Sole Sourcing Modern Management Theory:
Quality as the Source

Sixth National Quality Management Conference
January 28, 1994

Richard E. Winder, J.D., M.B.A.

Copyright 1994, Richard E. Winder.  All Rights Reserved.

ABSTRACT

The Five Dimension Quality Model provides a framework for understanding the dynamics and dimensions of quality. The Model elucidates not only how quality works, but why it works. Moreover, since the Five Dimension Model incorporates the dynamics and paradigms as well as the surface structure of quality, it integrates several modern management techniques, including reengineering, organizational learning, and system dynamics. With this integration, quality becomes a source (rather than a competitor) of modern management theory, permitting a concentrated strategic planning focus on quality rather than a fractured focus on a potpourri of otherwise unrelated management methods.

INTRODUCTION

They are fleeing the quality movement. This would not be a matter of such concern if it were not for the fact that they are providing some of the deepest insight into quality processes. Who are they? They are some of the modern management gurus. Michael Hammer and James Champy, for example, insist that "reengineering [is not] the same as quality improvement, total quality management, or any other manifestation of the current quality movement."⁽¹⁾ Business Week implies that quality philosophy is being replaced by modern management theories as quality gurus age.⁽²⁾ Newsweek emasculates quality, pointing to several business failures of quality-focused firms.⁽³⁾ Is total quality management dying? Karl Albrecht says it is.⁽⁴⁾

In a world in which major management fads are greeted with suspicion and enjoy a life cycle of less than a decade, quality was seen as a refreshing bright spot on the horizon. It appeared to have some permanence. Joel Barker, for example, says that the quality paradigm is essential to excel in the 90's, but by the next decade it will be a requirement for even being in business.⁽⁵⁾ Dr. Thomas Lee said that the quality movement is a groundswell movement, like none we have seen this century, which will (because of its grass roots development) pervade our socioeconomic environment.⁽⁶⁾

The problem is that quality itself is fragmented. The world has not discovered a universal theory of quality, so everyone looks at one or more pieces of quality, and the pieces do not look the same. As noted by Jeffrey Lowenthal, ". . . you will find about fifty seven different variations to the theme of quality, about 1,265 books on the subject, and approximately 5,567 articles."⁽⁷⁾

Moreover, as a result of (or perhaps leading to) this fragmentation, there is no clear vision of what quality is. Less than 7% of over 700 participants (including a number of quality professionals) in several quality workshops and seminars responded positively to the question, "How many of you have a definition of quality with which you feel comfortable."

Dr. Deming says that every system must have an aim.⁽⁸⁾ Quality itself is a system which is either mapped over, adjunct to or integrated with an organization's operational system. If we do not understand what quality is, then the quality system remains an aimless system. Fragmentation occurs when aimless systems wander. That is why there are fifty seven different variations on the quality theme. That is why we see some modern management gurus avoiding the bad press of quality. Why would they want to be associated with aimless wandering?

If modern management theory is to be integrated with quality, we must first have a quality framework that itself is complete. A recent shift in paradigms has opened the door to a five dimensional quality framework that is comprehensive, integrative, and simple (see Chart 1 and The Five Dimensions of Quality chart at the end of this paper).⁽⁹⁾ This framework reflects underlying dynamics in a manner that it accounts for competitiveness as well as competition, for partnership as well as punishment, for leadership as well as management or bureaucracy.⁽¹⁰⁾ Utilizing this framework, the Five Dimension Quality Model provides an entirely new definition of quality which is broad enough to encompass the fifty seven varieties of quality as well as the emerging management theories.

Integrating psychology, leadership, and economics with quality dynamics, the Five Dimension Model utilizes relational economic theory to lay a socioeconomic foundation for seeing quality as the source of modern management theory rather than as a separate method or system (see Figure 1). The distinct advantage of this approach is that it provides a single source of learning and permits an organization to focus its entire energy on building its strategic plan around the quality paradigm rather than on an unfocused potpourri of methods. In a symbionic manner, these modern management methods in turn make a significant contribution to our understanding of quality. In fact, reengineering (Michael Hammer), organizational architecture (David Nadler), principle-centered leadership (Stephen R. Covey), organizational learning (Peter Senge), core competencies (C. K. Prahalad), and time-based competition (George Stalk, Jr.), are multi-dimensional quality functions that lead us to the highest (fifth) dimension of quality: delight the customer. These tools take us beyond the shallow two-dimensional linear view of quality and even beyond the three dimensional process view to a complete five-dimensional view of the quality system and its underlying dynamics.

