1 K. A. POTOCKI AND R. C. BROCATO. QUALITY Management . A System of Management for Organizational Improvement Kenneth A. Potocki and Richard C. Brocato F aced with cutbacks in funding, escalating costs, global competition for limited resources, and a demand for higher-quality outcomes, organizations of all types have felt the pressure to operate more effectively. Organizational improvement is required. Based upon various Management approaches, five guiding principles are being used to make outstanding improvements in Organizational performance: measurements/bench- marking, leadership, employee involvement, process improvement, and customer focus. However, not every organization trying to apply these principles is successful. What is required for success is that these principles be understood and applied as an integrated System of Management . INTRODUCTION. During the past decade, rapid worldwide technolog- these principles seem familiar and make good common ical and sociopolitical changes have precipitated the sense, yet not every organization that has tried to apply globalization of the economy where.
2 In every them has been successful. industry and sector throughout the world, success, and The purpose of this article is to describe how this set in some cases survival, will depend upon the ability of of five principles constitutes the components of a System organizations to compete globally. 1 Fueled by this of Management for Organizational improvement. First, change, organizations of all types, including business, the failure of improvement initiatives will be examined government, education, health care, military, and re- to shed light on why quality improvement approaches search and development, have been rethinking their are often unsuccessful. Next, systems concepts will be operations and Management Faced with reviewed in order to establish appreciation for a sys- many of the same demands, such as cutbacks in funding, tem. 2 Insights gained from the applications of systems escalating costs, competition for limited resources, and thinking to this theory of Organizational improvement a demand for higher-quality outcomes, these organiza- will then be used to develop an understanding of how tions have all felt the pressure to operate more effec- the individual components of the System reinforce each tively.
3 The old paradigms simply are not working other. Finally, the validity of this proposed System of Transformation into a new style of manage- Management will be examined through its different ment is applications to Organizational improvement. When we examine the various Management ap- proaches that these organizations are taking toward REASONS FOR FAILURE OF. managing improvement, we find five guiding principles that are working to make outstanding gains: measure- IMPROVEMENT INITIATIVES. ments/benchmarking, leadership, employee involve- One of the key reasons cited for the failure of ment, process improvement, and customer focus. All of quality improvement initiatives is that many quality 402 JOHNS HOPKINS APL TECHNICAL DIGEST, VOLUME 16, NUMBER 4 (1995). A System OF Management FOR Organizational IMPROVEMENT. Management plans are simply too amorphous to gen- a partial manner employing a confusing set of tools erate better products and services .. [Yet,] the only and techniques, improvement teams, and training, with justification for the enormous sums of money invested no visible connection to the real business of the orga- in [quality improvement initiatives], is increased cus- nization or to its improved These efforts tomer satisfaction and improved competitive posi- failed because the organizations failed to realize the tion.
4 4 Simply reading lots of books, training lots of interrelationships of the five previously cited guiding people, and forming lots of teams to implement thou- principles; little benefit was derived when the princi- sands of new practices simultaneously have little effect ples were on customer satisfaction. Neither do such acts have an On the other hand, studies have shown that successful effect on determining what competitive advantage an organizations appreciate the importance of the inter- organization will have in the marketplace. If these relationships of these common-sense principles. When activities do not add value to an organization or do not they employ the principles as a System of Management , align with its strategic direction, they will fail to make they exhibit greater profitability, increased customer a meaningful contribution to the bottom line and they satisfaction, more involved employees, lower costs, will be discarded. Many companies have fallen into this higher productivity and efficiency, and superior quality activity trap in trying to implement quality improve- in their products and services.
5 10,11. ment Several recent studies have suggested that quality SYSTEMS CONCEPTS. improvement, in its present form, may not be able to The quality improvement approach is not a pro- claim the kinds of successes that would justify current gram or an organization intervention with a specific levels of According to a study by Mat- beginning, middle, and end. It is a System of manage- thews and Katel,6 Douglas Aircraft was troubled by poor ment: strategic in nature, open to the environment, earnings and an inferior competitive position. In 1989 cyclical in operation (producing output and receiving the company implemented an extensive quality im- feedback), striving for equilibrium (a state of balance provement program; by 1990, continued losses forced or adjustment between opposing or divergent influenc- them to abandon it. Matthews and Katel also reported es or elements), and seeking optimization (a process of that winning the Malcolm Baldrige National Quality arranging or combining the efforts of all components Award did not help the Wallace Co.)
