When Marconi invented radio he thought of it only as a point-to-point wireless telegraph. He did not initially recognise its potential for broadcasting. Thomas Edison once said that the value of his newly-devised phonograph was to allow 'dying gentlemen' to record their last wishes. Using computer networks to automate processes that were invented before they were, misses their potential in a similar way.
By the start of the 1990s a shocking realisation began to spread among top executives that they had spent a vast amount of money on computers, but most of the time they were the wrong systems.
Worse still, most of the systems being built today are the wrong systems.
Managers should have been thinking in terms of cybercorp opportunities and value added by value-stream design. But most were thinking about computer applications for existing departments.
The wrong focus
The computer industry captivates its professionals with a mind-gripping fascination unlike any other profession.
Computer professionals acquire deep, intricate knowledge about how to make software work, but few think about how the business should be reinvented.
They may think about how to automate a procedure that already exists, but that approach negates the value of the technology.
The true value lies in fundamentally rethinking how the enterprise works.
The more complex the technology becomes, the more that IT professionals tend to focus on the technology rather than the extensive opportunities it presents.
Many computer professionals focus intensely on making the electronics and software work, but not on how to create business value with IT; they build the wrong applications.
The financial implications of this are staggering. In most businesses the computing budget is the largest capital budget. The true cost of computing goes well beyond the computing budget. It includes the time business people spend in IT-related meetings and tinkering with PCs. The costs across society as a whole are enormous, and the financial impact of lost opportunities are much greater than the cost of computing.
Social commentators and unions worry about employees being laid off because of computers. In reality, many employees are being made redundant because foreign companies are more efficient. The UK used to have a vigorous car industry, admired worldwide. Today, there is no UK-owned mass-market car factory. The industry has been taken over by the US, Japan and Germany.
It was often assumed in the West that the Japanese competed better because of cheap labour or because they moved like armies of insects (the French Prime Minister called them 'ants').
Neither of these assumptions was true. They are intelligent business people who reinvented their business processes. They reinvented every aspect of how car manufacturers should design cars, relate to their suppliers, assemble cars and interact with customers. What happened in the car industry then happened in other industries.
Paving the cow path
Many managers fail to understand the potential of technology because they think of it in terms of solving the problems they have today. They ask: 'How can we automate what already exists?' The great potential of technology is to replace what exists with something different and fundamentally better. Tibetans invented the turbine mechanism but used it only for rotating prayer wheels.
Much computer software has been designed to capture old procedures that should be replaced. 'Knowledge engineers' are taught how to interview people and represent what they do in rules that can be computerised. This can be like identifying a cow path and setting it in concrete, when the whole activity should have been reinvented.
Organisations have sacred cows: you can change anything but not the sacred cows. The sacred cows almost always date back to an era long ago before cybercorp technology.
The first thing that should be done when reinventing value streams is to identify the sacred cows and question their existence. If a system is built without doing this, the sacred cows become part of the computerised procedures.
Don't automate yesterday's processes
In its early days, office automation became discredited because the costs exceeded the benefits. Users did not want to give up 'hard copy' when mail or documents became electronic. An IBM Systems Journal article expressed the popular wisdom: 'Customers are anxious to avoid disruption of their established organisation by introducing office communications. As a matter of philosophy, the system must fit the users and not the reverse.' This is the wrong philosophy. The users must be carefully trained in new ways or most of the advantages of automation are lost.
Enterprises sometimes seem unable to take seriously the change needed in their organisation until they have spent significant money on automation first. Despite the advice 'think before you automate', many executives seem to have to automate first to understand it, then rethink the process.
They spend so they can focus; then think; and then redo. This is expensive and slow. But if you have to 'spend, think, then redo,' be sure that the steps done before thinking are easily changeable.
The lesson is: 'Never apply automation without totally redesigning the end-to-end process.'
Clumsy white-collar processes
The lessons learned in lean manufacturing apply even more to administrative procedures. We have applied expensive computer systems to outrageously old-fashioned processes. The clumsy nature of the process itself prevents the computers from making much difference. We can make a big difference if we scrap the entire end-to-end process, fundamentally rethink its goals and invent something that meets those goals as directly and simply as possible, using modern technology and new teams of motivated people.
Dealing with a customer who says she has found an error in her credit-card bill may involve multiple letters and perhaps 40 process steps. It can sometimes take weeks to resolve the problem.
With cybercorp design the customer dials an 0800 phone number and is connected to someone who has a screen image of the credit-card slip. The problem can be corrected with one phone call. Many administrative procedures have been reinvented to achieve dramatic reductions in the time and work required and major improvements in the ability to please the customer. Most administrative processes are even more in need of reinvention than manufacturing processes. Immense reinvention is needed in service industries. Enterprise reinvention is in the air everywhere, and corporations that don't do it will go the way of the dinosaur car factories.
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