Chapter 2 Literature Review
2.2 Immediate discipline
2.2.1 Total Quality Management- a systems perspective
The first approach to the understanding of TQM is from a systems perspective.
System thinking developed in the 1950s as an alternative to traditional management thinking (McElyea 2003, p.59). The systems school grew out of the ‘general systems theory’
developed by the biologist Bertalanffy (McElyea 2003, Mirvis 1996) and the quantitative techniques- operations research and systems analysis—that were developed during the second world war. Further, Simon’s contributions on bounded rationality, satisficing, and incremental decision making recognised the complex environment in which post-war managers made decisions (Ehrenberg & Stupak, 1994, p. 77). System thinking school is aware that traditional management thinking does not have a full picture of situations in organizations. The system school views organizations as complex interrelationships amongst input, throughput (process), output, and feedback. From a systems point of view, an organization is an open and complex system with varying degrees of process flexibility and
many feedback loops which are used adaptively by an organization for its survival. In the context of organisational change, Harrington, Carr and Reid (1999) have explained three interrelated concepts of system, emergent properties and complexity. It is briefly explained now.
System is a set of different elements which together can perform a function which the constituent elements cannot perform alone. Emergent properties are those functions, good or bad, which would not exist except for the operation of the system. Complexity is something that is composed of interconnected elements that function as a system to produce emergent properties. In the context of system, Deming gave the example of automobile – a collection of wheels, engine and transmission do not make them a system. To become a system they must possess the complexity of having been designed in a particular way and then be inter-connected in a particular way. Then they become a system called automobile which provides the emergent property called ‘transportation’ and thereby makes it valuable. Thus it is the complexity which gives rise to the emergent properties which define a system and make it valuable.
But complexity is also the source of problem. Complexity is on the cusp between stability and chaos and a small amount of perturbation can push the system one way or the other. Systems with the order of complexity as small as three elements with two interconnections per element can produce chaotic behaviour. Lack of chaos is not always desirable. Bankruptcy and death are examples of stable but undesirable states.
Thus more the complexity more is the chance that the system will degenerate into a chaotic state or a stable but undesirable state.
An interface is a point where two elements come together and exchange something.
Interface is the key to design an effective system. The interfaces should be clear and defined and should not be complex. A complex interface results in people developing means to ‘work around’ the complexity. Thus in an organization, a complex inter departmental interface results in people developing ‘ a personal relationship’ to manage the poor inter departmental interface. Interfaces which are ambiguous, grey and subject to interpretation will result in variations in behaviour. High inter-element complexity and ill-defined interfaces will result in disaster. An ideal organization is one in which the elements have a high order of internal and a low order of external complexity. Thus each element must be as independent as possible.
Most good systems have good feedback control mechanisms. Feedback is used to maintain and improve the system. But feedback is also a source of complexity and thus has
advantages and risks. A good system is one that manages perturbation and change as a system. If feedback results in a perturbation which does not die out before the next perturbation, the system will result in chaos or a stable but undesirable state.
The systems view of organization is shown in Figure 2.3. It shows an organization in which the main sub-systems are marketing management, operations / production and finance.
It is an example of open system where the customer gives feedback to the marketing sub system of the organization about his/her product choice and its quality requirement. It also gives feedback to the operation / production sub system about the quality of output. The more effective the feedback loops are in a system, the ‘softer’ the system (i.e. the more flexible and response-able to change). According to Cusins (1994) the quality management system (QMS) can be thought of as the servomechanism for the organization. It runs in the reverse direction to the operational systems. Information on outputs from operations form input to QMS and outputs from QMS form inputs to operations.Total quality management consists in making effective boundary judgement at every system interface within the organization and between the organisational system and the user system.
The business environment
Supplier systems (peri-organizational environment) Customer systems
Figure 2. 3Simplified example of an organization as a system Source: Cusins (1994, p. 23).
Thus from the point of view of system theorists, the quality judgement is a judgement made at the boundary between the supplier system and the user system about what passes across it. Further, whether an output is a product or waste is a judgement on its quality. A satisfactory output is a product. An output which cannot be used by the user system is a waste. Waste can collect in the production system, or in the user system or both. Nature often becomes the user system of the waste. Cusins further defines ‘dynamic quality factors’ and
‘static quality factors’. The dynamic quality factors are individual and unique and situation dependent. Their addition will create an image of high quality. The static quality factors are general and common to all customers. They are not situation dependent. Their absence will create an image of poor quality. (Cusine 1994, p. 27)
In the context of TQM, systems approach has made a lasting impact. According to McElyea (2003) the birth of most management models like TQM, HPO (High Performance Organization), etc stems from a systems view of organization. Deming who is the father of TQM, also developed what he called ‘the system of profound knowledge’ (Bauer, Reiner &
Schamschule 2000, p. 412).
