All entries for October 2013
October 30, 2013
Reading Deming's The New Economics, (I literally recommend this book to everyone I know!!!) offered an interesting insight into failure and success. When discussing variation in his concept of System of Profound Knowledge, Deming offers a good example. When a student receives their grades, some of the class will be above average, and some of the class will be below average. If you are rated as being below average, I personally (and believe most people would too) feel greatly inferior in comparison to others. What is irrelevant here is how good the average could be. The average could be 95%.
Therefore, understanding this variability is of key importance to an organisation. In order to understand this, Deming argues that data needs to be brought into a state of statistical control. This subsequently allows for future outcomes to be far more predictable. What is more important is to understand whether any variation is a special cause or common cause. A common cause of variation is something that is built into the process. For example, my times when jogging may vary based on how much energy have I already expended in the day, what have I eaten, how recently have I last exercised and my general mood. A special cause of variation is something that is unique and outside the system, such as having to alter my route because a road is closed, thus varying my time.
Therefore, and back in a business context, understanding this variation and drawing knowledge from it is of significant importance to an organisation looking to develop and grow. That's what the System of Profound Knowledge exactly tries to do, it is aimed at making employees within an organisation get an external view of what is going on in the organisation. If you complain that David Cameron is not doing a good job as Prime Minister, would you be able to do a better job by taking over and working harder? No. You would make exactly the same decisions leading to the same outcomes that David Cameron has. It is only new knowledge that guide an individual in a different, (and hopefully) better direction. As Deming states himself, best effort and hardwork only dig deeper in the pit we are in. It is new knowledge that allows us to climb out of this pit.
Therefore in the future, when I apply for jobs and undertake online tests, if I fail and fall below the average, I will not be to aggreived. Why? Because half of the applicants will fall short of the average, because results will always vary. Who knows in the future what I will achieve? I could be by far a better potential worker for an organisation, but lose out of a job because of variability in my performance on online tests. The candidate that beats me could have experienced a common cause of positive variation, whilst a special cause of variation could have caused me to fall far short of my potential.
October 29, 2013
Does the Learning Organisation naturally lend itself to the EFQM Excellence Model? I would have to argue that yes, it does. Why? Because the EFQM Model is all about improving as an organisation. It is about learning, allowing creativity and ultimately, becoming more innovative as an organisation. A Learning Organisation is all about encouraging the sharing of knowledge. Employees should confidently be able to share their thoughts, views and knowledge they have obtained from experience, and share this with their peers. This would allow organisational learning to occur, provided the organisation is willing to embrace solutions and new processes from its employees and move away from the current code of practice. Provided knowledge obtained is not strictly taught through rigid teaching exercises, allowing for ones own interpretation, the learning organisation can be argued to facilitate new ideas, innovation and processes.
This links heavily to EFQM. The commitment to learning links to EFQM, the sharing of ideas and proceses, links to EFQM, the refinement and development of ideas, links to EFQM. The fact that leadership needs to be a part of organisational learning, links to EFQM. Therefore, the use of the EFQM Model by an organisation would lead to that organisation following the characteristics and behaviours of a learning organisation, just by the very fact of what the EFQM Model causes an organisation to do.
Therefore, I feel that if I were a manager in an organisation who wanted to create a learning organisation, using an excellence model such as the EFQM Model would help as a rough guideline to implement the processes and procedures required to create a learning organisation, and would in tandem bring the benefits that having a learning organisation has.
October 28, 2013
October 27, 2013
The system of profound knowledge outlines four points according to Deming that an organisation should adhere too. Firstly, to set an example, secondly, to be a good listener, but not to compromise, thirdly, to continually teach people and finally, to help people transform their practices and beliefs.
Essentially, this is saying to me that competition is not viable to establishing and ensuring a successful organisation. Why? Because if one department in an organisation tries to optimise its performance, it may lead to sub optimisation of another department within that organisation, through not sharing knowledge, or helping, or teaching others for example. No, it would appear that competition is the very bane of modern organisations, not just from external factors (i.e. competitors, regulations, obtaining resources), but also internally from employees within the organisation.
If a line manager is scared that by educating his work force for example, they may surpass his knowledge and ability subsequently leading to one of them taking his job, organisational output would be limited by this line manager who would not share his knowledge and continually teach people. Therefore, I feel that the SOPK is a key component that organisations should embrace, even those seeking their excellence journey using EFQM or Baldrige. By eliminating competition, we can all grow and all improve. Not just one growing whilst one loses.
