Integrating Customer Focus, Involvement, and Horizontal Management
If we don’t change our direction we are likely to end up where we’re headed.
In today’s “Nanosecond” culture, successful organizations are doing what was once considered impossible. They are increasing customer satisfaction, shortening process cycles and response times, reducing costs, and developing innovative new products and services — all at the same time.
Not long ago, organizations could succeed by excelling at one or two of these areas. But the corporate landscape is now littered with the once mighty victims of this obsolete thinking. Today’s winners are capitalizing on the changes and challenges facing all organizations, by being better and faster and cheaper and newer than their less nimble competitors.
Pointed In The Wrong Direction
Transforming a traditional organization to one that’s better, faster, cheaper, and newer is extremely difficult. That’s because organizations have built powerful cultures, systems, and practices that are now pointed in the wrong direction. This misdirection can be found across three key areas:
Internally-Focused — Most decisions about products, services, and organization direction are inside out. Product and service development specialists, technical experts, managers, planners, and other professionals spend most of their time inside the organization pushing products and services out to the market.
Too often the needs of the organization are put ahead of those people it’s trying to “serve”. As John McDonnell, Chairman and CEO of McDonnell Douglas put it, “We did not always listen to what the customer had to say before telling him what he wanted.” This “we know best” approach is now finding many long time leaders out of sync with their markets. The ratings (and revenues) of many mighty corporations are plummeting. Their “loyal” (once treated as captive) customers find products and services that better reflect their changing perceptions of value.
Functionally Managed — Individual departments work to optimize their own internal efficiency. Goals, objectives, measurements, and career paths move up and down within the narrow, functional “chimney walls.” Functional managers and their employees focus on doing their own jobs or segment of the production, delivery, or support process.
Functionally managed organizations typically reduce service/quality levels while increasing cycle times and costs by; 1) fostering an “us-versus-them” approach to communications and fighting for organizational resources, 2) leaving unmanaged gaps between departments which disrupt cross-functional work processes, 3) making improvements or changes in one department which hurts the effectiveness of other departments in the process, and, 4) losing sight of customer-supplier relationships and meeting everyone’s needs.
Since the 1950’s, Toyota has worked tirelessly to reduce the walls and gaps between departments. By the 1970’s, their manufacturing methods became widely known throughout Japan as the “Toyota Production Methods.” In the early 1980’s, their highly successful practices migrated to North America as “just-in-time” manufacturing. Stressing the importance of managing across organizational boundaries, a Toyota executive said, “It is not enough to manage the affairs within your own division. One of the most important functions of a Division Manager is to improve coordination between his own division and other divisions. It you cannot handle this task, please go work for an American company.”
Management-Centered — Management’s needs, goals, and perspectives are the starting point for all activities. Managers and their staff professionals are the brains and employees are the hands. Employees serve their managerial masters and do as they are told. Broad business perspectives and strategies, operational performance data, problem solving and decision making authority, and cross-functional skills are kept by management.
But the world is now moving too fast to maintain this archaic “command and control” approach that puts management at the center of the universe. Managers can no longer know enough, fast enough, about enough things, enough of the time, to anticipate enough of the changes that are needed to improve the organization enough to become better and faster and cheaper and newer enough.
Partial Improvement Patches and Pieces
Recognizing the urgent need to quickly reverse direction, many organizations are implementing a variety of improvement programs and process. These include:
- Employee Involvement and Empowerment — Many training and motivational programs, as well as structural changes aim to move daily problem solving, decision making, customer satisfaction, and productivity improvement responsibilities closer to the frontlines.
- Teams — A rapidly growing employee involvement trend uses departmental, problem solving, cross-functional, project, process improvement, planning and coordinating, and self-directed workteams in many combinations and configurations.
- Customer Service — Increasingly, organizations are identifying key customer groups, clarifying and ranking their expectations, working to realign the organization’s systems customer around those expectations, and training employees to deal with customers more effectively.
- Process Improvement and Reengineering — Data-based tools and techniques, flowcharting, and other “mapping” approaches improve processes at micro or departmental levels. In other cases, processes are radically reengineered across vertical departments at macro or strategic levels.
- Training and Development — Many executives recognize the need for massive improvements in skill levels throughout their organizations. This is leading to major increases in technical, personal communications and effectiveness, team (leaders and members), data-based tools and techniques, process improvement and management, and coaching skill development.
