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Quality integration

Juhani Anttila, profile picture
Juhani Anttila

The document discusses business-integrated quality management, which aims to seamlessly coordinate quality activities within an organization's normal business operations and management processes. It cannot be distinguished from normal business management. Key aspects include understanding the organization, management, quality, and quality management from the perspective of the specific organization. Popular quality management methodologies like Lean, Six Sigma, ISO standards, and performance excellence models can be embedded within an organization's overall business system and strategic and operational direction. The challenge is applying these concepts flexibly based on each organization's unique business needs and processes.

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Striving for the business-integrated quality management - Quality Integration Juhani Anttila 1 xxxx/25.2.2014/jan These pages are licensed under the Creative Commons 3.0 License http://creativecommons.org/licenses/by/3.0 (Mention the origin)
Striving for the business-integrated quality management Business-integrated quality management: Quality management that consists of: • Coordinating activities embedded seamlessly in the organization's management processes and • Professional quality practices within the organization’s normal business operations One cannot distinguish the business-integrated quality management from the business management of an organization. • The approach is a deliberate countermeasure to separate quality systems. The business-integrated quality management is to reinforce an organizational business identity. • The approach is to stand out amongst the crowd of look-likes of standard image with regard to quality in striving for business competitiveness. 2 Fundamental understanding of the topic: - Without a proper answer to the following questions, the business-integrated quality management is not possible: How to understand organization? How to understand management? How to understand quality? How to understand quality management? 4254/15.1.2014/jan Answers to these questions may be different in different practical organizational cases. Hence, also the solutions of the embedded quality management may also differ greatly among different organizations.
“In the beginning was the Word ...”(*) The ontological basis of integration Joseph Juran, Quality control handbook (1974): “Any widespread discipline must identify and clarify the universal concepts, which underlie its very existence as a discipline. In addition, it must evolve and standardize the key words and phrases through witch the practitioners of the discipline can communicate with each other. The quality function has taken some steps to identify and clarify these concepts to prepare some glossaries of terms. Because they have not been widely adopted (or even circulated), there is great difficulty in reaching a meeting of the minds when practitioners convene to solve problems. --The reader is urged to keep in mind that differences in meanings of key words and phrases are a frequent source of confusion. The question “Just what do you mean by this word” is especially important in those cases where someone else is drawing an “illogical” conclusion from the identical set of facts. Such outward differences in conclusions are seldom the result of illogical reasoning. More usually they are the result of logical reasoning from different concepts or premises.” 3 4255/15.1.2014/jan (*) Johannes 1:1
The key concepts of the business-integrated quality management - A pragmatic approach organization: person or group of people that has its own functions with responsibilities, authorities and relationships to achieve its objectives (*) management: coordinated activities to direct and control an organization (**) - Management takes place through managing processes. quality: degree to which a set of inherent characteristics fulfils requirements (**) - Requirement: need or expectation that is stated, generally implied or obligatory (*) - Interested party: person or organization that can affect, be affected by, or perceive themselves to be affected by a decision or activity (*) quality management: coordinated activities to direct and control an organization with regard to quality (**) - Quality management is an organization-internal engagement for ensuring business results fulfilling the needs and expectations of the organization’s interested parties. quality assurance: part of quality management focused on providing confidence that quality requirements will be fulfilled (**) - Quality assurance is a communication issue between the organization and its interested parties. 4 4256/15.1.2014/jan (*) ISO Directives Annex SL, (**) ISO 9000
Typical managing infrastructure and elements of an organization Action plans Development projects, ”Becoming Better” Policies Mission (Purpose, justification of the existence) Strategies Resources, Procedure documents, Tools Operational processes, ”Earning Money” Realization means 0,4...1 year Action just now Vision SHARED BUSINESS VALUES Purpose of the company 5 1730/29.1.2014/jan Strategic plans 3...5 1...3 years years Separate quality (management) system within this typical business framework is very artificial. All quality actions must be integrated with the management system.
Managing activities and responsibilities cover the whole organization and different levels of the organization Top management Business establishments Breakthrough activities Division Directors Business area establishments Improvement activities Routine operational and maintenance activities Unit / function managers and professionals Process owners Process team members Portion of time spent on activity 6 1365/12.1.2014/jan (Ref.: The Itoh Model, Singh Soin)
