PART 5
ChangeLand

The 1970s and 1980s were a period of rapid consolidation and shakeout, dominated by aquisitions, mergers, and corporate takeovers. The oddly shaped companies, stretched across time zones and cultures, that resulted from these recombinations helped fire the Reform movement, creating new structural concepts to govern these unruly entities.

By the 1990s the burst of acquisition had settled down, and these new ideas have resulted in a zodiac of new shapes for organizational architects. It was one thing for investors to swoop down and snap thjese companies up, but quite another thing for managers to make the disjointed entities work together.

Corporate restructurings were announced on an almost daily basis, many of them caused by the enormous debt loads incurred by acquiring other companies. Restructuring by itself had almost no meaning, except the sense that things were going wrong because of some geometric infelicity on the organizational chart. Inside the organization, it usually meant that someone was being punished for failure, and the punishment was to create a new job title for the next guy to fail under.

Restructuring never implied that the organization itself would change -- just the flow of command, widely held by those currently in command to be blemish-free. Too often, restructuring was the Latin form for a familiar concept, scapegoating.

Shrinkage

The most familiar reform is reduction in size. The shrinkage subtheme is a sign management has lost confidence in its ability to grow markets, sell products, and maintain central control.

The shrinkage mentality is summed up by Gary Hamel and C.K. Prahalad as "denominator thinking." If you recall sixth grade math, you will remember a fraction has a top number (the numerator) and a bottom number (the denominator). The numerator is a company's potential for growth, expansion, core competencies, new products, new markets, generativity -- profit by doing. Whereas the denominator is various schemes for increasing the bottom line, at least on paper: cost containment, downsizing, flattening, delayering, dehiring.

Numerator companies succeed by doing terrific work and satisfying customers. Denominator companies seek to shrink a company until its current level of profits seems higher in relation to reduced costs.

Both numerator and denominator approaches are legitimate. Indeed, all companies pursue both all the time, investing resources where growth potential is apparent, and cutting costs where prospects are more modest. Shrinkage may be attempted by organizations in any mode -- Pummel, Pamper, Push, or Pull.

Given the high reliability of shrinkage, it is a wonder that so few companies simply break themselves up into separate companies and cashier the rest, as AT&T did in 1996 and as Control Data did in 1989. To do so, of course, means surrendering managerial power -- an untrod path to executive greatness.

The shrinkage strategies companies have resorted to instead have varied widely from organization to organization. The first sense that smaller was better occurred decades ago at General Motors and Dupont Chemical. In the 1920s these two huge organizations, each in turn under the management of Alfred Sloan, envisioned a greater degree of managerial flexibility by breaking a large organization into divisions. It was a good enough idea to generate a powerful competitive advantage for scores of Fortune 500 companies in the decades that followed. If you didn't decentralize in the 1960s or 70s, you just weren't trying.

But decentralization failed in its ambitions to shrink the actual size of organizations. In fact, by instituting an autonomous management tier within each division, decentralization created the very kind of bureaucratic bloat the idea was supposed to combat.

The practice suffers, too, from the tendency large corporations have of maintaining control even over autonomous divisions. IBM in the 1980s is a good example of a decentralized company whose decentralization was counterfeit -- each division was handcuffed by requirements that product releases be coordinated with other divisions, in order that IBM could get first crack at its own technologies. Net result: a tradition of delays and innovative kludginess that nearly killed "the world's most successful company." IBM was never serious about divisional empowerment.

Because decentralization is more often a dodge from greater efficiencies than a spur to them, and because it is wedded in the minds of most managers to big company empire-building, it has lost much of its currency for today's generation. The saddest commentary is that the effective company ideal modeled by Alfred Sloan in the 1920s in two generations had become the ineffective model we associate with Pamper, entitlement, and being out of touch with customers and markets. x

Demassification

The next major shrinkage solution was workgroup breakup, or demassification. Alvin Toffler coined used the phrase in Future Shock^[7] to describe an unlikely trend -- organizations and systems voluntarily reversing their trend from very large to smaller and more manageable. It was the corporate world's version of E.F. Schumacher's "Small is beautiful."