- Technology — Investments in factory automation, information systems, voice and data communication systems, inventory control systems, and so on are growing rapidly as companies push for higher productivity, faster response times, and improved service/quality.
Many of the above efforts are piecemeal or implemented in isolation. For example, training and development, customer service, technology, and process reengineering are often implemented by separate departments with little or no joint planning and coordination. As a result, products or services are either better or faster or cheaper or newer, but rarely all four. That leads to a weakened competitive position. And cynicism for subsequent change programs grows throughout the organization.
Total Quality Management (TQM) is one management approach that can successfully integrate all of the above improvement efforts. But very few organizations are implementing true total quality management. Most so-called TQM efforts are really PQM — Partial Quality Management. That’s why many studies now show that 50-70 percent of what are called TQM efforts are dying or dead. The good news is that 30-50 percent of TQM implementations (those that are truly total) are dramatically increasing customer satisfaction, shortening process cycles and response times, reducing costs and strengthening innovation. Although it’s very tough to do, it can clearly be done.
The Labels Rarely Describe The Contents
The TQM/PQM problem is hardly unique. Most labels describing a number of organization change and improvement efforts have become meaningless. For example, when an executive talks about building a team-based organization, he or she may mean instilling a “teaminess” attitude. Or this might mean using temporary task forces to solve problems. Possibly the executive envisions filling their organization with employee improvement teams (similar to quality circles). Or he or she may want to develop self-directed workteams with no direct supervision. Some times “reengineering” describes layoffs, or traditional “slash and burn” cost cutting exercises. In other cases, reengineering means a change to the organization’s structure. Sometimes it means installing new information technology systems. Or reengineering could be a radical revamping of the macro, strategic processes that establish how most work and customer interactions flow across the organization.
Successful change and improvement initiatives are integrated, or “whole” rather than partial and piecemeal. They flow from the organization’s basic reason for being, values, vision of the future, and strategies. The effort is intertwined with the organization’s operating goals, systems, and measurements. These changes and improvements aren’t programs bolted on the side of the organization. These approaches are tightly intertwined and connected to management systems, daily practices, and behavior.
As he continues a long string of successes in building “the new GE”, CEO Jack Welch observed, “The winners of the 90’s will be those who can develop a culture that allows them to move faster, communicate more clearly, and involve everyone in a focused effort to serve even more demanding customers.” At Multifoods, the international food processing giant (brands include Robin Hood and Bicks), Human Resource Vice President, Bob Maddocks finds that “the improvement process isn’t separate from good leadership and management practices.” He adds, “We want everyone involved in operating the company, focusing on customers, and improving our processes and systems. It’s got to become a way of life for all of us.”
Whatever labels are used, a “wholistic” or systems approach to change and improvement means reversing the inward focus, management-centredness, and vertical management found in most organizations.
For most organizations, these are not minor course corrections. Each of these three key areas demands changing direction by a full 180 degrees.
Besides changing direction in any one of these key areas individually, there is an evermore pressing need to integrate all three as an organization-wide system. This can be either an area-by-area evolution or a broad scale simultaneous implementation. For example, an organization might start by focusing on customers, begin managing processes with basic teams, then move toward shared leadership and self-directed teams. Or the change effort may begin by involving employees through teams, focus on customers, and then move to incorporate process management.
An executive at a US-based telecommunications equipment manufacturer illustrates how these areas can evolve and merge, “We hit the cultural change wall because people didn’t want to do the behavioral stuff (skillbuilding, dealing with conflict, changing habits and practices). People didn’t want to do that because it hurt too much. That got real ugly. So we said, ‘We’re not going to do that behavioral stuff. Instead we’re going to do process improvement work.’ And, after beating our heads against the process wall for a few months, some people found out that they’re really not separate and distinct. You can’t do one without the other. And, oh by the way, the only way that is going to work is to have teams. So, we’re starting to break through the barrier of linking all of those pieces that were originally perceived to be separate. We’re really breaking through the barrier and recognizing that this is all interconnected.”
However the transformation is begun and whatever it’s called, effective long-term change and improvement efforts integrate all three of the key areas. Only through an integrated systems approach to customer service, process management, and employee involvement can organizations become industry leaders who are clearly better and faster and cheaper and newer than their competitors.