TOTAL QUALITY MANAGEMENT REPORT ON

TOTAL QUALITY MANAGEEMENT IN THE CORPORATE STRATEGY MAKING

PRESENTED TO: SUBJECT: PRESENTED BY: Dr. YASEEN TOTAL QUALITY MANAGEMENT ISRAR AHMED JAWAD BILLAH EHTESHAM ABDULLAH MBA-3B (Morning)

CLASS:

DATE OF SUBMISSION: November 26, 2004

BAHRIA INSTITUTE OF MANAGEMENT AND COMPUTER SCIENCES

1

DEDICATION
WE DEDICATE THIS TERM REPORT TO OUR PARENTS AND ALL THE FACULTY OF BAHRIA INSTITUTE OF MANAGEMENT AND COMPUTER SCIENCES, WHO ARE ALWAYS A SOURCE OF INSPIRATION FOR US AND MADE US WHAT WE ARE TODAY, THEY ALWAYS MOTIVATED AND HELPED US IN EVERY SITUATION.

LETTER OF TRANSMITTLE

First of all we would like to thank almighty Allah who has given us the strength to make the term report. After that we would like to thank our respected teacher Dr. Yaseen for providing us the opportunity to gain practical knowledge.

Sincerely yours, Israr Ahmed Jawad Billah Mansoor Lakhany

Class: MBA-3B (Morning) Bahria Institute of Management and computer Sciences

EXECUTIVE SUMMARY

Is the process of specifying an organization's quality objectives, developing policies and plans to achieve these quality objectives, and allocating resources so as to implement the quality plans. It is the highest level of managerial activity, usually performed by the company's Chief Executive Officer (CEO) and executive team. It provides overall direction to the whole enterprise. An organizations quality strategy must be appropriate for its resources, circumstances, and quality objectives. The process involves matching the companies' strategic advantages to the business environment the organization faces. One quality objective of an overall corporate strategy is to put the organization into a position to carry out its mission effectively and efficiently. A good corporate quality strategy should integrate an organizations goals, policies, and action sequences (tactics) into a cohesive whole.

TQM IN THE CORPORATE STRATEGIES

INTRODUCTION
TQM in the corporate Strategies Is the process of specifying an organization's quality objectives, developing policies and plans to achieve these quality objectives, and allocating resources so as to implement the quality plans. It is the highest level of managerial activity, usually performed by the company's Chief Executive Officer (CEO) and executive team. It provides overall direction to the whole enterprise. An organizations quality strategy must be appropriate for its resources, circumstances, and quality objectives. The process involves matching the companies' strategic advantages to the business environment the organization faces. One quality objective of an overall corporate strategy is to put the organization into a position to carry out its mission effectively and efficiently. A good corporate quality strategy should integrate an organizations goals, policies, and action sequences (tactics) into a cohesive whole.

Strategy formulation and implementation

Quality strategic management can be seen as a combination of strategy formulation and strategy implementation. Quality Strategy formulation involves: Doing a situation analysis: both internal and external; both microenvironmental and macro-environmental.

 Concurrent with this assessment, quality objectives are set. This

involves crafting vision statements (long term), mission statements (medium term), overall corporate quality objectives (both financial and strategic), strategic business unit quality objectives (both financial and strategic), and tactical quality objectives.
These quality objectives should, in the light of the situation analysis,

suggest a strategic quality plan. The plan provides the details of how to obtain these goals. This three-step strategy formation process is sometimes referred to as determining where you are now, determining where you want to go, and then determining how to get there. These three questions are the essence of strategic quality planning.

Strategy implementation involves:

Allocation of sufficient resources (financial, personnel, time, computer system support) Establishing a chain of command or some alternative structure (such as cross functional teams) Assigning responsibility of specific tasks or processes to specific individuals or groups It also involves managing the process. This includes monitoring results, comparing to benchmarks and best practices, evaluating the efficacy and efficiency of the process, controlling for variances, and making adjustments to the process as necessary.

When implementing specific programs, this involves acquiring the requisite resources, developing the process, training, process testing, documentation, and integration with (and/or conversion from) legacy processes. Strategy formation and implementation is an on-going, never-ending, integrated process requiring continuous reassessment and reformation. Strategic management is dynamic. It involves a complex pattern of actions and reactions. It is partially planned and partially unplanned. Strategy is both planned and emergent, dynamic, and interactive. Strategic management operates on several time scales. Short term strategies involve planning and managing for the present. Long term strategies involve preparing for and preempting the future. Marketing strategist, Derek Abell (1993), has suggested that understanding this dual nature of strategic management is the least understood part of the process. He claims that balancing the temporal aspects of strategic quality planning requires the use of dual strategies simultaneously.

