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The Case of TQM and Innovation
THE DISCUSSION LEONARD D'COSTA Group President (Corporate Development), Piramal Enterprises Using a static model of TQM is always dangerous. CEO Narayanan should focus Horizon's TQM program on a dynamic model--such as the Malcom Baldrige or European Quality Assurance (EQA) Models--which aims at achieving total business excellence. They are not static like the one used by Horizon; they are continuously upgraded on the basis of the learnings from best-in-class companies, and factor in changes in the external business environment. Business processes change on a regular basis, and can never remain the same, especially when the environment is in a state of flux. Most important, the criteria used by both models are non-prescriptive and, therefore, encourage companies to be highly creative, adaptive, and flexible. In fact, both the Baldrige and the EQA Models have separate chapters focusing on innovation and creativity. Chapter 5 of the EQA Model, for instance, deals specifically with the identification and evaluation of critical success-factors. This includes specifics on how the organisation can focus the creative talent of its employees through improvements that are either incremental or breakthrough. It encourages the innovation of designs, technologies, and operating philosophies. Another important module of the models deals with the customer's changing perception of products, services, and customer relations. The strategy development process in Section 2.1 of the Malcom Baldrige Model, for instance, looks at an organisation's capability to create new opportunities, and evaluates its ability to innovate. Clearly, there is no dichotomy between TQM and business excellence. And innovation and creativity are integral constituents of the latter. Horizon is, possibly, strong in manufacturing excellence, and weak in innovation. If the key focus in the company is to shift to innovation, the TQM model is flexible enough to provide for, and reflect the new thrust. A few appropriate changes in the assessment-framework can actually facilitate this. It is true that ISO 9000 imposes a certain discipline of conduct, and seeks conformity to certain norms. And it does generate a bureaucracy of its own. There is a tendency to overdocument procedures and processes, often without examining their relevance to business results. This, of course, has the advantage of providing a quality focus to the entire organisation. The flip side is that it may stifle the creative talents of individuals, and not allow an organisation to realise the full potential of its people. The key is to move quickly out of this particular mode, even while consolidating the gains of the system, towards a dynamic model of business excellence. Team-work is, indeed, the cornerstone of TQM. But, sometimes, people feel that consensus means the absence of confrontation. This is not consensus, but a compromise, where one plus one equals one-andhalf. It is only when individuals are forced to compromise that they become disillusioned with TQM. The best way to avoid this is to look at team-work as a synergistic process, where one plus one equals 10, 15, or even 100. A consensus based on synergy would entail brainstorming and valuing differences of 1
It creates a foundation of excellence that can nurture the pioneering spirit of entrepreneurs and the creative spirit of individuals. which characterises the early stages of TQM. A culture that values performance. Until then. such a score would indicate that Horizon has not reached the level of excellence. or anticipated. and it should work on all 4 parameters simultaneously. It is only through such a mindset that you can encourage creativity. Even ABC. Komatsu finds a need for underwater earth-moving equipment. It is a complete management approach. it is about innovation. if carried to an extreme. thereby unleashing the power of offence backed by defence. quality. it cannot be denied that Narayanan's concerns over the lack of innovation are genuine. It is important not to pursue any change-initiative in isolation of the larger organisational concerns. Agreed. Narayanan has not. But TQM is different. Horizon has. most often.67 per cent. SRF Horizon has clearly travelled some distance into TQM. enhanced its defensive abilities. 2 . TQM is.opinion. vastly different from what companies usually do with it. Two instances: Konica finds that amateurs often forget to use the flash in their cameras. sometimes only to reinvent the wheel into something of a polygon. delivery. Companies where large-scale downsizing has been one of the modules of BPR have not been able to reap its benefits primarily because the need for balance was ignored at some point of time. transparency. When you foster an environment which encourages an openness to new ideas and a willingness to accommodate different points of view. you automatically make room for the generation of breakthroughs. AT&T. stifles creativity and innovation. evidently. and candour is a pre-requisite for quality improvement. BPR. as an individual. That is how organisations like Motorola.500 works out to 56. about improving an existing product but. Narayanan and his team must realise that balance is of the essence irrespective of the nature of the change-initiative they adopt: TQM. The focus is then on the creation of quality that attracts customers through product-differentiation. As TQM establishes itself in the organisation. and innovation. the focus is purely on the elimination of defects and the spike-points of customer dissatisfaction. Result? An underwater dredger. N. And BPR does nothing to institutionalise innovation. people-oriented. sometimes. The moment you move to one extreme in any area. Development in that area can only come at the cost of development in others. the focus gradually moves to the satisfaction of customers' needs-stated. and 3m develop new products and services regularly. At this stage. basically. His unstated approach seems to be that quality is "freedom from errors. Innovation is an integral part of TQM's ethos. Attractive quality is. Now is the time for the company to introduce attractive quality by applying the template of TQM to new productdevelopment. a word on Horizon's self-assessment process. moved with the times. Result? Autoflash. there is no real TQM at Horizon. Finally. the balance tilts. RAMANATHAN President (TQM). At the same time. Food for thought for Narayanan. ABC is a managerial tool and a good one." This is a defensive approach. or ABC. But Jetley's analysis--which tars all change-initiatives with the same brush to suggest that all of them extract a price in terms of stymied innovation--is a bit off. BPR is a technique which applies blue sky thinking. A score of 850 out of 1. a good score but. However. it is neutral to innovation. latent. in both the Baldrige and EQA models. Horizon should achieve a balance between cost.
