A Comparison Of Business Improvement Methodologies: Are They Converging Towards One Universal Approach - Dissertation Example

?A Comparison Of Business Improvement Methodologies: Are They Converging Towards One Universal Approach? Business Process Re-engineering, Six Sigma, Total Quality Management -- there are many different business improvement methodologies. All the major business firms of this century use these methodologies to improve their overall performance and gain a competitive advantage over other firms. Any change which brings about sustainable development in terms of quality improvement, cost reduction and ease of management is welcome by all the businesses. This paper examines the common features and the major differences between the most famous business methodologies through a research conducted among the top executives among various firms. The aim of the study is to evaluate whether these business improvement tactics are moving towards a universal goal or leading the businesses in a different path. The results captured in our analysis states that these methodologies are evolving towards developing a unique value or a brand name instead of concentrating on saving money and increasing profits in general. Introduction Every business is on the lookout for new strategies to improve themselves. Many business methodologies were developed to help the huge corporate conglomerates lower the administration cost, deliver high quality products and increase customer satisfaction methods. Following these business strategies have become a must for many companies. In fact, most of the management schools teach these principles and almost all business consultancies encourage huge companies to follow them when it comes to implementing change. Analyzing these business methodologies which have been in the picture for nearly a century is important now, because the market trends keep changing day by day. New platforms like the Mobile marketing and e-commerce keep arising pushing back the traditional way business was done. Comparing the major business improvement methodologies in practice today will give us an idea where these strategies are driving the current businesses. Observing their trend will allow us to examine whether there is a need for new strategies or the current strategies are sufficient enough to lead the businesses to success even in the new platforms. Objectives of the Study The main objective of this study is to evaluate the efficiently of the business improvement methodologies used widely in each and every organization these days. The study analyses 1. The common traits and the unique features of the three major business improvement strategies in practice today 2. It questions whether these strategies evolve towards a common goal or lead the businesses in a different road based on their industry This study will compare and contrast three important business improvement methodologies Business Process Re-engineering, Six Sigma, Total Quality Management. These three methodologies were selected among the many prevailing strategies in the market because of their high reputation and the long list of successful companies following them. Take any name form LG to General Motors or Samsung to P&G, one among these three business methodologies are followed. In fact, these strategies have helped these companies become what they are now and play a significant role in shaping their future too. Total Quality Management or TQM Total Quality Management or TQM started to appear in the middle of the previous century mostly in 1950's and spread widely in 1960's. Japanese companies spurting up from the huge loss after the Second World War during the 50's aimed in distinguishing themselves from others through their unmatched quality. The TQM concept spread from Japan to the western world gradually in 1970's (Garvin, 1998). Some famous companies which have benefited from TQM are Unilever and Philips. The main aim of TQM is to concentrate on the labour market and the technology. They mass produce various products and market them at a very cheap rate. Several products from electronic watches to calculators we use widely today were mass produced by the Japanese companies using the TQM principles. Improving the quality to perfection was the strategies main objective. When they reached that point, they concentrated on producing new products, bringing down the size and weight etc. TQM's main focus always lay in the processes associated with quality and the steps taken to empower them, like build much huge factories with better technologies. Every employee had a crucial role to play in TQM. The role of the leaders was actually minimized to that of a supervisor or a quality controller. The bottom-up approach in management helped the companies following TQM maintain a very good relationship with their workers. However, companies following TQM were slow to adapt any new changes. Six Sigma Process Motorola, LG Group, Samsung Electronics and many other modern companies use the Six Sigma strategy. It is a relatively new strategy which evolved in the late 1990's and gained fame in a very few years. It is seen as an extension of the TQM in a more perfect level by many experts. Six Sigma Certification was initially issued to companies with excellent manufacturing and delivering qualities. Nowadays it is used in several industries from the banking sector to healthcare. The approach has shifted from maintaining the quality of the products to maintaining the service provided to the customers. General Electric and Motorola were the very first companies to adapt the strategy. In fact the pioneers who worked in Motorola like Keki Bhote and Bill Smith are credited as the founders of the system till date. Six Sigma's core concept is to maintain zero defects in their products. The companies adapting Six Sigma follow a top-down approach giving little space for employee creativity. They aim in reducing the operational costs and save time by bringing down the number of defective products. The role of the employees is to follow the process strictly and the role of the leaders is to perfect the process to ensure maximum profit. Senior management plays a crucial part in six sigma process as they act as analysis leaders. The companies following Six Sigma strategy are capable of adapting to changes very quickly. Business Process Re-engineering or BPR BPR was introduced by Hammer and Champy. They wanted to introduce a system which gave enough space to workers creativity and a slighter inclination to process in opposition to traditional strategies