The strategy hierarchy

In most (large) corporations there are several levels of strategy. Quality Strategic management is the highest in the sense that it is the broadest, applying to all parts of the firm. It gives direction to corporate values, corporate culture, corporate goals, and corporate missions (pursuing quality). Under this broad corporate strategy there are often functional or business unit strategies. Functional quality strategies Include marketing strategies, new product development strategies, human resource strategies, financial strategies, legal strategies, and

information technology management strategies. The emphasis is on short and medium term plans and is limited to the domain of each departments functional responsibility. Each functional department attempts to do its part in meeting overall corporate quality objectives, and hence to some extent their strategies are derived from broader corporate strategies. The lowest level of strategy is operational quality strategy. It is very narrow in focus and deals with day-to-day operational activities such as scheduling criteria. It must operate within a budget but is not at liberty to adjust or create that budget. Operational level strategy was encouraged by Peter Drucker in his theory of management by quality objectives (MBO). Operational level strategies are informed by business level strategies which, in turn, are informed by corporate level strategies. Since the turn of the millennium, there has been a tendency in some firms to revert to a simpler strategic structure. This is being driven by information technology. It is felt that knowledge management systems should be used to share information and create common goals. Strategic divisions are thought to hamper this process.

REASONS WHY STRATEGIC QUALITY PLANS FAIL

There are many reasons why strategic quality plans fail, especially:

Failure to understand the customer

o o o

why do they buy is there a real need for the product inadequate or incorrect marketing research

Inability to predict environmental reaction

o

what will competitors do

fighting brands price wars

will government intervene

Over-estimation of resource competence

o

can the staff, equipment, and processes handle the new strategy

failure to develop new employee and management skills

Failure to coordinate
o o

reporting and control relationships not adequate organizational structure not flexible enough

Failure to obtain senior management commitment

o

failure to get management involved right from the start

failure to obtain sufficient company resources to accomplish task

Failure to obtain employee commitment

o o

new strategy not well explained to employees no incentives given to workers to embrace the new strategy

Under-estimation of time requirements

o

no critical path analysis done

Failure to follow the plan

o o o

no follow through after initial planning no tracking of progress against plan no consequences for above

10

A great concern
By this time there can be few companies or organizations (especially in Pakistan) which have not heard of the importance of total quality Management. Recent research throughout the world shows that TQMM is still high on the agenda. Ingersoll Engineers[HREF=#B1] found that 60 per cent of their 150 survey respondents report current use of TQMM techniques and over 90 per cent report their intention to use such techniques in the future Policies of the company. EFFECTIVE Approach Looking at companies which are acknowledged quality leaders (e.g. Malcolm Baldrige Award winners), and others which had been doing TQMM for a long time, it is apparent that characteristically they had changed making corporate policies on TQMM implementation tack several times. These changes are attempts to redress issues which are incompletely tackled in previous phases and to rejuvenate the TQMM effort by focusing it on new areas. The companies also talk about changing the quality culture, but generally, and perhaps not surprisingly, did not have a coherent view of what this meant except at the most basic level of changing attitudes and behavior through TQM systems, tools and techniques. Culture change is used to describe what you ended up with when you had gone through a successful TQM program, and TQMM corporate strategies and TQM programs consisted of introducing a range of systems, tools and techniques. When we try to examine the sorts of activities in which companies are involved, it became clear that there are wide differences in approach, and that these vary over time for those with longevity. Certain types of TQMM activities group together; for example, it is unlikely that companies are using

11

Statistical Process Control without also using Ishikawa problem-solving techniques. Companies are not selecting to pursue TQMM activities ad hoc. Rather they are constructing corporate strategies of activities which hung together and made sense in terms of their frequently implicit view of what TQMM is about, and what creating a TQMM culture meant. Doing TQMM is not quite as straightforward as it at first sounded. It appeared to be dependent largely on what managers, either implicitly or explicitly, think TQMM is about. The strategies that people developed for implementing TQMM often are a result of the fuzzy images they had of what the world of TQMM looked like. In these circumstances it is not surprising that there are high levels of diversity in the ways companies are making their policies and approaching TQMM; that many fail after the first flush of enthusiasm; and that most successful corporate strategies and TQM programsprograms lurch from stage to stage as their proponents discover the limitations of their TQMM models and enrich their mental images of what they are trying to achieve. The degree to which these developments are experienced as crises depends on a number of factors including the: Availability of alternative perspectives
Dependence on outsiders for driving the program Degree of wedded ness to the existing approach Capacity of the organization to learn.