Many organizations attempt a modest degree of demassification as a move toward contained businesses-within-a-business. These would be business units or mini-companies of as many as 100 workers, containing all the functions a business requires, and charged with the mission of making money, but without decision-making autonomy. These groups often foundered because they were a sham: teams were expected to act like businesses without being given power to perform entrepreneurially -- Push without a pathway to safety.

A few organizations pursued a radical demassification model, described as a "street of shops" by M. M. Stuckey, in which the business units are even smaller, with a top size of about 50, and do have a high degree of decision-making autonomy in matters such as purchasing and training. "Street of shops" is like portfolio management in reverse: the work team must figure out ways to produce satisfactory results, or it will be cashed in.^[8]

Demassification is Push-intensive, but at least workers have their fates in their own hands. Under such succeed-or-die pressures, "street of shops" groups at Kodak, ABB, Cooper Industries and Thomas J. Lipton generally performed well. But the net effect of their independent ways was to scare top management. Break General Motors into 5,000 demassified work teams, and good things are bound to happen here and there. On the other hand, it only takes a few horror stories to draw a big company's experimental comfort zone back in. x

Flattening

Another general approach to resizing was delayering, sometimes called dehierarchization, or flattening. These structure-squashing approaches are "burning platforms," but without pathways to safety -- thus more in the realm of Pummel than Push. The idea of all of them is to collapse the traditional pyramid structure (a CEO on top, management team below, supervisory staff below that, rank and file along the bottom) into something looking more like the head of a garden rake (CEO on top, rank and file one tier below).

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The plus of this movement was to direct the maximum amount of organizational muscle toward customer satisfaction. Since, management adds no value to customers in this philosophy, there is no point in not minimizing it, and having people at the bottom manage themselves.

But workers generally know full well that "value adding" is not the real point of all this mashing down. Thinning the ranks of middle managers, dumping their salaries, and adding the burden of self-management to an already overloaded staff ("I'm not getting paid to do management's job") by is the point of much of it.

Organizations undergoing delayering need to make clear to workers, especially those sent down to the bottom tier, that de-hierarchization doesn't mean the end of the line for them. Most people find hope in the idea of promotion. Removing the hierarchy they hoped to be promoted in dampens that hope. The burden is upon the organization to create new hope, in a new dimension -- better pay, higher satisfaction, greater job enrichment. Unless this is done, the delayered organization becomes what its rake-like structure most nearly resembles -- a sweatshop. x

Downsizing

We come now to the ultimate shrinkage  initiative, downsizing and its euphemism rightsizing.^[9] No change initiative drags with it the attendant bad publicity that downsizing does. This is too bad since not all downsizing is alike. There are three classes, and only one is the evil thing the popular press depicts:

                 ƒ  Push, or catastrophic downsizing. This kind of downsizing has been with us since the dawn of time. Think of it as emergency rations. An organization loses a big contract, or it bets everything on a product that fails, or it loses its founder. The result in each case is a desperate effort to trim the company's costs -- including its payroll -- in order to survive. Analogy: the organization is lost on a raft in the Pacific, and workers must draw straws to see who will eat whom.

                 ƒ  Pull, or visionary downsizing. Without being in an immediate emergency, the organization sees that down the road, there will be greater chance for companywide success (and overall employment) by cutting away certain existing functions, divisions, product lines, and people. It is impossible to justify such cuts in the eyes of those who will feel the greatest pain, but the cuts are justified by the big picture, and the pain is balanced among constituencies -- short-term investors, employees, and even customers. A recent example is AT&T's splitting itself into three separate organizations. True, 12,000 people were laid off -- but with reasonable chances of starting over again in the new organizations. Analogy: a surgeon excises moribund tissue to save the patient. It's not anyone's dream, to learn they are nothing more to their organization than a polyp or cyst. But today's pain is prelude to tomorrow's healing.

