Leveraging Management Improvement Techniques

How many times in the past few years have you heard, “This is not just an improvement program. It’s a revolution in management thinking”? Then, after thinking about this specific revolution, you find that, in many ways, it is similar to other revolutions you’ve recently heard about, such as reengineering, total quality management, activity-based costing or management, just-in-time management, time compression management, employee empowerment, benchmarking, lean manufacturing, economic value analysis, or broadbanding.1

How can so many revolutions — similar in many ways — be concurrent? First, some revolutionary improvement techniques are identified with problems that are limited to specific parts of the organization. Second, only a small subset of an organization’s members may understand the jargon of each method. Third, different strategies often require emphasis on different aspects of performance to which the specific improvement methods are directed. Organizations face the challenge of choosing from a plethora of methods that claim to effectively and efficiently reduce costs and improve service and value to customers. One way for the whole organization to improve is to merge methods, because each revolutionary method, by itself, may be ineffective or inefficient in parts of the organization. We present a framework that helps managers understand why this failure occurs. The framework also helps managers merge improvement methods. This leveraging of methods makes it possible to produce more significant results in less time than the application of any single approach. Managers can use the framework to create their own management revolution.

Understanding Improvement Methods

Any improvement method has four major components:

1. A particular perspective that defines its approach and objective.
2. A special language or jargon.
3. Analytical tools and techniques.
4. Change tools and techniques.

Understanding the four components of a specific method has several benefits. It provides a basis for assessing the applicability (and likelihood of success) of a method in specific situations. As we will demonstrate, the method’s perspective, language, and tools help to identify and define the problem, how to address it, and who should address it. It helps a manager identify and address the potential weaknesses of a specific improvement technique. And it gives a relatively simple, powerful way for finding opportunities to link various methods.

· Perspective or Frame of Reference.

The perspective of an improvement method can be thought of as an observation platform that allows a manager to focus on the objective and see the route for getting there. For instance, empowerment allows people to innovate and use their own judgment; thus it focuses on an individual employee’s role. Activity-based costing identifies costs with outputs and thus focuses on the work that employees perform and the cost of performing it. JIT management reduces waste, delay, and unevenness and thus focuses on minimizing their impact on the organization.

The perspective of a specific method can identify previously unseen problems. For example, TTI, Inc., a highly successful $370 million distributor of electronic components, is the market leader in distribution of passive components (capacitors and resistors). Consistently dominating customer ratings, TTI has received the highest “share of mind” ratings in its market niche.2 As part of its continuous improvement efforts, the company evaluated its internal management practices using the Malcolm Baldrige National Quality Award criteria. In the category of customer satisfaction and measurement, the evaluation revealed a need to formalize portions of the customer-service process, to improve measurement of customer satisfaction, and to close the feedback cycle to ensure that the improvement steps had the desired results. CEO Paul Andrews commented, “We built this company by enabling our people to satisfy customers. The Baldrige evaluation provided greater clarity and insight on what other steps we should be taking to remain number one in the minds of our customers.”3 Using the perspective of a single improvement method to reveal problems is valuable. However, the success of one method in one area can turn users into zealots who erroneously conclude that the method is a universal cure-all.

· Language.

Complementing an improvement method’s particular perspective is its language of compatible terms, which provides a means to communicate and make others understand the opportunity. Thus, understanding the language is central to visualizing and comprehending the problem as the method defines it.

A method’s language is normally tied to the language or jargon of a particular professional group that is, in turn, identified with a distinct functional area. Therefore, the language will generally reveal the functional group that is likely to advocate the particular method.4 For instance, operational managers focus on eliminating flow problems in operations, production waste, and bottlenecks. Their language is that of the shop floor, so they discuss materials flow, machine layouts, set-up times, and the operational issues that involve production workers. Thus they are comfortable with JIT terminology; their trade journals, case studies, and professional meetings address the benefits of JIT; and it tends to be their preferred improvement method.

Accountants are likely to prefer activity-based costing or management, which focuses on cost and related activities, because it uses their language. It is the language of accounting trade journals, case studies, and professional meetings. Indeed, activity-based costing and management has become the accounting profession’s chosen method for implementing continuous improvement. (For the improvement methods that various functional areas use most often and the methods’ focus, see Table 1.)

· Analytical Tools and Techniques.

Each improvement method uses specific tools to make the existing environment’s problems more visible and help managers decide on a specific action. Once managers understand the current environment, they can reapply the tools to identify the desired characteristics for the future. The gap between the present and the future reveals specific opportunities for improvement. (Table 2 lists common tools and techniques of various methods.)

· Change Tools and Techniques.

Once managers identify opportunities for improvement, they can implement the method. However, many improvement methods fail because managers ignore change tools and techniques. Managers who have been “converted” into true believers of a particular method can fall victim to the “field of dreams” syndrome. Their analysis for the future may seem compelling to them, but what about others in the organization who have different perspectives or use different languages or tools? Although improvement methods give widely varying emphases to implementation, they all imply the necessity of change; that is, until implementation occurs, nothing positive has happened. Indeed, managers can cause great harm if they identify problems without successfully implementing improvements. If they create expectations for improvement but never actually deliver the change, their credibility declines.

Management literature is filled with descriptions of implementation techniques.5 We discuss a few specific tools to emphasize the importance of the implementation process and to identify the level at which to address the implementation. The most basic tool for implementation is the plan, which should specify what the issue is, what actions to take, expected costs and benefits of those actions, who is responsible for specific actions, and expected completion dates. The plan can be used as both a guide and a scorecard to track progress.

Another particularly useful tool is the awareness, buy-in, and ownership questionnaire, a simple tool to ensure continuing consensus.6 The questionnaire identifies executives’ attitudes as they move from awareness to ownership of a change (the ABO continuum^sm). There are also additional tools for assessing people’s attitudes toward change, readiness for change, and training needs.7

Implementation cannot be ambiguously defined; it must be as clearly focused as the original analysis. If the focus is clear, the choice of tools will relate to both the present and future. The tools can then measure progress toward future goals.

Processing Customer Orders at XYZ Corp.

The process for improving the handling of customer orders illustrates our points. Fulfilling orders consists of two subprocesses: accepting orders from customers and entering orders into the output-generation and delivery process. The sales order department at XYZ Corp. was under pressure to improve. External customers complained that the company took twice as long to process orders as its competitors. In addition, managers were concerned about the increasing costs to run the sales order department.

Mary Jones, the manager of the department, knew that her staff could process orders more quickly and be more responsive to customers if she added more people. Yet such an action would certainly add costs. If she cut back the personnel, costs would drop, but customers would experience even slower acceptance and processing of orders. Jones wanted to improve the department and realized she needed something to help her identify how to improve — a way to focus her efforts.

After investigating possible improvement methods, she decided to take a process view of the department, i.e., process mapping, because she was more comfortable with it than the others, such as TQM or activity-based costing. She had majored in information processing in college, so thinking about, designing, and drawing flowcharts of processes was part of her formal education. Additionally, Jones had spent many hours explaining processes and procedures to new employees and updating her procedures manuals for new systems. With this background, she believed she could not only apply process mapping but also be able to teach it to her subordinates. After discussions of the problem with her direct subordinates, together they easily prepared a simple process map or transactional flowchart in a single storyboard session