Otherwise. as CEO. Change-initiatives like TQM. but it will achieve very little in terms of real ideas." as Ishikawa said. The belief that TQM brings about only incremental improvements is false. SURESH LULLA CEO. Horizon's senior managers need to remind themselves that policy-deployment--one of the pillars of TQM--is concerned. That it brings about incremental improvements at the cost of innovation is an even bigger fallacy.50 million acts of creativity. Toyota receives 2. In the US. customers.50 million ideas ever year. what is wrong with small improvements? Continuous and small improvement can. Sending every employee to vendors. The Japanese have mastered this art to achieve competitive advantage.I do not agree that it may not be possible to pursue innovation while simultaneously tackling issues related to quality and cost. A close look at any TQM model will convince even the most die-hard unbelievers that innovative and incremental improvements can take place simultaneously in a TQM initiative. it will only breed cynicism--as TQM has. But some of the most powerful innovations in products. and dealers once in a while is a good idea. Xerox rejuvenated its new product-development through quality efforts. of course. Nippondenso is not only at the cutting-edge of technology. Qimpro Consultants Narayanan's apprehensions are misplaced. TQM--and incremental and linear? No way. innovation in the absence of such a defensive-base will fail. essentially. with breakthroughs. it is also the stable from where concepts like Just-In-Time. we owe to it the concepts of Early Stage Instability Control and. it is true that any change-initiative should begin by focusing on the elimination of waste. TQM is a "thorough revolution. 3 . at times. That mechanism is policy-deployment. In any case. let alone innovation. The way vendor partnerships are built. and even management know-how have been made by companies that have adopted TQM. Improvement. Or the way team-spirit is promoted through active employee participation. and ABC do not stifle innovation. Encouraging people to question the impossible. But the organisation must assess if it has the capability to deal with customer needs. is not in its scope. In a sense. incremental changes. and Cross-Functional Teams have evolved. TQM is about the uncompromising rejection of the quick-fix. In fact. it would help if Narayanan were to ask himself that question first. mean quite fundamental changes. BPR. On the contrary. Equally wrong is the thinking that TQM focuses only on gradual. Toyota continues to innovate at an astonishing pace. Companies which freeze their standards without first learning to improve get stuck in bureaucracies. Why blame ISO 9000? It is. which translate into 2. It is a misconception that ISO 9000 discourages people from breaking away. Only. But it is not sufficient to say: back it up all the way. after all. TQM is founded on explicitly-stated principles which lead to 180-degree turnarounds in the way things are done. they promote it. How can Horizon make innovation a part of its strategic policy? Making innovation the organisation's theme may sound good. technologies. 5-S. Horizon needs a management system to translate the breakthrough vision into a popular initiative in which everyone must participate. TPM (Total Productive Maintenance). Of such questions are born great strategies. and moving the company beyond its existing boundaries is a good idea. no more than a maintenance document. and gave us the tool of Benchmarking. innovations are more a rule than an exception in great TQM companies. and that the process itself tends to be linear and predictable. for instance. Both the Baldrige and EQA criteria encourage the adoption of innovative and incremental improvements in tandem.
It is there in the fine-print. Narayanan should be clear about the direction the company should take to achieve this change--an area in which Strategic Planning comes into play. its main objective is costreduction. A few modifications in its assessment-framework should do. BPR facilitates innovation. ABC is a tool that prioritises opportunities for incremental improvement in TQM's processmanagement. better. This demands an understanding of individual market segments. and cheaper. one proactive. cost-reduction is merely a byproduct. Clearly. This is where the Leadership parameter matters. and the community. In a reactive approach. Horizon--like most other companies that use a self-assessment template--has been liberal in scoring itself and has. It expresses quality in terms of product features that attract a customer to purchase Company A's products in preference to those of Company B's. TQM. is to track business results for at least 3 years. and supplements the process-management element of TQM. He should be firm about the pace of change he seeks. At the same time. Even while making investments for innovation. as the Japanese do. The proactive approach defines quality from the customer's perspective. ignored the small stuff. Evidently. one reactive. employees. in the process. There is no compelling reason for Horizon to change the weightages assigned to the parameters in its TQM model. not with orders but with complaints. Over a period of time. The essence of a successful change-initiative is using the right tool for the right project. compare them with those of the company's main competitors'. Let me highlight how these tools are interlinked. suppliers. and invite a third party to 4 . Usually. it is the proactive approach to quality which should drive a change-initiative. All Narayanan needs to do is to revisit the model. There are a number of tools--like BPR. and how innovation is an integral part of all 3: TQM goes beyond product. Clearly.and process-quality. It measures the quality of management as perceived by customers. shareholders. This module will help him decide whether Horizon should seek the incremental route or the innovative route or. it is the customer who chases a company. What is quality? You can look at it in 2 ways.It is important to understand that innovation requires capital investments while incremental improvements happen with little. and Strategic Planning. there is a strong element of infotech-intervention in BPR. The reactive approach expresses quality as freedom from deficiencies. benchmark the practices of world-class companies. The eventual objective of ABC is better quality. or ABC--that he could deploy in this context. in addition. Japanese companies manage to achieve a positive performance-edge over their competitors through sustained incremental improvements. or no investments. which have some bearing on his own role as a change-agent. What Narayanan should do. and requires innovative responses to change. which results in a simplified organisational structure that emphasises process-ownership in addition to functional-ownership. By its very nature. The focus of BPR is on delivering output faster. The parameter of process-management in most TQM models underlines both innovation and incremental improvement. this inability tends to reduce the impact of innovation on their business results. Even the self-assessment model being followed at Horizon does have a provision for innovation. and consider 2 specific parameters: Leadership. a combination of both. companies like Horizon are unable to supplement incremental improvements with innovation.