6 , a Houston-based so as to achieve a required response). oil supplier, stay profitable. And they cited a survey of By System , we mean an integrated assembly of in- 500 companies conducted by Boston's Arthur D. Little teracting elements [or components] designed to carry that found that out cooperatively a predetermined function. 12 This [A] slim 36 percent said the [quality improvement] process definition is intentionally broad to cover a wide range was having a significant impact on their ability to [be of different systems. In an Organizational context this competitive]. Some companies complain that such manage- implies a multiplicity of people, processes, technolo- ment techniques cost more than they're worth ..6. gies, and materials that together perform a significant In another study, MacFarland7 cited that federal function and contribute to a specific aim a service or managers are ambivalent about [quality improvement] product development. because they do not fully understand the concept or the A simple three-function model of a System is shown connection between improved quality and cost sav- in Fig.
7 1. The input to this three-function System comes ings. She based her claim on a survey of 600 federal from sensing the environment; the processing is done executives and managers conducted by the international consulting firm, Coopers & Lybrand. The study suggest- planning Information Communication Technology Process ed that critical steps are being missed in the implemen- control tation of the quality improvement Blewitt8. reported that most quality improvement initiatives spend too much time focusing on the processes and mechanics of the improvement program instead of the end result, which is customer satisfaction. He also pointed out that every company should strive for con- Analysis Sensing and Response tinuous improvement .. They need to be continu- decision ously refined to reflect changes in the business environment and in customer needs. To work, quality improvement initiatives should clearly define leadership and communicate a vision for Organizational Input Processing Output Wilkinson's research indicated that many failed Figure 1.
8 Three-function systems model. quality improvement initiatives were implemented in JOHNS HOPKINS APL TECHNICAL DIGEST, VOLUME 16, NUMBER 4 (1995) 403. K. A. POTOCKI AND R. C. BROCATO. by people using technology and methods to do analysis ning System changes or process improvements. In ad- and make decisions; and the output constitutes the dition, measurements/benchmarking can be used as a response of the System to the input. The infrastructure feed forward mechanism to predict trends, forecast to make the System work is contained in subsystems future environments, and anticipate needed improve- such as planning , information, communication, tech- ments. This allows organizations to change course and nology, and process control. anticipate the needs of customers for new products or Extending this three-function model in Fig. 1 to a new services. System of Management for Organizational improvement, Leadership, the second component, is a System pro- a relationship of Management principles develops.
9 The cess that is strategic in nature. A System must be first element, sensing, provides the input to which the managed ; this is the leader's It requires the System will react. This input usually comes from the conception of an Organizational vision an ideal, pre- environment outside the System . In an Organizational ferred future with a grand purpose and a strategic plan improvement context, it may come from measurement to realize that vision. This plan includes mission, goals, of customer or sponsor satisfaction about products and/ and objectives that cascade down each level of the or services or from benchmarking other organizations' organization. Leadership also serves to create and best practices. The second element, analysis and deci- maintain an environment of information sharing, open sion, considers processes inside the System that result communications, integrity, and trust. These elements from acting upon the information from outside the constitute a basis for reacting to customer inputs and System .
10 In an Organizational improvement context, empowering employees. analysis and decision includes the leadership, employee The third component, employee involvement, is a involvement, process improvements, and communica- System process that creates a spirit of cooperation with- tions necessary to tailor a specific response. The third in an organization and taps the creative contributions element, response, represents the output of the System . of each member. An organization's success in improving In an Organizational improvement context, an output performance depends largely on the skills and motiva- could be customer-focused improvements in product or tion of its workforce. Employee involvement aligns performance. Thus, the System of Management for or- human resource development with strategic plans and ganizational improvement has five interrelated compo- change processes. It focuses on empowering the work- nents as shown in Fig. 2. force and forming worker manager partnerships.