What is business management all about? Creators of the classical schools of management theory: 7 H. Fayol 1841 –1925 Industrial administration (strategic management) 1. Division of work among individuals and groups to focus effort and attention on special portions of the task 2. Authority of managers to give orders. 3. Discipline. Employees obey and respect the rules F.W Taylor 1856 –1915 4. Unity of command. Every employee gets orders from only one Scientific management (production superior operations) 5. Unity of direction. Each group with the same objective is directed by one manager using one plan 1. Replace rule-of-thumb work 6. Subordinate individual interests to the general interest of the methods with methods based organization as a whole on a scientific study of the 7. Remuneration. Workers must be paid a fair wage for their tasks services. 2. Scientifically select, train, and 8. Centralization to find the optimum degree of centralization for develop each employee rather than passively leaving them to 9. each situation line of authority from top management to the Scalar chain. The train themselves lowest ranks represents the scalar chain. Communications follow 3. Provide detailed instruction this chain and supervision of each worker 10. Order. People and materials should be in the right place at the in the performance of that right time. worker's discrete task 11. Equity. Managers should be kind and fair to their subordinates 4. Divide work between managers 12. Stability of tenure of personnel. High employee turnover is and workers; the managers inefficient. Management should provide orderly personnel apply scientific management planning principles to plan the work and 13. Initiative. Employees who are allowed to originate and carry out the workers perform the tasks. plans will exert high levels of effort 14. Esprit de corps. Promoting team spirit will build harmony and unity within the organization 4152/11.1.2014/jan
The 2013 “Thinkers50” global ranking of management thinkers 8 4151/11.1.2014/jan http://www.thinkers50.com/t50-ranking/2013-2/
Management methods / Management models / Management theories STRATEGY - VALUE CREATION: 3C's model Ohmae 7 Ps Booms Bitner 7-S Framework McKinsey ADL Matrix Arthur D,Little, Ansoff product/market grid Acquisition Integration Approaches Haspeslagh Jemison BCG Matrix Blue Ocean Strategy Kim BPR Business Process Reengineering Bricks and Clicks Business Assessment Array Capability Maturity Model CMM Change Dimensions Pettigrew Whipp Clarkson Principles Competitive Advantage Nations Porter Competitive Advantage framework Core Competence Hamel Prahalad Core Groups Art Kleiner Cost-benefits analysis Cultural Dimensions Hofstede Delta Model Hax Deming cycle PDSA Dialectical Inquiry Diamond Model Porter Dimensions of Change Pettigrew Whipp Distinctive Capabilities Kay ERG Theory Alderfer Experience Curve Extended Marketing Mix 7P's Five Forces Porter Force Field Analysis Lewin Growth Phases Greiner Game Theory Nash GE / McKinsey matrix GE Business Screen Growth Share Matrix BCG Hierarchy of Needs Maslow Hofstede National Differences Impact/value Hammer Industry Change McGahan Industry Life Cycle Instrumental Approach of Stakeholder Theory Intrinsic Stakeholder Commitment Kaizen philosophy Learning Organization, The M&A approaches Management by Objectives Drucker Managing for Value MfV Insead Marketing Mix 4P's 5P's McCarthy Modeling business simulation Normative Approach of Stakeholder Theory OODA Loop Boyd Organizational Configurations Mintzberg Organizational Learning Outsourcing Parenting Advantage Goold Campbell Parenting Styles Goold Campbell PDSA Deming cycle Performance categories Baldrige Performance Prism PEST analysis Plausibility Theory Porter competitive advantage Porter Value Chain Portfolio Analysis Product/market grid Ansoff Profit Pools Gadiesh, Gilbert Real Options Luehrman SDG Relative Value of Growth Mass Resource-Based View Barney Root Cause Analysis Scenario Planning Simulation modeling Six Thinking Hats de Bono Spiral Dynamics Graves Strategic Alignment Venkatraman Strategic Intent Hamel Prahalad Strategic Stakeholder Management Strategic Triangle Ohmae Strategic Thrusts Wiseman Strategy Map Kaplan Norton STRATPORT Larreche SWOT analysis Systems Thinking / Dynamics TDC matrix Internet value Theory of Constraints Goldratt Twelve Principles of the Network Economy Kelly Value Chain Porter Value Disciplines Treacy Wiersema Value Mapping Jack Value Stream Mapping VRIN Barney VALUATION - DECISION MAKING: Absorption Costing Activity Based Costing ABC ABM ARIMA Box and Jenkins Balanced Scorecard Kaplan Norton Baldrige categories of performance Benchmarking Brainstorming Break-even Point Capital Asset Pricing Model CAPM CAPM Capital Asset Pricing Model Cash Flow from Operations Cash Flow Return on Investment Cash Ratio Cash Value Added CVA Anelda CFROI Contingency Theory Vroom Corporate Reputation Harris-Fombrun Cost-benefits analysis Current Ratio measuring liquidity Debt to Equity Ratio measuring solvency Direct Costing Discounted Cash Flow DCF Dividend Payout Ratio Dynamic Regression Earnings Per Share EPS Enronitis EBIT EBITDA Economic Margin EM Economic Value Added EVA EFQM EFQM EPS Earnings Per Share EVA Economic Value Added EVM CPM Excess Return ER Suggest a theory Exponential Smoothing Fair Value accounting Free Cash Flow Full Costing Game Theory Nash Gross Profit Percentage Groupthink Janis Human Capital Index HCI IAS Accounting Standards IC-Rating Intellectual Capital Impact/value Hammer ICT value Inclusive Value Measurement IVM Intangible Assets Monitor IAM Sveiby IRR (Internal Rate of Return) Leveraged Buy-Out Liquidation value M&A approaches Management buy-out MAGIC QPR Marginal Costing Market Value Added MVA Net Present Value NPV NOPAT Operating Cash Flow Operating Profit Percentage Operations Research P/E ratio Payback Period Performance categories Baldrige Performance Prism Plausibility Theory Portfolio Analysis PRVit Quick Ratio RAROC Risk-Adjusted Return on Capital Real Options Luehrman SDG Real Ratio Regression Analysis Relative Value of Growth Mass Reputation Quotient Harris Fornbrun Return on Capital Employed ROCE Return on Equity ROE Return on Invested Capital ROIC Return on Investment ROI Return on Net Assets RONA Risk Management Simulation business modeling Six Sigma GE Six Thinking Hats de Bono Skandia Navigator Leif Edvinsson Strategic Thrusts Wiseman TDC matrix Internet value Time-Based Activity Based Costing Kaplan Total Business Return TBR BCG Total Shareholder Return TSR US GAAP Accounting Principles ValueReporting Framework PWC Value Creation Index CGE&Y CBI Variable Costing VRIN Barney WACC Z-Score Altman