People and Processes Working together as
Cross-Functional Teams

Since the industrial revolution in the late 18th and early 19th Centuries, the birth, design and operation of organizations has been characterized by an interdependent balance between two broad “perspectives” for how people explain the underlying causes of an organization’s day-to-day operations. The first is a structures-and-systems perspective that tends to view organizations as interdependent structures and systems that need to be directed, managed and controlled in order to achieve well-defined goals and objectives. On this view, structures and systems are populated by managers, supervisors, and staff members who must be trained and developed, and can be replaced by other competent people. The human-performance perspective tends to view organizations as interdependent social networks, work-groups, teams or individual performers who need to be led, facilitated and inspired, with strategies, objectives and goals that emerge and can morph over time. On this view, people are the process rather than structures and systems – in fact, sometimes people are viewed as being irreplaceable. Most people tend to live in the Essential Tension™ between both perspectives, with one or the other being a more dominant way of seeing themselves, others, and the world of day-to-day operations. Why is it important to understand the distinction between the: a) structures-and-systems and b) human-performance perspectives? It’s important because most organizational cultures have stronger preferences (or biases) for one perspective over the other, and this preference shapes and defines the conclusions that managers come to about the underlying causes of organizational and individual performance problems.

Over the last seven decades, the prevailing wisdom in most business schools and boardrooms has been dominated by the structures-and-systems perspective. In fact, an analysis of the top 100 best selling articles from the first 75 years of the Harvard Business Review (1922-1997) shows that 90% of them reflect the structures-and-systems perspective, and half of the remaining 10% of articles that cover topics from the human-performance perspective were written by a single person – John Kotter. Perhaps the best example of viewing an organization from strictly a structures-and-systems perspective and ignoring the human-performance perspective was Business Process Reengineering (BPR).

Despite its devastating effects, BPR had a rather uneventful beginning. The creators of BPR believed it showed promise as an organizational tool because it connected three previously existing elements in a new way. The first was that the value of technology (information technology) was not simply in doing work more efficiently, but in changing how work was organized and performed, so organizations could use information technology to link various processes that cut across functional boundaries. The second element was that "business processes" were a useful model for describing how work gets done in organizations. This was a natural extension of the TQM programs that many organizations already had in place where work was characterized as processes. The third element was a "clean-sheet-of-paper" approach to organizational change programs. Using this approach, the existing organization was defined as organization "A" and a virtual new organization "B" was created on paper, being built around clearly defined enterprise-wide business processes. As new jobs were developed for organization "B", people in organization "A" reapplied for those jobs and their old jobs in organization "A" were abolished. Those who were not hired into organization "B" were normally laid-off. The clean-sheet-of-paper approach was welcomed by many senior managers because companies had accumulated myriad policies-procedures (and the jobs associated with them) that were once useful, lost their usefulness, and then threatened to drag organizations into the black hole of Invisible Bureaucracy.

Thomas Davenport, one of the "creators" of BPR (with Hammer and Champy) argued that in the wake of the leveraged buy outs of the 1980s, companies like Ford, Hewlett-Packard, and Mutual Benefit Life developed big financial problems, so they hired "big bucks" consulting firms who promised big savings using BPR. The CEOs, consultants, and information technologists became solidified into what Davenport called the "Reengineering Industrial Complex" – a 51-billion dollar industry by 1995. In the cost-cutting frenzy of the late 1980s and early 1990s, companies began to rewrite their corporate histories by taking activities that were performed under the auspices of other programs like TQM and quality improvement, and to repackage them as BPR success stories. But most of the BPR interventions failed to produce the promised bottom-line results and consequently, executives were under tremendous pressure to demonstrate the financial benefits of BPR and justify the enormous sums of money paid to consulting firms. When savings failed to materialize as a natural consequence of BPR methodologies, many corporate executives decided to demonstrate bottom-line savings the only other way they knew how – by reducing head count.

By 1995, BPR had taken its toll on U.S. workers (especially mid-level managers) with massive layoffs totaling in the millions of people. For example, from 1984 through 1996, AT&T had reduced head count by 212,000 people, with one of the final increments being a reduction in force of 40,000 workers. Also, companies like Capital Holding's Direct Response Group, who were viewed as models of successful BPR interventions, began abandoning their BPR efforts. Other companies who were viewed as BPR role models, like Mutual Benefits Life, almost went out of business. So where did BPR go wrong? Davenport claims that the 1994 CSC Index State of Reengineering Report had the answers: 50% of the companies that participated in the study reported that the most difficult part of BPR is dealing with the fear and anxiety of the human performers in their organizations; 73% of the companies said that they were using BPR to eliminate, on average, 21% of the jobs; and of the 99 completed BPR initiatives, 67% were judged as producing mediocre, marginal, or failed results. More specifically, 72% of the companies claimed that survivors believed the restructured organization was not a better place to work. Davenport's view of the fundamental problem with BPR was that it treated people as if they were interchangeable parts in a machine – a view that echoes a myopic focus on the structures-and-systems perspective. To put it another way, whenever you sever the person from the function (we need the function, but we don't need you doing it), the result is often demoralizing for human performers at all organizational levels.

In a world of increasing stakeholder expectations and decreasing resources, aggressive cost-cutting programs like BPR have taken their toll, and run their course. A number of books published from the structures-and-systems perspective after the BPR era started to recognize the important role of the human-performance perspective in building high-performing organizations, especially in the areas of the change management associated with the implementation of new computing systems and IT infrastructure. This trend of emphasizing the human-performance perspective has continued as evidenced by the current focus on employee engagement. Perhaps the most important lesson to learn from the BPR experience is that while the structures-and-systems perspective of organizations is necessary, it is not sufficient to accurately diagnose what’s actually happening in an organization. Focusing on only one of the two perspectives almost ensures that a manager’s causal analysis and recommendations for change will focus on symptoms and causal factors, rather than the underlying “root” causes of organizational performance and culture.