System thinking suggests that instead of reductionist approaches to management, a holistic view should be adopted (Taiwo 2001). Taiwo adds that while there is no single model which can capture an organisational situation fully, some of the methodologies which can be used to capture the inter-relationship and intra relationship of an organization are classified as ‘hard’, ‘soft’, ‘cybernetic’ or ‘emanicipatory’ depending on the effectiveness of their feedback loop. These methodologies, if used adequately, complement the customer focus, process improvement and employee involvement principles of TQM.
From the point of view of systems theory, TQM fits within the open and the rational systems perspective. Thus TQM process is a system with interactive components.
Committing to just one part of the system is unlikely to produce the desired effects.
Therefore, from systems theory point of view, TQM is more than leadership; it is more than culture, or training or teams. It is all of these factors together. Further, successful implementation means that effort and perseverance are required to find the right balance for each organization. Thus it is desirable that each firm explores its own needs for leadership, education and training, the use of teams, and the culture development to fit its own particular brand of TQM (Reed, Lemak & Mero 2000).
As per the system theorists, implementing a complex system like quality management, with all its serial interactions, is a difficult task and many of the ‘TQM failures’ can be
attributed more to the failure to implement and manage them as a system. It is not because of any inherent weakness or fundamental flaws in the system or its components (Reed, Lemak
& Mero 2002).
Bauer, Reiner and Schamschule (2000) parallel the systems thinking with the growth of quality systems as shown in Figure 2.4 and Figure 2.5.
Business excellence 1990 TQM 1980
Quality assurance 1970
System thinking 1960 System Dynamics 1950
Operations Research 1940
Human Relations 1924
Taylor 1913
Figure 2. 4Milestones of organisational roots Source: Bauer, Reiner and Schamschule (2000).
Knowledge management Value management
Customer focus
Customer orientation
Business excellence
Management systems
Process quality Product quality
1970 1980 1990 2000
Figure 2. 5Milestones of quality development Source: Bauer, Reiner and Schamschule (2000).
Bauer, Reiner and Schamschule (2000, p.412) say that today, what was earlier known as TQM has morphed into business excellence. All the quality awards are today known as models of business excellence. It really makes the two conceptually the same. Both are dominated by a comprehensive systems approach which includes a systemic control of all resources including social and cultural ones.
2.2.1.1 TQM and System Dynamics
The understanding of TQM from the point of view of systems thinking led Bauer, Reiner and Schamschule (2000) to develop a model of quality from the point of view of system dynamics. System dynamics is a tool which can capture the interactions among a range of system variables and predict the implication of each over a period of time (Khanna, 2003). Khanna et al. (2002) have quoted a study by Forrester wherein he used system dynamics to investigate how strategy, decision-making, structure and delay influence the growth and stability of organizations. In the context of quality, through the use of system dynamics software, Bauer, Reiner and Schamschule (2000) showed the interdependence of different organisational sub systems for quality. This is shown in Figure 2.6.
People
(The arrows indicate the information flow) Figure 2. 6Quality and business results
Source: Bauer, Reiner and Schamschule (2000).
Taking the study of TQM through system dynamics further, Khanna et al. (2002) have studied the dynamic interactions among TQM subsystems in the Indian automobile sector. Using the Malcolm Baldridge National Quality Award Model (MBNQA) of USA and modifying it to suit Indian socio-cultural conditions, they identified 12 TQM variables which help in implementing the TQM philosophy. They developed causal relationships among
Leadership
People Management
Business Result
Customer Satisfaction Processes
different variables and clustered seven of them as enablers and five of them as results. The definitions of the full set of variables are given in Table 2.3 and Table 2.4. The table also links the variables with the emphasis given by the founding fathers of TQM and with the ISO quality management system.
