Now serving as chairman of Perot Systems’ consulting practice, Jim Champy is recognized throughout the world for his work on leadership and management issues and on organizational change and business reengineering. He is the author of several books that include Reengineering the Corporation co-authored with Michael Hammer, Reengineering Management, The Arc of Ambition co-authored with Nitin Nohria, Fast Forward, and then the first two volumes in a new series, OUTSMART! and INSPIRE! At Perot Systems, Champy provides strategic guidance to the company’s team of business and management consultants and plays a pivotal role in furthering the firm’s goal to create an approach to services design and delivery unlike any in the industry. He consults extensively with senior executives of multinational companies seeking to improve business performance. His approach centers on helping leaders achieve business results through four distinct, yet overlapping areas—business strategy, management and operations, organizational development and change, and information technology. Champy earned BS and MS degrees in civil engineering at MIT and then a JD degree from Boston College Law School where he became deeply involved in the intellectual life of the school and served on The Law Review as a writer and as an editor of The Annual Review of Massachusetts Law. He received his JD in 1968 and is a member of the Massachusetts Bar.  He is a Life Trustee at MIT and is a Director of Analog Devices Incorporated.

Note: This interview was conducted before Champy published Reengineering Health Care, co-authored with Harry Greenspun. The third volume in his aforementioned series, DELIVER!, will be published by Financial Times Press (October, 2011).

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Morris: Your formal training in civil engineering seems to have played an important role in the development of the ideas you share in the two Reengineering books. Is that a fair assessment?

Champy: Mike Hammer and I were both trained as engineers – Mike as an electrical engineer, I as a civil engineer. Our engineering training taught us to be systems thinkers. We looked at companies as “systems” and saw work as a system of tasks – that needed to be reengineered. We were also focused on operations, getting things done and built. Our engineering training taught us to be pragmatists.

Morris: Despite the information and advice that you and others such as Michael Hammer and James Womack have provided, how do you explain the failure of many (if not most) change initiatives?

Champy: A change initiative can fail for multiple reasons – in fact, there are just too many things that can go wrong. The focus of the initiative might be wrong – too narrow or too broad. The initiative might be poorly executed or under-resourced. But most often, a change initiative fails because it hits a behavioral impasse. Something in the culture of the company is in conflict with the objective or execution of the initiative. When a change initiative is focused on changing a company’s culture directly, it can take five to ten years to accomplish its objective. Company cultures don’t change easily. My friend Peter Drucker used to argue that company cultures don’t change at all.

Morris: Especially within the last few years, there has been a great deal attention devoted to employee engagement or the lack thereof. Recent Gallup research indicates that indicating that 29% of the U.S. workforce is engaged (i.e. loyal, enthusiastic, and productive) whereas 55% is passively disengaged. That is, they are going through the motions, doing only what they must, “mailing it in,” coasting, etc. What about the other 16%? Are they engaged? Yes. They are actively undermining efforts to achieve their organization’s objectives. If true, how do you explain these statistics?

Champy: I think that many people have lost their sense of loyalty to their company. That’s because very few companies remain loyal to their people. The old “job for life” condition disappeared 20 years ago – and nothing has replaced it.

On the other hand, I think that people still naturally want to be part of a team and participate in the success and achievement of a group effort. So we tend to be enthusiastic and productive – and even loyal. I believe that there are very few people who purposefully try to undermine the efforts of their organization. When people do act against the objectives of a change initiative, it’s often because they genuinely believe it’s not the right thing for the company to do. You could argue that it’s a form of misguided loyalty.

Morris: Now let’s shift our attention to OUTSMART!, the first volume in a series of three. To what extent is this book a significant departure from your earlier works?

Champy: OUTSMART! and INSPIRE! are different in approach and form from my reengineering books. OUTSMART! and INSPIRE! don’t start with a big idea. Their underlying belief is that there is not much new in management, but there is a lot new in business. In both of these books, I wanted to write about companies that had new business modles – new products and services, delivering them in new ways. It was inspiring to see what some companies are doing. Of course, some general principles did emerge from these examples, and I call them out in both books.