TEXT

Like sole supplier sourcing, sole sourcing modern management theory, with quality as the source, provides many advantages to the organization:⁽¹¹⁾ It permits the organization to build an "arms around" (rather than an "arms length") relationship with quality. It permits innovation and development around a single focus rather than around a fractured focus which fragments the system through a constant pursuit of the latest fads. It saves the time and expense of "shopping around"--constantly evaluating competing products or services--and permits focusing of energy and resources on supporting and enhancing quality as the single source. It "reduces variation in product" through a consistent, unified approach; and it eliminates time wasted in "changeover" which occurs when the organization moves from fad to fad. It "simplifies accounting and paperwork" by eliminating the policy, paperwork, and accountability systems that are inevitably constructed around each new management method. Yet quality, as a trusted source of supply, is reliable. It "holds up its responsibility for continual improvement" and remains on the cutting edge of innovation because its five dimension framework is able to absorb, integrate, and even elucidate consistent management practices and at the same time evaluate and reject management fads that would be detrimental to the organization.

The Five Dimension Quality Model, based on the five dimensions of quality, provides the means of integrating cutting-edge management methods with quality processes. The reason the Five Dimension Model is able to integrate modern management methods is that it deals with quality on the surface level as well as on the paradigm and underlying dynamic level (see Chart 2). The vast majority of quality training today takes place at the surface level. It is behavioral oriented, and deals with what we can see and "control." On the other hand, both quality and the most significant modern management methods have their roots at the dynamic level, and must be understood and explained through dynamics rather than through surface appearances and structures. On the surface, modern management techniques may appear quite different from traditional quality processes. But at their core, they utilize the same dynamic interactions. The Five Dimension Model assists us in linking quality with modern management at the dynamic level, where the focus is on creating the environment in which growth is natural because it results from nurturing the dynamics rather than controlling the behavior. This gives us the ability to see modern management methods as part of, rather than distinct from, quality systems and processes.

THE TRADITIONAL QUALITY MODEL

The Five Dimension Quality Model provides a basis for understanding that quality is a system and for understanding what the quality system is. The traditional view of the quality system identified three components: Quality Performance, Quality Measurement, and Quality Systems and Processes (see Chart 3). These components comprise the first three dimensions of quality: Experience, Measurement, and Relationships and Systems Thinking.⁽¹²⁾ They also comprise the Do-Study-Act phases of Dr. Deming's Plan-Do-Study-Act (PDSA) cycle for continuous improvement (also known as the Plan-Do-Check-Act, or PDCA cycle).

The First Three Dimensions of Quality. At the experience level, quality performance is actually achieved--whether by accident, by serendipity, or by plan.⁽¹³⁾ Measurement provides us with knowledge of the system and verifies or refutes that what is expected to happen is happening.⁽¹⁴⁾ As we see and judge relationships from the data obtained through measurement we are able to structure systems and processes to ensure consistency and to focus on "building-in" quality rather than "inspecting it in."⁽¹⁵⁾

While the traditional quality system has been extremely useful for a number of years and has brought us to the quality decade, it is now proving inadequate to respond to new demands of quality, as quality moves from the "customer satisfaction" standard to "delight the customer" and from structured management systems to employee empowerment. It was easy to understand the science of quality in terms of the "hard side" of quality which can be measured and processed on a scientific basis. But now the practice of quality has moved to its "soft side," where planning and human issues of customer delight and employee empowerment are becoming more and more critical. Our traditional quality system does not give us the tools to handle this "soft side" of quality. The "soft side" requires a whole new set of tools, which are now emerging as modern management methods. In fact, one writer (erroneously) concludes that the movement toward the soft side means that we can now ignore the tools of the hard side.⁽¹⁶⁾

THE FIVE DIMENSION QUALITY MODEL

As noted above, traditional quality systems apply only three of the five dimensions of quality (experience, measurement, and relationships) and only three (Do-Study-Act) of the four stages of Dr. Deming's Plan-Do-Study-Act cycle. As the quality paradigm continues to shift, we are now realizing that the three-dimensional traditional quality system merely provides the surface structure, or delivery system, for quality. We further realize that there are two other key dimensions that support the delivery system: value sharing and interconnectivity, which are actualized through vision and planning. Establishing a quality framework by planning for quality in the context of its vision has become a critical element in the quality system.