ORGANIZATION - CHANGE - CULTURE: 7-S Framework McKinsey Acquisition Integration Approaches Haspeslagh Jemison Attributes of Management Excellence Peters Balanced Scorecard Kaplan Norton Baldrige categories of performance Bases of Social Power French Raven BPR Hammer Champy Business Process Reengineering BPR Capability Maturity Model CMM Change Approaches Kotter Change Behavior Ajzen Change Dimensions Pettigrew Whipp Change Management Iceberg Change Model Beckhard Change Phases Kotter Changing Organization Cultures Trice Beyer Cultural Intelligence Early Clarkson Principles Competing Values Framework Quinn Core Groups Kleiner Corporate Governance OECD Crisis Management tips Cultural Dimensions Hofstede Culture Change Trice Beyer Culture Levels Schein Deming cycle PDSA Dialectical Inquiry Dimensions of Change Pettigrew Whipp Eight Attributes of Management Excellence Peters Entrepreneurial Government Osborne EVM CPM EFQM EFQM Expectancy Theory Vroom Industry Change McGahan Five Disciplines Senge Force Field Analysis Lewin Fourteen Points of Management Deming Gestalt theory Growth Phases Greiner Hierarchy of Needs Maslow Implementation Management Krüger Innovation Adoption Curve Rogers Intrinsic Stakeholder Commitment Intangible Assets Monitor Sveiby Kaizen change philosophy Learning Organization Senge Levels of Culture Schein Levers of Control Simons Management by Objectives Managing for Value MfV Insead Organic Organization Burns Organizational Configurations Mintzberg Organizational Learning Outsourcing Parenting Advantage Goold Campbell Parenting Styles Goold Campbell Path-Goal Theory House PDSA Deming cycle People CMM CM-SEI Performance categories Baldrige Performance Prism Planned Behavior Theory Ajzen Points of Management Deming RACI (RASCI) Result Oriented Management Seven Habits Covey Seven Surprises Porter Six Change Approaches Kotter Six Sigma GE Skandia Navigator Leif Edvinsson SMART Drucker Stakeholder Management Strategic Alignment Venkatraman Strategic Stakeholder Management Strategy Map Kaplan Norton System Dynamics / Thinking Forrester Ten Principles of Reinvention Osborne Theory of Planned Behavior Ajzen Theory of Reasoned Action Ajzen Fishbein TQM Total Quality Management Two Factor Theory Hertzberg ValueReporting Framework PWC COMMUNICATION - MARKETING: 7 Ps Booms Bitner ADL Matrix Arthur D. Little Ansoff product/market grid ARIMA Time Series Analysis Balanced Scorecard Kaplan Norton Bass Diffusion model Bass BCG Matrix Brand Asset Valuator Brand Personality Aaker Bricks and Clicks Business Assessment Array Business Process Reengineering BPR Change Behavior Ajzen Change Management Iceberg Change Phases Kotter Core Groups Kleiner Corporate Reputation Harris-Fombrun Crisis Management tips Distinctive Capabilities Kay Enterprise Architecture Zachman Extended Marketing Mix 7P's Missing a method? <../opinion.html> Framing Tversky Gestalt theory Groupthink Janis Implementation Management Krüger Industry Life Cycle Innovation Adoption Curve Rogers Intrinsic Stakeholder Commitment Kaizen change philosophy Leadership Styles Goleman Learning Organization, The Levers of Control Simons Marketing Mix 4P's 5P's McCarthy Organizational Learning PEST analysis Planned Behavior Theory Ajzen Positioning Trout Product/market grid Ansoff Product Life Cycle Profit Pools Gadiesh, Gilbert Reputation Quotient Harris Fornbrun Strategy Map Kaplan Norton STRATPORT Larreche Theory of Planned Behavior Ajzen Theory of Reasoned Action Ajzen Fishbein Twelve Principles of the Network Economy Kelly Value Disciplines Treacy Wiersema LEADERSHIP - MANAGEMENT: 4 Dimensions of Relational Work Butler Activity Based Costing ABC ABM Bases of Social Power French Raven Benchmarking Brainstorming Business Process Reengineering BPR Change Management Iceberg Competing Values Framework Quinn Contingency Theory Fiedler Cost-benefits analysis Crisis Management tips Cultural Intelligence Early Deming cycle PDSA Emotional Intelligence Goleman Enterprise Architecture Zachman ERG Theory Alderfer Expectancy Theory Vroom Five Disciplines Senge Framing Tversky Groupthink Janis Growth Phases Greiner Hierarchic Organization Burns Hofstede National Differences Human Capital Index HCI Just-in-time JIT Kepner-Tregoe Matrix Leadership Continuum Leadership Styles Goleman Levels of Culture Schein M&A approaches Management by Objectives Modeling business simulation Organic Organization Burns PAEI management roles Parenting Styles Goold Campbell Path-Goal Theory House PDSA Deming cycle PDCA Power Bases French Raven Results-Based Leadership Ulrich Result Oriented Management Risk Management Root Cause Analysis Seven Habits Covey Seven Surprises Porter Simulation modeling Six Sigma GE SMART Drucker Social Intelligence SWOT analysis TDC matrix Internet value Theory of Constraints Goldratt Theory X Theory Y McGregor Theory Z Ouchi TQM Total Quality Management Two Factor Theory Hertzberg Value Chain Michael Porter 9 4257/15.1.2014/jan http://www.valuebasedmanagement.net/
The challenge of the integration The business-integrated quality management: • Is applicable in all and any kind of organizations • Is a natural and professional way to improve an organization’s business competitiveness with regard to quality • Is based on organizations’ existing practices of management and quality, which factually means that every organization always has a certain level of quality management • May always be improved according an organization’s business needs and business decisions. A foundation for recognizing and developing an organization’s businessintegrated quality management is to identify the organization’s business system and managing processes (The “organizational profile”) • Is always ready but may never get finished • Is flexible to make creatively use of all concepts, principles and methodologies of the whole recognized quality discipline • Is able to cover, in addition to quality management, also all other managerial disciplines, e.g. according to the corresponding management system standards 10 4258/15.1.2014/jan The business-integrated approach is in principle and in practice different from the integrated management systems where several separated management systems based on different management system standards are realized as one single management system.