                 ƒ  Pummel, or evil downsizing. Downsizing as short-term financial play. Downsizing as Pummel. One constituency (ownership) feels all the pleasure, while another (workers) feels all the pain. It is the downsizing we see when a company is taken over and sold off when liquidated assets are more valuable than unliquidated assets -- the people and processes in place that could yet yield long-term profitability. This view of workers holds workers as no more precious or irreplaceable as the gas that is sprayed into an engine to supply power, and allowed to dissipate.

It is pointless to urge devotees of the third class of downsizing to adopt more humane attitudes. These people are not interested in soft landings or safety nets. When they put the bite on people, their eyes roll upward like sharks'; it is in their nature to be that way.

We can hope, however, that companies pursuing the other two classes of downsizing give greater consideration to the needs of the people who are cut away from the main. Eye-contact, hugs, and outplacement services -- counseling the laid-off on how to stave off depression as they clear the wreckage of their careers from the road -- are not enough.

Workers need to know that the company's failure was the fault of management, not their own. They need to hear it come from management's own mouth: "If we had managed better, planned better, trained better, communicated better, this would not have happened. Your loss is our shame." x

Workout

Jack Welch stormed to the top of General Electric in 1980 promising a regime of continuous revolution, in which nothing was sacred and no one was safe. His goals were ambitious and culture-wrenching: all GE's businesses had be #1 or #2 in their industries, and GE itself had to grow to be the #1 company in market value -- the biggest mound on Wall Street. Until that moment GE was a classic Pamper organization, and he forced it to bend over backwards, to a hard Push.

Some would characterize GE in those days as unrelieved Pummel, , with a heavy emphasis on results. Welch borrowed the word workout to describe the lathered-up state of stress the organization is put through to change. He also used the image of a fishbowl to describe the scrutiny managers at every level were exposed to. They had to either produce or vamoose, and there was no hiding from results.

Welch was the ultimate Push manager, treating employees like puppets to be either manipulated or tossed onto the discard pile. He did not blanch at lighting a fire under people and altering their body temperatures. His early reign of terror is the textbook example of a corporate savior pulling every switch and flipping every lever to get results.^[10]

Yet Welch remains a cipher, like Quetzalcoatl, the mysterious figure who abolished human sacrifice among one group, the Toltecs, then disappeared and resurfaced among the Maya where he instituted human sacrifice. Before the decade ended Welch would re-emerge as a self-styled Pull leader, speaking of boundaryless organizations and vision-driven futures. He was like an entirely different person. But why not -- if you can change an enormous organization's culture, how hard can it be to change your own? x

     The Integration Theme

Organizations are by definition complex, made of many parts and many people. management has been ingenious at creating systems to fit people and processes together. But the more complicated systems get, the more hiding places they create. Integration gives way to fragmentation. After a while it is very difficult to see where things go wrong, where the gleaming complexity is a curtain obscuring all kinds of error and delay.

Thus we have initiatives clustered under the Integration theme , each one addressing in a different way the problems of knitting complexity back together. The best known of these is business process reengineering.

Reengineering

Reengineering is a way of re-thinking the way businesses work -- green-grass thinking that is unafraid to jettison the tried and true in search of greater efficiencies. The official definition goes like this: "Business reengineering is the process of fundamentally changing the way work is performed in order to achieve radical performance improvements in speed, cost, quality, market share, and return on investment." A reengineered definition might describe it simply as "a fresh look."

Reengineering is an open-ended regimen. It invites you to search for an answer ("What's the very best way to run your organization?") when there is no preconceived right answer, and no cookie-cutter methodology for finding a right answer. It asks you to imagine, using your best powers of imagination, a quantum leap forward in performance.

Given this open-endedness, it is not surprising that many reengineering efforts are failures. The ideas of reengineering are too often implemented incorrectly, at enormous financial and emotional cost to the organization. Hammer and Champy concede that 70% of reengineering efforts fail to achieve any results. There are several reasons for this difficulty -- most stem from the organization's unwillingness to go far enough to:

                 ƒ  Ready the wrecking ball. The first order of repair is often demolition. To build an organization up, we must first tear it down. To solve a problem, we must first erase our wrong answers so that we may begin with "a clean sheet of paper."

