidence, intellectual arrogance, and anchoring in the present.
1. Michael Hammer and James Champy, Reengineering the Corporation (New York: HarperCollins, 1993).
2. C. Argyris, Overcoming Organizational Defenses (Needham, Massachusetts: Allyn & Bacon, 1990).
3. Currently, New York and Tokyo, the two largest stock exchanges, have foreign volume that is a single-digit share of domestic volume, while in London, foreign volume actually exceeds domestic volume.
4. P.J.H. Schoemaker, “Scenario Planning: A Tool for Strategic Thinking,” Sloan Management Review, Winter 1995, pp. 25–40.
5. J. Russo and P.J.H. Schoemaker, Decision Traps (New York: Doubleday, 1989); and Schoemaker (1995).
6. J. Keegan, The Second World War (New York: Penguin Books, 1989).
7. M. Tushman and P. Anderson, “Technological Discontinuities and Organizational Environments,” Administrative Science Quarterly 31 (1986): 439–465; and
M. Tushman and E. Romanelli, “Organizational Evolution: A Metamorphosis Model of Convergence and Reorientation,” in L.L. Cummings and B.M. Staw, eds., Research in Organizational Behavior 7 (1985): 171–222.
8. Tushman and Anderson (1986); and
Tushman and Romanelli (1985).
9. P. Schwartz, The Art of the Long View (New York: Doubleday, 1991).
Schwartz provides an excellent, easy-to-read introduction to scenario analysis. My description of scenario creation and use is based on exercises conducted with Global Business Network and is described in more detail by Schwartz. A different methodology, leading to equivalent results, is described in Schoemaker (1995).
10. This is surprisingly difficult. U.S. business culture places considerable value on executives who are decisive and in charge. Executives competing to see who can be least certain about future trends and events that most influence the company, strategy, and performance can easily be seen as competing to demonstrate who is least qualified for his or her current position. An outside facilitator is important.
11. Schoemaker (1995).
12. Schwartz (1991); and
13. Schoemaker (1995).
Lawrence Wilkinson of Global Business Network helped me understand the scenario planning process and facilitate scenario planning workshops for several clients’ reengineering efforts.