October 26, 2013
The title of this blog is an interesting comment raised by Peter Drucker. Employees should be viewed, according to Drucker, as an organisation's greatest asset. The people who can drive innovation within an organisation, who can develop and refine processes and lead to an organisation that achieves a competitive advantage over its competitors, with a higher degree of excellence in the products and services it provides. In fact, this theme has been explored in many of my blogs, and the very nature of some of the excellence blogs I have mentioned before, such as EFQM, lend themselves to Drucker's view, as People are an important enabler within EFQM.
Therefore, it can be concluded from this that organisation's should spend plenty of time developing, looking after and caring for their employees. If they are the most important asset within an organisation, their development, knowledge and ultiamtely satisfaction within their work should be of paramount importance. However, Drucker argues that instead of having this view, and somewhat counter intuitively to achieving an organisation's goals, organisation's see employees as their biggest liability.
This seems somewhat contradictory if an organisation is seeking to improve its processes, efficiency and ultimately excellence. However, the fact that a lot of organisation's employee cheaper temporary workers and outsource certain aspects of their HR work, the evidence suggests that employees are not viewed as an organisation's most important aspect.
I need to continue my reading to develop my understanding as to why this is occuring!
October 25, 2013
An interesting point was raised in class today, the idea of whether European/American countries are ready to embrace the methods outlined in Deming's fourteen points or whether the current models of EFQM and Baldrige need to be used. The reason for the "shunning" of Deming's methods (if you could call it that) is that Deming barely focuses on the results, but on the processes and the people who ultimately influence the result. In Japan, businesses are able to embrace this culture and identity, they believe and know that they by spedning time refining processes, adhering to the methods of Kaizen for example, and continually improving, the results in due course will improve. This may seem rather obvious, however the main excellence models used in the West, EFQM and Baldrige, focus much more on the results.
This may be because businesses in the West pay much more attention to financial information and how the results of the business are affected, rather than being solely concerned on the processes within the organisation. This was in fact raised inadvertantly in the class session, 'meetings, meetings, meetings!' on Monday. I was a hypothetical financial manager of a hotel in that practical exercise. A student acting as the bar and restaurant manager wanted more money to try and imrpove their restaurant and the services they offer. My information card said that money was tight and sales in the restaurant were decreasing. Therefore, with my Western upbringing, I was mainly interested and focused on the financial results (as opposed to the benefits to excellence), and asked the bar and restaurant manager what benefits and returns would we see based on further investment. He was unable to provide me with an answer and myself and the whole group undertaking the meeting instantly dismissed his claims for investment stating that it was unviable and would be better served keeping our limited funds elsewhere.
This example perhaps illustrates the reason Western socities choose not to use Deming's model, as our cultural upbringing has seen us become far more focused on the result, and doing everything we can to improve results, such as our financial takings, as opposed to looking primarily at the processes and looking to be a better, more productive and efficient organisation. Perhaps this is why the use of EFQM and Baldrige is more prevelant in the West. Arguably, Western firms are more focused on risk assessment and maintaing position rather than focusing on exploring and seizing more opportunity.
October 24, 2013
Today's tutorial raised some interesting thoughts on the concept of competition and whether organisations should share knowledge, skills and expertise on their processes for mutual benefit or whether they should keep processes and secrets to themselves, and compete against their rivals. The traditional view would argue that competition is beneficial to the consumer, as rivals try and outdo each other with innovative ideas and try to sell their product at a lower price than their rivals. However, would this ultimately lead to a reduction in quality as cost is reduced?
The traditional view would argue that an organisation that establishes itself as market leader would want to maintain its position, by keeping its innovative ideas to itself. However, if it is competing against a whole host of organisations who may collaborate together, the organisation may be fighting a losing battle. A good metaphor that was used in class is again, sports. Me and one of my good friends enjoy cycling, and have taken part in many road races of over 100km. When we race, we are competing against one another, and it is very very VERY competitive. However, we train together in between races to push each other further and harder, to motivate ourselves and to share knowledge and tips on good training routines and routes that make us overall, fitter, stronger and better cyclists. This ulitmately sees us both perform better in the races than if we trained solely by ourselves.