                 ƒ  Compress your workforce horizontally. I.e., combine jobs. Reengineered processes move away from the assembly line concept -- there is no longer a long chain of individuals, each involved in a single task. Individuals are responsible for processes, such as "customer service," not unitary tasks like "answers phones" or "handles complaints." This consolidation or compression is horizontal in nature -- one person bow doing the tasks that several did before.

                 ƒ  Compress the workforce vertically. Compression can be up-and-down as well: workers can take on the tasks of their supervisors, monitoring and managing themselves.

                 ƒ  Let work find its natural path. Once expressed as part of an organization's flow chart, processes calcify into needless "linearization." Flow charts should not take the place of common sense and must never preclude innovation. Confused about the natural sequence of steps in a process?

                 ƒ  Enlist technology as partner. Not technology as automation, simply speeding up the same old tasks, but technology that brings the possible into clearer focus. Hammer, an information technology specialist, devotes an important chapter to use computers and telecommunications advances -- machines -- as the enablers of new visions.

                 ƒ  Overcome resistance. Most reengineering efforts fail not because the points of change are poorly designed but because they are poorly communicated. Reengineering should be seen not as a value-neutral proposal but as a war to be fought with propaganda and persistence.

                 ƒ  Discard half-measures. Too many managers opt for the safe compromise, the hybrid that melds the old with the new. Hammer emphatically rejects the idea of "just fixing things." The main reengineering efforts fail is because they aren't reengineering at all -- just quick fixes in drag. What is called for he says, is a new kind of discontinuous thinking that identifies and abandons outdated rules and assumptions.

                 ƒ  Allow executive evolution. The CEO as scorekeeper and punisher/rewarder must give way to one that leads.

                 ƒ  Forget about "standardization." Big companies have become slave to the top-down, one-size-must-fit-all mentality. Reengineered processes vary from application to application. Massive downward-dictated standards are an organizational ego-trip. Let standards percolate upward, from the pockets of actual expertise.

                 ƒ  Reengineer the right processes. The most obvious candidates will be those obviously in trouble, suffering frequent breakdowns. Beyond these, look for processes in which there are many handoffs, reweighings, rework and repetition; bloated and costly inventories and protective buffers; a high degree of cross-checking, and a low degree of value-adding; and processes that seem swamped by their own complexity, and the high number of exceptions and "special cases" to be dealt with.

                 ƒ  Clear away clutter. The modern corporation is a tinker-toy monstrosity of checks, balances, and reconciliations. All that must be stricken down, and a fresh, clean beginning made amid the rubble. Having work pass through so many hands and lie fallow in so many in-baskets is like watching a pig pass through a snake. Reengineering efforts which fail to straighten out this clutter miss the whole point of reengineering.

As you grapple with the challenge of creating a new organization on the site of the old one, consider these suggestions:

                              ‚  Before you obliterate, educate. Obviously, a solution which calls for ten to do the work of twenty or thirty requires a different kind of workforce. It's easy to say "Hire better -- hire flexible self-starting generalists with good communications and decision-making skills, judgment, wisdom, maturity, education, and talent. " Business and society must become more serious about education.

                              ‚  Think "case manager." That's Hammer's concept of the new role of the reengineered worker -- a competent, empowered, versatile, informed person who serves as custodian of a problem through to its solution.

                              ‚  Find a reason to believe. Workers aren't puppets. You can't put them through a million motions without giving them a reason why. Reengineering rises or falls on the new values and beliefs it engenders. A primary task of management is to communicate these values and beliefs -- honestly, clearly, and often.

                              ‚  Don't try to do too much. Process redesign requires sharp focus and enormous discipline. Attempting to do it companywide, all at once, is like trying to tackle a dinosaur.

                              ‚  Or settle for too little. There is a temptation, when your company is in mid-upheaval, to celebrate too soon, and call a few minor improvements a success. Don't succumb -- big results require big ambitions. Indeed, Hammer says, incremental improvements can be hazardous to your company's health. Instead of simplifying, they add to the lacework of the organization's existing structure. Most pernicious of all, glorifying "the little things" creates a culture of smallthink, and a company with no valor and no courage.

