All entries for November 2011

November 18, 2011

Thoughts on World Class Organisation – Capability to Adapt

The third dimension of our model looks at an organization’s Capability to Adapt. To be successful and even stunningly successful at one moment in time is not difficult. But it is a lot harder to sustain it. Organizations that meet the challenges with the right responses have been seen to succeed. But faced by new challenges, too often the old successful patterns no longer work. Our literature review again shows that few of the existing models and frameworks have given adequate emphasis to this crucial aspect of world class companies. For example, in the McKinsey’s 7-S framework (structure, strategy, systems, shared values, skills, staff, and style) none of the criteria directly or indirectly specify the constant need to adapt; in Peters and Waterman’s search for excellence model (1982, pp.13-16) the eight attributes are detailed which they believed to have characterised the excellent and innovative companies. Again none is related to capability to adapt. EFQM’s Business Excellence Model has been criticized for not having measures on change management (McAdam & O'Neill 1999). Capability to adapt is a measure of organizational learning and organizational transformation – critical to the long term and sustainable success. It captures personnel training, technology upgrading as well as organizational structure and external supply chain change. We argue that such changes are essential for any organization that aspires to world class excellence.

Capability to adapt reflects the dynamic school of business excellence. Deep and rapid changes in management practices took place during the early 1980s. The changes were mainly spurred by the huge success of Japanese automotive and electronics industries. The concept of excellence here can be summarized as arising from strength in innovation, ability to change and a leadership that excels through both their values and their actions. Thriving on Chaos (Peters, 1987) was published only five years after his seminal book In Search of Excellence and analyzed the impact of uncertainty in the business environment requiring and increased capability for organizations to be able to adapt to such uncertainties. It is frequently stated that technology has an ever-increasing influence on every aspect of business and markets, and that customers continuously change their tastes and preferences. “Excellent firms don’t believe in excellence – only in constant improvement and constant change” (Peters, 1987). Soon after, Michael Hammer and James Champy published their book “Reengineering the Corporation” in 1993, which further supports the idea of adaptation and becoming a learning organization.

November 01, 2011

Has Toyota had a 'change of heart'?

On 7th Oct Bloomberg News bulletin posted an interesting article: 'Toyota Said to Ask Parts-Makers to Cut Prices or Be Replaced'. It is somewhat interesting because Toyota has been long held as the role model for close partnership with its suppliers. The partnership model with the first tier suppliers has been regarded as the critical factor for its success.  Not surprisingly, I was immediately asked by a number of executives in the automotive industry to share my view on this seemingly contentious phenomenon. Here is my answer and I would welcome any discussion and debate.

First, I believe it was a "desperate measure" for the "desperate time", for it was the first time I saw Toyota make such announcement that is seemingly controversial to its long beheld principles. The perpetual economic stagnation has been exacerbated by the rising exchange value of the Yen. The traditionally export-orientated industries of automakers and beyond have thus been truly bog mired in adversarial or even hostile environment. Something different has to be unleashed.

Second, I believe that it should not be read as an all-out "sea-change" in its relationship strategy, nor a "change-of-heart". The parts suppliers that will take the blunt of this strategy are likely to be the non-critical components prefecturers, not the sub-system manufacturers. The switching cost would be too high for Toyota to forsake its long-term sub-system producers. Toyota cannot afford it. Nevertheless, this announcement is still beneficial because "it kills the chicken in front of the monkeys"!

Third, I believe that any theories or business models, no matter how brilliant they may sound (just like the partnership model), will have to give way to the overriding "pragmatism" principle, which is only measured in terms of market success. A dogma is only worthy of beholding when and only when it delivers the practical success. It is perhaps the time now when the partnership modelf stood another real test.

November 2011

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  • This sounds a good book, Dawei. Would you like it ordering for the Library? If so, can you let me ha… by Helen Ireland on this entry

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