Business-integrated quality management embeds wellknown quality management methodologies PEM = Performance Excellence Model (Quality award criteria) Business System PEM Strategic direction Kaizen ISO 9001 BSC Six Sigma Lean ISO 9004 Operational direction 11 4259/11.2.2013/jan BSC = Business Strategy-Card (e.g. Balanced Scorecard)
The business-integration is always an organization-specific solution All organizations have • Different business needs • Different interested parties • Different business management approaches • Different emphases, selections, and applications in quality policies, principles, practices, and methodologies Hence, the business-integration is an organization-specific solution. Particularly startups and small organizations need a special reflection but in these cases quality, quality management and business integration are more important. 12 4260/15.1.2014/jan
Business-quality trade-off High Authoritative Successful power integration Strength and Low integration effectiveness of the business management “Laissez-faire” “Geek activity” Low Low integration Weak Strong Genuine quality management awareness and engagement 13 Business driven development Business solutions Implementation policy Quality solutions Articulation Business Quality Balance 4261/15.1.2014/jan
Effective dialogue and cooperation is needed between business leaders and experts Business leaders know the right things and experts know the best means to do things right: • Business leaders are generalists and strongly acting individuals with strong organizational positions. Normally they don’t have a deep knowledge of quality management. • Experts are specialists and deeply knowing individuals with low positionbased authority. Clear responsibility / authority roles should be established between business leaders and experts, and an effective dialogue and cooperation between them made possible. 14 1816/2.1.2014/jan
Promoting business-integrated quality management as a regional approach Geographical regions, e.g. a country, are networked communities of various organizational and individual actors. Organizations, which may be private business companies, public civil service organizations, and the third sector voluntary organizations, are independent but in many complicated ways interlinked with each other. Business-integrated quality management approach is applicable in all types of organizations, but each organization makes its own decisions and selections by itself. Business-integrated quality management may be promoted region-widely by: • Shared experiences of the pioneer companies • Organizations educating, training, coaching, and supporting professional quality and quality management practices • Collaboration among organizations • Related research activities In all cases the approaches of business-integrated quality management should be realized in accordance of the business situations and needs of the particular organizations. 15 4262/11.2.2013/jan
An instantiation of the business-integrated quality management: Quality Integration The Quality Integration approach: - The integration covers all the subject areas considered within the ISO 9000 standards and performance excellence models (quality awards criteria). - Also the topics of many other specialized management areas, e.g. environmental management, safety management, risk management, and information security management, etc., are typical sub-domains of Quality Integration. - One can also find significant ideas of Quality Integration from teachings of recognized gurus of quality profession and through benchmarking from the practices of world class organizations. - Quality management equals quality of management. We call this Quality Integration. It was invented as a concept and introduced to practical business solutions at Sonera Corporation in the 1990's. 16 4263/15.1.2014/jan
Our approach - Quality Integration Domain of action of the organization with Quality Integration: Competitiveness Sustained success Innovatory management Infrastructure (3) An organization with Quality Integration (2) Effective methods and tools (1) Sound management principles Quality Integration makes use of the principles of learning organization (*). 17 4264/11.1.2014/jan (*) P. Senge
The managerial foundation of all organizations and basis for Quality Integration All organizations strive for competitiveness and sustained success with certain (*):  Principles • propositions that serve as the foundation for the organization’s business and belief or behavior; guiding ideas that drive the whole business  Methodology • methods used for managing the organization; practical soft and hard instrumental means for the organizational operations  Infrastructure • basic physical and organizational structures and facilities needed for the operation and management of the organization; the means through which the organization makes available resources to support operations that are selected and decided by the organizations themselves. The domain of action (*) that defines the identity of the organization’s management approach. 18 4150/11.1.2014/jan (*) P. Senge
Cornerstones of Quality Integration Elements of the Quality Integration for an organization’s domain of action: Principles • ISO 9000 quality concepts and quality management principles (QMPs) • Fundamental concepts, core values, and principles of the recognized performance excellence models • Principles of the quality related other disciplines • Integration, focus and alignment, consistency, responsiveness, innovation, and collaboration • Organization-specific articulation of the guiding principles 19 Infrastructure • System / process structure • Structure of the ISO Directives Annex SL • Strategic and operational management 4265/11.1.2014/jan Methodology • Process management model • “3-in-1” self-assessment model • Process performance assessment methodology (auditing) • Benchmarking • Business strategy card, BSC (tailored with Balanced Scorecard, Hoshin Kanri and MIDO) • Problem solving and improvement methodology (“ProbEl”) • Project management model • Other tools for financial management, human resource management, technology management, risk management, purchase and logistics, marketing, etc.
Understanding the benefits from Quality Integration contributions (EEM - Enabler-Effect Map) Enabler / effect map Beneficial features and phenomena in processes, procedures, activities, etc. and their results: E4 E1 A Quality Integration contribution, investment, etc. Operational benefits Enhancing customer perceived value E5 E2 E6 E3 E = Enabler / Effect 20 3979/24.1.2014/jan (Ref.: Lillrank, Laulajainen) Driving innovative opportunities and real option values Risk factors Strategic results Actions of the business management Behavior Increasing of the operational markets & efficiency or customers decreasing cost Business bottom line results
Flexibility of the business integration: Organization’s capabilities tailored to customer’s individuality Customer’ individuality Uniform lll lV l ll Customer’s needs Uniform Differentiated The tailored (121) 1 to 1 business relationships. 21 4266/20.1.2014/jan (Ref.: D Peppers, M Rogers) High Communications flexibility Customer’s value creation Differentiated Organization’s capabilities Low lll lV l ll Flexibility in production and delivery Low High
Quality Integration (QI) process, QI expert process in an organization Customers’ activity (internal & external Customer needs Clarifying the needs, Defining the issue Creating the solution QI product: • Added value outcome to the customer Establishing the solution into practice Maintaining QI knowledge foundation 22 3799/1.2.2014/jan Following-up • Customer’s business develops • Customer’s satisfaction increases Organizationinternal QI expert service process
Bridging the chasm between theory and practice in Quality Integration (Vee heuristics) Conceptual / theoretical THINKING Methodological DOING FOCUS QUESTION Introducing and developing Ontology: quality integration in any Evaluating the examination and -The nature of reality of quality organization for enhancing the achieved results integration, existence and competitiveness and relationships of the key entities business success Conclusions that answer the focus -Principles that govern the properties questions of quality integration -Basic concepts for considering quality integration in events and Creating information and knowledge from objects observation data with analyses and -Validity of and motivation for solving discussion the focus questions 23 Epistemology: Observing the facts and recording data from -Theories, methodology, and models, to the examined events or objects get and process knowledge of quality integration EVENTS OR OBJECTS Organization, performance development, quality integration implementation, business performance 4267/19.1.2014/jan (Ref. Gowin, Novak, Åhlberg)

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Quality integration

  • 1. Striving for the business-integrated quality management - Quality Integration Juhani Anttila 1 xxxx/25.2.2014/jan These pages are licensed under the Creative Commons 3.0 License http://creativecommons.org/licenses/by/3.0 (Mention the origin)
  • 2. Striving for the business-integrated quality management Business-integrated quality management: Quality management that consists of: • Coordinating activities embedded seamlessly in the organization's management processes and • Professional quality practices within the organization’s normal business operations One cannot distinguish the business-integrated quality management from the business management of an organization. • The approach is a deliberate countermeasure to separate quality systems. The business-integrated quality management is to reinforce an organizational business identity. • The approach is to stand out amongst the crowd of look-likes of standard image with regard to quality in striving for business competitiveness. 2 Fundamental understanding of the topic: - Without a proper answer to the following questions, the business-integrated quality management is not possible: How to understand organization? How to understand management? How to understand quality? How to understand quality management? 4254/15.1.2014/jan Answers to these questions may be different in different practical organizational cases. Hence, also the solutions of the embedded quality management may also differ greatly among different organizations.