Hammer believes that by empowering workers to find their own ways to add value to customers, they will rise to unparalleled levels of compensation. You may spend your entire career as nothing more than a "case manager," but you may earn a salary in the high six figures. Those who excel will rise; those who are average will quickly plateau; and those who are not up to the vision, or lack the skills, will be toast.

The question is, is this really happening anywhere? Workers at organizations undergoing major change initiatives move heaven and earth to become more customer-conscious, with an eye toward this promised land of higher salaries. To our eyes, most people, whether they are peak performers or average performers, are making the same pay they made in pre-reengineering days.

Workers are either a) delivering uncompensated value but keeping their jobs or b) losing their jobs. For the former group, it's a sped-up world, fraught with tons of accountability (Push) but little perceivable payback (Pull). For the latter group, any distinction between reengineering and downsizing is niggling, because brother, they're gone. x

You have to feel a little sorry for Michael Hammer, co-author of the book that set the reengineering craze in motion, Reengineering the Corporation.^[11] He is a great success who is associated in many people's minds with great failure.

Reengineering is the only major change initiative that can be identified with a single person. William Edwards Deming may be "Mr. Quality" to his devotees, but no one attributes all the good or all the bad done in the name of quality to him. Hammer, an exuberant self-promoter, has not been so lucky

Reengineering has been the biggest change initiative of the 1990s (assuming TQM and teams are seen as creatures of the previous decade). Because Hammer and Champy sold a quarter million copies of the book, they -- especially Hammer, who typifies the metamaniac  personality type-- came to be seen as the owners of the idea. This occurred despite forty other books on business process reengineering by Hammer-Champy wannabes and an army of independent consultants, all presenting their own versions of reengineering.

This may explain the defensive tone of his recent work. His three books all include lengthy sections of explanation  for reengineering efforts gone awry. Even Champy introduced his followup book, Reengineering Management, with the sentence, "Reengineering is in trouble." x

Speedup

Improving cycle time could fall into either the Process or Results themes. It is process reengineering that focuses exclusively on time, and it is the direct ancestor of the time-motion studies of the 1920s. Improving cycle time requires that a continuous voice be whispering in your head, "How long does this activity take? Can you find a way to do it quicker?"

Shortening cycle times -- how long it takes to develop a product, to test it, to manufacture it, to roll it out to market -- can be a major strategic advantage. For certain products and services, such as package delivery or food preparation, short cycle time is synonymous with quality. The reverse is also true: improve quality by eliminating defects, and your cycle can't help but speed up.

But there is a downside to improving cycle times, and Peter Senge nails it:

What has concerned me is not the logic but the implementation of the logic. In particular, I believed American corporations, ever in search of the 'quick fix,' would see this as the ultimate bromide. By trying to 'speed up,' we would simply take one more step in a long-term trend of shortening time horizons, discounting the past, and living for the moment.^[12]

Overstretched workers are stretched a little more, he said. Managers distracted by crisis after crisis will find even less time for reflection and planning.

Cycle time improvement must be more than just a Chinese fire drill, in which people are made to perform tasks more and more quickly. The Push for measurable improvement Stress must be balanced with the Pull of engaged sympathies: "Faster delivery means greater security."

Companies achieving shorter cycle times through simple fiat -- demanding faster results from people without giving them the means to do so on a sustainable basis or a vision of long-term livability -- soon have an organization with its motor racing and its heart about to explode. x

Value Disciplines

Value is like looking at quality through a wide-angle lens. Instead of a close-up of a satisfied customer, it shows us the bigger picture of what it may take to put that smile on the customer's face. It broadens the definition of customer satisfaction and allows an organization to see the consequences of all its processes in one neat frame.

The value crusade underway today got a big push from a book by Michael Treacy and Fred Weirsema published in 1995, The Discipline of Market Leaders.^[13] It declared that today's vital companies are those that are attuned to the idea of delivering some kind of value; and that today's moribund companies are those that have lost their way, whose outlook, business traditions, and fixed assets prevent them from delivering "the best deal anywhere."

