INTERVIEW: MICHAEL HAMMER – Process Must Focus On Customer

Reengineering guru Michael Hammer has a new agenda. More precisely, a new book called The Agenda (Crown Business, 2001), which discusses how business processes need to change to sustain companies throughout the next decade. CIO recently talked with Hammer about his book.

CIO: Why did you write The Agenda?

Hammer: I spend my time trying to see why some companies do well and others don’t. When I see a number of consistently smart and successful companies do something, I conclude that this might be something interesting. What I’ve seen over the past five years is a set of issues focused on what it takes to operate successfully in [today’s] environment. And I knew I had to write a book, which is not something that you generally want to do. It’s financially a terrible thing and tedious as well. You only do it if you feel as if you will explode if you don’t write it down.

What’s the book’s overarching theme?

The basic premise is that we are operating in a new environment, which I call the customer economy. It sounds familiar, but it’s very different. It’s driven by overcapacity in nearly every industry–the overcapacity of the worldwide steel industry, for example, is larger than the total capacity of the entire U.S. steel industry. We also have the effects of globalization, shorter production cycles and more sophisticated buyers, all of which mean that the customer rules. But strangely, and in spite of a lot of lip service, companies still don’t put the customer first in their business processes. For example, measurement systems are undoubtedly very important. But they don’t measure the right things. If you ask, “How long does it take your company to fill an order, or how much does it cost to fill an order?” people say, “Huh?” They know the functional costs associated with each department, but they don’t know the end-to-end costs per unit.

Where does CRM software fit in?

Nowhere, because we don’t have real CRM yet. Real CRM would be almost as monolithic as ERP. It would integrate all interfaces with customers over time. But when you buy CRM software now, you find that it’s nothing like that. It’s sales-force management software or call center software.