Chapter 9

1. Chapter 9 Building and Sustaining Performance Excellence in Organizations

2. Key IdeaIntroduction A total quality strategy requires significant changes in organization design, process, and culture.

3. Obstacles to TQ Implementations • Lack of a strong motivation • Lack of time • Lack of a formalized strategic plan for change

4. Learn to think like top executives Position quality as a way to address priorities of stakeholders Align objectives with those of senior management Make arguments quantitative Make the first pitch to someone likely to be sympathetic Focus on getting an early win, even if it is small Ensure that efforts won’t be undercut by corporate accounting principles Develop allies, both internal and external Develop metrics for return on quality Never stop selling quality Selling the TQ Concept

5. Corporate Culture and Change • Corporate culture is a company’s value system and its collection of guiding principles • Understanding culture and its importance • Cultural values often seen in mission and vision statements

6. Key IdeaOrganizational Culture & TQ Culture is reflected by the management policies and actions that a company practices. Therefore, organizations that believe in the principles of total quality are more likely to implement the practices successfully. Conversely, actions set culture in motion. As total quality practices are used routinely within an organization, its people learn to believe in the principles, and cultural changes can occur.

7. Visionary leadership Customer Driven Organizational and personal learning Valuing employees and partners Agility Focus on the future Managing for innovation Management by fact Social responsibility Focus on results and creating value Systems perspective Baldrige Core Values and Concepts

8. Cultural Change • Change can be accomplished, but it is difficult • Imposed change will be resisted • Full cooperation, commitment, and participation by all levels of management is essential • Change takes time • You might not get positive results at first • Change might go in unintended directions

9. Key IdeaCultural Change Impatient managers often seek immediate cultural change by adopting off-the-shelf quality programs and practices, or by imitating other successful organizations. In most cases, this approach is setting themselves up for failure.

10. Building on Best Practices • Universal best practices • Cycle time analysis • Process value analysis • Process simplification • Strategic planning • Formal supplier certification programs

11. Best Practices: Infrastructure Design (1 of 3) • Low performers • process management fundamentals • customer response • training and teamwork • benchmarking competitors • cost reduction • rewards for teamwork and quality

12. Best Practices: Infrastructure Design (2 of 3) • Medium performers • use customer input and market research • select suppliers by quality • flexibility and cycle time reduction • compensation tied to quality and teamwork

13. Best Practices: Infrastructure Design (3 of 3) • High performers • self-managed and cross-functional teams • strategic partnerships • benchmarking world-class companies • senior management compensation tied to quality • rapid response

14. Implementing Total Quality:Key Players • Senior management • Middle management • Workforce

15. Developing Positive Quality Culture--Five Key Behavior • Create and maintain an awareness of quality. • Must provide evidence of mgt leadership, such as serving on a quality council. • Must encourage self-development and empowerment. • Must develop opportunities for employee participation to inspire action. • Must provide recognition and rewards.

16. Key IdeaChange Management Organizations contemplating change must answer some tough questions, such as, Why is the change necessary? What will it do to my organization (department, job)? What problems will I encounter in making the change? and perhaps the most important one — What’s in it for me?

17. Change Management as a Process • Think of change management as a process. • Three basic steps • Questioning the organization’s current state. • Developing new approaches—a state of flux. • Institutionalizing the new behaviors and attitudes.

18. Change Management at American Express • Scope the change • Why are we doing this? • Create a vision • What will the change look like? • Drive commitment • What needs to happen to make the change work? • Accelerate transition • How are we going to manage the effort? • Sustain momentum • How can we leverage what we learned?

19. Strategic vs. Process Change • Strategic change is broad in scope andstems from strategic objectives, which are generally externally focused and relate to significant customer, market, product/service, or technological opportunities and challenges. • Process change is narrow in scope anddeals with the operations of an organization. An accumulation of continuously improving process changes can lead to a positive and sustainable culture change.

20. Contrasts

21. Key IdeaImplementation Barriers Numerous barriers exist to successfully transform organizations to a sustained culture of total quality. Understanding these barriers can help significantly in managing change processes.

22. Implementation Barriers • Lack of constancy of purpose • Lack of holistic view • Lack of understanding cultural issues • Lack of alignment

23. Common Mistakes in TQ Implementation (1 of 3) • TQ regarded as a “program” • Short-term results are not obtained • Process not driven by focus on customer, connection to strategic business issues, and support from senior management • Structural elements block change • Goals set too low • “Command and control” organizational culture

24. Common Mistakes in TQ Implementation (2 of 3) • Training not properly addressed • Focus on products, not processes • Little real empowerment is given • Organization too successful and complacent • Organization fails to address fundamental questions • Senior management not personally and visibly committed

25. Common Mistakes in TQ Implementation (3 of 3) • Overemphasis on teams for cross-functional problems • Employees operate under belief that more data are always desirable • Management fails to recognize that quality improvement is personal responsibility • Organization does not see itself as collection of interrelated processes

26. Six Stages of Quality Life Cycle • Adoption • Regeneration • Energizing • Maturation • Limitation or stagnation • Decline

27. Key IdeaLearning Organizations Organizations have both dynamic and static components. Organizations are dynamic entities. Managers must consider the dynamic component in order to deal with instability in the environment, imperfect plans, the need for innovation, and the common human desire for variety and change.

28. Learning Organization Peter Senge … an organization that is continually expanding its capacity to create its future. adaptive learning & generative learning

29. Learning Organization David Garvin … an organization that is skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights… Peter Senge Leaders must develop the capability to integrate creative thinking and problem solving throughout the organization.

30. Key Activities of Learning Organizations • Systematic problem solving • Experimentation with new approaches • Learning from their own experiences and history • Learning from the experiences and best practices of others • Transferring knowledge quickly and efficiently throughout the organization

31. Key IdeaSelf-Assessment Process Self-assessment should identify both strengths and opportunities for improvement, creating a basis for evolving toward higher levels of performance. Thus, a major objective of most self-assessment projects is the improvement of organizational processes based on opportunities identified by the evaluation.

32. Self Assessment: Basic Elements • Management involvement and leadership • Product and process design • Product control • Customer and supplier communications • Quality improvement • Employee participation • Education and training • Quality information

33. Importance of Follow-Up of Self-Assessment Results • Many organizations derive little benefit from conducting self-assessment and achieve few of the process improvements suggested by self-study • Reasons: • Managers do not sense a problem • Managers react negatively or by denial • Managers don’t know what to do with the information

34. Key IdeaImportance of Follow-up Following up requires senior leaders to engage in two types of activities: action planning and subsequently tracking implementation progress.

35. Leveraging Self-Assessment Findings • Prepare to be humbled • Talk through the findings • Recognize institutional influences • Grind out the follow-up

36. Implementing ISO 9000 • Start with a quality policy that identifies key objectives and basic procedures • Develop a quality manual to document the procedures • Use internal audits to maintain procedures • Provide adequate resources

37. Implementing Six Sigma • Committed leadership • Integration with existing initiatives, business strategy, and performance measurement • Process thinking • Disciplined customer and market intelligence gathering • A bottom line orientation • Leadership in the trenches • Training • Continuous reinforcement and rewards