Future success belongs to organizations that commit to being value leaders in their markets, companies unwilling to settle for parity level performance.

There are only three strategic approaches, called value disciplines, that lead to value leadership. 

                 ƒ  The first value discipline is product leadership. It applies to companies who endeavor to sell products that deliver the best results to customers. Quality hardware, and an intense focus on product deveelopement are the hallmarks of this kind of company. Examples: Procter & Gamble, Johnson and Johnson, Walt Disney, Intel, Thomas Edison's laboratories in its heyday.

                 ƒ  The second value discipline is operational excellence. It applies to companies thast deliver a combination of high reliability, low price, and hassle-free convenience -- Treacy calls this "total cost" -- that competitors cannot match. Examples: McDonalds, Price/Costco, Wal-Mart, Dell Computer, and Ford Motor in the days of Henry Ford.

                 ƒ  The third value discipline is customer intimacy. It applies to companies that offer their customers the best total solution: consultation, individual service, guaranteed products. Price aside, these are companies you cannot lose with. Examples, Nordstrom, Roadway Logistics, Johnson Controls, IBM in its heyday,

A value leader must commit to being the best in its market at one of these disciplines, and to achieving parity performance with the other. Because they are in tension, one cannot commit to excellence in all three. But you have to be best in your class in at least one, and "good enough" in the other two.

Reengineering efforts are organized to a large degree around the value concept -- pulling people away from non-value-adding functions and putting them where they have direct impact on the value proposition. So organizations caught up in defining what approach they will take to deliver value to customers go through the same headaches as companies gutting their process map.

Companies founder when their strategies don't match up well with the people they have working for them. A company that figures out what its key value discipline is has to rummage through all its processes and policies, rooting out those that are not in alignment with the new regime.

This search-and-destroy mission is not limited to things; it also extends to people. Few employees -- a handful of Amiables and Analyticals -- are suited to work interchangeably in all three of the value philosophies:

                 ƒ  Product leader companies like 3M and Intel employ workers with extraordinarily high levels of knowledge, and are given a corresponding high degree of autonomy. Workers are like aristocrats; because they are highly self-motivated, the atmosphere is a powerful Pull.

                 ƒ  Customer intimacy companies like New York's Plaza Hotel have a Push and Pull orientation, featuring high compensation for individuals who can delivering quality to individual customers, and intolerance of anything less. Workers function on a level of shopkeepers, proud of their skills and alert to customer needs.

                 ƒ  Operationally excellent companies like Taco Bell, which has stopped preparing food, and is now just assembling ingredients supplied by vendors, are Push all the way -- low wages, low skills, lots of rules. Workers are treated as peasants, who perform best when their work is least distinguishable from the next person's.

When value change initiatives falter, it is often because the existing workforce includes people who would enjoy greater success in one of the other two disciplines. x

These three parables are variations on three famous business anecdotes: the employee who is handsomely rewarded for making a mistake, the frogs who allow themselves to boil to death so lonf as the heat is increased slowly, and the associate who goes to heroic lengths to assure customer satisfaction. We changed them from their inspiring original versions to better reflect everyday reality.

A young associate at an investment bank had been empowered to make decisions that he felt would increase customer satisfaction. One day he sensed that a client's assets could perform better in the futures market, moved $3 million into it, lost the entire amount in less than a week. When the client sued and was awarded the full $3 million, the associate was called to the senior partner's office.

"I guess you figure you just spent $3 million educating me, huh?"

"Security, this is Mr. Honeywell. Will you get up here on the double?"

*

Every night in the executive suites of transnational corporations, CEOs are heating up pots of water with frogs inside, to see if the fampus story is true. But when the water starts getting to warm, the frogs jump out.