Morris: It seems to me that there is an almost total lack of theory and hypothesis in OUTSMART! When offering suggestions with regard to improving performance, you focus almost entirely on what works, what doesn’t, and why. Is that a fair assessment?

Champy:  You have got the book right: I’m trying to focus on what’s working. Enough has been written on management theory – and I don’t have much to add to that thinking.

Morris: What is your overall objective for the series, to be concluded with DELIVER!?

Champy: I think that we can all learn from what smart companies are doing. My objective in this series is to demonstrate what’s possible, even during tough economic times. This is a period of great business dislocation, but that means it’s also the time to try new things. This will be a challenge for existing companies. (I call them “incumbents” in the books.)  But the behaviors of smart companies can be learned.

Each book is looking at new business models through a different lens. OUTSMART! is about where new ideas come from and how they are being implemented differently. INSPIRE! is about businesses that are exceptionally good at engaging their customers.

DELIVER! Will be a book about execution, advice at a time when every customer seems to want more value, but also expects to pay less.

Morris: As you and countless others have correctly noted, much of the resistance to change initiatives is the result of culture barriers, of what James O’Toole aptly describes as “the ideology of comfort and the tyranny of custom.” In your opinion, how to overcome such resistance?

Champy: I agree with O’Toole, and as I have suggested above, culture is also a cause for the failure of many change initiatives. Not much has been learned about how to overcome cultural resistance since we wrote the reengineering book. I used to believe that you could change the culture or behavior of a company. I still believe it’s possible, but it is at least a five to ten year process, if you are successful at all. More recently, I have been attracted to the ideas of the behavioralist, Edgar Schein. Schein has argued that you cannot change the culture of a company, but you can use the culture of a company to create change. It’s an interesting approach to overcoming resistance. And if you can change how a company does its work, you might eventually be able to change how its people think.

Morris: Although DELIVER! has not as yet been published, presumably it will support an assertion made by Peter Drucker more than 45 years ago: “There is surely nothing quite so useless as doing with great efficiency what should not be done at all.”

Champy: Yes, I also agree with Drucker. The DELIVER! book will examine how companies (and one government agency) are becoming dramatically more efficient while, at the same time, delivering more value to their customers. It’s a book for the times: how to deliver more with less.

Morris: An economy such as the current one seems to create both unusual perils and unusual opportunities. Two separate but related questions. Which peril do you consider to be the most serious? Which opportunity excites you most?

Champy: It is a time of both challenge and opportunity. I worry most about the actions of government and whether government actions will, inadvertently, dampen the entrepreneurial spirit in this country. We are a great capitalist society, that works most of the time. We do need to take better care of our people and fix the access, cost, and quality of healthcare. But we need to act intelligently. We needed the intervention of government to keep the economy from falling into an abyss, but we must now encourage the creation of business – not burden it.

Even during these times, there is great opportunity – especially for young companies that invent new ways of doing things. We are going to see new, dramatically lower price points for products and services in many industries – just think about information and software and what’s available free today. There is opportunity here for companies that are not burdened with high costs and old operating models.

Morris: In your opinion, what is the one issue that most business leaders do not take into full account when making decisions?

Champy: Most business leaders don’t consider their own causality in the creation of problems. They fail to see that their company could have avoided breakdowns if they had acted differently. We tend to see problems as having been created by someone else or by the “economy”. It’s good to be a little introspective from time to time. Think about how your own behavior might have gotten your company into a problem, and how it may help to get you out.

Morris: Looking ahead (let’s say) 3-5 years, what do you think will be the greatest challenge that business leaders will face and most somehow overcome?

Champy: In 3-5 years, most companies will need to have a global operating model – even if you only sell locally. Even mid-sized companies will source globally. Knowing how to operate in this environment will be critical. We need to train managers and leaders to become citizens of the world.

Morris: Which question do you wish you had been asked – but weren’t — and what is your response to it?

Champy: Whose books do I most frequently re-read? Peter Drucker’s

because he defined modern management and wrote clearly and concisely about it.

To learn more about Jim Champy, please visit http://www.jimchampy.com/.