The traditional three-dimension quality model, then, is actually the third stage--the delivery system--of a three-part, five-dimension quality model. The first part (related to quality's fifth dimension, value sharing) is Quality Vision. It involves comprehending the value of our contribution to society now and in the future. The second part (related to interconnectivity, the fourth dimension of quality) is Planning for Quality, or establishing the Quality Framework. It involves developing a framework or environment in which quality can thrive.

The quality system is not complete without all five dimensions. Without performance, measurement, and processes there is no way to bring the Quality Vision into actualization. But without planning and vision, the quality system will drift from fad to fad without any clear direction. For this reason, vision and planning, though fourth and fifth dimension functions, must become the primary focus of the quality system. Thus, they are the first and second parts of the Model, with the first, second and third dimension functions (performance, measurement, and processes) being the third part--the delivery system--of the model.

The Fourth Dimension of Quality. Quality Planning is a fourth dimension function related to Interconnectivity and Paradigm Logic. This phase is critical because it sets the stage and builds the framework and the environment for quality implementation.⁽¹⁷⁾ Interconnectivity permits us to view the interrelationships of dynamics. It is more than planning in the structured systems sense. It goes beyond a Management by Objectives (MBO) structure to creating the entire environment in which quality exists. It involves not only selecting the methods, procedures, policies, and processes of the quality system, but also selecting and nourishing the various paradigms under which quality can thrive.

An example of its application has been given by Peter Scholtes.⁽¹⁸⁾ A firm had a lengthy bereavement policy which specified very strict requirements for employees to take three days bereavement leave. The management realized that the strictness of the policy was undesirable for many employees, although it was designed to prevent abuse. The firm assessed which employees were not likely to abuse the policy, and determined that 95% of the employees could be trusted. The policy was in place for the 5% who would likely abuse the policy. The firm decided to simplify the policy to permit bereavement leave upon approval of the supervisor. While the incidence of bereavement leave went up, the number of days actually taken decreased by 47%. By moving from a non-trust paradigm to a trust paradigm, a quality result was achieved, resulting in significant savings to the firm as well as greater fulfillment to employees.

But planning for quality, while a necessary condition for an effective quality system, is not a sufficient condition. Dr. Deming points out that every system must have an aim.⁽¹⁹⁾ In the Five Dimension Model this is the Vision. It is vision, founded on value sharing (the fifth dimension of quality), which drives the quality system.

The Fifth Dimension of Quality: Value Sharing and Vision. Vision has often been described as a view of a future state of the organization. While vision encompasses the future of the organization, it also encompasses the present, because it is the present capacity of the organization which gives it the power to move to the future state. In the five dimension model, vision is not a distant light on the horizon which grows brighter and brighter as we draw nearer to it. Rather it is a burning fire within which illuminates everything we do. Vision illuminates the future, but it also elucidates the present. Vision is as relevant to the present as it is to the future. In fact, it is a clear vision of the present which leads us into the future.

Vision is at the heart of the Quality Model (see Figure 2). It supports the quality paradigms and delivery systems. Vision is the comprehension of our value to society. In the Five Dimension Model, Vision is described as the common good in a relationship. It deals with the existence of a need on the part of one participant and the capacity on the part of the other participant(s) to fulfill that need.⁽²⁰⁾ Under this dynamic view of vision, it is always adjusting to meet the needs of participants. If the needs change, the capacity is developed to meet the modified needs. The focus moves toward sustaining relationships rather than simply satisfying needs.

Vision, then, is enhanced by knowledge of our capacity, including our competencies, measurements, and systems.⁽²¹⁾ Our capacity relates to our ability to fulfill needs. A true knowledge of our capacity gives us a true knowledge of the needs we can assist in fulfilling. This is the reason we are constantly amazed at what is accomplished by a visionary. It is not that they walk on water or have angel wings. Rather, it is that they understand their capacity, and they do not limit their capacity by thinking in traditional paradigms. President John F. Kennedy, when he painted the vision of being on the moon within a decade, was not simply describing a future hope. He was describing a capacity which he knew existed. Since all the resources were not currently available at that time, part of that capacity involved the ability to put together the resources that were needed in order to fulfill the vision. If our view of our capacity is limited, so is our vision. Consequently, limitations on our vision, and the resulting limitations on our capacity, are often self-imposed.