*

John, a clerk at a well-known department store, noticed that a customer he had never seen before had accidentally dropped a dollar bill. Before he could return it, the customer had left the area. John consulted the credit slip and determined that she was on vacation from Baraboo, Wisconsin, and that she was booked for a flight home in less than an hour. He debated leaving work, driving to the airport, and if necessary, booking a flight to Baraboo to return the dollar. Then he caught himself and said, "What am I thinking? It's only a dollar." x

     The Improvement Theme

The Improvement theme holds that the challenge of every organization is to keep getting better -- forever. The theme has its roots in the ideas of Frederick Taylor and Frank Gilbreth, who fashioned a new and, for the time, an idealistic internal vision of productivity and specialization in the 1920s.

Quality

In the modern era improvement has meant a focus on boosting quality in products and services. During World War II poor manufacturing quality cost many American lives, and a new generation of engineers and statisticians applied their talents to ensuring reliability in the factory.

Out of this effort grew the idea of inspector-based quality control and, in time, the more preventive, more proactive approaches of quality assurance. It was during the postwar occupation of Japan that William Edwards Deming shared his ideas of industrial quality improvement with leaders of a devastated Japanese industrial base, and laid the foundation not just for a revivified Japan but a new way of thinking about organizations.

This new way was half-American and half-Japanese. It reached its full flower in the discipline of continuous improvement, or kaizen, and its broadest definition in the practice of total quality management, or TQM. But Americans probably first heard about the way of thinking in the context of quality circles.

Quality circles were the breakthrough fad of the 1980s, and they spelled out a pattern that all too many change initiatives would duplicate in the months and years that followed. The idea was that workers would meet formally and propose changes to an organization's quality system. This way people at the shop floor level would have a voice in critiquing and improving the organization.

Quality circles continued to work well in Japan, where a culture of respect compels organizations to hear employees out once they are invited to speak. In the United States, however, there is no such tradition of respect; here, we feel freer to disregard inputs we don't like. Quality circles had no power except the power to propose. Inevitably, a circle would critique something that a higher-up deemed to be beyond reproach -- something embarrassing to a manager, or something that cost money , or something that diminished a boss's power -- and the circle would be hung out to dry.

Quality circles were a Pull mechanism that, transplanted to the United states, were expected to function in a Push environment. They caught on as a fad, but were unable to survive in the hostile working environment. . Of the many thousands of quality circles formed in the early 1980s, it is estimated that 75 percent were extinct within four years.^[14] x

TQM

When quality returned to the American forefront, it came back roaring. Quality circles had been like bicycles, meek and underpowered. Total Quality management came on like an American car, ambitious, wide, with tons of features, chrome, and customability.

The main things TQM had that quality circles lacked were involvement, empowerment, and feedback. TQM aimed to touch every improvement base. It would look to improve an organization's leadership; its relationships with customers, partners and suppliers; it would expect a new attitude about topics never before tied to quality -- data management, training, employee involvement. It was called total quality management because its scope spared nothing.

TQM today is a mall of change initiatives, a theme-park-within-a-theme-park. It is a nexus for over a dozen revolutionary management themes, including improved worker relations (employee participation), improved communication (feedback loops), improved processes, improved measurement, and above all, a deeper relationship with customers. It is the philosophy undergirding the Baldrige Award.

In application, TQM can be a modest, one-focus-at-a-time program, or it can be a fire-every-gun-at-once overhaul of the entire organization. It succeeds best when its many tentacles are guided by a central principle. Customer satisfaction is the principle most often supplied, but it is possible to fashion a TQM program based on other visions: the drive to innovate, to entertain, to strengthen a cause, to provide long-term employment and profits.

TQM seldom goes 100 percent awry because there are so many facets of it, several are sure to yield results. But complaints about comprehensive quality improvement programs are very common. Usually they arise because of the brand of TQM that is being implemented.

                 ƒ  too broad. Attacking everything at once is usually a recipe for exhausted confusion, but that is the approach most companies adopt with TQM. Wise organizations assign pilot teams to make mistakes on a small-scale, and roll out the program to other units along with the lessons learned in the pilot stage.