We have attempted to create a map of the world of TQM and to identify the archetypical mindsets which underpin existing approaches to creating TQMM cultures. To do this we drew on a wide range of material through secondary sources:
Companies experiences of implementing TQM Approaches practiced by consultants and advocated by quality gurus; 12

 Organizational culture-change literature.

In understanding the significance of quality culture, we have come to the view that the most significant problem for any manager, including those initiating and leading TQMM corporate strategies and TQM programsprograms, is not knowing what they do not know. Once an issue is on the managerial agenda it is possible to make plans to address it. The issues which have the potential to lay organizations low are the ones that catch them by surprise those that they do not recognize until it is too late. Going behind a description or map of TQMM, which is specified purely in terms of activities to one which identifies the underlying mindsets, illuminates the taken-for-granted assumptions about the nature of TQM culture change which lead individual managers and companies to pursue particular TQM recipes. Companies attempt to create TQM corporate strategies and TQM programs which reflect their view of quality. Therefore, to sustain quality improvement over the medium/long term, it is essential that they are able to see the limitations of their existing approach and have some map of the broader TQM world. In the short run, all TQM corporate strategies and TQM programs are partial. In order to design any practicable course of action, particularly ones as ambitious as changing the attitudes and behaviors of an entire organization, it is necessary to simplify reality. People cannot cope with and sustain corporate strategies and TQM programs of change which are excessively complex or unfocused. Successful change inevitably highlights a limited number of issues and ideas. These may knock on into a wide range of changes, but they are background to the foreground of the focal issues of the change program. Japanese companies understand this well in their use of posters and slogans in change campaigns. The other factor which influences companies to adopt particular approaches to TQM is their starting position their

13

history and the situation in which they find themselves. Companies know what they do know and do not know what they do not know as a result of their experience. Providing a map is an attempt to make the transition to knowing a less painful experience. Company Approaches to TQM Implementation Our report reveals three archetypal approaches to TQM which we have labelled:
The planning mindset of TQM (PTQM). The learning mindset of TQM (LTQM). The visionary mindset of TQM (VTQM).

The terms visionary, planning and learning are borrowed from Henry Mintzbergs work on modes of strategy formulation. To these we added a fourth meta-mindset the transformational model of TQM (TTQM) which enables movement between the three archetypes. Initially, when managers "do TQM" they tend to utilize exemplars specific to, and introduce bundles of activities, primarily from one mindset. The Planning Mindset Many managers measure the success of their TQM implementation corporate strategies and TQM programs in terms of increases in systems predictability, reductions in system leakage, and improvements in system outputs per unit of input. The cost of quality and price of non-conformance have become potent symbols to this managerial community. To achieve these improvements, perceived as solutions to organization quality problems

14

and hence as remedies for the causes of declining competitiveness, the following activities are typically introduced: I. Training of employees in;
1.

Variance analysis methods such as Problem-solving techniques such as

statistical process control;

2.

Ishikawa diagrams. I. II. III. IV. V. Systems tracking and auditing using standards such as BS 5750 and ISO 9000. Design and development of manufacturing processes and products using internal customer/supplier concepts. Measurement and benchmarking of manufacturing performance against industry best lead-times, WIP, on-time delivery, etc. Development of information planning and control systems utilizing MRP, CIM, and JIT. Management of suppliers and development of an integrated supply chain. Owners and orchestraqtors of the PTQM approach tend to be engineers, technologists, and manufacturing and quality managers. By focusing on measurement, and in utilizing proven techniques, the mindset offers a systematic and programmable way of tackling the performance of, and coordination between, basic processes by learning from feedback. However, it is our experience that take-up of the above activities rarely extends beyond manufacturing to administrative, personnel, marketing or finance employees and that adoption of this approach does not require the active involvement of executive-level management other than for resourcing decisions. It is

15

unlikely, therefore, to fuel significant strategic change. This manifestation of TQM can be very effective for improving what is already being done and can promote incremental advances in product, process and organization design. It is not a "quick-fix", turnaround strategy but, given a medium time frame, can change loss makers into profitable enterprises providing there is still a market.

