Performance Excellence and Organizational Change Quality & Performance Excellence, 8th Edition Chapter 11 Performance Excellence and Organizational Change

Outline Explain the importance and scope of organizational change Explore how organizations build a strong quality culture, sustain performance, and continually improve Provide some examples of firms undertaking these changes Explain how TQ perspectives on organizational change relate to organization theory.

Stages of Learning Unconscious incompetence Conscious incompetence Conscious competence Unconscious competence

Organizational Change Realities Organizations contemplating change must answer some tough questions, such as Why is the change necessary? What will it do to my organization (department, job)? What problems will I encounter in making the change? and perhaps the most important one: What’s in it for me?

Strategic vs. Process Change Strategic change is broad in scope and stems from strategic objectives, which are generally externally focused and relate to significant customer, market, product/service, or technological opportunities and challenges. Process change is narrow in scope and deals with the operations of an organization. An accumulation of continuously improving process changes can lead to a positive and sustainable culture change.

Strategic vs. Process Change

Cultural Change Culture – the set of beliefs and values shared by the people in an organization. Cultural values often seen in mission and vision statements Firms pursuing TQ often need cultural change

Elements of a Performance Excellence Culture Systems perspective Managing for innovation Visionary leadership Management by fact Customer-focused excellence Societal responsibility Ethics and transparency Valuing people Delivering value and results Organizational learning and agility Focus on success

Why Adopt a Performance Excellence Philosophy? Reaction to competitive threat to profitable survival An opportunity to improve

Requirements for Building and Sustaining Performance Excellence Readiness for change Sound practices and implementation strategies Effective organization

Perspectives on Cultural Change Change can be accomplished, but it is difficult Imposed change will be resisted Full cooperation, commitment, and participation by all levels of management is essential Change takes time You might not get positive results at first Change might go in unintended directions

American Express Change Process Scope the change—why are we doing this? Create a vision—what will the change look like? Drive commitment—what needs to happen to make the change work? Accelerate the transition—how are we going to manage the effort on an ongoing basis? Sustain momentum—what have we learned and how can we leverage it?

People Roles in Organizational Change Senior management – remove barriers Middle management – be supportive Workforce – create ownership

Transforming Middle Managers to Change Agents Empower Create a common vision of excellence Create new organizational rules Implement continuous improvement Develop and retain peak performers

Common Implementation Mistakes (1 of 3) Change is regarded as a short-term “program” Compelling results are not obtained quickly Process not driven by focus on customer, connection to strategic business issues, and support from senior management Structural elements block change Goals set too low “Command and control” organizational culture

Common Implementation Mistakes (2 of 3) Training not properly addressed Focus on products, not processes Little real empowerment is given Organization too successful and complacent Organization fails to address fundamental questions Senior management not personally and visibly committed

Common Implementation Mistakes (3 of 3) Overemphasis on teams for cross-functional problems Employees operate under belief that more data are always desirable Management fails to recognize that quality improvement is personal responsibility Organization does not see itself as collection of interrelated processes

Life Cycles of Quality Initiatives Adoption: the implementation stage of a new quality initiative. Regeneration: when a new quality initiative is used in conjunction with an existing one to generate new energy and impact. Energizing: when an existing quality initiative is refocused and given new resources. Maturation: when quality is strategically aligned and deployed across the organization. Limitation or stagnation: when quality has not been strategically driven or aligned. Decline: When a quality initiative has had a limited impact, is failing and the initiative is awaiting termination.

Baldrige Roadmap to Performance Excellence

Self Assessment: Basic Elements Management involvement and leadership Product and process design Product control Customer and supplier communications Quality improvement Employee participation Education and training Quality information

Importance of Follow-Up of Self-Assessment Results Many organizations derive little benefit from conducting self-assessment and achieve few of the process improvements suggested by self-study Reasons: Managers do not sense a problem Managers react negatively or by denial Managers don’t know what to do with the information

Leveraging Self-Assessment Findings Prepare to be humbled Talk through the findings Recognize institutional influences Grind out the follow-up

Knowledge Management The process of identifying, capturing, organizing, and using knowledge assets to create and sustain competitive advantage. Knowledge assets refer to the accumulated intellectual resources that an organization possesses, including information, ideas, learning, understanding, memory, insights, cognitive and technical skills, and capabilities.

Types of Knowledge Explicit knowledge includes information stored in documents or other forms of media. Tacit knowledge is information that is formed around intangible factors resulting from an individual’s experience, and is personal and content-specific.

Organizational Learning Create a “learning organization” Planning Execution of plans Assessment of progress Revision of plans based on assessment findings

Key Activities of Learning Organizations Systematic problem solving Experimentation with new approaches Learning from their own experiences and history Learning from the experiences and best practices of others Transferring knowledge quickly and efficiently throughout the organization

Internal Benchmarking …the ability to identify and transfer best practices within the organization Process: Identify and collect internal knowledge and best practices Share and understand those practices Adapt and apply them to new situations and bringing them up to best-practice performance levels.

Organizational Change in Action Boeing Motorola

Organizational Change Theory Organizational models : Weisbord’s “six box” model Nadler and Tushman’s congruence model McKinsey “seven-s” model Tichy’s change framework and TPC (technical, political, cultural) matrix Burke-Litwin model

Teleological Perspective Organizations change through an iterative process of goal setting, implementation, evaluation, and revision Change is a deliberate undertaking by individuals affiliated with the organization

Organizational Change and Total Quality Reason for change Traditional: productivity or job satisfaction TQ: customer satisfaction Source of change Both: top management Types of change Traditional: limited in scope and duration TQ: continuous improvement over a long period of time

Principles for Managing Change Unfreeze attitudes and behavior Have effective leadership Manage interdependence Involve the people Refreeze to make gains permanent

Outline Explain the importance and scope of organizational change Explore how organizations build a strong quality culture, sustain performance, and continually improve Provide some examples of firms undertaking these changes Explain how TQ perspectives on organizational change relate to organization theory.

Homework As newly hired Quality Ninjas, prepare a list of 10 quality terms, ideas, principles, etc. and briefly explain the importance of each. The CEO heard that Total Quality or Performance Excellence can help the company stay competitive and is eager to learn more. What should he know?