                 ƒ  too narrow. Companies that adopt off-the-shelf quality solutions, imitating what they read about another company, or that put all their eggs in the ISO 9000 or Baldrige assessment basket, violate the first law of continuous improvement -- open-mindedness to change opportunities. Deming warned that organizations need to craft quality regimens out of their own knowledge and experience -- not what we read in a magazine.too rushed. Doing TQM the way it cries out to be done is like adding a second full-time job to the one you already have. Many companies have implemented a companywide TQM effort only to cut it back later when it proved too distracting and too demoralizing to workers.Florida Power & Light won the Deming Award in 1988, and immediately abbreviated their TQM program to one they could manage.

                 ƒ  too expensive. Large corporations have spent tens of millions on TQM measurements, paradoxically without measuring whether the money was well-spent. The $64,000 question is still, after 20 years of experience, does higher quality reap higher profits?

                 ƒ  too bureaucratic. Quality has been stretched to include every imaginable dimension of product and service success, but it has not been extended to include the corporation itself. Thus many of the companies we associate with highest quality are often the very kind of bloated Pamper organizations . Quality in products and services is not their problem; quality in operational efficiency is.

If there is a single moment when most quality programs go wrong, it is the moment of deployment, when an organization of some size hands the TQM package over to its workforce. Leaders who had shepherded the program from its inception to the formulation of fine details have a bad habit of stepping back from the action at this point, perhaps hoping the newly empowered workforce will figure everything out by itself.That never happens. Leadership is never as necessary as at this moment of handoff. Not only must the champions and sponsors of the quality effort show their support -- including the topmost levels of management -- but they must hang in there as teachers and coaches, even as the "official" trainers go to work.

Finally, give some thought to differences among workers. The generic two-day quality training course may be appropriate for the heart of the workforce -- the people who can be relied on to respond affirmatively to the Push/Pull of a new challenge.

But there will be people at the far end of the scales that will require special attention. The metaphiles will be like rabbits, wanting to get started without delay. If you were smart, you enlisted their help during the pilot stages. These are the people who can fall on their faces and get up laughing -- the perfect people to launch a new idea.

At the other end of the scale will be the people who will likely show the greatest resistance, the metamorons that keep the old system humming, and are likely to balk at the new. These people will need more work, more reassurance, and more time to get with the new regime. x

When William Edwards Deming died at age 94 in 1993, he was the most respected figure in the history of organizational thought. But as much as he enjoyed in life telling companies when they were wrong, so would he be dismayed at companies who have simplistically implemented his "14 Points of Management." Deming did not suffer fools lightly, and he abhorred seeing his life of rigorous thinking reduced to a cheat-sheet. There are many stories of him upbraiding quality professionals for taking his 14 Points too literally.^[15]

He said that each organization, once it possessed profound knowledge, should come up with its own version of the 14 points. As an exercise in perversity, consider each of his 14 Points, and imagine how each has been routinely misunderstood, imperfectly understood, understood out of context, and downright botched:

1. "Create constancy of purpose toward improvement of product and service."  Adopt a single point of view and close the book on new thinking.

2. "Adopt the new philosophy."  Trash all that went before and create afresh.

3. "Cease dependence on inspection to achieve quality."
Stop looking for mistakes.

4. "End the practice of awarding business on the basis of price tag."
Form sweetheart unions with key suppliers.

5. "Improve constantly.."
Focus entirely on improving processes, turning a blind eye to whether what is being improved matters to customers.

6. "Institute training on the job."
Do only on-the-job training.

7. "Institute leadership."
Replace managerial acumen with charismatic posturing.

8. "Drive out fear"
Pamper people.

9. "Break down barriers between departments."
Weaken functions.

10. "Eliminate slogans, exhortations, and targets ."
Eliminate encouragement and recognition.

11. "Eliminate quotas. Eliminate management by objective. Eliminate management by numbers, numerical goals.."
Eliminate standards. Eliminate objectives. Eliminate arithmetic.

12. "Remove barriers that rob the hourly worker of his right to pride of workmanship."
Ignore deadlines and cost overruns.

13. "Institute a vigorous program of education and self-improvement."
Emphasize learning over doing.

14. "The transformation is everybody's job."^[16]

Compulsory drills at dawn.. x