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Juhani
Anttila
NEW PRINCIPLES, TOOLS,
AND INFRASTRUCTURES FOR QUALITY MANAGEMENT IN MODERN CHANGED BUSINESS
ENVIRONMENTS Introduction Business environments have been changed remarkable during the recent years. However, development of quality management has not accommodated sufficiently along with these general trends. Therefore we have serious problems in quality approaches in organizations. That has also caused frustration within the whole quality discipline. There is a strong need for reform and modernization in quality management approaches to be applied in modern organizations. This paper discusses new principles, tools, and infrastructures that are based on deep understanding of the modern business environments and recent innovations in quality management tools and practices. From confusions and problems to clarity, excellence and sustainable success Understanding problems In many cases quality development has not redeemed its promises
indisputably. There are serious problems in the prevalent quality
management approaches. These include the following: There is a lack of innovations in the field of quality practices
and methodology. One may wonder whether it has been created anything
remarkable new for organizations' quality development after Deming,
Ichikawa, and Juran. Quality discipline has not been able to follow
the general development of organizations' business development and
trends of the society at large (figure 1). Figure 1. Ability to adapt is a great problem of quality profession. Genuinely all quality initiatives and measures should strive for
enhancing overall operational (business) performance, effectiveness
and efficiency, productivity and profitability, satisfaction and
confidence, competitiveness, etc. Overall business or organizational
performance consists of non-financial and financial facts relating
to business processes and products (goods and services) that also
permit evaluations and comparisons relative to organizational goals,
standards, past results, and to other organizations. Main performance
dimensions are: In organizational practices, there are many different concepts
in use for describing specifically and quantitatively a business
performance. These terms are not, however, used clearly in practice.
E.g. the following concepts have caused much confusion: Interestingly, the basic concept quality is not at all a clear issue in practice. It has many understandings and interpretations even among quality professionals. One should also note that the ISO 9000 standard term "requirements" is very often confusing. According to the official definition it means stakeholders' needs and expectations. Definitions of same terms may be different in different references. One may have additional difficulties when using translations in different languages. The key concepts should always be clarified according to the context and viewpoint of the case in question. More important than the definitions is the communication process for mutual understanding of the concepts. Challenging excellence Only performance excellence may ensure sustainable success for
organizations - excellence that is originated from organizations'
operational activities (business processes) and not only being superficially
outstanding. Excellence means excelling, surpassing the certain
reference levels of performance. Challenging references include: When striving for practical and effective solutions for quality management, all recognized references emphasize integration and innovation. An innovative quality approach is particularly needed in market driven business environments. There are no single solutions to business challenges. One must always develop organization-dedicated innovative and unique approaches. In competitive business environments multiple different choices for quality management should be encouraged. There are extensive national movements for strengthening innovation in all kinds of organizations, e.g. in EU and USA. This has often seen as the next wave of the international quality movement. Innovation should take place also in the development of the quality principles and practices. Integration is the main strategy for excellent performance by quality
management. Integration implies: Business-separated quality initiatives are artificial (disintegration). Standards-initiated quality approach in an organization is absurd and ineffective. Integration deals with all necessary expertise areas of business management. Cornerstones and goal of an organization's successful management
and performance excellence are summarized in figure 2. Excellent
performance and quality are originated in good management ofn organizations
and are based on:
Figure 2. Cornerstones for striving for excellence in quality of management Organizational identity and profile Starting point to the quality development is organizational identity and knowing environment of the organization. An organization's integral and holistic oneness is created by the organization itself. An orgnization's ethos - the way of life, the mindset - should be in harmony with its environments. All organizations - and also all business communities - have distinctive characteristics. Business leaders' duty is to establish, maintain and develop the holistic business identity of an organization in the real business environments. Even quality initiatives should be aligned with that. There are useful practices and tools available to define organization's business profile. Malcolm Baldrige performance excellence criteria's clauses P1 and P2 define a framework for the organizational profile as a snapshot for the organization including the key influences on how the organization operate and the key challenges it faces. Also in the ISO 9000 standardization, there is under consideration a particular approach for the same purpose (figure 3). This will be a methodology to provide important information on any organizations business bases and realities before going to the application of the standards and other knowledge sources for performance improvement.