The vision, or aim, of a quality system must have a very precise focus: to build and sustain relationships. Let us suppose that the aim of a particular quality system is something different from building and sustaining relationships: to increase profitability by 30% in one year. This is perhaps a very commendable organizational aim, but it is not a quality aim if it does not build and sustain relationships. In fact, it may have the opposite effect of degrading or even destroying relationships with customers and employees if wages are cut or prices are raised in order to increase profitability. This may result in achievement of short-term goals, but if relationships are degraded, then the long-term effect can be the exact opposite of the intended aim--erosion of the customer and employee base and lagging profits.

With this five dimensional framework we can develop a definition of quality that focuses on the precise aim of quality: Quality is the on-going process of building and sustaining relationships by assessing, anticipating, and fulfilling stated and implied needs. Under this definition, both the "hard side" and the "soft side" of quality are important. If the "soft side" relationship is not maintained, the "customer" will not "order" products or services and there will no longer be the opportunity to fulfill needs. If the "hard side" is not maintained by providing products or services which actually fulfill the needs, then the relationship will be degraded, reducing or eliminating the opportunity to fulfill needs.

It is the fifth dimension of quality--the value sharing dimension--which provides the power to build and sustain relationships. Value sharing is linked with vision (which is defined as "a description of the common good in a relationship"). Value sharing is described as follows: "If I give you something that has more value to you than it does to me, then together we are better off as a result of the trade. For example, "If I give you something that is worth $10 to you but $3 to me, then after the trade we, together, are worth $10 rather than $3--even if I do not receive anything in exchange.

There are three conditions necessary for value sharing to take place: First, there must be a trusting relationship such that value to you is value to me. This is the core, or essence, of shared vision. It is derived from common values and the interactive dynamics related to these values. Second, there must be mutual sharing of resources, including human (time), information, and capital resources. It is through the mutual sharing of resources that resources are available where they are needed, when they are needed, to fulfill needs as they arise. Hoarding of resources removes them from the free interchange needed for an efficient and equitable socioeconomic environment. Third, there must be sharing of value, with no hoarding of value by either participant. The hoarding of value chills the sharing of value.

When value sharing takes place, the resulting environment is one in which participants 1) give more than is required, 2) become "sustaining members" (such as long-term employees and loyal customers), and 3) share the vision with others (through word-of-mouth advertising, for example). Where this type of relationship exists, a "buyer" will pay more and a "seller" will accept less, expanding the trading range and increasing the likelihood that a trade will take place. The relationship becomes more important than the trade, and the focus turns from "selling to the customer" to "fulfilling customer needs." Price becomes less important, and is adjusted to meet the needs of participants.

Leadership and Management. In the value sharing dimension, leadership is the primary tool of governance. The leadership process is simple yet powerful (see Figure 3). The leader develops a vision for the organization and shares it with the other participants. Then all participants engage in sharing vision, resources (human/time resources, information/knowledge resources, and financial/capital resources), and value. All of this is bound together by the vision and its logical implementation.

In the leadership model, leadership begins and ends with shared vision. Shared vision becomes the lifeblood of leadership. When vision fades, so does leadership. Vision is driven by the underlying paradigm of the participants, and as such, becomes the logic by which the activities of the participants are understood.

In the value sharing paradigm, the vision of an organization is a description of the common good that is derived from the relationship among its participants. Consequently, the vision cannot be fully defined until an understanding is reached as to who the participants are, since, in the quality process it is the fulfillment of the needs of these participants which drives the quality improvement process.

Vision is directed toward the needs of each and all participants. Vision is the node which binds the participants together. Consequently, in relational economics, if vision is not shared, it does not exist. If the vision does not address the needs of a participant, then the vision is not (and cannot be) shared by that participant.

Anything less than leadership does not have the power to fulfill all the dimensions of quality. For example, management by objective, decried by Dr. Deming, uses only three dimensions (see Figure 4). It operates on an incentive system in which ideally the goals of the organization are tied to extrinsic rewards for the employees. As the employees do the work necessary to achieve the incentive (in the achievement paradigm), the work of the corporation is accomplished. However, if the goals of the corporation change to respond to new market needs, it is very difficult to change the incentives. Yet unless they are changed, the employees continue to work toward the wrong objectives.

Worse yet is the tyranny or autocratic model, which exists only in the experience dimension (see Figure 4). The autocrat has no sensitivity to the needs of others and imposes his or her will on them. This breeds the punishment paradigm ("get back" or "get even") or the apathy paradigm ("I'll put in my 40 hours a week, but do not ask me to do anything extra.").

As leadership is implemented, it becomes synonymous with quality. The primary function of quality is in meeting the needs of internal and external customers. Fulfilling quality comes from identifying the participants and the vision, identifying which participants will provide what resources, and identifying how the value will be shared among participants.