The Learning Mindset "Empowerment", achieving commitment through involvement and selfdetermination, symbolizes the learning mindset approach to TQM. The fundamental tenet of this approach is to mobilize individual and group creativity and problem solving in tackling quality improvement. It is about liberating the grassroots potential which in many organizations is untapped and suppressed. A typical comment from companies pursuing this approach is that: "with every pair of hands, a brain comes free." This approach is based on the assumption that the organization can learn to become a "Total Quality Company" through stimulating a bottom-up, emergent process of quality improvements. This process does not need to be strongly directed since it is seen to be self-coordinating through the mutual adjustments of the individuals and work groups involved. The company tackles quality by becoming a learning organization and increasing its inherent capability to improve and adjust to both internal and external customer demands. This approach is dependent on employees being able to identify with the company and its aims. It is important, therefore, that status differentials are minimized. The LTQM model measures quality improvement, and hence successful TQM implementation, in terms of participation rates in quality improvement
16

groups and corrective action teams, the development of specified skills (such as those required for working in groups, negotiation, self-presentation, goal and objective setting, etc), better meetings, customer-friendly behavior, and the "harmonization" of employment and working conditions, particularly at the operator end of the organization hierarchy. Indeed, images of the single-status canteen and unreserved car-parking spaces have come to epitomize the whole approach. Implementation activities typically introduced in this approach include:
Restructuring of pay and performance appraisal systems; Changes in authority and reporting structures e.g. rethinking

supervisory roles;
Training in personal and group management skills; Introduction of recognition schemes, awards, peer review; Investment in the physical environment and sponsoring of "good

housekeeping";
Emphasis on employee safety and ethical management; Changes in recruitment, selection, redundancy practices.

Human resource managers, personnel directors and organization development specialists tend to own and orchestrate LTQM. Its focus on empowerment through structural changes, together with the development of individual skills and attitudes and attempts to meet individual needs, can result in strong bottom-up commitment to TQM which is unintrusive, flexible and self-sustaining. However, we have found this very strength is also a weakness in that its ideology of individual commitment and learning makes strategic change difficult. The approach is good at incremental improvements to existing practices, i.e. doing what you do better, but is not good at more fundamental change, i.e. doing something different.

17

The Visionary Mindset Visionary TQM is the approach which is initiated, designed and led by senior management. Frequently it is seen as the major plank in the companys plan for strategic regeneration. Its focus is on external customers and stakeholders and being a "Total Quality Company" is at the centre of the vision which top management promulgate as necessary for survival and growth. Implementation tends to be a top-down cascade of awareness and skills training together with quality improvement groups, increased communications, widespread changes in corporate symbols and revamping of reward and control systems. VTQM sees quality culture as something that it is possible to engineer by offering appropriate training and putting in place the appropriate working environment. VTQM is essentially a process of formulating and disseminating a vision for the future through the clear identification of methods and objectives. Senior management tends to be the owner and prime mover in this approach, frequently aided by an external consultant. Having arrived at a strategic recipe for the company, the key task in the implementation program is perceived to be that of controlling against corruptions of and deviations from the recipe as it is cascaded down through the organization. Successful TQM implementation from this perspective is judged on whether a company mission emerges which strongly espouses TQM values and the extent to which the mission is translated into an integrated business and quality policy to guide operations. Changes in leadership behaviour, style and language, quality of communication on (un)competitive company performance and the degree of "quality awareness" among employees are also frequently used indicators of success with this approach.

18

The sorts of TQM implementation activities which are thought to lead to these results are:
Adoption by senior management of a TQM philosophy, through

intense conversion experience, for example, at "Quality College". Senior management development. Senior management direct contact with and feedback from customers and front-line employees. Competitive benchmarking and market analysis. Customer and employee surveys. Use of cascade training and education workshops. Introduction of briefing group and other communication structures. VTQM can signal a new era for a company by bringing the voice of the customer into the decision-making process within a novel context of competitor awareness. Unlike LTQM, it is a systematic approach, directed towards changing core attitudes and practices, and is sanctioned from the top. Unfortunately, that is often where it stays. The vision can be perceived as alienating and intrusive by those not involved in the strategy-making process. If the company is highly stratified, or there is distrust of senior management, then this approach to TQM can be seen as manipulative. The Transformation Mindset Do organizations which live out their TQM experiences primarily by introducing activities from within a single mindset achieve a total quality culture? Do approaches become redundant as TQM fails to break through to new levels of performance?

