Several years ago at IBM Credit Corporation, arriving at a quote for computer financing involved five business functions and, on average, took seven days — even though customers and sales representatives were anxiously awaiting the outcome. Now, coming up with a quote takes six hours, largely because one person handles the entire deal from start to finish. The company issues more than ten times as many quotes as it did in 1985, using a computer for more than half of the quotes. And IBM is beginning to issue quotes in real time on the customer site, by combining yet another role with that of doing the deal — selling the computer. IBM account executives have become representatives of IBM Credit.
At Pacific Bell, providing a business customer with Centrex telephone service once took eleven jobs and more than five business days. Service representatives had to update at least nine computer systems with the correct information, making frequent errors and rework, and consulting customers several times. Now, with a redesigned process for provisioning, Centrex service coordinators handle all interfaces with customers. Using a computer workstation that interfaces with all nine systems, they provide the customer’s service in no more than 2.3 days; if the order is for a type of service predefined in network software (as in 80 percent of orders), it is usually done the day of the order. The customer has only to interact with Pacific Bell once and almost always gets service when requested. Order rework is down substantially.
The Internal Revenue Service’s collections division once had a very complex process for collecting taxes from delinquent taxpayers, which involved six different functions and much time spent on locating taxpayer files. The backlog of uncollected revenues grew. When the agency built a new computer system for tracking cases, the collections and backlog improved dramatically, with major reductions in number of employees and offices, but worker morale declined and turnover increased. Only when collections teams handled entire cases to completion did collections improve in both productivity and job satisfaction (see Figure 1).
These organizations are taking actions that counter a century of conventional wisdom about how jobs and organizations should be structured. Throughout the industrial age, the emphasis has been on seeking efficiencies through the detailed functional specialization of jobs or the so-called functional division of labor.
1. N. Nohria and J. Chalykoff, “Internal Revenue Service: Automated Collections System” (Boston: Harvard Business School, Case No. 9-490-042, 1990).
2. J. Berkeley and R.G. Eccles, “Rethinking the Corporate Workplace: Case Managers at Mutual Benefit Life” (Boston: Harvard Business School, Case No. N9-492-015, 1991).
3. B. Shapiro, K. Rangan, and J. Sviokla, “Staple Yourself to an Order,” Harvard Business Review, July-August 1992, pp. 113–122.
4. For a detailed discussion of the incremental improvement approach to processes, see:
H.J. Harrington, Business Process Improvement (New York: McGraw-Hill, 1991).
For discussions of radical process change, see:
T.H. Davenport, Process Innovation (Boston: Harvard Business School Press, 1993).
5. In 1979, Richard Mattheis of Citibank described a precursor of case management in the letter of credit area. The combination of several job tasks was made possible by a new system that handled all letter of credit functions. Real case management as we describe it, however, is typically broader than this example. See:
R. Mattheis, “The New Back Office Focuses on Customer Service,” Harvard Business Review, March-April 1979, pp. 146–159.
6. A. Smith, The Wealth of Nations (Chicago: University of Chicago Press, 1976), p. 8.
7. R.B. Goldman, A Work Experiment: Six Americans in a Swedish Plant (New York: The Ford Foundation, 1976), p. 31.
8. J.D. Thompson, Organizations in Action (New York: McGraw-Hill, 1967), pp. 20–24.
9. R.B. Chase and D. Garvin, “The Service Factory,” Harvard Business Review, July-August 1989, pp. 61–69.
10. The possibility of such ethical violations should not be taken lightly. Witness, for example, the recent British Airways infractions relative to Virgin Atlantic; British Airways marketing personnel were apparently given a high level of autonomy and a low level of ethical counseling on appropriate competitive tactics. See:
P. Betts and M. Cassell, “BA to Pay Virgin ¥610,000 in ‘Dirty Tricks’ Case,” Financial Times, 12 January 1993, p. 1.
11. The cultural difficulties arising in cross-functional teams have been documented with respect to design and manufacturing processes. See:
D.G. Ancona and D.E. Caldwell, “Cross-Functional Teams: Blessing or Curse for New Product Development?” Transforming Organizations, ed. T.A. Kochan and M. Useem (New York: Oxford University Press, 1992), pp. 154–166.
12. For a discussion of the “horizontal organization,” see:
T.A. Stewart, “The Search for the Organization of Tomorrow,” Fortune, 18 May 1992, pp. 92–98.
13. This concept is similar to that of “minimum critical specifications” in the sociotechnical design literature. See, for example:
C. Pava, Managing New Office Technology (New York: Free Press, 1983), pp. 17–18.