MODERN MANAGEMENT THEORIES⁽²²⁾

With this five-dimension framework, we can now link modern management theories to the quality Model. But first let us re-draw the model in terms of its core components. These are: core vision, core logic, core competencies, core measurements, and core systems.

One of the modern management theories, reengineering, has its foundation in Phase I of the Model, core vision, which relates to the value sharing (fifth) dimension of quality. Phase I relates to the underlying dynamics, which may or may not be in alignment with the surface structure, but which must be in alignment in order to achieve quality's highest fulfillment. Two others (organizational architecture and principle-centered leadership) relate to the interconnectivity (fourth) dimension (Phase II of the Model). They relate to the paradigms or frames of reference underlying and supporting the surface structure. Finally, three of the modern management theories (organizational learning, core competencies, and time-based competition) relate to the three-part delivery system (Phase III of the Quality Model), which in turn relate to the first three dimensions of quality (experience, measurement and systems). However, the modern management theories treat this surface structure as an interactive whole rather than as separate pieces, as it is sometimes treated in quality.

Phase I: Dynamics. Phase I of the Quality Model is the most important phase of quality because it deals with the dynamics integrating the value systems of the participants in an organization or undertaking. Yet it is the most complex, the least apparent, and the most often ignored phase of the Model, because emphasis is placed on the more visible three-dimension delivery system. Without value sharing, a quality system can fall into the trap of delivering products or services without fulfilling needs, and thus fail to accomplish the true underlying vision or aim of the system.

Reengineering is an excellent tool to bring the delivery system into alignment with the underlying values and dynamics. Hammer and Champy describe reengineering as "starting with a clean slate" to restructure a process or system to better respond to customer needs instead of merely fitting the design of the organization.⁽²³⁾ For example, they describe an order and billing process that was so fragmented (because various steps in the process were handled by different departments) that customers were unable to verify the status of an order without significant delay. Reengineering of business processes has resulted in quantum leap improvements in cycle time or cost savings, rather than in just incremental improvements traditionally associated with total quality management. It is this which led Hammer and Champy to assert that reengineering is not TQM or any other form of the current quality movement.

However, to understand and apply reengineering, it is essential to understand the dynamics underlying a process. This is a fifth dimension quality function which relates to building and sustaining relationships with customers. Dynamics are at the core of every process, and the dynamics relate to the value systems of participants in the process. Virtually every example given by Hammer and Champy deals with reengineering a process to better respond to needs of internal and external customers, and thus to build and sustain relationships among the key participants of a process.

Reengineering becomes necessary when the systems and processes of the surface structure are out of alignment with the underlying dynamics. This can result from a faulty design of the process in the first place, such as a design which matches the structure of the organization rather than the needs of the customer. But it can also occur when, as often happens, the underlying dynamics change. In today's market, this can occur on an annual, quarterly, monthly, or even a weekly or daily basis.

Reengineering, then, involves first assessing the underlying dynamics, and then structuring the systems and processes to respond to those dynamics. This requires knowledge of the organization's core competencies, because the system design must either reflect these competencies or allow for acquisition of the necessary competencies to support the re-engineered system.⁽²⁴⁾

Dr. Peter Senge, in his discussion of dynamic systems thinking, has described one of the best methods for assessing and understanding the underlying dynamics of a system. Using a series of loops to represent reinforcing cycles and balancing cycles, he provides a "language" which can be used to map a dynamic interaction. Such a map can then be used to design the appropriate process for the dynamic.⁽²⁵⁾

Phase II: Paradigms. Phase II of the Quality Model deals with the fourth dimension quality function of providing the framework or environment for quality. Organizational architecture and principle-centered leadership are fourth dimension functions. They both deal with the frame of reference of the participants in the organization. By modifying the organizational structure to permit the paradigms of the organization to become more closely aligned with the paradigms of the participants, the organization captures the power of the aggregate internal desire of the participants. This power is much greater and much more responsive to customer needs and organizational vision⁽²⁶⁾ than is the power of extrinsic rewards, which are rigid and non-responsive to change, and which wane in value as the values of the participants change.

Organizational architecture, developed by David Nadler, deals with the restructuring of the organization to bring into congruence the work, the people, the formal structure of the organization, and the informal structure and processes. This often results in autonomous, self-directed work teams or business units in which employees and teams are empowered to make decisions traditionally restricted to upper management. This empowerment (referred to as "high performance involvement by Edward E. Lawler III) is nourished where there is a high level of stewardship (responsible use of resources) and a high level of consecration (dedication of resources to a common good).

