“Operational Excellence”, Are We There Yet?
By Paul Baker and Bill Franch
As we described in our first article, the American and Western European manufacturing world was caught by surprise by the effectiveness of the Japanese quality initiatives and subsequent successes in the marketplace. By the mid 1980s, the “Quality Revolution” was officially underway; it was becoming clear to top management that more was needed than just a topical application of a few tools or techniques such as “Quality Circles”. It was now essential to apply the complete array of quality disciplines throughout the entire company or organization to address the power shift from seller to buyer. Failure to do so meant certain extinction. A shorthand expression for this comprehensive approach became known as Total Quality Management. The seeds for transformational change had been planted in the quest for “Operational Excellence” that still persists to this day.
Initially, no standard definition for what comprised “TQM” existed. However, it generally included the concept that the improvement efforts should be focused on preventing defects rather than detecting defects late in the process. This evolution in thought now made it necessary to formally address every aspect of a product’s life cycle from cradle to grave. Ford Motor Company demonstrated this approach in a convincing way with the development of the highly successful Taurus platform launched in 1986. This vehicle marked a major milestone for the entire automotive industry being completely designed and manufactured from square one with quality in mind.
The implementation of TQM in American industry took many forms. The larger Fortune 500 companies hired the superstars like Edwards Deming and Joseph Juran to directly lead their improvement efforts while many small to medium-sized companies used lesser known consultants, in-house trainers, or existing personnel within the company’s quality organization. In addition, professional organizations along with many authors jumped on the TQM bandwagon providing implementers with an abundance of resources. Despite the differences in approach, the expected outcome was the same: get everybody in the company trained and effective in implementing quality methodologies within their individual sphere of responsibility. The encouraging note was that smaller organizations could implement the TQM concepts without big names or big budgets and still experience solid transformational change.
A hallmark of the typical TQM implementation involved the selection of empowered cross-functional team members coupled with rigorous training sessions. A personal note written by Deming in 1992 captures the spirit and intent of the TQM efforts: “We suffer from evil styles of management, such as ranking people, divisions, plants (creating competition between people), management by results, failure to understand cooperation in a system in which everybody wins. Transformation is required: not mere change. Transformation requires profound knowledge”. The amount of time and resources that many organizations devoted to this transformation process along with the involvement of employees at all levels was quite impressive to behold.
One of the biggest TQM challenges that we personally faced with the new team dynamics was that it was much more difficult to identify scenarios in which everybody wins. We found ourselves navigating through a minefield of hidden agendas that had to be addressed before forward movement could be realized. Typically, incentive or bonus programs caused some team members to drift from the team objective or where somebody’s non-financial “personal win” conflicted with the team goals. For example, a manager at one company was getting a percentage of the profit made on custom tooling created for a specific customer and could increase his personal stake by cutting corners on the design and fabrication standards. This obviously created downstream problems for the other team members. Although daunting at times and often requiring creative solutions, it is critically important to effectively understand and manage this aspect of teamwork.
Another attractive element of the TQM approach involved penetrating the sacred walls of Research and Development in order to build the product or service “right” in the first place. Conventional wisdom of the day held that you couldn’t measure creativity or demand it to happen. In addition, there was significant pushback that the product development schedules couldn’t accommodate the extra prevention activities. Fortunately, many western companies were beginning to rack up significant “build-it-right-the-first-time” success stories like Motorola, Harley-Davidson, Ford and Louisville Slugger. These early successes changed the argument from “we can’t afford to do this” to “we can’t afford not to do this”. Early involvement in the design process remains both a significant opportunity and challenge facing organizations today.
All of us recognize to some extent that you can’t change or improve on something that you cannot measure (e.g., losing weight or improving your golf game is not possible without some level of record keeping). Early TQM teams learned quickly to rely heavily on measurement and tracking data. Decisions and actions would be based on fact; details would be studied and analyzed using a number of quantitative tools. General TQM training often included instruction in basic statistics for immediate application on the manufacturing floors, laboratories, hospitals, utility companies, and customer service. Measurement became the norm for many business processes flowing straight into continuous improvement and Lean Six Sigma programs that followed. Finally, organizations had the quantitative tools to measure and close the gap with the foreign competition.
As your organization strives for operational excellence, there is no doubt that you are relying on many of the foundational tools and concepts planted during the TQM days. Terminology, team subtleties, quality in design, and measurement systems are still essential elements today. However, the dynamic nature of organizations and the marketplace always require fresh perspective and adaptability for effective implementation. Has your organization arrived at the destination of “operational excellence “ or are you still somewhere on the journey? With years of experience in assembling and managing high performance teams, let us help your organization breathe new life into its quest toward long-term cultural change and improvement.
About the authors:
Over the last 30 years, Paul Baker has been a solutions-driven manufacturing business executive developing positive and long-lasting multimillion-dollar customer relationships by creating differentiating value through quality, delivery, technology, and time-to-market initiatives across multiple sites and global markets. In addition, he has been a corporate instructor for Lean Enterprise, SPC, Six Sigma, and Program Management. He is a certified Lean Six Sigma Black Belt through Villanova University. Paul is the Managing Director of Global Business Consulting, LLC, at www.global-businessconsulting.com.
During the last 30 years, Bill Franch has been a solutions-driven business leader with years of success producing breakthrough results for large businesses engaged in numerous product technologies. He is a business strategy specialist and lean six sigma expert, delivering best-in-class performance in EBIT, order fulfillment, cost reduction, and quality across regional sites and global markets. Consistently a top performer and recipient of many honors, including the Shingo Prize and Industry Week’s America’s Best Plants awards, Bill is currently the Managing Director of Performance Resource Partners, LLC, at www.performanceRP.com.
-  Operational Excellence Defined: A philosophy of the workplace where problem solving, teamwork and leadership results in the ongoing improvement in an organization. The process involves focusing on the customer’s needs, keeping the employees positive and empowered, and continually improving the current activities in the workplace. Read more: http://www.businessdictionary.com/definition/operational-excellence.html#ixzz3htTFfBXE
-  Excerpt from: W. Edwards Deming, Joyce (edited by) Orsini & Diana (edited by) Deming Cahill. “The Essential Deming: Leadership Principles from the Father of Quality.” McGraw-Hill Education, 2013. ibooks