  • 3. “In the beginning was the Word ...”(*) The ontological basis of integration Joseph Juran, Quality control handbook (1974): “Any widespread discipline must identify and clarify the universal concepts, which underlie its very existence as a discipline. In addition, it must evolve and standardize the key words and phrases through witch the practitioners of the discipline can communicate with each other. The quality function has taken some steps to identify and clarify these concepts to prepare some glossaries of terms. Because they have not been widely adopted (or even circulated), there is great difficulty in reaching a meeting of the minds when practitioners convene to solve problems. --The reader is urged to keep in mind that differences in meanings of key words and phrases are a frequent source of confusion. The question “Just what do you mean by this word” is especially important in those cases where someone else is drawing an “illogical” conclusion from the identical set of facts. Such outward differences in conclusions are seldom the result of illogical reasoning. More usually they are the result of logical reasoning from different concepts or premises.” 3 4255/15.1.2014/jan (*) Johannes 1:1
  • 4. The key concepts of the business-integrated quality management - A pragmatic approach organization: person or group of people that has its own functions with responsibilities, authorities and relationships to achieve its objectives (*) management: coordinated activities to direct and control an organization (**) - Management takes place through managing processes. quality: degree to which a set of inherent characteristics fulfils requirements (**) - Requirement: need or expectation that is stated, generally implied or obligatory (*) - Interested party: person or organization that can affect, be affected by, or perceive themselves to be affected by a decision or activity (*) quality management: coordinated activities to direct and control an organization with regard to quality (**) - Quality management is an organization-internal engagement for ensuring business results fulfilling the needs and expectations of the organization’s interested parties. quality assurance: part of quality management focused on providing confidence that quality requirements will be fulfilled (**) - Quality assurance is a communication issue between the organization and its interested parties. 4 4256/15.1.2014/jan (*) ISO Directives Annex SL, (**) ISO 9000
  • 5. Typical managing infrastructure and elements of an organization Action plans Development projects, ”Becoming Better” Policies Mission (Purpose, justification of the existence) Strategies Resources, Procedure documents, Tools Operational processes, ”Earning Money” Realization means 0,4...1 year Action just now Vision SHARED BUSINESS VALUES Purpose of the company 5 1730/29.1.2014/jan Strategic plans 3...5 1...3 years years Separate quality (management) system within this typical business framework is very artificial. All quality actions must be integrated with the management system.
  • 6. Managing activities and responsibilities cover the whole organization and different levels of the organization Top management Business establishments Breakthrough activities Division Directors Business area establishments Improvement activities Routine operational and maintenance activities Unit / function managers and professionals Process owners Process team members Portion of time spent on activity 6 1365/12.1.2014/jan (Ref.: The Itoh Model, Singh Soin)
  • 7. What is business management all about? Creators of the classical schools of management theory: 7 H. Fayol 1841 –1925 Industrial administration (strategic management) 1. Division of work among individuals and groups to focus effort and attention on special portions of the task 2. Authority of managers to give orders. 3. Discipline. Employees obey and respect the rules F.W Taylor 1856 –1915 4. Unity of command. Every employee gets orders from only one Scientific management (production superior operations) 5. Unity of direction. Each group with the same objective is directed by one manager using one plan 1. Replace rule-of-thumb work 6. Subordinate individual interests to the general interest of the methods with methods based organization as a whole on a scientific study of the 7. Remuneration. Workers must be paid a fair wage for their tasks services. 2. Scientifically select, train, and 8. Centralization to find the optimum degree of centralization for develop each employee rather than passively leaving them to 9. each situation line of authority from top management to the Scalar chain. The train themselves lowest ranks represents the scalar chain. Communications follow 3. Provide detailed instruction this chain and supervision of each worker 10. Order. People and materials should be in the right place at the in the performance of that right time. worker's discrete task 11. Equity. Managers should be kind and fair to their subordinates 4. Divide work between managers 12. Stability of tenure of personnel. High employee turnover is and workers; the managers inefficient. Management should provide orderly personnel apply scientific management planning principles to plan the work and 13. Initiative. Employees who are allowed to originate and carry out the workers perform the tasks. plans will exert high levels of effort 14. Esprit de corps. Promoting team spirit will build harmony and unity within the organization 4152/11.1.2014/jan
