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Subject Area: Managing Quality
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Article citation: John S. Oakland, (2007) "From good to great to ACE", The TQM Magazine, Vol. 19 Iss: 6, pp. -
As my colleagues and I visit organisations of all types and sizes, whether they be large global companies in the aerospace and defence industry, oil and petrochemical giants, plastics manufacturers or formers, financial services or media companies, hospitals, criminal justice agencies or tax collectors, we meet people who are essentially trying to achieve the same make things or do things better, faster and cheaper. Customers, shareholders and governments (central and local) all over the world make ever-increasing demands on organisations to deliver goods and services to quality, on time and at ever lower cost. This puts pressure on most executives to find their own route to quality and operational excellence. It’s not good enough to live off past glories you’re only as good as your last customer review or reported accounts or published waiting lists. Moreover, the plans for the next period need to show improved performance over the last and the search for never ending improvement is truly continuous.
How are manufacturers, hospitals, universities, prisons, rail operators, insurance companies, new energy firms and other utility operators to feed these hungry animals? How will their top management cope with the relentless pressure for improved performance? Not by staying as they are, that’s for sure. Technology has to play its part, of course, but in isolation it will not deliver the goods. It must be managed well within the process people technology triangle.
It was Fujio Cho, President of the Toyota Motor Company, who in 1999 sent the chilling message to the competitors: “We get brilliant results from average people managing brilliant processes while our competitors get average or worse results from brilliant people managing broken processes.” This comparison between organisations is as valuable today as it was then, yet we still see many senior executives in organisations all over the world, in large and small companies, who are struggling to find how to implement the relatively simple concepts behind it.
The key to improving quality performance is reducing variation in materials, in the way things are done, in the value and correctness of information, etc. The key to improving on-time delivery performance, including in the public sector, is the elimination of waste non-value adding activities that cause the “total throughput time” to be much longer than it should and needs to be. The key to improving cost performance is getting rid of unnecessary variation, which causes failure costs, and getting rid of waste, which well just wastes time and money.
This explains the rise and rise of improvement approaches such as six sigma, lean and business process re-engineering (BPR). In isolation, like many past “flavours of the month,” such as quality circles, statistical process control and Kaizen, the effect of six sigma, lean and BPR will disappoint. Put together with the right strategies and with alignment behind them, however, lean and six sigma can be part of a very powerful approach to deliver real business performance improvement.
In thinking about how companies or public sector organisations might deliver “better” as well as “faster”, lean and six sigma approaches together bring within reach the virtue of being “Agile” the ability to do things well, quickly and with flexibility. To do things “better” and “cheaper” the organisation needs to be “Capable” both in terms of its processes and its people, and to deliver “faster” and “cheaper”, it needs to be “Efficient”. Agile, Capable, Efficient they spell out the “ACE” company or organisation.
Becoming an ACE organisation is a continuation of the TQM (see Oakland, 2003, 2004) or Business Excellence (see Oakland, 2001) theme, but it requires additional management time and attention to ensure that they and their people are not being left behind by the Toyotas of this world. There have been many attempts during the last 25-30 years to find the Holy Grail to “search for excellence”, to “build to last”, to go “from good to great”. Based on our many man-years of business and public sector case experience and research, we have concluded that the keys to success to doing things better, faster, cheaper are now to be agile, capable and efficient. If you did TQM or Excellence well, the right components will be part of your DNA, and you will have the right platforms on which to build an ACE organisation. If not, you may have some foundation work to do!
John S. Oakland
Executive Chairman, Oakland Consulting plc (www.oaklandconsulting.com) and Emeritus Professor, Leeds University Business School, Leeds, UK