Managing for Competitive Advantage (part 11)

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The Responsive Organization

 by

 Charles Lamson

 Organizing for Environmental Response

 Apart from organizing for optimal size, organizations have to adapt to external environments. In a sense, this is the crux of creating a responsive organization. There are various approaches organizations might take to respond to the environment. They included adapting to the environment, influencing the environment, and selecting a new environment. In this section, we want to delve more deeply into how organizations organize for environmental response. 

Organizing for Customer Responsiveness

The environment is composed of many different parts (government, suppliers, competitors, and the like). Perhaps no other aspect of the environment has had a more profound impact on organizing in recent years then a focus on customers. Dr Kenichi Ohmae points out that any business unit must take into account three key players: the company itself, the competition, and the customer. These components form what Ohmae a refers to as the strategic triangle, as shown in Figure 1. Managers need to balance the strategic triangle and successful organizations use their strengths to create value by meeting customer requirements better than competitors do.

FIGURE 1 The Strategic Triangle 

Customer Relationship Management CRM Customer relationship management is a multifaceted process, typically mediated by a set of information technologies, that focuses on creating two-way exchanges with customers so that firms have an intimate knowledge of their needs, wants, and buying patterns. In this way, CRM helps companies understand, as well as anticipate, the needs of current and potential customers. And in that way, it is part of a business strategy for managing customers to maximize their long-term value to an enterprise.

As discussed throughout this analysis, customers want quality goods and services, low cost, innovative products, and speed. Traditional thinking considered these basic customer wants as a set of potential trade-offs. For instance, customers wanted high quality or low costs passed along in the form of low prices. But world-class companies today know that the “trade-off” mentality no longer applies. Customers want it all, and they are learning that somewhere an organization exists that will provide it all.

But if all companies seek to satisfy customers, how can a company realize a competitive advantage? World-class companies have learned that almost any advantage is temporary, for competitors will strive to catch up. Simply stated---though obviously not simply done---a company attains and retains competitive advantage by continuing to improve. This concept---kaizen, or continuous improvement---is an integral part of Japanese operations strategy. Motorola, a winner of the Malcolm Bridge National Quality Award, operates with the philosophy that “the company that is satisfied with its progress will soon find that its customers are not.”

As organizations focus on responding to customer needs, they soon find that traditional meaning of a customer expands to include “internal customers.” The word customer now refers to the next process, or wherever the work goes next. This highlights the idea of interdependence among related functions and means that all functions of the organization---not just marketing people---have to be concerned with customer satisfaction. All recipients of the person's work, whether co-worker, boss, subordinate, or external party, come to be viewed as the customer.

Total Quality Management (TQM) Total quality management is a way of managing in which everyone is committed to continuous improvement of his or her part of the operation. In business, success depends on having quality products. TQM is a comprehensive approach to improving product quality and thereby customer satisfaction. It is characterized by a strong orientation toward customers (external and internal) and has become an umbrella theme for organizing work. TQM reorients managers toward involving people across departments in improving all aspects of the business. Continuous Improvement requires integrated mechanisms that facilitate group problem-solving, information sharing, and cooperation across business functions. As a consequence, the walls that separate stages and functions of work tend to come down, and the organization operates more in a team-oriented manner.

W. Edwards Deming was one of the founders of the quality management movement. His "14 points" of quality emphasized a holistic approach to management that demands intimate understanding of the process---the delicate interaction of materials, machines, and people that determine productivity, quality, and competitive advantage:

1. Create constancy of purpose---strive for long-term Improvement rather than short-term profit.
2. Adopt the new philosophy---don't tolerate delays and mistakes. 
3. Cease dependence on mass inspection---build quality into the process on the front end. 
4. End the practice of awarding business on price tag alone---build long-term relationships. 
5. Improve constantly and forever the system of production and service---at each stage.  
6. Institute training and retraining---continual updating of methods and thinking. 
7. Institute leadership---provide the resources needed for effectiveness. 
8. Drive out fear---people must believe it is safe to report problems or ask for help.  
9. Break down barriers among departments---promote teamwork. 
10. Eliminate slogans, exhortations, and arbitrary targets---supply methods, not buzzwords. 
11. Eliminate numerical quotas---they are contrary to the idea of continuous Improvement. 
12. Remove barriers to pride and workmanship---allow autonomy and spontaneity.  
13. Institute a vigorous program of education and retraining---people are assets, not commodities. 
14. Take action to accomplish the transformation---provide a structure that enables quality.

*SOURCE: MANAGEMENT: THE NEW COMPETITIVE LANDSCAPE, 6TH ED., 2004, THOMAS S. BATEMAN & SCOTT A. SNELL, PGS. 279-280*

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