As the relational economic model illustrates,⁽²⁷⁾ empowerment transcends the control dynamics of traditional management theory where resources are hoarded through lack of willingness to consecrate or share them for a community good; or where resources are centrally controlled through enforced consecration or bureaucracy which eliminates stewardship (see Figure 5). Empowerment creates the most efficient economic system because resources are used responsibly (stewardship) and are put where they are needed when they are needed (consecration) rather than being tied up in a particular department (hoarding) or being subject to strict controls and extensive red tape (central planning or bureaucracy). An example of hoarding of resources is the aircraft repair that was delayed overnight at substantial cost to the airline because one organization was not willing to bear the cost of a $100 hotel room for a maintenance crew member.⁽²⁸⁾

Principle-centered leadership. developed by Stephen R. Covey, deals with modifying or structuring the organization's control system to respond to the values of the members of the organization, and building the organization on a paradigm of partnership, trust, and integrity. "Effective people lead their lives and manage their relationships according to principles--natural laws and governing values that are universally valid."⁽²⁹⁾ For some organizations this can represent a major shift in paradigms. But the shift in paradigms can result in a seemingly serendipitous shift in behavior. What, in fact, underlies this process is the principle that the paradigm drives the behavior and provides the logic for it. What may seemingly be illogical under one paradigm is completely logical under another. This paradigm logic is illustrated in the bereavement policy example noted above. A traditional lawyer would view the change of the bereavement policy from one with strict controls to one that was totally at the discretion of the supervisor as totally illogical. The new policy presented a significant possibility for abuse. But to the firm and its employees, the shift was totally logical, and the resulting behavior verified the wisdom of the logic. The detailed, strict bereavement policy had become a surrogate for trust, but had actually destroyed trust and responsibility. By modifying the policy, the firm replaced the surrogate with genuine trust, and was richly rewarded financially and with an increase in employee morale.

Phase III: Surface Structure. Organizational learning, core competencies, and time-based competition all relate to the surface structure, or delivery system (Phase III), of the quality Model. This is the part of the quality system that is most visible and thus the most easily understood.

Organizational learning, a concept developed by Dr. Peter Senge, deals with the ability of the organization to learn from its experience.⁽³⁰⁾ Many organizations have a learning disability simply because they have not learned how to learn. Senge points out that in sports or in the performing arts we have perfected the art of practice--of repeating our experience many times in order to perfect it prior to actual performance. Yet we have not carried the practice concept to the business organization. So we often end up failing on the front line merely from lack of practice. The Japanese obsession with market share is directed toward increasing their "practice time" and thus increasing their organizational learning in order to decrease costs and become even more competitive.

The successful organization is one that can incorporate its experience into an organizational pool of knowledge. The three dimension surface structure of the quality model is what supports organizational learning. The organization's experience or performance (the "Do" part of the Deming cycle) is measured ("Studied") to provide knowledge of the system. Then processes are developed, modified, and standardized (the "Act" part of the Deming cycle) to capture the learning as part of the system. This learning cycle takes place on a continuous basis. Thus, the organizational pool of knowledge includes not only the experience of the organization, but also the measurements and processes which codify that experience base. This process of standardization helps the organization "become free of mortal risk."⁽³¹⁾

It is this organizational learning which helps the organization develop its core competencies, a concept developed by C. K. Prahalad. Core competencies are the collective skills and knowledge which are unique to the organization and which relate to the needs the organization intends to fulfill.⁽³²⁾ Core competencies are the sum of the experience of the organization as reflected not only in the performance or experience dimension of quality, but also in the second-dimension measurements and third-dimension systems which support that performance. Core competencies give the organization its reason for being, and are tied to the very existence of the organization. Were it not for the ability of the organization to apply its human, information, and capital resources to fulfilling a particular set of needs, it would not survive.

High employee turnover and management mobility are antithetical to core competency because it is impossible or impracticable to record all the nuances of a process that make up the core competency, and when this experience base is reduced, some of the competency is lost. One organization is now rehiring a number of engineers to whom it had given early retirement because it has found that the experience base of those engineers cannot easily be replicated.

Time-based competition, a concept developed by George Stalk, is an application of learning theory to decrease the cycle time for performance of a process. The reduction of cycle time increases the organization's capacity: if an organization can cut its cycle time for a particular production process in half, it can produce twice as many parts in the same amount of time.

