Strategic management is an ongoing process to achieving an organization's long term goals. In effective organizations strategy is aligned with the values and core purpose and the organization achieves consistent execution in the way it carries out business to ensure strategic goals are met. W. Edwards Deming, well known quality management guru whose marked influence can still be felt strongly in quality principles today, advocated a cycle of continual improvement that can be applied to management strategy.
A Deming Perspective
Deming proposed a reasoned wide-ranging way of managing how to emphasise the delivery of consistent high performance over the long term. It views organizations as whole systems focused on meeting the needs of the customer and other stakeholders, which means quality reduces waste and so improve productivity. Deming saw the customer as the most important part of the production line or service provision, which means the focus must be on customer satisfaction. A truly distinctive offering can achieve customer delight or even customer insistence.
Only the customer can define quality-it can be whatever he or she says it is. Quality means having a primary focus on customers' needs and expectations and everything flows from this focus. It is not an incidental or support issue but the central issue, especially for top management. Quality is true effectiveness in that it means not only producing things right , but producing the right things-those items that customers want to buy. Strategy for sustained organizational success is inseparable from the need for quality.
In his chain reaction Deming showed how the power of quality can provide organizations with competitive advantage and lead to sustainability.
Understanding the whole of the organization's current situation is an essential foundation for the strategy process. Deming advocated a balanced perspective when trying to understand the situation, which he called a system of profound knowledge knowledge, comprising:
- Appreciation for a system
- Knowledge about variation in data
- Knowledge and explicit learning
Deming concluded that only through this broad range of capabilities could managers transform their management style to one suitable for what we call a sustainable organization. His well-known promotion of statistical process control covers the point above concerning knowledge about variation in data. His 14 points for managers, presented in Out of the Crisis, and his stress on the importance of leadership covers psychological knowledge. Points one and three, however have particularly strong relevance to strategy.
The Deming Wheel
A system is a network of interdependent components, or processes, that work together to achieve a particular aim- without an aim there is no system. Organizations must therefore have a stated aim or purpose that is clear to everyone and says something about the future. The effectiveness of connections and communications between processes is equally as important as the performance of the individual processes. Competition between the components of a system can lead to failure to achieve its aims. Cooperation, not competition is required between the parts of the system. Information must be open and transparent.
Surprisingly, perhaps , Deming had long been a strong advocate of thinking about organizations as systematic wholes. The best approach is to coherently integrate aspects of an organization that are often treated in isolation. Deming frequently stated that 97% of problems come from the system. He was clear that management is responsible for the organizational system and continually improving it, which again links to strategy. This is the basis of providing quality to customer. The plan -do-study-act cycle emphasizes the importance of adaptive feedback and learning in an organization.
As Deming said, "there is no substitute for knowledge." The Deming wheel or PDSA cycle is familiar to many employees and managers as feedback and learning tool that can develop knowledge about the organization. Indispensable in continual improvement and innovation, it is applicable to individual, organizations and society. It also provides a template for strategic processes.
As never-ending cycle of learning and improvement it can be used to model the strategy process. Within each of these four stages, further cycles ensure that each part of the process works effectively.
P- Define your aim
There are a number of stages to defining the aim . These include:
* Scan the environment. The need for change must be assessed. Successful strategy is dependent upon a sound foundation of knowledge. Evaluation is required of the whole business environment, looking at political, economic, sociological, technological, legal and environmental factors. Competitive trends maybe understood by benchmarking , conducting industry analysis and evaluating competitive intelligence. Trend information can then be projected to develop alternative future scenarios.
* Vision and Mission. Based on the above knowledge the strategy process can proceed. Managers can establish a vision and mission that expand on the focus of meeting or exceeding customer expectations. Profit is not the sole purpose, but in fact an outcome. This clarification of management's concept of the business is essential for policy development, planning and successful strategy implementation. Having established the organization's business vision and objectives, focus moves on to making competitive changes required to gain or maintain its market position. Mutual consensus is then built among the management team om implications of observed and projected indicators.