19

Many managers charged with implementing TQM report disappointment and loss of confidence in their own DIY, and some branded TQM methodologies as "corporate strategies and TQM programs which run out of steam once the first 18-24 month honeymoon period is over". During this start-up phase, we have observed that most of the practices introduced tend to cluster within a single mindset, reflecting the TQM mindset of the consultant and/or the company sponsor. If this first phase can be successfully accomplished, with resourcing maintained and the program sustained, then another crisis may occur. This is typically evidenced by falling participation in improvement activities, loss of any involvement by senior management, the demise of the "facilitator" role, and identification of the total quality program with a particular group of people. TQMM is no longer perceived as a vehicle for transporting the company to a new competitive future, but as another set of routine tasks performed by a particular group of employees. Should a company also manage to avoid this sorry but familiar scenario and maintain enthusiasm and support, the TQM program will still inevitably falter if the same mindset of culture change continues to inform action. The potential to generate improvement within the same structures becomes exhausted. That Ford, after several years of quality improvement experience, have recently changed from using a "conformance to requirements" definition of quality to one which places far more emphasis on customer, reliability and value, suggests that it is necessary to be prepared to define quality in response to external circumstances, and as organizational learning allows[HREF=#B4]. We have found that companies which sustain their TQM corporate strategies and TQM programs over several years, and attribute step-function

20

changes in performance to those corporate strategies and TQM programs, switch TQM mindsets as momentum associated with any one mindset starts to fade. Successful TQM implementation therefore comprises learning how to:
Improve quality utilizing any one of the three mindsets we have

already outlined;
Change mindsets. This requires a Meta perspective to inform and

enable movement between the mindsets. TTQM provides such a perspective. Given that the PTQM, LTQM and VTQM mindsets constitute approaches reflecting competing world views of total quality culture and how to achieve it, a critical issue in managing this switch is how alternative world views can be seriously heard, let alone entertained. TTQM addresses this issue by conceptualizing the role of management as trustees rather than as beneficiaries of the TQM implementation process. This is the essence of a "win-win" management philosophy. Rarely have we seen the transformation mindset articulated as a coherent approach to implementing TQM in companies more than in Milliken. Milliken is an American multinational textile company which is awarded the Baldrige award in 1989. It looks back on 12 years of quality improvement as a series of phases or epochs, each unique in its focus and differentiated from previous phases by changes in mindset. Mindset management, managing the agenda for change, is the remit of TTQM. It comprises activities which enable managers to reflect on the efficacy and appropriateness of their approach to total quality by providing insights into alternative ways of doing TQM. It therefore provides a superordinate, or meta-perspective on approaches to delivering total quality. This offers managers the prospect of planning their TQM activities to generate the greatest returns on investment
21

by shifting away from TQM models to models which offer trajectories for further change. Activities directed at enabling managers and hence companies to break out of their existing paradigms for implementing TQM include the following:
Futuring/playing/scenario planning; Seeking quality and other performance awards; Benchmarking and collaborative/informal ventures outside own

industry;
Encouraging managerial self-development through reading,

employing personal coaches, and other external sources of ideas;

Partnerships with and acquisitions of other companies; Managers stepping into the shoes of customers and employees for

substantial periods of time. Activities which enable management teams to reframe their change corporate strategies and TQM programs by "paradigm busting" are not the product of any particular school of thought. Perhaps this is inevitable. This means that, as a fourth model, TTQM can appear unfocused, speculative and lacking in content. Its very adoption requires considerable management insight into how change can be planned and implemented to achieve breakthrough. For these reasons TTQM is perceived as innovative, perhaps experimental, and therefore often "not for us". It is this mindset that maintains the gulf between companies which stay the TQM course and those which falter.

22

IMPORTANCE OF TQMM IN CORPORATE STRATEGY MAKING: Well-designed, clearly communicated and properly implemented strategies will help your organization achieve good financial returns. The program is designed to:- Help management think and act strategically in the search for future growth and competitiveness; It will help you learn lessons from the most successful organizations and to apply these; The framework, tools and techniques discussed will guide the development and implementation of strategies which should help you get closer to the customer, and create positions of strategic relationship. This program coverage will include: Establishing Corporate Strategies, Implementing Strategies, Monitoring Implementation, Evaluation Audit of Strategy, and Establishing Implementation Process Management of Performance Improvement.

23