K. A. POTOCKI AND R. C. BROCATO
A System of Management for Organizational Improvement
Kenneth A. Potocki and Richard C. Brocato
aced with cutbacks in funding, escalating costs, global competition for limited resources, and a demand for higher-quality outcomes, organizations of all types have felt the pressure to operate more effectively. Organizational improvement is required. Based upon various management approaches, five guiding principles are being used to make outstanding improvements in organizational performance: measurements/benchmarking, leadership, employee involvement, process improvement, and customer focus. However, not every organization trying to apply these principles is successful. What is required for success is that these principles be understood and applied as an integrated system of management.
During the past decade, rapid worldwide technological and sociopolitical changes have precipitated the “globalization” of the economy where “. . . in every industry and sector throughout the world, success, and in some cases survival, will depend upon the ability of organizations to compete globally.”1 Fueled by this change, organizations of all types, including business, government, education, health care, military, and research and development, have been rethinking their operations and management approaches.2 Faced with many of the same demands, such as cutbacks in funding, escalating costs, competition for limited resources, and a demand for higher-quality outcomes, these organizations have all felt the pressure to operate more effectively. The old paradigms simply are not working anymore.3 Transformation into a new style of management is required.2 When we examine the various management approaches that these organizations are taking toward managing improvement, we find five guiding principles that are working to make outstanding gains: measurements/benchmarking, leadership, employee involvement, process improvement, and customer focus. All of 402
these principles seem familiar and make good common sense, yet not every organization that has tried to apply them has been successful. The purpose of this article is to describe how this set of five principles constitutes the components of a system of management for organizational improvement. First, the failure of improvement initiatives will be examined to shed light on why quality improvement approaches are often unsuccessful. Next, systems concepts will be reviewed in order to establish “appreciation for a system.”2 Insights gained from the applications of systems thinking to this theory of organizational improvement will then be used to develop an understanding of how the individual components of the system reinforce each other. Finally, the validity of this proposed system of management will be examined through its different applications to organizational improvement.
REASONS FOR FAILURE OF IMPROVEMENT INITIATIVES
One of the key reasons cited for the failure of quality improvement initiatives is that “many quality
JOHNS HOPKINS APL TECHNICAL DIGEST, VOLUME 16, NUMBER 4 (1995)
A SYSTEM OF MANAGEMENT FOR ORGANIZATIONAL IMPROVEMENT
management plans are simply too amorphous to generate better products and services . . . . [Yet,] the only justification for the enormous sums of money invested in [quality improvement initiatives], is increased customer satisfaction and improved competitive position.”4 Simply reading lots of books, training lots of people, and forming lots of teams to implement thousands of new practices simultaneously have little effect on customer satisfaction. Neither do such acts have an effect on determining what competitive advantage an organization will have in the marketplace. If these activities do not add value to an organization or do not align with its strategic direction, they will fail to make a meaningful contribution to the bottom line and they will be discarded. Many...
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