Down to Details

Good and bad advice for managers

Reengineering the Corporation: A Manifesto for Business Revolution, by Michael Hammer and James Champy, New York: HarperBusiness, 223 pages, $25.00

No Excuses Management: Proven Systems for Starting Fast, Growing Quickly, and Surviving Hard Times, by T.J. Rodgers, William Taylor, and Rick Foreman, New York: Doubleday, 296 pages, $35.00

Michael Hammer and James Champy's Reengineering the Corporation has been the past year's major management best seller, and on the strength of its success Hammer, a former business professor at MIT, has emerged as one of America's hot new management gurus, jetting hither and yon to talk to conclaves of corporate executives for daily fees running into five figures. The book offers an interesting glimpse of the state of the big corporation in the '9Os and of the management doctors who tend to its ills.

Hammer and Champy style themselves radicals. The traditional big corporation is dead, they argue. The principles it rested on—the division of labor and hierarchical control—have been invalidated by new competition and information technology, and if the General Electrics and Citicorps and Procter & Gambles want to survive, they must transform themselves into substantially unhierarchical, self-managing networks of teams avid to serve the customer, beat the competition, and embrace change. In effect, the authors argue, the big corporation must recast itself in the image of the traditional small firm.

Reengineering the corporation, the authors argue, means ceasing to think in terms of jobs and objectives and other such traditional management concepts and starting to think in terms of "process." The entire "work process" must be reconceived and restructured, with everything up for grabs and nothing taken as a given. Reengineering requires strong leadership from the top. It empowers people at the bottom.

As for what specifically an executive could do to implement Hammer and Champy's program at his company, the book is curiously silent. To be sure, it describes the experiences of some well-known companies that have reengineered themselves. It lists mistakes often made by firms trying to take the reengineering cure. It describes the benefits of the process. But the case studies are superficial and the lists are short. Both enthusiasts who want to go ahead with the authors' program and skeptics who want more information are left with little choice but to call Hammer and Champy's offices and arrange for an in-person consultation, suitably compensated of course.

In other words, behind the authors' professed radicalism, there is—nothing much. The authors' advice is so general, so far removed from real life and practical experience, so anxious to avoid giving offense, so desirous of making a good impression as to be almost totally devoid of practical value. Telling a CEO at IBM or G.M., as Hammer and Champy effectively do, to "be radical" or "start with a clean sheet of paper" without getting down to cases is about as useful as advising him, as a way of improving his relationships with subordinates, to "be a good listener."

The Polonius-to-Laertes-style homilies, in the context in which Hammer and Champy present them, are not just unhelpful, they're positively pernicious. At the core of the plight of the big corporation these days is a powerful capacity to deny painful truths, tell comforting lies, and thereby make it possible for business as usual to go forward even as everyone gives lip service to the idea that they're finally facing up to reality and putting a bad old dysfunctional past behind them. With its glib generality, Hammer and Champy's best seller is a recipe for precisely such a defense of business as usual.

In this, Hammer and Champy are very much in the tradition of the modern management bestseller, the bizarre genre brought into being a decade ago by Tom Peters and Robert Waterman's In Search of Excellence. The book itself was an interesting exploration of the conditions under which good performance occurs in big firms. Its message, however, was grossly distorted by the circumstances surrounding its publication—severe inflation, a long recession, and the shocking competitive decline of some of America's biggest corporations. Anxious Americans read Peters and Waterman as saying that, contrary to the impression given by recent events, the IBMs and Fords and International Harvesters were still the rocks of economic vitality they'd always been. Fortune 500 firms bought copies of Excellence by the thousands and distributed them far and wide to spread the good news. Ever since, the nonfiction best-seller lists have seldom been without a feel-good management book that cashes in on the growing uncompetitiveness of big companies in the United States by pretending to acknowledge their need to change. With their pseudo-radicalism, Hammer and Champy are just the latest in a long list of doctors of denial.