One caution is critical. As important and exciting as organizational learning, core competency, and time-based competition are, it is possible to lose sight of the fact that they are part of the surface structure or delivery system of quality and still must be integrated with the underlying paradigms and dynamics. For example, a firm can spend a lot of time developing a core competency which is not in alignment with its customers' needs or which is made obsolete by a shift in markets. Also, a firm may reduce cycle time for product introduction, but find that its stock price is dropping because it is developing less and less sophisticated products, albeit in a shorter time frame.⁽³³⁾ If an organization does not use the complete quality Model, it may in fact end up using some of these modern management tools to its detriment.

CONCLUSION

Equipped with a comprehensive five dimension quality framework, we can see beyond quality's surface structure to its underlying paradigms and dynamics. This permits us to see that many modern management theories, while sometimes bearing little resemblance to quality processes at the surface level, are, in fact, quality processes. This allows us to see quality as the sole source of modern management theory, and to use quality to evaluate and embrace or reject these management theories as part of our quality process rather than as separate, seemingly unrelated management fads. With this understanding, quality will become central to the strategic planning process as organizations see quality integrated with rather than adjunct to their existing operational systems.

ENDNOTES

1. Hammer, Michael and Champy, James, Reengineering the Corporation, HarperBusiness, 1993, page 49.

2. Byrne, John A., "Management's New Gurus," Business Week, August 21, 1992, pages 44-52.

3. "The Cost of Quality," Newsweek, September 7, 1992.

4. Albrecht, Karl, "The last days of TQM?" Quality Digest, November 1992, page 16. Albrecht says, ". . . we are now in the last stages of the 'total quality management (TQM)' phase of the quality movement. TQM, as a formally adopted management model, will soon be as dead as management by objectives (MBO) is. . . ."

5. Barker, Joel A., Future Edge, New York: William Morrow and Company, Inc., 1992.

6. Lee, Thomas, Keynote Address, 1991 Midwest Quality Conference.

7. Lowenthal, Jeffrey N., "Blueprint for Service Quality" Second Annual Service Quality Conference, April 20, 1993.

8. Deming, W. Edwards, The New Economics, Cambridge, Mass.: Massachusetts Institute for Technology, Center for Advanced Engineering Study, 1993.

9. See Winder, Richard E., "Fulfilling Quality's Five Dimensions," 47th Annual Quality Congress Transactions, May 24-26, 1993, pages 71-84.

10. See the Five Dimension Chart at the end of this article.

11. Deming, W. Edwards, Out of the Crisis, Cambridge, Mass.: Massachusetts Institute for Technology, Center for Advanced Engineering Study, 1986, pages 36-48.

12. See Winder, Richard E., "Fulfilling Service Quality Through Quality's Five Dimensions," 2nd Annual Service Quality Conference Transcripts, April 20, 1993, for a detailed discussions of the Five Dimensions of quality.

13. Philip Crosby taught the importance of quality performance. See Crosby, Philip B., Quality Without Tears, New York: McGraw-Hill, Inc., 1984.

14. This process is an important part of Dr. Deming's theory of profound knowledge. Deming, W. Edwards, The New Economics, Cambridge, Mass.: Massachusetts Institute for Technology, Center for Advanced Engineering Study, 1993, pages 104-110.

15. Dr. Deming taught how system and process measurements permit the voice of the system to help us eliminate problems before they happen rather than having to inspect them out.

16. "The good news is that in the post-Deming era we will be freed from the statistical tyranny of the numbers nuts." Albrecht, Karl, "The last days of TQM?" Quality Digest, November 1992, page 17.

17. Dr. Juran emphasizes the importance of planning for quality. Quality Planning is the first step in his three-step model (the "Juran Trilogy") that parallels the financial planning models used by business: planning, control, and improvement. Juran, Joseph M., ed., and Frank M. Gryna, assoc. ed., Juran's Quality Control Handbook, 4th Edition, (New York: McGraw-Hill), 1988, page 2.5.

18. Scholtes, Peter R., "Teamwork in the Quality Era," televised broadcast on April 14, 1992 in cooperation with the U. S. Chamber of Commerce, George Washington University, and GW National Satellite Network.

19. Deming, The New Economics, pages 51-53.

20. Winder, Richard E., "Fulfilling Quality's Five Dimensions," 47th Annual Quality Congress Transactions, May 24-26, 1993.