Figure 3. Organizational profile defining managerial grid developed in the ISO 9000 standardization committee Operational realities and environments In excellent quality realizations organizations take seriously into consideration their operational environment as a whole and their own identity in this environment. All organizations whether they are large or small, profit or not-for-profit exist and operate in an environment that is complex, ever changing, volatile and ambiguous - an environment where the dominant features today are uncertainty and change. Moreover, every organization has an impact on, and is impacted by, its environment in a unique way, and for that and other reasons each and every organization has a unique identity. However, despite each organization having a unique identity, all organizations have a number of features in common. All organizations have a single management system (which may be implicit or explicit, simple or complex) that is the focus and responsibility of top management. All organizations also share the purpose or aim of creating a benefit, or value, by producing some kinds of products that are offered to customers. While some organizations are created to achieve a short-term objective, most expect to sustain their activities over a long period. The true operational business reality is different from appearance, or the reality we perceive explicitly. Actual and apparent reality may be distinguished with the terms implicate and explicate order. The implicate order is to be a metaphysical entity related to things and actions as well as consciousness (figure 2). It is the fundamental underlying substructure of everything. It is a vast and deeper level of reality out of which our reality unfolds and where everything is enfolded into everything. The implicate order is continually unfolding into what we experience as the manifest world, the explicit order. Business environments of all kinds of organizations from small
and big companies to public and not-for-profit organizations have
been changed from certainty and predictability to uncertainty and
ambiguity. That includes the following: These environments cause a lot of difficulties and problems but
provide also new opportunities in the realization of quality management.
Practical experiences from development within different organizations
prove that organizations could cope with and adapt for the new business
requirements for quality management according to the thinking framework
of figure 2. This requires suitable solutions for new changed business
environments including: Principles and models for a good management Quality management concepts Traditional basic concepts of quality and quality management according to the ISO 9000 standard are still valid in today's business circumstances but they must be understood in an innovative and integrative way. The very basic concepts in this context for any quality approach are quality, quality management (QM) and quality assurance (QA). Regarding the concept quality there are in use many different definitions even among quality specialists. Threfore it is very pracmaticly useful to use standardardized definition of ISO 9000 at least in business contexts: Quality = Degree of fulfilling needs and expectations of all stakeholders QM equals quality of management: Degree to which coordinated activities by the management of an organization to direct and control the organization fulfill the needs and expectations of organization's all stakeholders. Quality management is the responsibility of business leaders and it is taking place through the managing actions of business leaders. Quality experts have an assisting role. This is also the meaning of QM in the recent ISO 9000 standards and the issue is further emphasized in the next generation of the ISO 9004 standard for year 2009. Quality management system (QMS) is the basic concepts for getting
quality of management happen in any organization in a systematic
way. There are two parts in this concept of QMS: The term quality management system has caused a lot of confusions, especially when translated into different languages. And many organizations are still using concept quality system (QS) although it was removed from ISO 9000 standards already almost ten years ago. Perhaps therefore still QMS is understood as a system for quality that is a very artificial issue in practice. QMS is principally aimed for organization's own internal business management needs and purposes for business excellence. In order to differ from the others an organization could use a particular title for its QMS. E. g. a company that emphasizes innovativeness in its business - and also in its quality approach - calls its QMS as IBR - Innovative Business Realization. QA is for the external purpose of business for creating and strengthening confidence within customers (and other stakeholders) in business relationships. QA is particularly a communication issue between an organization and its stakeholders. Both QM and QA are always needed in practical organizational cases. The concept (QMS) relates to both QM and QA. QA is a sub-item of QM. In the ISO 9000 standard family QM and QA were designed to be a consistent pair of these QMS items. If an organization has not explicitly used ISO 9004 but only ISO 9001, the organization should ensure consistency of its ISO 9001 solution directly with organization's business system. ISO 9001 is only for QA. Principles of good management There are many appreciated references for principles of a good