No Excuses Management tells the story of the management techniques and perspectives with which T.J. Rodgers built innovative, fast-growing, profitable Cypress Semiconductor from a 1983 Silicon Valley startup to a $300-million chipmaker with plants from Texas to Taiwan. A sharper contrast with Hammer and Champy is hard to imagine. Rodgers is specific where they are abstract, practical where they are academic, savvy where they are naive. His book distills the lessons of direct personal experience, whereas Hammer and Champy dimly observe others from afar. A reader finds no loose chitchat in this book about the decline of hierarchy—this is every inch the testament of a boss who insists on being in charge, expects to win, and doesn't mind being in your face if that's what it takes to get the job done. It is an outstanding contribution to the literature of American management that deserves a place in the tiny circle of classic books by practitioners of management, including Alfred Sloan's My Years with General Motors and Chester Barnard's Functions of the Executive.

Rodgers has been making a name for himself in recent years as the "bad boy of Silicon Valley," in the phrase of a Business Week cover story. He's a Stanford Ph.D. in electrical engineering and onetime Dartmouth varsity football player who sometimes receives visitors to his office dressed in his running clothes. As CEO of Cypress, he not only broke ranks with the industry to oppose federal subsidies, antitrust exemptions, and other government-given goodies for U.S. chipmakers but struck terror in the hearts of procrastinators everywhere when he created "killer software" to automatically shut down the computers of business units with projects that have fallen behind schedule by a certain length of time.

Rodgers got the idea for the software when, at a management meeting, exasperated by the lateness of some vice presidents in submitting quarterly performance reviews for the employees in their units, he yelled, "What do you people want me to do? Cut off your paychecks until your managers do their reviews?" A light bulb went off. Rodgers stopped the meeting, summoned the human resources director, and issued the fateful instructions to take effect in two weeks' time. One of the eventual victims was a Cypress founder, who immediately came to the boss to object that he had tuition and mortgage payments to meet. "You won't get another paycheck until your manager does his reviews," Rodgers replied. "I'm prepared to watch your kid drop out of school and your house be auctioned off on the courthouse steps." Rodgers adds: "For effect, I followed my macho tirade with my best impression of the vacant glare of a crazed killer, Robert De Niro style." Two days later the reviews were in and the vice president got his paycheck.

The book exudes Rodgers's combative style at every turn. The cover features an extreme close-up portrait from which he glares balefully at the prospective reader. Inside, the book reproduces a memo in which the CEO takes two line managers to task for trying to shift responsibility for a shared problem onto one another and denounces the data and arguments they used as "bullshit." Another memo, entitled, "FOLLOWING THE RULES—THIS MEANS YOU," begins, "I was very disappointed today to find out that—once again—you deliberately violated a Cypress specification." A third memo to the managers of one of the company's "fabs" (factories) notes that their billing practices ranked last in a survey of customer satisfaction and tells them to remedy the situation. "I do not view the solution to this problem as a 'program' in which you use 'kaizen' to reduce the defect level over time," the memo concludes. "I view this problem as a 'slam-dunk, kick-some-ass, get-it-done-now problem.' The next billing should be perfect. Thank you in advance for your cooperation."

Once one adjusts to T.J.'s testosterone-drenched persona, this book offers a candid and engaging picture of the way an unusually thoughtful executive does his job in a challenging industry. Its outstanding quality is a passionate, almost novelistic sense of reality. A fascinating chapter describes Rodgers's intriguing computer-based system for giving salary raises based on both merit and equity considerations. There is a long example told with such a relish for the practical issues and physical activities involved that it even identifies the keys Rodgers punches on his keyboard to activate various tests built into Cypress's special compensation software. (Included with the book is a floppy disk for IBM-compatible PC's that demonstrates the program.) Another chapter tells how Cypress developed its elaborate and apparently quite effective system for hiring people in an industry in which talent is the single most important resource.

