What can the plant manager at a Japanese soy sauce producer teach us about reengineering? In this case study, the authors describe Toshio Okuno’s five techniques for managing major changes in his company. By focusing first on changing people’s attitudes toward change and encouraging them to be creative, Okuno brought about significant improvements in processes and results. And the managers and workers, rather than reengineering consultants, began to propose ideas for change. Okuno’s techniques work as an integrated system that allow his company to innovate continuously and present many lessons for making change fun.
Just a few years ago, business process reengineering seemed to be the answer to many managers’ prayers. Managers everywhere faced huge gaps between the performance of their organizations and their best competitors. The gaps were so large that they seemed unbridgeable by tried-and-true methods like incremental improvement and total quality management. Something more was needed, something big. And reengineering seemed to fit the bill. It promised to do, in one bold, creative stroke, what years of hard work could not accomplish. Further, it pledged to achieve this goal in a rational, orderly, engineered way through cool-headed analysis by people in white shirts.
But then the bad news began to filter in. Reengineering efforts have a high failure rate.1 Reengineering fails because people resist change.2 Organizations are bound to continue having trouble implementing change until they learn that people resist not change per se, but the way they are treated in the change process and the roles they play in the effort.3 This means that it is not enough merely to reengineer the corporation, we must now reengineer management.4
Increasingly, it is becoming clear that the engine of reengineering is not reengineering analysts, but managers and the people who do the work. Reengineering requires committed, empowered people, not simply to operate processes after they have been reengineered, but also to reengineer them in the first place.5 No matter which reengineering consultants your company might employ, one step in the methodology always remains the same: design teams are staffed by people who perform key activities in the process that is being redesigned. So the success of reengineering hinges critically on these people and their knowledge, creativity, and openness to radical change.
Knowing this, reengineering consultants frequently recommend expensive training programs to increase people’s readiness for change. The programs typically include communication about the company’s competitive situation, education about reengineering concepts and techniques, data collection and survey feedback about company culture and organizational problems, and so forth. While the jury is still out on the effectiveness of these approaches when used in conjunction with reengineering efforts, critics have faulted similar programs for a number of reasons.
1. B.J. Bashein, M.L. Markus, and P. Riley, “Business Reengineering: Preconditions for BPR Success, and How to Prevent Failure,” Information Systems Management 11 (1994): 7–13.
2. R.K. Reger, J.V. Mullane, L.T. Gustafson, and S.M. DeMarie, “Creating Earthquakes to Change Organizational Mindsets,” Academy of Management Executive 8 (1994): 31–46.
3. J. Berry, “Executive Commentary,” Academy of Management Executive 8 (1994): 43–44.
4. J. Champy, Reengineering Management: The Mandate for New Leadership (New York: HarperBusiness, 1995).
5. Bashein et al. (1994).
6. M. Beer, R.A. Eisenstat, and B. Spector, “Why Change Programs Don’t Produce Change,” Harvard Business Review, November–December 1990, pp. 158–166; and
R.H. Schaffer and H.A. Thompson, “Successful Change Programs Begin with Results,” Harvard Business Review, January–February 1992, pp. 80–89.
7. The first author interviewed Okuno, the group leaders, and contributors who were actively involved in the application of the five change techniques. In-depth interviews in English, with appropriate translator support, were held. Copious notes and tape recordings of the interviews were used to prepare two research cases of approximately 5,000 words each and were used as the basis for this article. Neither the cases nor this article can document all the complexities of the firm’s practices. However, the major structural properties of the five techniques have been captured. For the full text of the cases, see:
R. Cooper, “Higashimaru Shoyu Co., Ltd. (A): Price Control System” (Boston: Harvard Business School, Case 9-195-050, Copyright 1994 by the President and Fellows of Harvard College); and
R. Cooper, “Higashimaru Shoyu Co., Ltd. (B): Revitalizing the Organization” (Boston: Harvard Business School, Case 9-195-051, Copyright 1994 by the President and Fellows of Harvard College).
8. There are some parallels between this case and that of Taco Bell. In both cases, there was a leader who pursued an incremental improvement strategy for years before embarking on a successful program of radical change. However, at Taco Bell, the CEO pursued a classic reengineering strategy focused on strategy, process, and systems, whereas at Higashimaru, the change strategy focused primarily on people. See:
Roger Hallowell, “Taco Bell Corp.” (Boston: Harvard Business School, Case 9-692-058, 1992).
9. Readers interested in more detailed descriptions of these techniques should read the original cases; see note 7.
10. Cooper, “Higashimaru Shoyu (B)”: 9.
11. All group leaders in the plant were men.
12. R.N. Ashkenas and T.D. Jick, “From Dialogue to Action: In GE Work-Out: Developmental Learning in a Change Process,” in Research in Organizational Change and Development, vol. 6 (Greenwich, Connecticut: JAI Press, 1992), pp. 267–287.
13. Cooper, “Higashimaru Shoyu (B)”: 9–10.
14. See M. Beer, “The Critical Path for Change: Keys to Success and Failure in Six Companies,” in R.H. Kilmann, T.J. Covin, and Associates, Corporate Transformation: Revitalizing Organizations for a Competitive World (San Francisco: Jossey-Bass, 1988), pp. 17–45.
15. P. Senge, The Fifth Discipline: The Art and Practice of the Learning Organization (New York: Doubleday Currency, 1990).
16. If Okuno had reacted defensively, it is likely his employees would not have felt free to joke as they did — or else the joke would have been made at Okuno’s expense, and it was not. Compare:
C. Argyris, Overcoming Organizational Defenses: Facilitating Organizational Learning (Needham, Massachusetts: Allyn & Bacon, 1990).
17. Cooper, “Higashimaru Shoyu (B)”: 10.
18. D.R. Conner, Managing at the Speed of Change: How Resilient Managers Succeed and Prosper Where Others Fail (New York: Villard Books, 1992).
19. E.H. Schein, Organizational Culture and Leadership (San Francisco: Jossey-Bass, 1992).
20. Bashein et al. (1994); and
D.A. Nadler and M.L. Tushman, “Organizational Frame Bending: Principles for Managing Reorientation,” Academy of Management Executive 3 (1989): 194–204.
21. Beer et al. (1990).
22. Cooper, “Higashimaru Shoyu (B)”: 10.
23. Ibid., 10–11.
24. Bashein et al. (1994).
25. Senge (1990).
26. See, for example, E.M. Goldratt and J. Cox, The Goal (Crotonon-Hudson, New York: North River Press, 1992).
27. Champy (1995).
28. Reger et al. (1994); see also:
T.H. Davenport and D.B. Stoddard, “Reengineering: Business Change of Mythic Proportions?,” MIS Quarterly 18 (1994): 121–127.
29. Schein (1992). In Chapter 15, Schein lists the following mechanisms of organizational change: (1) incremental change through general and specific evolution, (2) change through insight from organizational therapy, (3) change through promotion of hybrids (insiders who know about changed external realities), (4) change through systematic promotion from selected (organizational) subcultures, (5) planned change through organizational development projects and the creation of parallel learning structures, (6) unfreezing and change through technological seduction, (7) change through infusion of outsiders, (8) unfreezing through scandal and myth explosion, (9) change through turnarounds, (10) change through coercive persuasion, and (11) destruction and rebirth.
30. P.F. Drucker, “The New Productivity Challenge,” Harvard Business Review, November–December 1991, pp. 69–79.