/ excellent management. Especially the following four sets of principles
for a good management could be used in all organizations: Although these references use different titles and phraseology their contents are very similar and they all relate to good principles for managing an organization. When applying these "standard" principles in a particular organization one should take into account organization's specific business needs and situations in an innovative way. As an example, a company tried to take into account all aspects
of the mentioned references and apply them in their modern business
environments. They focused the results into following seven fundamental
principles for managing the organization towards performance excellence:
Defining these principles by the team of executives of the company was really a challenging exercise for quality of management. Management models How could an excellent performance of management be achieved? There is a huge amount of studies, research and literature on management. There are also many competing schools for a good management, and plenty of managerial tools are available. Many feel the situation confusing. On behalf of management development, it is made so much that the thing itself may disappear. There is no single model or standards that could describe what a good management practice is. However, management can be always developed better and more effective in a systematic way. Systematic management could be more effective and efficient than unsystematic and in that context adequate models, tools, and standards may be useful. A well-known general and recognized model for all areas of management
is PDCA (Plan-Do-Check-Act) model or Deming / Shewhart cycle. In
organizational environments the PDCA model is to be applied in three
different scopes that cover the whole area of QM: Due to the fast development of the modern business environments, particularly the breakthrough management has become more relevant than earlier. It is a today a must for sustainable success. Performance excellence models By using the PDCA model comprehensively one may also apply the ISO 9000 standards and performance excellence models (quality award criteria) for finding advice to the details. Again organization's own identity, organizational profile, and business needs must be emphasized. There are complementary similarities and differences in ISO 9000
standards and performance excellence models. Therefore they supplement
each other in an excellent way when they are integrated within specific
business environments. These widely used reference models have: Both ISO standardization and excellence model organizations support
the combined use of the ISO 9004 standard and the excellence models,
e.g. the ISO standardization committee TC 176 has developed guidance
on promoting the use of ISO 9004 in combination with the performance
excellence models as a path to performance excellence. In this work
especially the following performance excellence models were examined
in a close cooperation with the responsible performance model organizations: Additionall the International Asia Pacific Quality Award (IAPQA) has a large coverage of Asian-Pacific countries. It is using the Malcolm Baldrige Model. Modern operational infrastructures Networked business Modern organizations operate in networked business environments.
Genuine networks are unplanned, emergent entities. Their growth
is sporadic and self-organizing. Different kinds of actors are involved
within today's business networks: There cannot be any common values, targets, or strategies in this
kind of networks. Each actor has its own reason and interest to
be a member of the network. Additionally all actors have always
certain networking characteristics and impacts in the network: In networked business environments conventional quality systems, quality organizations, quality manuals or quality records, traditional work of quality managers, or third party certifications have very little or no beneficial role for the real purpose of quality management. In fact, they may even cause more harm than advantage. However, the networks themselves may be very useful for quality of the member organizations in the network because of win / win relationships. Complex responsive processes of relating Cooperating networked organizations may be patterned through complex responsive processes of relating that consist of many different types of activities (figure 4). How to manage with networked situation depends on the following
three aspects:
Figure 4. Activities in complex responsive processes of relating. All kinds of activities may exist in the cooperating business processes. Appropriate management actions should be selected based on the degree of certainty and level of agreement on the issue in question. If the relating processes are not clearly identified (e.g. by process plans), the situation falls into pieces of interacting process-internal actors, and even may develop towards chaos or anarchy. Some of the relating processes may even be unknown or hostile. Managerial quality tools Investing in tools Managerial quality-tools consist of practical systematic operating
models, methodologies, means, etc. and even useful theories. There
is a huge amount of different tools for quality management available.