I think this is a very good way of describing how the sharing of knowledge can help organisations that are in competition. Sure, you could argue that collaboration could lead to price cartels between rivals earning themselves more money, but this would only occur in the short term as organisations are likely to self regulate and be more transparent about their deals. The example of British Airways and Virgin Atlantic setting up a price cartel before Virgin eventually blew the whistle is a prime example of this. Furthermore, when at the top, the only way is down. Perhaps the sharing of knowledge, processes and ideas is a better way to maintain market position with the focus being to expand the market, rather than fight tooth and nail to preserve what you have against rivals.
Paul eventually demonstrated a very good example, showing that an organisation should not try and compete to increase their individual market share, but should collaborate to increase the size of the market, and bring in new customers through new and innovative ideas. This was a perfect illustration of why rivals should ally and share information. As someone who has studied Economics at A2 Level and briefly at BSC level before chaning my degree, this idea completely contrasted to the views I had been shown and taught about competition within economics. However, I think it would be a much more beneficial environment to live in with all organisations acting this way than the traditional economic view of competition being a good thing. Why have a 'win lose' scenario when you can have a 'win win' for all parties, including society as a whole?
October 23, 2013
So far in my blogs I have discussed how managing workers and the use of performance related pay within organisations may not be the best way of managing the worker, as it increases internal competition within the organisation. However, I have described workers under a blanket, as being all the same. Different workers will surely react to different rules, regulations and policies in a different manner. This issue was raised whilst reading Peter Drucker's Management book. Drucker raises some interesting concepts about productive work and achieving work, and that the segmentation of the workforce, into primarily two distinct categories of manual workers and knowledge workers, requires management to lead their employees in different ways depending upon which category they belong too.
This is a concept that I have not so far considered or raised discussion on in class. Managing knowledge workers is however, fundamentally similar to some of the points and issues I have raised in my previous blogs; that the right policies and practices are developed with the focus on the future rather than the past and on opportunities rather than problems. Drucker reinforces this point by arguing that only self motivation and self direction make these workers productive, and that they have to be achieving in order to produce at all.
This I feel is relevant to the EFQM model and contemporary organisatons today, because there has been a shift away from traditional manual workers to these knowledge workers. Therefore, it is imperitave that managerial policies and the leadership within an organisation adjusts from the more scientific measured apporaches, defined by the likes of Taylor when managing manual workers, to focusing on how to bring the best out of these knowledge workers, who Drucker labels as the new breed, "challenging the traditional economic and power relationships" within society and organisations.
However, it is important to also understand and appreciate that the traditional manual worker has evolved in most developed economies. Manual operations now also include knowledge work within them, and it is important to realise that the traditional mangerial view the likes of Frederick Taylor developed may not best serve the employees within the organisation. No, it is a stimulating environment with freedom for employees and consultation on both levels that may lead to increasing productivity within an organisation, and help achieve higher levels of excellence.
October 22, 2013
After today's class, an interesting debate occured concerning targets and their use that has led to me developing the idea for this blog. It concerned the use of targets when measuring performance and/or acting as an incentive or goal for employees to reach. Essentially, the first criticism of targets was how to correctly predict them? Because if you are launching a new product, for example, it is almost impossible to accurately predict how many units you may sell. If the target is too low, employees may be demotivated once they have hit their target, and if the target is too high, employees may think they have no chance of reaching it, and may choose to miss the target by 100% as opposed to working hard, missing it by 5% and being in the same position of missing the target.
A good example of the shortcomings of targets could be highlighted by a sales worker. If they have hit their targets for the week, they may become complacent for the rest of the week. If for instance, someone phones them up asking to place an order, the sales person may defer the actual order until next week so it can contribute to their targets for that week, reducing sales for that working week and delaying the time the customer may receive the product. Furthermore, the use of targets, like performance related pay can increase competition within an organisation, which can in turn have an adverse effect on productivity, morale and the overall performance of employees within an organisation.
Therefore, there must be potentially alternative solutions to the use of targets that can still guide and help see whether an organisation is meeting expectations or not. As opposed to frequent targets (e.g. weekly), the use of either periodic targets or/and one flat annual target may help reduce some of the issues discussed above. However, the use of performance reviews of employees may be a better way of measuring employee's work and the organisation's output. This is because data is analysed concerning performance and variables may be understood rather than just offering a statistical insight into productivity with no information as to why targets were or were not met. Therefore, this and the use of key performance indicators is potentially a more suitable and useful measuring tool than just setting targets. More importantly, customer satisfaction feedback also offers more insightful and detailed information on not just whether targets are met, but whether the product or service offered is meeting or exceeding the customer's demands.
Therefore, I feel that the use of targets is not the most successful way of measuring results within an organisation.