Leadership Senior managers who provide clear vision and values that promote total quality. It is the most important enabler for driving a total quality management culture
Crosby, 1981;
Deming, 1993
Strategic planning
Business strategies incorporate long-term and short-term goals based on customer and market expectations
Ishikawa, 1985
Information management
Effective information and communication systems for continuous improvement of all work
Ishikawa, 1985
Human
resource focus
Maximize opportunities for all employees to realize their full potential
Juran, 1995
Customer and market focus
Customer (internal and external customer) relationships must be managed to secure clear understanding of requirements
ISO 9000 -2000,
Supplier focus Suppliers are treated as partners in the process of improvement
ISO 9000- 2000
Process management
Systems approach to quality control of all operations including appropriate use of “quality tools”
ISO 9000- 2000
Table 2. 3Definition of variable for enablers Source: Khanna et al. (2002, p. 367).
TQM variables: enablers
Variables Definition Reference
TQM variables: results
Variables Definition References Impact on society Societal
responsibilities/environmental
All employees are motivated and dedicated to continuous improvement – feeling empowered and valued
ISO 9000/2000, ISO/TS 16949/2002
Customer satisfaction Internal and external customers know that their needs are important – and addressed
ISO/9000-2000, ISO/TS 16949-2002
Supplier satisfaction Suppliers want to do repeat business – as partners
2.2.1.2 Systems theory, TQM and organisational learning
Organisational learning is another concept which is rooted in systems theory and which is linked to TQM. One definition of organisational learning is that it is the capacity or processes within an organization to maintain or improve performance based on experience (Nevis, DiBella & Gould 1995, p.73). Since implementing TQM involves substantial organisational change (Ehrenberg & Stupak 1994, p. 81), a TQM organization has been defined as an organization that has developed the continuous capacity to adapt and change.
Therefore quality movement has been considered the forerunner in creating learning organizations (Elkjaer 1999; Senge 1994, p.61; Zhao & Bryar n.d.) and organisational learning has been considered a necessary outcome of a TQM initiative (Barrow 1993, p.39;
Sohal & Morrison 1995). A learning organization adopts TQM commitment to continuous improvement (Garvin 1993, p.78). In the American context, Robbins (1997, p. 735) has dealt
with different aspect of learning organization. He says that a learning organization among other things supports the importance of disagreements, constructive criticism and other forms of functional conflict. However, there is some evidence that the way organization learns also depends on the culture of that organization. For example, Kumar (2000), Snell & Chak (1998) and Tsang (1997, p. 83) have shown Indian, Singaporean and Chinese theories of organisational learning respectively which are dependent on the specific culture of the country. Thus Easterby-Smith and Araujo (1999, p.14) advocated a culture and institution based theory of organisational learning.
One important way to understand organisational learning is through a theory of action.
Argyris and Schön have described organisational learning as a theory of action (Elkhaer 1999, p.79). Action learning postulates that people learn most effectively when working on real time problems occurring in their own setting (Raelin 1997, p.21). Burgoyne, Pedler and Boydell (1994) have shown culture based differences in organisational learning between the US and UK models of action learning. Zimmer (2001) says that using a systemic action-learning cycle at the level of second-order cybernetics, it is possible to reduce conflict in the organization and maintain autonomy. According to Zimmer, first order cybernetics is about first order feedback system –‘I plan and do, I sense and I check’. Second order cybernetics is about second order feedback system wherein ‘I share my reflection and feedback with those from another person – you’. Zimmer further says that respect for autonomy is a powerful tool to manage complexity. It lets mutually supportive order emerge.
In western culture though, much order is imposed. This causes conflict, which only adds to the complexity.
Another approach to organisational change is through innovation. Innovation is a specialised kind of change wherein a new idea is applied to initiating or improving a product, process or service (Kanter quoted in Robbins 1997, p. 732). Bart (2004) has studied the link between innovative practices and organisational learning. Innovative organizations have a culture that rewards both successes and failures (Robbins 1997).
Schein (1993) identifies three types of learning: (i) knowledge acquisition and insight, (ii) habit and skill learning and (iii) emotional conditioning and learned anxieties. Most organisational learning theories focus on knowledge acquisition and insight (Schein 1993, p.2). Schein (1996) has also identified three cultures in an organization – the operator culture, the engineering culture and the executive culture. According to him, organizations will not learn effectively unless they recognise and confront the implications of these three
occupational cultures. For example, he views the executive culture and the engineer culture as major problems because they do not sufficiently consider human factors.
This brings into focus the aspects of the content and process of organisational learning. However, organisational learning has not so much been defined in terms of processes (Nonaka 1994, p.16). It has more been identified in terms of outcomes (Huysman 1999). Prange (1999) has therefore argued for a linkage between the content and process of organisational learning.