Very often these offerings cause confusion in organizations and
even among quality experts. Tools have only instrumental value but
nevertheless they are important for achieving efficiently targets
of quality of management in practice. A business management tool
is always an investment including: Therefore it is essential that tools are effective and efficient, and selected, planned and maintained carefully for organization's real needs. A tool is beneficial only if it is used beneficially. In a consistent management system, tools are developed and maintained
in a proper way. As an example, the following methodologies were
the major managerial tools in a "business excellence tool kit"
of an organization with which particularly quality experts of the
organization were involved: Many experiences prove that process management model is obviously the most significant methodology in striving for excellence in managing an organization, even more significant in modern environments. However, other tools from other expert areas, e.g. financial management, human resource management, technology management, risk management, purchasing and logistics, marketing, etc. are also essential for the quality of management. Leveraging information / knowledge in quality management Modern organizations are very strongly dependent on knowledge and
information. Knowledge / information can never exist only as such
but they have always some kind of carriers: Successful organizational management is based on right knowledge and managerial skills to use the knowledge for the current business needs. In fact, quality management is principally management of organizational business information and knowledge. Additionally, exchange of information is necessary between customers, employees, shareholders, suppliers, business partners, and the great public. The use of information and communication technology (ICT) has been increased overwhelmingly within all kinds of organizations, their management systems, business processes, and relationships with stakeholders. However, this has often taken place in terms of ICT solutions only. This has induced to difficult situations in many business cases. Modern electronic business solutions and ICT systems have become almost obligatory in all kinds of businesses. However, typically they have not made the total situation easier because, in fact, they are much more than only technological issues. One should also take into account thinking, understanding, competences, skills, commitment, and feelings of users of the IT systems. These things are linked to the tacit or implicit knowledge of people. Also quality management is primarily based on the beneficial use of business related data, information, and knowledge. Multifarious methodologies, tools, and practices of managing knowledge should be used in the context of professional quality applications, and even quality experts should be aware and follow the general development of these aspects. Quality experts and the application of recognized quality references, especially ISO 9000 standards and performance excellence models, have traditionally emphasized explicit information, e.g. documentation, written descriptions and procedures, specifications, agreements, and information records. Tacit knowledge has not been considered as consistently and in the same details and deepness. However, the most voluminous and important part of knowledge from the business point of view is tacit. Knowing and managing information / knowledge Traditional business information solutions that have emphasized
distinct and rather passive information / knowledge bases include: Also traditional quality management approaches are based on these same means including handbooks, procedure documents, records, etc. For exchange of information / knowledge, communication (Anttila,
2001), organizations have used separate practices and means that
typically have included the following: The modern approach is to integrate information/knowledge bases together with communication and collaboration. Supporting collaborative cooperation and enhancing quality awareness Separate information / knowledge bases and communication systems
and practices are not necessarily effective for leveraging the beneficial
use of information / knowledge in an organization. The new approach
is striving for integrated and effective solutions consisting of
the following: Especially Web 2.0 and social media applications provide challenging new possibilities for quality management. These approaches have been described with concepts "Enterprise 2.0" and "Real Time Economy, RTE" for which there are many applications developed recently. Management learning in organizations has been based on training by traditional or e-learning means. However, investments in these solutions have not proved effective. Only basic management skills including quality aspects may be learned by traditional training programs. Business leaders are busy and not interested in using ordinary e-learning means. E-learning solutions based on "learning management systems" have not been encouraging. Systems are too expensive, learning too boring, search of material (learning objects) too cumbersome, and reusable objects not really reusable. Additional challenge is that half-life of the relevant business knowledge has shortened. Effective learning is the key for developing quality in management. Organizational and personal learning are prerequisites for enhancing management / leadership skills. These skills are needed at different levels in organizations, including the board, executives, directors, managers, process owners, project managers, and individuals (self-management). On-the-job learning offers cost-effective way to link learning to the organizational needs and priorities. For quality management this particularly means enhancing quality awareness within an organization.Factually 80% of the learning takes place by informal learning and serendipity. Knowledge Work Environment (KWE) is a modern IT (in this context interactive technology) supported approach to facilitate effective and efficient knowledge-intensive and networked business activities. KWE provides remarkable improvement to the current problems of organizational training / e-learning and documentation applications. Management is most important area of these activities in all organizations. KWE provides means for learning through improving internal and external interactive and collaborative communication of management and experts, and building social knowledge and intelligence. Management learning is integrated with normal managing activities of the business leaders. This is also a very natural way to learn to quality of management. Effective e-learning requires application of new learning theories like connectivity, interactivity, and sharing information. KWE is to realize these new learning theories in practical business cases. It also facilitates learning in networks which is practical situation in all business cases.