like TQM. The system relies heavily on IT management. BPR believes most of the monotonous jobs can be automated and the workers ideas should be used as the important entity in solving issues. Most of the famous IT companies in the market today use this concept. The process concentrates on customers, competition and change equally. It strictly opposes using the IT infrastructure, just to speed up the existing process. Hammer and Champy argue technological revolution should free the employees from traditional way of working. Both the employees as well as the leaders act together in this model. There is no major distinction between their positions. BPR is considered as a breakthrough strategy which is capable of bringing changes quite quickly across any major organization. They too operate on the top-down hierarchy. All these three business methodologies have their own advantages and disadvantages. Our study observed some similarities between all three methods and some major differences too. Similarities between the three methodologies 1. They are popularized by the business consultancies and the media alike 2. They guarantee massive profits in a very short time. The Six Sigma method earned nearly $300million to General Electric’s in 1997. Similarly TQM has helped Japanese economy rule the world for many decades. 3. These concepts aim in cutting down the operational cost, increasing the customer satisfaction and give ample importance to the quality of the product. Differences between the three methodologies 1. The main difference is the way the leaders are treated. While TQM hails labourers as the driving force, Six Sigma gives importance to leaders. BPR gives equal importance to both. 2. BPR and TQM gives ample importance to technology oriented company infrastructure, while Six Sigma aims in making the best use of the available resources 3. TQM is too slow to adapt changes while Six Sigma and BPR are very fast in changing their process and ideologies according to the changing trends. Literary Review Kotler (1995), the most famous management guru suggests changes in an organization do not happen overnight. It should happen gradually in many phases influencing everybody in the company. The leader of the organization should take care to ensure the changes are implemented with a sense of urgency, pushing the employees out of their comfort level, motivating them to work towards a particular vision together. The message should be communicated very clearly throughout the company every employee should be given enough space and resources to contribute his share in the journey towards fulfilling the vision. The work force should be kept motivated by keeping them informed about the short term achievements to encourage them. Katzenbach (1996) clearly stated changes will not happen in an organization only through leaders. The leaders might be instrumental in deciding what type of changes they want in their company, but it is the middle management or the mid-level employees who are usually responsible for major changes. These people have direct contact with the senior management, the labourers as well as the consumers in general. So, it is important to gain their co-operation for any change. Peter (2001) suggests a steady stream of new products and businesses marketing them are necessary for the consulting field to exist. They aim in creating a unique brand value for each product, focusing their attention on some unique quality of the product or the business. For example, there are several tooth pastes in the market. But, still a new brand emerges now and then and creates great sensation because of its one unique quality. It becomes a trademark then. Only business strategies capable of creating such sustainable changes in the industry can stay alive in this new century. New businesses should concentrate on using them instead of traditional strategies. The study examines which of the three business methodologies discussed about has the capacity to bring about such massive changes in the future business in a very short period of time. Research and Methodology The purpose of this paper is to find out whether these strategies have evolved over time to fit themselves into the changing business trends. We aim in measuring the extent of their change and how beneficial it will be to the future businesses. A study was conducted among various experts in the field regarding the same through a survey. The reports of the survey and the detailed research methodology are given below. The study followed a systematic procedure from selecting the topic to preparing the final report and recommendation. Descriptive research was conducted to gain the views of various experts in the field through direct survey. The data to be collected was decided and a questionnaire which gathers the relevant data in a direct and easy was designed. The answers were designed to get the best results with very little interpretation work. The 'personal-contact' method was used to gather the required data in the form of survey. Primary data was collected directly from the individuals filling the survey and the secondary data was collected through associated readings and documents. Sampling: Nearly 50 individuals working in the management sector of various institutions starting from banks and corporate companies to healthcare and financial institutions were contacted. Their profiles were shortlisted from LinkedIn and they were approached with a small gift or memento in exchange for their valuable time. Only people who were working in the position of assistant managers or above were selected. The 50 candidates were approached through e-mail and direct telephone calls explaining the nature of the study. Those who showed interest were given a survey form and asked a few questions regarding the business methodologies used in their company for five minutes. The survey form was collected back from them after three days, giving them enough time to fill the same. Nearly 43 people out of 50 responded positively. The others were requested to fill in the form again. Some heeded to give verbal answers to the questions in the form through telephone. Finally 50 completed surveys bearing the views of masterminds in various fields of the business was collected. Data Collection, Analysis and Report Preparation Data was collected through direct consultation while handing over the surveys and through the answers given in the survey. Data was also gathered over telephone conversations. The data collected concentrated on core questions like which of the three business improvement