2.2.1.3 Organisational knowledge creating process
Within organisational learning, Nonaka (1994) has dealt with the organisational knowledge creating process. He argues that organisational knowledge is created by continuous dialogue between two types of knowledge – tacit knowledge and explicit knowledge. Explicit knowledge is the codified knowledge which is transmittable in formal, systematic knowledge. It is captured in the records of the past such as libraries, databases and archives and is assessed on sequential basis. Tacit knowledge has a personal quality which makes it hard to formalize and communicate. It involves both cognitive and technical elements. The cognitive element comes from the ‘mental models’ which includes schemata, beliefs, paradigms that help individuals to perceive and define the world. The technical element of tacit knowledge covers skills, concrete know-hows and crafts that apply to specific contexts. Sharing of tacit knowledge involves parallel processing of the complexities of current issues. Organisational knowledge is created, enlarged and enriched by the individuals of an organization. It is carried out by the interactive amplification of tacit and explicit knowledge held by individuals, organizations and societies in a spiral fashion.
Organization plays the role of a forum where the spiral of knowledge creation takes place through socialisation, externalisation, combination and internalisation (SECI). The SECI model is shown in Figure 2.7.
Tacit Knowledge Explicit Knowledge To
Tacit knowledge
From Explicit Knowledge
Figure 2. 7Modes of knowledge creation in an organization
Source: Nonaka (1994).
For parallel processing of knowledge, Nonaka emphasises middle-up-down management where all members work together both horizontally and vertically. He de-emphasises the charismatic role of top management or the entrepreneurial role of lower management. He looks upon the middle managers as the knowledge engineers who synthesise the tacit knowledge of top managers and frontline employees into new knowledge and new learning. He disagrees with Argyris and Schön that double loop learning is difficult.
He argues that double loop learning is in-built in his knowledge-creating model because
‘organization constantly creates new knowledge by reconstructing existing practices, perspective or frameworks on a day-to-day basis’ (Nonaka 1994, p.19).
In the context of learning, Reason (2001, p.185) has identified four levels of knowledge:
(i) Experiential knowing is through direct face- to-face encounter with person, place or thing;
it is knowing through empathy and resonance, and is almost impossible to put in words.
(ii) Presentational knowing emerges from experiential knowing, and provides its first expression through forms of imagery such as poetry, drawing, sculpture, movement, dance and so on.
(iii) Practical knowing is knowing “how to” do something and is expressed in a skill, knack or competence.
(iv) Propositional knowing is knowledge “about” something and is expressed through ideas and theories a. It is expressed in abstract language or mathematics.
Bawden (1991, p.17) has considered these four dimensions of learning as opposites yet integrated to each other as shown in Figure 2.8.
Socialisation Externalisation
Internalisation Combination
Experiential learning for praxis
Propositional Practical learning learning for knowing for doing
Intuitive learning for
fitting in
Figure 2. 8The four types of learning as polar opposites
Source: Bawden (1991).
According to Reason, knowing will be more valid – richer, deeper, more true to life and more useful – if these four ways of knowing are congruent with each other; that is if our knowing is grounded in our experience, expressed through our stories and images, understood through theories which make sense to us, and expressed in worthwhile action in our lives. There is much in common between Reason’s concept and the concept of action learning referred earlier.
2.2.1.4 Learning and second order change
In a different approach to organisational change, Torbert (1989) has said that first order change is like changing the efficiencies and effectiveness within the existing assumptions. It is akin to the single loop learning of Argyris, Putnam and Smith (1985).
Second order change involves change in assumptions, change in structure and strategy and change in goals. First order changes are those that occur in a stable system that itself remains unchanged while second order change occurs when fundamental properties or states of the system are changed (Hersey, Blanchard & Johnson 2002, p.388). According to Torbert, second order change is very rare. But it is the second order change which is truly transformational. Also it can rarely be planned. Most of the planned changes are first order change. Torbert (1989, p.89) thus doubts the transformational changes which have been
Second order change involves change in assumptions, change in structure and strategy and change in goals. First order changes are those that occur in a stable system that itself remains unchanged while second order change occurs when fundamental properties or states of the system are changed (Hersey, Blanchard & Johnson 2002, p.388). According to Torbert, second order change is very rare. But it is the second order change which is truly transformational. Also it can rarely be planned. Most of the planned changes are first order change. Torbert (1989, p.89) thus doubts the transformational changes which have been