CRAIG GOLDMAN

Chief information officer

Chase Manhattan Corp.

New York

"Reengineering" is a new name, but it is not necessarily a new game. It is not a silver bullet, and the zealots who believe that radical change is right, now know that. Corporations are making mistakes when they say that what is current is bad, just because it's current. It is critical to have a balanced approach to changing the business - that is, improving profitability while at the same time focusing on differentiating ourselves by servicing customers and improving shareholder value.

Finding out where the risks are is not rocket science. You must get people involved early, get management to back this, and implement a clearer set of objectives for everyone involved. Reengineering takes a major effort, and you must have the right resourcing, including the very best people - people who know the area and the disciplines so they can be creative and understand how you can change the given environment to a new way of doing business.

The reason many of restructurings fail is there isn't a sufficient level of commitment to take your very best and make things better. What is important is to make sure you have a corporate culture that accepts and promotes change. You must set a baseline and say, "This is our normal way of doing business - to constantly improve." Companies that seem to do things drastically have much greater difficulty achieving their goals.

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ROBERT ROUT

Chief financial officer

S&T Bancorp

Indiana, Pa.

No one should underestimate the difficulty of implementation, or the profound effects that reengineering will have on an organization. Reengineering is not just workflow and technology changes. Reengineering causes wholesale changes to an organization's culture. The risks of reengineering are so high that managers should only initiate these projects when they believe the changes are necessary for competitive survival.

Reengineering works best for organizations in financial crisis, or those that have neglected ongoing workflow assessments, staff development, and technological innovations. A continuous improvement approach has much less risk, and is more appropriate if the financials of an organization are reasonably healthy. I believe if managers are doing their job, reengineering their area of responsibility should be a daily function, not a special event.

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JAMES MCCORMICK

President

First Manhattan Consulting Group

New York

Most reengineering programs fail. Management starts out with a clean sheet of paper, aiming to refurbish the entire business. But the effort soon flags because the knowledge base needed to identify customer segments with both the potential to increase purchases of financial products and the likelihood of being profitable is absent. As a result, the focus of these programs nearly always shifts to cost cutting - an effort that is not sufficient. Since, in the long run, income growth will track revenue growth, banks that want to maintain strong stock valuations must mobilize internal and external resources with the marketing and customer- segmentation skills needed to transform their reengineering programs into major revenue-building successes.

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THOMAS KIELTY

Senior vice president

Canadian Imperial Bank Corp.

New York

A major reengineering minimizes risk if it: a) employs a holistic approach that commoditizes procedures while reducing variability; b) addresses long-term issues so follow-up reengineering of a similar magnitude isn't necessary over the short term; c) gets senior management buy-in and support, and, d) recognizes that day-to-day tasks still have to be addressed in the midst of macro changes. Equally important, successful reengineerings must be from the inside out, not outside in. Organizations must make their best people accountable for effecting changes, so the effort has to start with the internal talent base. We've learned at CIBC that although outside expertise is invaluable, there's no substitute for people who know our clients, policies, and culture.

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DAVID E. SPARKS

Vice chairman and CFO

Meridian Bancorp

Reading, Pa.

Since Meridian's performance has been strong, it was imperative that we explain and justify the program to our employees, customers, and investors as a positive program. We have made great efforts to avoid the impression that this program represents a retrenching or a vulnerability by emphasizing the strategic importance of improving our competitive edge, positioning the company for growth, and improving profitability.

The second biggest risk was the potential loss of focus on the part of our employees. We were concerned about potential revenue loss and quality revenue loss (those revenues that are profitable and have the potential for definite growth). There is a concern that employees could become preoccupied with internal strategies and lose the focus of staying on top of our customer service. We tried to make sure that did not happen.

Finally, we think it is imperative to change the culture of the company during a program of this kind.

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WILLIAM T. GREGOR

Senior VP, financial services

Gemini Consulting

Cambridge, Mass.

There are significant risks when embarking on a major reengineering project: Is there a clear and consistent agreement whether the effort is merely a 5% or 10% cost reduction or a transformation of the way that work is done to significantly reduce costs and to dramatically improve customer satisfaction?

If the latter is the case, does the design incorporate sufficient involvement and understanding of the customers' needs and the customers' own business processes? Is there an appropriate balance between top-down visions and commitment to the process, on the one hand, and the necessity of bottom-up ideas and involvement on the other? Does management, in its use of consultants - internal or external - strike the proper balance between giving them a free hand and having them expect front line managers to conduct an "autoappendectomy?"

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