21. Jeffrey Lowenthal links core competencies to vision. See Lowenthal, Jeffrey N., Reengineering the Organization (Milwaukee: Quality Press), 1993.

22. An excellent overview of these methods is contained in Byrne, John A., "Management's New Gurus," Business Week, August 21, 1992, pages 44-52.

23. Hammer, Michael and Champy, James, Reengineering the Corporation, HarperBusiness, 1993; see also Lowenthal, Jeffrey N., Reengineering the Organization (Milwaukee: Quality Press), 1993.

24. Lowenthal's definition of organizational reengineering integrates core competencies: Reengineering is "the rudimentary rethinking and redesign of operating processes and organizational structure, focused on the organization's core competencies, to achieve dramatic improvements in critical and contemporary measures of performance such as reduced cost, increased product and service quality, and increased market share and profitability. Lowenthal, Reengineering the Organization, page 34.

25. Senge, Peter M., The Fifth Discipline, New York: Doubleday/Currency, 1990.

26. Organizational vision is linked to the needs of the organization's customers since vision is a description of the common good in the relationship between an organization and its participants, including customers.

27. For a full discussion of the relational economic model, see Winder, Richard E., Lindon J. Robison, and Daniel K. Judd, "The Economic Dynamics of Quality," addendum to "Fulfilling Service Quality Through Quality's Five Dimensions," 2nd Annual Service Quality Conference, April 20, 1992.

28. Hammer, Michael and Champy, James, page 8.

29. Covey, Stephen R., Principle-Centered Leadership (New York: Summit Books), 1993.

30. Senge, Peter M., The Fifth Discipline, New York: Doubleday/Currency, 1990.

31. Dr. Eugene Jennings of Michigan State University developed this concept to help organizations standardize processes so they were not so dependent on a particular individual that the disappearance of that individual would lead to business failure.

32. See Prahalad, C. K., "The Core Competence of the Corporation," Harvard Business Review, May-June, 1990; Lowenthal, Jeffrey N., Reengineering the Organization, page 77.

33. Senge, Peter M., 47th Annual Quality Congress Keynote Address, May 24-26, 1993.

REFERENCES

Albrecht, Karl, "The last days of TQM?" Quality Digest, November 1992, page 16.

American Quality Foundation and Ernst and Young, Best Practice Report (New York: American Quality Foundation and Ernst and Young), 1992.

Barker, Joel A., Future Edge, New York: William Morrow and Company, Inc., 1992.

Byrne, John A., "Management's New Gurus," Business Week, August 21, 1992, pages 44-52.

Churchill, Neil C. and Lewis, Virginia L., "The Five Stages of Small Business Growth," Harvard Business Review, May-June, 1983, page 30.

Covey, Stephen R., Principle-Centered Leadership (New York: Summit Books), 1993.

Crosby, Philip B., Quality Without Tears, New York: McGraw-Hill, Inc., 1984.

Deming, W. Edwards, The New Economics, Cambridge, Mass.: Massachusetts Institute for Technology, Center for Advanced Engineering Study, 1993.

Deming, W. Edwards, Out of the Crisis, Cambridge, Mass.: Massachusetts Institute for Technology, Center for Advanced Engineering Study, 1986.

Hammer, Michael and Champy, James, Reengineering the Corporation, HarperBusiness, 1993.

Juran, Joseph M., ed., and Frank M. Gryna, assoc. ed., Juran's Quality Control Handbook, 4th Edition, (New York: McGraw-Hill), 1988.

Lowenthal, Jeffrey N., "Blueprint for Service Quality" Second Annual Service Quality Conference, April 20, 1993.

Lowenthal, Jeffrey N., Reengineering the Organization (Milwaukee: Quality Press), 1993.

Prahalad, C. K., "The Core Competence of the Corporation," Harvard Business Review, May-June 1990.

Scholtes, Peter R., "Teamwork in the Quality Era," televised broadcast on April 14, 1992 in cooperation with the U. S. Chamber of Commerce, George Washington University, and GW National Satellite Network.

Senge, Peter M., The Fifth Discipline, New York: Doubleday/Currency, 1990.

Winder, Richard E., Lindon J. Robison, and Daniel K. Judd, "The Economic Dynamics of Quality," addendum to "Fulfilling Service Quality Through Quality's Five Dimensions," 2nd Annual Service Quality Conference April 20, 1992.

Winder, Richard E., "Fulfilling Quality's Five Dimensions," 47th Annual Quality Congress Transactions, May 24-26, 1993.