methodologies the company the surveyor works follows and why. Do they prefer it, which business methodology do they support and why. The questionnaire also asked about the way these methodologies were evolving. The scale survey method was used to evaluate the given data and draw a conclusion. Report of the Survey 33% of the people contacted reported their companies used BPR. 10% stated they used Six Sigma while others stated their companies used TQM. 5% of the total surveyors stated their companies used other methods like Lean instead of these three methodologies. The surveyors who worked in companies following BPR felt they had more space than the others. People working with Six Sigma generally felt there was too much pressure and TQM influencers had a general notion that they were out of date. Asked about whether they want change, only 3% of TQM people were ready to accept new methodology even though they did not like the current one. The BPR people felt, they were going through massive changes constantly and the Six Sigma people were eager to try other methods owing to their very high pressure. Questioned about the evolution of the strategies, each surveyor came up with interesting facts based on their experience. TQM people working in healthcare mentioned how quality has changed its phase from best drugs and medicines to best hospitals with emphasis on best customer service. Similarly, Six Sigma people mentioned how they used to try and eliminate wastage to show profit earlier. But, nowadays they aim in increasing the customer service by implementing new features in their products rather than eliminating wastages. The results of the survey showed there wasn’t any major problem whatsoever with all the three methodologies. The people who followed other methods than these three strategies were eager to try BPR. It seems the IT infrastructure orientation is attracting many people. When questioned which business strategy is fit for the future, both TQM and BPR gain equal votes, even though Six Sigma is proven as the most efficient one in the practical world. Companies following other strategies like Lean usually look upon Six Sigma as a perfect model, but when it comes to adaption they like a much friendlier environment like the one prevalent in the BPR. BPR is also considered as the quickest way to implement change with very little human effort. Mostly labour oriented markets like spare parts production factories rely on TQM still. They have very little interest for BPR or Six Sigma. Final Finding The results showed all of the three methodologies were evolving to a certain extent towards a universal approach of creating more value to the products rather than concentrating on the cost. They are fast shedding their differences and motivating the businesses to create a unique brand image for themselves as it is the only way to survive in the highly competitive market. Limitations of the Study The managers and the high level executives who filled the survey had very little time. So they nearly rushed with most of the questions. Many of them gave their opinions to their secretaries who filled them out later. There is a chance for their personal opinion mixing with the target audience opinion in direct questions. Since the direct question and the telephonic sessions were limited to five minutes, the volunteers did not have a chance to clarify any doubts from the people who filled the survey. Time constraint prevented the executives from giving their elaborate view on various concepts. The data calculation part was roughly based on the direct answers they gave. Only qualitative data is focused upon not the quantitative data. Most people consider their system the best. The surveyor’s views might be highly influenced by their own personal or industry related experience rather than a biased view. Recommendations from the Study Six Sigma strategy strains the employees too much though it is considered as the best result showing one by far. Any new company looking for an effective business strategy to improve its process should consider twice before using it. BPR is the expected with curiosity by most of the workers. But, it will be fit only for organizations which rely on the brain power of the employees rather than their physical strength like the IT companies. Further, it is quite costly to implement. TQM is fit for most of the traditional manufacturing businesses and the employees working under the system seem quite ok with the results. Considering the modern environment and the new platforms the businesses are switching to like the ecommerce, BPR would be the best even though it is quite costly. The ROI or return on investment will be very high and quick compared to the other methods. Six Sigma is used successfully by many companies to this date. But, the companies using it suffer very high rate of attrition. The system will be much more useful if it is made flexible to suit the industry needs. Considering the evolution part, all three strategies are moving towards a position where the value or unique features of the products are given more importance than bringing down the operational cost or keeping the price of the product low. Conclusion There are several business improvement methodologies in the world. But, the business world is in a crucial state driven by brand power and customer perception about the brand power now. So all the strategies are evolving towards a phase where they drive the business to create high quality products with some uniqueness which only their brand name will possess. For example, Sony mobiles are known for great music while Samsung mobiles are known for slim body though most of the smart phones in the market share similar properties. The research conducted proves all the business methodologies are converging towards one universal approach – brand image which satisfied customer perception perfectly with unique product features. References 1. Hammer M., Champy J., 2001, Re-engineering the Corporation: A Manifesto for Business Revolution, Nicholas Brearley Publishing 2. Kotter J. P., 1995, Leading Change: Why Transformation Attempts Fail, Harvard Business Review. 3. Katzenbach J., 1996, Real Change Leaders, Nicholas Brearley Publishing 4. Grint K., Case P., 2000, ‘Now Where Were We?’ BPR Lotus Eaters and Corporate Amnesia, The Re-engineering Revolution, Critical Studies of Corporate Change, Sage 5. Peters T., 2001, True Confessions, Fast Company. 6. Peters T. J., Waterman R. H., 1982, In Search of Excellence: Lessons from America’s Best-Run Companies, Harper Collins Business. Read More