  • 8. The 2013 “Thinkers50” global ranking of management thinkers 8 4151/11.1.2014/jan http://www.thinkers50.com/t50-ranking/2013-2/
  • 9. Management methods / Management models / Management theories STRATEGY - VALUE CREATION: 3C's model Ohmae 7 Ps Booms Bitner 7-S Framework McKinsey ADL Matrix Arthur D,Little, Ansoff product/market grid Acquisition Integration Approaches Haspeslagh Jemison BCG Matrix Blue Ocean Strategy Kim BPR Business Process Reengineering Bricks and Clicks Business Assessment Array Capability Maturity Model CMM Change Dimensions Pettigrew Whipp Clarkson Principles Competitive Advantage Nations Porter Competitive Advantage framework Core Competence Hamel Prahalad Core Groups Art Kleiner Cost-benefits analysis Cultural Dimensions Hofstede Delta Model Hax Deming cycle PDSA Dialectical Inquiry Diamond Model Porter Dimensions of Change Pettigrew Whipp Distinctive Capabilities Kay ERG Theory Alderfer Experience Curve Extended Marketing Mix 7P's Five Forces Porter Force Field Analysis Lewin Growth Phases Greiner Game Theory Nash GE / McKinsey matrix GE Business Screen Growth Share Matrix BCG Hierarchy of Needs Maslow Hofstede National Differences Impact/value Hammer Industry Change McGahan Industry Life Cycle Instrumental Approach of Stakeholder Theory Intrinsic Stakeholder Commitment Kaizen philosophy Learning Organization, The M&A approaches Management by Objectives Drucker Managing for Value MfV Insead Marketing Mix 4P's 5P's McCarthy Modeling business simulation Normative Approach of Stakeholder Theory OODA Loop Boyd Organizational Configurations Mintzberg Organizational Learning Outsourcing Parenting Advantage Goold Campbell Parenting Styles Goold Campbell PDSA Deming cycle Performance categories Baldrige Performance Prism PEST analysis Plausibility Theory Porter competitive advantage Porter Value Chain Portfolio Analysis Product/market grid Ansoff Profit Pools Gadiesh, Gilbert Real Options Luehrman SDG Relative Value of Growth Mass Resource-Based View Barney Root Cause Analysis Scenario Planning Simulation modeling Six Thinking Hats de Bono Spiral Dynamics Graves Strategic Alignment Venkatraman Strategic Intent Hamel Prahalad Strategic Stakeholder Management Strategic Triangle Ohmae Strategic Thrusts Wiseman Strategy Map Kaplan Norton STRATPORT Larreche SWOT analysis Systems Thinking / Dynamics TDC matrix Internet value Theory of Constraints Goldratt Twelve Principles of the Network Economy Kelly Value Chain Porter Value Disciplines Treacy Wiersema Value Mapping Jack Value Stream Mapping VRIN Barney VALUATION - DECISION MAKING: Absorption Costing Activity Based Costing ABC ABM ARIMA Box and Jenkins Balanced Scorecard Kaplan Norton Baldrige categories of performance Benchmarking Brainstorming Break-even Point Capital Asset Pricing Model CAPM CAPM Capital Asset Pricing Model Cash Flow from Operations Cash Flow Return on Investment Cash Ratio Cash Value Added CVA Anelda CFROI Contingency Theory Vroom Corporate Reputation Harris-Fombrun Cost-benefits analysis Current Ratio measuring liquidity Debt to Equity Ratio measuring solvency Direct Costing Discounted Cash Flow DCF Dividend Payout Ratio Dynamic Regression Earnings Per Share EPS Enronitis EBIT EBITDA Economic Margin EM Economic Value Added EVA EFQM EFQM EPS Earnings Per Share EVA Economic Value Added EVM CPM Excess Return ER Suggest a theory Exponential Smoothing Fair Value accounting Free Cash Flow Full Costing Game Theory Nash Gross Profit Percentage Groupthink Janis Human Capital Index HCI IAS Accounting Standards IC-Rating Intellectual Capital Impact/value Hammer ICT value Inclusive Value Measurement IVM Intangible Assets Monitor IAM Sveiby IRR (Internal Rate of Return) Leveraged Buy-Out Liquidation value M&A approaches Management buy-out MAGIC QPR Marginal Costing Market Value Added MVA Net Present Value NPV NOPAT Operating Cash Flow Operating Profit Percentage Operations Research P/E ratio Payback Period Performance categories Baldrige Performance Prism Plausibility Theory Portfolio Analysis PRVit Quick Ratio RAROC Risk-Adjusted Return on Capital Real Options Luehrman SDG Real Ratio Regression Analysis Relative Value of Growth Mass Reputation Quotient Harris Fornbrun Return on Capital Employed ROCE Return on Equity ROE Return on Invested Capital ROIC Return on Investment ROI Return on Net Assets RONA Risk Management Simulation business modeling Six Sigma GE Six Thinking Hats de Bono Skandia Navigator Leif Edvinsson Strategic Thrusts Wiseman TDC matrix Internet value Time-Based Activity Based Costing Kaplan Total Business Return TBR BCG Total Shareholder Return TSR US GAAP Accounting Principles ValueReporting Framework PWC Value Creation Index CGE&Y CBI Variable Costing VRIN Barney WACC Z-Score Altman ORGANIZATION - CHANGE - CULTURE: 7-S Framework McKinsey Acquisition Integration Approaches Haspeslagh Jemison Attributes of Management Excellence Peters Balanced Scorecard Kaplan Norton Baldrige categories of performance Bases of Social Power French Raven BPR Hammer Champy Business Process Reengineering BPR Capability Maturity Model CMM Change Approaches Kotter Change Behavior Ajzen Change Dimensions Pettigrew Whipp Change Management Iceberg Change Model Beckhard Change Phases Kotter Changing Organization Cultures Trice Beyer Cultural Intelligence Early Clarkson Principles Competing Values Framework Quinn Core Groups Kleiner Corporate Governance OECD Crisis Management tips Cultural Dimensions Hofstede Culture Change Trice Beyer Culture Levels Schein Deming cycle PDSA Dialectical