This is no mere compendium of management technique, however. At the core of Rodgers's book is a critique of and strategy for dealing with the politics and careerism that have made the large corporation so ineffective in our time. Rodgers is a bear on internal politics. In a memo titled, "Politics Is Forbidden at Cypress," the boss scolds one of his top managers: "I thought you would have picked up this fundamental feature of our culture by now. We do not undercut each other. We do not plot against each other. We do not tell stories about other people when they are not there to defend themselves."

Rodgers's main strategy for minimizing corporate politics at Cypress is an extraordinary policy of openness and deliberation. Essentially all information about every aspect of company operations is available to essentially every employee at all times. If a shipping clerk wants to see how up to date or behind his supervisor, or his supervisor's supervisor, or even the chief executive, Rodgers himself, is with respect to his schedule of goals, he can access the person's file with a few strokes of the keyboard, no questions asked. As a result, there are few secrets, and correspondingly few opportunities for people to empower themselves at the expense of their fellow workers.

More important, the key management decisions to authorize new capital spending and new positions are made in a weekly meeting at which all managers are present, every request competes with every other request, and no request for money or personnel is granted unless the unit involved—and, in general, the company as a whole—has had a record of increasing its output per employee. The meetings are naturally contentious, but they get all the issues out on the table, guarantee that a consistent set of standards is applied across the board, make favoritism and inside deals difficult, and impress on everyone the absolute necessity of constantly increasing productivity. Rodgers reports that when he (mistakenly, he now believes) suspended the committee for almost a year, when profits and productivity were off and new spending and hires were on hold, hallway politicking for special dispensations from the CEO picked up dramatically—and that without the presence of other managers and competing information, he found himself hard pressed to say no to special pleading. When regular capital-and-headcount meetings resumed, the politics subsided.

Most ambitious of Rodgers's anti-politics strategies is Cypress's effort to turn itself into a confederation of largely autonomous entrepreneurial firms. At a certain point in its growth, Rodgers concluded that Cypress was beginning to fall prey to the bureaucratic tendencies that afflict big companies everywhere and decided to generate future corporate growth through substantially free-standing startup enterprises, undertaken either by talented employees or by ambitious newcomers. The company would provide venture capital, have a seat or two on the board, and exclusive rights to the product, which would go into Cypress's catalogue. The entrepreneurs would be entitled to the normal founders' rewards if the venture was successful. Rodgers reports that once the managers of his big Texas fab became equity owners of the facility they ran, their demands for capital and headcount fell sharply and they found ways to do more with less.

Rodgers evinces an ability unusual in a CEO—or any American these days—to admit mistakes. For example, a passage about Cypress's killer software casually acknowledges that, at the time it was being written, the CEO's own computer had shut itself down because a number of T.J.'s own tasks had fallen unacceptably behind schedule.

There's nothing wussy or self-abnegating about this—T.J., it's clear, has about as much ambition and ego as it's possible to fit in a normal human psyche, and he obviously hates to be less than perfect at anything. But, on the evidence of this book, at least, when he screws up, he does admit it. As he told some new employees in Minnesota in a briefing on the Cypress culture, "We make no excuses when things go wrong" and "success does not go to our heads."

As much as any system, it's this willingness to subordinate even the CEO's own ego and convenience to the same rules and goals he sets for everyone else that accounts for the importance of this book and differentiates it from what Hammer and Champy have written. The problem of the big corporation today is, in the end, a problem of the disjunction—intellectual, psychological, and moral—between company interests and individual interests. Hammer and Champy scarcely recognize the problem, let alone offer a solution.

Rodgers sees the problem with crystal clarity, and if he doesn't have the entire answer to it, he certainly puts his finger on a big part of it. Rodgers shows that realism in the conduct of a business depends ultimately on the participants' capacity for idealism—for sacrificing present pleasures for the sake of future fulfillments, for avoiding narcissistic politics and perks, and channeling personal pride and ambition to achieve corporate success. Not a new lesson, to be sure, but one that a lot of supposedly sophisticated people these days evidently need to study again.

Contributing Editor Paul H. Weaver, a writer in Palo Alto, California, is the author of The Suicidal Corporation.