Capital Management Corporation

In the late 1980s, Capital Management Corporation undertook a top-to-bottom review of its Direct Response Group, a division that had emphasized the direct marketing of insurance policies using celebrity television ads, mass mailings, and telephone solicitation. Into the early 1980s, the Direct Response Group (DRG) had been highly successful, but by the middle of the decade, its growth was showing signs of stagnation.

This paper will briefly examine how DRG responded to the changes in its business environment, and then expand from that example into a broader examination of the meaning, significance, and effectiveness of the business strategy that has come to be called reengineering.

A number of immediate causes for the stagnation of DRG could be identified (Hammer and Champy, 1994, p. 183). One is that the media environment in which its direct mass marketing operated was changing. The proliferation of cable was increasing the number of television stations available to most viewers; this not only reduced the reach of an ad on any one given station, but fragmented the old three-network mass market into specialized audiences; the demographics of, say, the CNN audience are vastly more different from those of the MTV audience than had formerly been the case as between the networks. The proliferation of direct marketing through the mail increased the volume of "junk mail" in consumers' mailboxes, causing more of it to go directly into the wastepaper basket, unread.

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Note that DRG did not say, in effect, "let's try to streamline the way customer paper work flows from functional department to department." Instead, the traditional "flow" of paperwork was essentially to be abolished entirely. A customer application would land on a given service representative's desk, and there it would be processed and returned to the customer. If it went anywhere else in the company, it would be because, in effect, the customer representative took it there himself or herself--for example, to ask a specialist whether a certain option could be offered. From the customer's point of view (and in the doctrine of reengineering, the question is always "how does this effect the customer;" see for example Lowenthal, 1995, p. 62), the new system offers two fundamental advantages. One is that it accelerates the handling of the customer's business. Any time paperwork "flows" from desk to desk, it is in practice subjected to successive traffic jams of one sort or another; one delay on, say, an individual application stalls all the others waiting in the "flow" behind it. In the new system, a customer service representative simply takes a problem to a specialist; if it can't be solved immediately, that item c

Category: Business - C