Figure 5. Virtual IT (interactive technology) supported managing / learning environment (KWE) of any organization XYZ by using Web 2.0 tools for quality approach via SAAS (Software as a Service) KWE (figure 5) consists of ability to lead knowledge workers into
electronic work areas, where they work in collaboration to learn
by building new knowledge. They have also all relevant explicit
information easily available through related documents. The basic
KWE tools include blog, wiki, aggregator, forums, and files that
are based on proved social software or Web 2.0 technology. Software
for the tools-components are available from the open source software
community that is the biggest resource in the world for developing
software products. KWE replaces also all traditional quality management
related documentation. Many different kinds of evaluations and assessments form an essential part of quality management. Self-assessment by using performance excellence models have proved useful in many organizations but the used methodologies have often been too laborious and too much stagnated to use one single model only. However, also in self-assessments one may strive for new innovative approaches. An example is 3-in-1 methodology where all contents from Malcolm Baldrige and EFQM models and ISO 9000 standards have been combined in a single assessment scheme that is also easy to modify for particular business needs, e.g. healthcare. An innovative 3-in-1 methodology uses an advanced ZEF (Z-score Electronic Feedback) technology that offers a user-friendly and efficient tool to collect people's tacit knowledge on views and opinions. ZEF is a unique web-based application. Its applicability is broad. Especially, its two dimensional evaluation charts offer effective and illustrative way to show achieved performance in assessment questions and how important the questions are from organization's business point of view. Quality assurance Quality assurance (QA) according to ISO 9000 refers to measures with which both customers as well as other stakeholders are getting convinced of the fact that the requirements pertaining to products are met and that the organization has reasonable abilities for that. The essence of good QA is an effective communication. QA has to be grounded in the actual practices and facts of the quality management which have been created on the basis of an organization's business requirements. Certification is a methodology for QA. Certification can be done by the company itself (first-party certification or self-certification), by the second party (customers), or by a third party (a service company specialized in certifying services). Self-certification combined with self-declaration is the most genuine and natural way to proceed, which approach has gained interest due to various flaws associated with third-party certifying. However, self-certification requires a strong personal commitment to quality management from the top management of organization. That is why certifying done by an external third party can be a sign of weak management. It also demonstrates obsolete control-centred approach to quality. With regard to third-party certifications - should this become obligatory or necessary in the light of marketing efforts - it is worthwhile to restrict them to questions pertaining to safety, health, environmental protection, and product liability. Serious criticism has been directed at credibility of certifications made by third parties due to the fact that these often entail emphasis on the business objectives of the companies doing certifications. This means commercialization of certification, and consultancy made by certification bodies. One cannot distinguish oneself from competitors by leaning on general third party certifications. Third party certification is not the only way - and never the strongest - to realize QA. There is a big and serious need for innovations in QA solutions that can reflect excellence and clearly respond to the needs of an organization and its customers. The e-business technology (ICT) creates completely new cutting-edge solutions (e.g. "e-certificate") for QA. E-certificate consists of Internet site(s) or portal solution providing for assurance that an item conforms to a standard or specification indicated by the certificate. It gives also an opportunity to personalize and create partnership-dedicated efficient solution with collaborative extranet technology or social software. This solution is also facilitating flexible real time and bilateral multi-media communication between cooperating partners according to the principle of "Enterprise one to one" (figure 6). With these means an organization may act individually to fulfil QA needs of separate stakeholders.
Figure 6. Customer's differentiation and organization's capabilities for an "enterprise one to one" approach is a challenge also in quality management. Conclusions There is a lot of stagnation, doubts, and even frustration about quality related initiatives in many organizations, e.g. application of ISO 9000 standards and quality awards criteria has routinized into stereotypic rituals. Major reasons for this kind of harmful development obviously include lack of innovation, lack of courage to take radically new approaches, and immense busyness of business people. Especially traditional quality management practices have not been enough flexible to accommodate to the needs of modern business environments. What should be done for rehabilitating the whole quality professionalism and discipline? When implementing quality management, one should reform QM principles and create new effective professional methodology to be employed in a natural and innovative manner integrated with organization-specific business emphases and within contemporary management infrastructures and business environments. General recognized principles and models of good management can be used as a good starting point for this development. New business approaches and emergent technologies may cause problems but may also offer new challenging solutions. When striving for competitiveness in these circumstances one could
underscore the following aspects: Basically, effective implementation of organization-dedicated business integrated QM does not call for any extra measures or investments. General information sources e.g. ISO 9000 standards and performance excellence models can still be utilized as reference materials innovatively. Experiences have proved that it is always worthwhile to improve the existing management "systematicity" of the organization based on a systematic methodology. This is still more important in new dynamic business environments than in traditional business relationships. For QM the organization must be always ready but never finished. References 1. Anttila J (2006). Modern
approach of information society to knowledge work environment for
management, IEEE: International conference on industrial technology
ICIT 2006 [This material has been presented in different forms in different seminars or conferences, e.g. in Prague Czech Republic 2007, Budapest Hungary 2007, Helsingborg Sweden 2007, St. Petersburg Russia 2007] |
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