are unwilling to experiment. which has registered some progress on several parameters. Therefore. RAJPAL Executive Director. and recognises his creative contribution. This approach is driven by the belief that. apart from demonstrating a visible commitment to business results.K. They are obsessed with self-preservation. they are. This can be done through efficiency-enhancement techniques--like TQM. It has happened because the people in Horizon are driven. they are motivated to achieve higher levels of excellence. but in the environment in which they are deployed. The most significant role of the senior management team is to provide an optimal organisational climate. The impact of change-initiatives has been encouraging at Horizon. the other 2 being specific to each individual and her level of competence. and.conduct an assessment of the company. It is important to understand how and why this has happened. where the customer has to be delighted. What companies like Horizon need is a culture that is oriented towards the creation of customer. obviously. NOCIL It is imperative that a company implement change-initiatives while keeping the perspectives of value-creation and process-simplification in mind. When they are driven by straightjacketed rules and regulations. the overall creativity of an organisation is zero. Creativity = Inspiration � Imagination � Environment. product launches. In fact. V. the senior management should create enabling processes to ensure a culture of value-creation. In Horizon's case. the only external factor in this equation is the organisational environment. ABC. Indeed. A company's reaction to change--which could vary from delight to disillusionment--is a function of the way in which it is handled. but by systems and structures. In a competitive market. given the right environment. in the process. The only safeguard against disillusionment lies in the creation of an environment which respects the individual. This means that if the contribution of any of the 3 elements is zero. and BPR--or growth initiatives--like value innovation. and diversification. this translates into 5 areas of action: 5 . When individuals are driven by a shared sense of purpose. To my mind. But its focus on long-term growth has been limited. the limitations of techniques like TQM do not lie in the processes that constitute them. every employee is capable of being creative. the real challenge of leadership lies in stimulating a drive for excellence in the organisation. not by a common vision.and shareholder-value. Therein lies the clue to Narayanan's disillusionment with the way things are. stifled. concerned only about retaining their jobs. What has happened at Horizon--and this is typical of most companies undergoing a transition--is that people are seeking comfort in their roles as prescribed by the prevailing systems. Any change-initiative creates some level of stress in the organisation. Which should encompass all areas of business. This will enable him to introduce an element of rigidity and objectivity into the framework. Note that it is a multiple.
both monetarily and emotionally. Innovations do not happen in a day nor do they yield immediate results. is the biggest motivator. however big. the CEO and his team should reiterate the company's vision. But. however incremental. Instituting structured interaction sessions at various levels to solve problems. Incentivising employees. Communicating the successes of value-creating initiatives as and when they occur. It is imperative that Narayanan and his team launch a dedicated product-development drive to ensure that Horizon creates value in the long run. At every available opportunity. for coming up with value-enhancing ideas. these steps will not only streamline the efficiency-enhancement techniques at Horizon.Establishing a common understanding of each initiative. the results are dramatic. is beyond resolution. when they do occur. should be managed by non-hierarchical. as I see it. Ensuring that people are ready for change-initiatives. the issue of growth remains unanswered. A demonstrative evidence of success. The easiest way in which Narayanan can motivate his employees to come up with new ideas is to evolve a framework of incentives that recognises and rewards ideas. This will help Narayanan create a climate of confidence that reinforces the belief that no problem. empowered. cross-functional teams. Implemented as a package. 6 . This will require employees to be trained in new skills proactively even before their existing skills become redundant. but also smoothen out the rough edges in their implementation. and the strategic direction that the company is pursuing to realise that vision. It should also be able to eliminate factors that seem to be inhibiting innovation. This. However. and can take the organisation beyond its existing boundaries.
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