* Define objectives. The objectives must reflect the underlying business purpose of the organization serving customers in every transactions. The business objectives that are developed must address possible alternatives. Once core objectives are identified it is necessary to gain shared commitment within the business.
* Plan Indicators. Establish the key control indicators that must be measured in order to monitor successful implementation strategy.
* Communicate objectives. Sustainable organizations communicate and act on their purpose in a way that transpires whole-hearted commitment in all those who are important o their success. They balance the needs of multiple stakeholders, recognizing their responsibilities to their owners, employees, customers and the community, and seek to achieve consensus around a common vision of the organization's purpose, direction and character.
D- Implement the strategy
Having devised a long term strategy this should be broken down into medium term and annual strategies. There should be a method to strategy deployment , passing it through subsequent levels of management until it reaches the workplace. As the strategy cascades down to the front line, the plan should include increasingly specific plans and activities that should describe "work worth doing". This creates and sustains excitement and commitment among the organization's leaders, managers, employees, and most importantly, customers. The daily work of the organization is to add value for the customers or consumers of its outcomes. It is the most important part of an organization and must be designed to meet or exceed customer needs.
as above , quality is determined by the senior management team through its responsibility for the system. It cannot be delegated. All activities that directly relate to making a product or providing a service should be the key focus of management attention. This means taking responsibility for maintaining and improving the way every-day work is done. Poor quality results from management failing to carry out this responsibility , not from poor workmanship or laziness.
S- Measuring progress
Understanding the whole situation, requires measurement. Measurement of any aspect of an organization objectively counterbalances human nature, but is critical during strategy implementation. Sustainable organizations understand through measurement and ongoing monitoring how they are performing against the overall purpose and strategic plans. It shows whether, and how much, change has been achieved and knowledge is built for the next iteration of the strategy process.
Indicators are chosen to show if the system is achieving its customer-focused goals. They must test validity of understanding and of the strategic plans. Measurement can be numerical or language data. Data collection needs careful thought and planning because real -world numerical measurement data varies.
This is the one area where Deming specified a method-the process behavior or control chart, known as Statistical process control. SPC tells you if it is safe to take action on data, identifies signals of exceptional debts requiring action and allows you to assess whether changes have led to improvement.
Many elements of the organization cannot be defined in strict numerical terms. For example , customer loyalty or the benefits of training may appear to be impossible to quantify , yet this does not mean that they cannot be managed and improved.
Customers, competition and society impose constant pressures to change. Strategy creates an environment in which sustainable organizations take a planned approach to improvement, innovation and learning. A culture of learning will facilitate change, foster exploitation of new ideas from all sources and encourage a strong team approach to managing change. Learning will be shared between processes, projects and company units increasing the knowledge base. Appropriate processes can encourage all staff to make innovative suggestions for improvement.
Improvement and learning are directed towards better products and towards services being more responsive, adaptive and effective , presenting additional marketplaces and performance advantages. The same goes for ongoing improvements to all business processes, systems and procedures. Knowledge, Deming stated. was the key. Making PDSA part of strategy and culture enables organizations to update and increase their knowledge to become truly sustainable.
A successful corporate strategy is typically a realistic assessment of the current environment situation, an inherent vision of the future and understanding of the change required to link the present to the future. It is of critical importance in achieving sustainable organizational success.
Deming ideas focused on achieving quality in the eyes of the customer and although many of his ideas are incorporated into modern quality management, he has something to add to the strategy process.
He advocated balanced perspective including appreciation for a system, knowledge about variation in data, knowledge and explicit learning and psychology. This is all grounded in the primacy of the customer and managing for quality. Deming challenged managers leading strategy development, particularly when it involves significant change, to be prepared to embrace the wholesale transformation of themselves and their management style.
The Piece was delivered last September 20,2011 to all Professors and Students of King Abdullah University of Science and Technology., Kingdom of Saudi Arabia.