Inquiry Dimensions of Change Pettigrew Whipp Eight Attributes of Management Excellence Peters Entrepreneurial Government Osborne EVM CPM EFQM EFQM Expectancy Theory Vroom Industry Change McGahan Five Disciplines Senge Force Field Analysis Lewin Fourteen Points of Management Deming Gestalt theory Growth Phases Greiner Hierarchy of Needs Maslow Implementation Management Krüger Innovation Adoption Curve Rogers Intrinsic Stakeholder Commitment Intangible Assets Monitor Sveiby Kaizen change philosophy Learning Organization Senge Levels of Culture Schein Levers of Control Simons Management by Objectives Managing for Value MfV Insead Organic Organization Burns Organizational Configurations Mintzberg Organizational Learning Outsourcing Parenting Advantage Goold Campbell Parenting Styles Goold Campbell Path-Goal Theory House PDSA Deming cycle People CMM CM-SEI Performance categories Baldrige Performance Prism Planned Behavior Theory Ajzen Points of Management Deming RACI (RASCI) Result Oriented Management Seven Habits Covey Seven Surprises Porter Six Change Approaches Kotter Six Sigma GE Skandia Navigator Leif Edvinsson SMART Drucker Stakeholder Management Strategic Alignment Venkatraman Strategic Stakeholder Management Strategy Map Kaplan Norton System Dynamics / Thinking Forrester Ten Principles of Reinvention Osborne Theory of Planned Behavior Ajzen Theory of Reasoned Action Ajzen Fishbein TQM Total Quality Management Two Factor Theory Hertzberg ValueReporting Framework PWC COMMUNICATION - MARKETING: 7 Ps Booms Bitner ADL Matrix Arthur D. Little Ansoff product/market grid ARIMA Time Series Analysis Balanced Scorecard Kaplan Norton Bass Diffusion model Bass BCG Matrix Brand Asset Valuator Brand Personality Aaker Bricks and Clicks Business Assessment Array Business Process Reengineering BPR Change Behavior Ajzen Change Management Iceberg Change Phases Kotter Core Groups Kleiner Corporate Reputation Harris-Fombrun Crisis Management tips Distinctive Capabilities Kay Enterprise Architecture Zachman Extended Marketing Mix 7P's Missing a method? <../opinion.html> Framing Tversky Gestalt theory Groupthink Janis Implementation Management Krüger Industry Life Cycle Innovation Adoption Curve Rogers Intrinsic Stakeholder Commitment Kaizen change philosophy Leadership Styles Goleman Learning Organization, The Levers of Control Simons Marketing Mix 4P's 5P's McCarthy Organizational Learning PEST analysis Planned Behavior Theory Ajzen Positioning Trout Product/market grid Ansoff Product Life Cycle Profit Pools Gadiesh, Gilbert Reputation Quotient Harris Fornbrun Strategy Map Kaplan Norton STRATPORT Larreche Theory of Planned Behavior Ajzen Theory of Reasoned Action Ajzen Fishbein Twelve Principles of the Network Economy Kelly Value Disciplines Treacy Wiersema LEADERSHIP - MANAGEMENT: 4 Dimensions of Relational Work Butler Activity Based Costing ABC ABM Bases of Social Power French Raven Benchmarking Brainstorming Business Process Reengineering BPR Change Management Iceberg Competing Values Framework Quinn Contingency Theory Fiedler Cost-benefits analysis Crisis Management tips Cultural Intelligence Early Deming cycle PDSA Emotional Intelligence Goleman Enterprise Architecture Zachman ERG Theory Alderfer Expectancy Theory Vroom Five Disciplines Senge Framing Tversky Groupthink Janis Growth Phases Greiner Hierarchic Organization Burns Hofstede National Differences Human Capital Index HCI Just-in-time JIT Kepner-Tregoe Matrix Leadership Continuum Leadership Styles Goleman Levels of Culture Schein M&A approaches Management by Objectives Modeling business simulation Organic Organization Burns PAEI management roles Parenting Styles Goold Campbell Path-Goal Theory House PDSA Deming cycle PDCA Power Bases French Raven Results-Based Leadership Ulrich Result Oriented Management Risk Management Root Cause Analysis Seven Habits Covey Seven Surprises Porter Simulation modeling Six Sigma GE SMART Drucker Social Intelligence SWOT analysis TDC matrix Internet value Theory of Constraints Goldratt Theory X Theory Y McGregor Theory Z Ouchi TQM Total Quality Management Two Factor Theory Hertzberg Value Chain Michael Porter 9 4257/15.1.2014/jan http://www.valuebasedmanagement.net/
  • 10. The challenge of the integration The business-integrated quality management: • Is applicable in all and any kind of organizations • Is a natural and professional way to improve an organization’s business competitiveness with regard to quality • Is based on organizations’ existing practices of management and quality, which factually means that every organization always has a certain level of quality management • May always be improved according an organization’s business needs and business decisions. A foundation for recognizing and developing an organization’s businessintegrated quality management is to identify the organization’s business system and managing processes (The “organizational profile”) • Is always ready but may never get finished • Is flexible to make creatively use of all concepts, principles and methodologies of the whole recognized quality discipline • Is able to cover, in addition to quality management, also all other managerial disciplines, e.g. according to the corresponding management system standards 10 4258/15.1.2014/jan The business-integrated approach is in principle and in practice different from the integrated management systems where several separated management systems based on different management system standards are realized as one single management system.
