Foreword

Michael Hammer was admired by people worldwide. What is most intriguing about his story is what you learn about him by talking to people who knew him or even met him just once in a class. They admired his commitment to his family, his enormous intellect, and his accomplishments. They also mention his passion for process and improving organizational performance. As the conversation continues, you find other facets that further describe Michael and why so many people found him intriguing.

He was one of the most remarkable presenters I had ever seen. His Socratic style, sharp wit, and uncanny recollection made him both entertaining and awe-inspiring. I remember my first class with him: four days of process reengineering. While I was looking forward to refreshing my skills, the thought of sitting for four days to review redesigning techniques sounded about as exciting as watching paint dry. Wow, was I wrong. He spoke so quickly, involved the class so widely, and delivered such wonderful insights that it was anything but dry. He used many quotes, both popular and obscure, to make his points. He tiptoed on the edge of political correctness (which he cared little about) with some of his favorite Dorothy Parker quotes (“You can lead a whore to culture but you can’t make her think”) and his definitions of training vs. education (sex training vs. sex education: which one would you go to and which one would you send your kid to?). Then there were the slides that equated the process journey to biblical stories—a comparison that was fascinating, daring, memorable, and accurate.

As he learned about my experiences implementing his theories in manufacturing, service, and distribution industries, he asked if he could study my work. I was immensely gratified that he would want to collaborate with me. I was able to provide him with the problems and solutions I had encountered implementing process in many companies; he gave me benchmark data, new approaches, and proven solutions from others he had studied. And then there were the debates: challenging his theories, challenging my approaches. We learned a lot from each other.

In the early 1990s Michael introduced the world to business transformation with his work on reengineering, most notably Reengineering the Corporation . People from a wide range of industries told him that they used it as their bible for transformation efforts. This puzzled and perplexed him since it was not written to be a handbook. It merely introduced the concept of transformation; it did not pretend to offer a comprehensive solution. In the years following its publication Michael continued his work on how to rethink the nuts and bolts of business. When executives from companies sought his counsel he offered no opinions on what they should do (i.e., what business they should be in); his role was to tell them how to do it best. And that meant how to do it differently by transforming how work actually gets done. His search for a comprehensive solution about why some companies succeed and others fail led to this book. He studied both the successes and the failures—what they had done and not done—to identify where they had run aground or what had made their efforts bear fruit. There are companies he studied for long periods of time, well over a decade in many cases. Some were first mentioned in Reengineering the Corporation and are reported on in depth in this book. Drawing on his extensive research, Michael formulated hypotheses, tested them, and refined them. He shared interim results with companies in the Phoenix Consortium, a group of Hammer & Co. clients committed to breakthrough performance. Finally, in 2005 Michael developed a framework that turned description into prescription. It was tested at several companies and many found it so valuable that they institutionalized it as a guide to their transformational efforts. This book builds on and expands these ideas into a structured approach to business transformation. That framework became the Process and Enterprise Maturity Model (PEMM), first published in the Harvard Business Review article “The Process Audit” in April 2007.

Michael believed, as do I, that the issue of how work gets done is central to success in a world undergoing a sea change. We are facing an unprecedented confluence of macroeconomic and business factors that are creating a new and unfamiliar business environment. The solutions to these issues are apparent and easy to state but hard to implement: wring out cost so that a company’s direct labor differential with the competition is not an issue; do more for customers than the competition so that the value delivered is worth any additional cost; become more flexible and be the first to bring new products, excel at quality, and out-execute the competition in every way.

If there is no alternative—and there is not—then what is the problem? Why is it so difficult to accomplish the obvious?

It’s simply that the way companies today are organized and operated makes it impossible for them to get the dramatic performance improvements they need, even if they were staffed by supermen and superwomen. The only option is deep and fundamental change to how they do their work. Providing the road map to doing so is the mission of this book.

One example told in depth in the book is that of Tetra Pak, the food packaging company that had been the juggernaut of its industry. By the early 2000s it showed symptoms of the kind of decline that too often dooms longtime industry leaders (think Sears and General Motors). Market share was starting to go down; customers were complaining about how hard it was to do business with the company; new competitors were creating a disturbing pattern of being the first with product innovations. It seemed as though Tetra Pak would be just another story of a corporate giant turned corporate dinosaur.

Instead, Tetra Pak used the idea of process-based transformation to create new ways of working. One of its first goals was to improve the accuracy of the dates it gave customers about when new products would hit the market. It had been late on almost nine out of ten new products. By rethinking the way it developed and announced products, it started hitting its promise dates nearly 90 percent of the time—a huge turnaround.

This improvement was no flash in the pan. First, it endured, as opposed to being a short-term blip that before long regressed to the unfortunate mean. More importantly, it was only the first in a series of breakthroughs. Tetra Pak subsequently turned its attention to how it installs equipment in customers’ plants, and nearly doubled customer satisfaction with its installation experience. It examined how it schedules the engineers who maintain and upgrade the equipment in customer sites—and thereby saved money and further increased customer satisfaction. By rethinking how it manages its supply chain—ordering raw materials, scheduling production, managing distribution—it was able to cut inventory in half in some countries and increase the number of “perfect orders” by 50 percent. The slide in market share has been reversed and the list of achievements continues to build.

Michael’s research into how a company can transform its enterprise processes focused on the relatively few (typically five to ten) end-to-end sequences of activities that create all the value a company delivers to its customers, such as order fulfillment, product development, customer problem resolution, demand creation, and supply chain management. While always present, these processes have largely been invisible in the past. They represent a new way of looking at a company’s operations—not in terms of piecemeal fragments of work performed in a slew of isolated functional departments but in terms of large-scale holistic work units.

His research identified nine levers for action necessary to achieve transformational results. They are broken into two sections. The first are called process enablers, and they are what a company needs to address in order to achieve breakthrough performance improvements in an end-to-end process: the process design; appropriate metrics; performers who do the work; a process owner; and an effective infrastructure. Attending to these five critical elements gives companies a road map for transforming a process and creating breakthrough performance. However, merely having this road map, while necessary, is insufficient. He discovered that, despite their best intentions, some companies were simply incapable of making progress on these elements. These companies seemed to know what to do but just couldn’t get it done. This led him to realize that companies able to follow his road map did so because they had four enterprise capabilities in place—overarching characteristics that equipped them to undertake fundamental transformation: leadership; culture; governance; and expertise. Without these capabilities, he found, a company will simply not have the wherewithal to carry out the process changes needed to achieve its goals; with them, it is ready to embark on the journey and succeed.

Not only was Michael Hammer a serious scholar, researcher, and teacher, he was fun. His fondness for movies, musicals, Motown, and Monty Python always made it into the presentations and conversations. He found insightful elements in all of these and applied the lines, references, and characters to real-life business situations. He was a consummate entertainer, skilled in imitating voices and gestures.

He was also kind. I remember struggling with a problem at work that had to do with a particular executive. We had a chance to have dinner together and I said, “Michael, I need some help—” Before I could even finish, he responded with, “Name it.” That was the last time I saw him. He passed away less than a month later.

He was a good citizen, an intellectual giant, and a great friend. He inspired us. He made us laugh. He made us think. And he encouraged us to be creative and to try new things. By continuing his work and building upon the foundation he created, I hope we make him proud.

— Lisa Wilkes Hershman
CEO, Hammer and Company