  • 11. Business-integrated quality management embeds wellknown quality management methodologies PEM = Performance Excellence Model (Quality award criteria) Business System PEM Strategic direction Kaizen ISO 9001 BSC Six Sigma Lean ISO 9004 Operational direction 11 4259/11.2.2013/jan BSC = Business Strategy-Card (e.g. Balanced Scorecard)
  • 12. The business-integration is always an organization-specific solution All organizations have • Different business needs • Different interested parties • Different business management approaches • Different emphases, selections, and applications in quality policies, principles, practices, and methodologies Hence, the business-integration is an organization-specific solution. Particularly startups and small organizations need a special reflection but in these cases quality, quality management and business integration are more important. 12 4260/15.1.2014/jan
  • 13. Business-quality trade-off High Authoritative Successful power integration Strength and Low integration effectiveness of the business management “Laissez-faire” “Geek activity” Low Low integration Weak Strong Genuine quality management awareness and engagement 13 Business driven development Business solutions Implementation policy Quality solutions Articulation Business Quality Balance 4261/15.1.2014/jan
  • 14. Effective dialogue and cooperation is needed between business leaders and experts Business leaders know the right things and experts know the best means to do things right: • Business leaders are generalists and strongly acting individuals with strong organizational positions. Normally they don’t have a deep knowledge of quality management. • Experts are specialists and deeply knowing individuals with low positionbased authority. Clear responsibility / authority roles should be established between business leaders and experts, and an effective dialogue and cooperation between them made possible. 14 1816/2.1.2014/jan
  • 15. Promoting business-integrated quality management as a regional approach Geographical regions, e.g. a country, are networked communities of various organizational and individual actors. Organizations, which may be private business companies, public civil service organizations, and the third sector voluntary organizations, are independent but in many complicated ways interlinked with each other. Business-integrated quality management approach is applicable in all types of organizations, but each organization makes its own decisions and selections by itself. Business-integrated quality management may be promoted region-widely by: • Shared experiences of the pioneer companies • Organizations educating, training, coaching, and supporting professional quality and quality management practices • Collaboration among organizations • Related research activities In all cases the approaches of business-integrated quality management should be realized in accordance of the business situations and needs of the particular organizations. 15 4262/11.2.2013/jan
  • 16. An instantiation of the business-integrated quality management: Quality Integration The Quality Integration approach: - The integration covers all the subject areas considered within the ISO 9000 standards and performance excellence models (quality awards criteria). - Also the topics of many other specialized management areas, e.g. environmental management, safety management, risk management, and information security management, etc., are typical sub-domains of Quality Integration. - One can also find significant ideas of Quality Integration from teachings of recognized gurus of quality profession and through benchmarking from the practices of world class organizations. - Quality management equals quality of management. We call this Quality Integration. It was invented as a concept and introduced to practical business solutions at Sonera Corporation in the 1990's. 16 4263/15.1.2014/jan
  • 17. Our approach - Quality Integration Domain of action of the organization with Quality Integration: Competitiveness Sustained success Innovatory management Infrastructure (3) An organization with Quality Integration (2) Effective methods and tools (1) Sound management principles Quality Integration makes use of the principles of learning organization (*). 17 4264/11.1.2014/jan (*) P. Senge
  • 18. The managerial foundation of all organizations and basis for Quality Integration All organizations strive for competitiveness and sustained success with certain (*):  Principles • propositions that serve as the foundation for the organization’s business and belief or behavior; guiding ideas that drive the whole business  Methodology • methods used for managing the organization; practical soft and hard instrumental means for the organizational operations  Infrastructure • basic physical and organizational structures and facilities needed for the operation and management of the organization; the means through which the organization makes available resources to support operations that are selected and decided by the organizations themselves. The domain of action (*) that defines the identity of the organization’s management approach. 18 4150/11.1.2014/jan (*) P. Senge
  • 19. Cornerstones of Quality Integration Elements of the Quality Integration for an organization’s domain of action: Principles • ISO 9000 quality concepts and quality management principles (QMPs) • Fundamental concepts, core values, and principles of the recognized performance excellence models • Principles of the quality related other disciplines • Integration, focus and alignment, consistency, responsiveness, innovation, and collaboration • Organization-specific articulation of the guiding principles 19 Infrastructure • System / process structure • Structure of the ISO Directives Annex SL • Strategic and operational management 4265/11.1.2014/jan Methodology • Process management model • “3-in-1” self-assessment model • Process performance assessment methodology (auditing) • Benchmarking • Business strategy card, BSC (tailored with Balanced Scorecard, Hoshin Kanri and MIDO) • Problem solving and improvement methodology (“ProbEl”) • Project management model • Other tools for financial management, human resource management, technology management, risk management, purchase and logistics, marketing, etc.
  • 20. Understanding the benefits from Quality Integration contributions (EEM - Enabler-Effect Map) Enabler / effect map Beneficial features and phenomena in processes, procedures, activities, etc. and their results: E4 E1 A Quality Integration contribution, investment, etc. Operational benefits Enhancing customer perceived value E5 E2 E6 E3 E = Enabler / Effect 20 3979/24.1.2014/jan (Ref.: Lillrank, Laulajainen) Driving innovative opportunities and real option values Risk factors Strategic results Actions of the business management Behavior Increasing of the operational markets & efficiency or customers decreasing cost Business bottom line results
  • 21. Flexibility of the business integration: Organization’s capabilities tailored to customer’s individuality Customer’ individuality Uniform lll lV l ll Customer’s needs Uniform Differentiated The tailored (121) 1 to 1 business relationships. 21 4266/20.1.2014/jan (Ref.: D Peppers, M Rogers) High Communications flexibility Customer’s value creation Differentiated Organization’s capabilities Low lll lV l ll Flexibility in production and delivery Low High
  • 22. Quality Integration (QI) process, QI expert process in an organization Customers’ activity (internal & external Customer needs Clarifying the needs, Defining the issue Creating the solution QI product: • Added value outcome to the customer Establishing the solution into practice Maintaining QI knowledge foundation 22 3799/1.2.2014/jan Following-up • Customer’s business develops • Customer’s satisfaction increases Organizationinternal QI expert service process
  • 23. Bridging the chasm between theory and practice in Quality Integration (Vee heuristics) Conceptual / theoretical THINKING Methodological DOING FOCUS QUESTION Introducing and developing Ontology: quality integration in any Evaluating the examination and -The nature of reality of quality organization for enhancing the achieved results integration, existence and competitiveness and relationships of the key entities business success Conclusions that answer the focus -Principles that govern the properties questions of quality integration -Basic concepts for considering quality integration in events and Creating information and knowledge from objects observation data with analyses and -Validity of and motivation for solving discussion the focus questions 23 Epistemology: Observing the facts and recording data from -Theories, methodology, and models, to the examined events or objects get and process knowledge of quality integration EVENTS OR OBJECTS Organization, performance development, quality integration implementation, business performance 4267/19.1.2014/jan (Ref. Gowin, Novak, Åhlberg)