Sustainable competitiveness in the organizational performance

Today all organizations – even the public civil service organizations – operate in competitive business environments. That increases the level and diversity of requirements for the quality – the degree to which the organization and its products with their inherent characteristics should fulfill the requirements of its stakeholders. Fulfilling certain minimum requirements is not enough, neither operating at the average level of performance, because in those cases there are better organizations that win the competition. The competitive organization should strive for something more. That is expressed in the modern quality approaches by aiming at performance excellence.

Excellence refers to the overall business performance of the organization taking into account relevant references (see attached diagram). Excellence implies that an organization’s performance exceeds a) its own targets, b) its competitors’ performance, and even c) has a good performance-related reference value (world-class benchmark) outside its own business branch.

Fuzzy and relative concept of quality

Definitely the concept quality and its understanding are most essential matters of quality integration and quality management. However, it is not easy to cope with this central concept. In ordinary every-day language quality may mean many different things. Also its professional interpretation is fuzzy and relative.

The international standard vocabulary ISO 9000 defines quality as: degree to which a set of inherent characteristics fulfils requirements This definition implies many interesting aspects:

• Item to be addressed from the quality point of view should be defined. Very often this item is a product (goods or service) produced by an organization, but the item in a quality consideration may be any kind of object.
• All items have a lot of inherent characteristics, and quality of the item is squarely depended on them.
• Fuzziness relates to the degree that the item possesses particular characteristics and through them fulfils certain requirements.
• Requirements consist of all needs and expectations of all the interested parties related to the item. These requirements may be general or specific, stated (explicit) or implied (implicit and non-articulated), or any kind of combination of them. Therefore the requirements are never completely a priori unambiguous or objective. One should always recognize the perception of all interested parties in order to get impression about the quality of the item.
• Fulfilling requirements often means that the interested parties get satisfied or they get benefits or value using the item.

Too often – unfortunately – in practice quality concept has intermingled with the concept grade. Quality is subjective and grade objective concept. ISO 9000 defines grade as category or rank given to different quality requirements for the items having the same functional use. Examples include class of airline ticket and category of hotel.

In the contexts of quality considerations there are often also needs for concepts of non-quality. Correspondingly to quality and grade quality practices have adopted the following two terms:

• Defect – non-fulfillment of the needs and expectations
• Nonconformity – non-fulfillment of the stated requirement specifications

A systematic and professional approach to quality terms and definitions

Unambiguous concepts, terms, and definitions are important in communicating and understanding things. Therefore creating a clear general professional terminology for the field of quality management is an important means to achieve the objectives of the ISO 9000 standardization. However, within each organization applying quality related methodology one should apply terms according to the needs and conditions of the organization. In this approach, standard vocabularies and dictionaries may be of a great advantage. The most central terms that organizations should adopt according to the ISO 9000 standard include:

• quality
• quality management system
• quality policy
• quality control
• quality assurance
• quality improvement

Organizations should, of course, also understand the definitions and meanings of those terms in the standard way. In this sense, however, there are a lot of imperfections in practice. There is much obscurity and ambiguity in the use of key quality concepts. Especially there exist difficulties when applying e.g. ISO 9000 standards related to the following terms:

• quality versus grade
• quality management system versus already obsolete quality system
• quality assurance versus quality management
• quality policy as a general organization-dedicated code of practice
• requirements as needs and expectations
• effectiveness versus efficiency
• ensure versus assure.

The situation gets even more difficult when translating these expressions into various languages.

TQM –What, How, and Why?

The concept TQM (Total Quality Management) has long roots in the history of quality professionalism. Originally the concept TQC (Total Quality Control) was launched by Dr. Feigenbaum’s famous book Total Quality Control, first published in 1951 under the title Quality Control: Principles, Practice, and Administration. TQC means a system that integrates quality development, maintenance and improvement of the various parts of an organization to enable it economically produce and deliver products to full customer satisfaction. In Japan practically the same concept got the name CWQC (Company Wide Quality Control) mainly by Dr. Ishikawa.

The term TQM (Total Quality Management) was initially coined by the US Naval Air Systems Command to describe its Japanese style management approach to quality improvement. Since then, TQM has taken on many different meanings and definitions in quality related literature and by different quality specialists around the world. Even in Japan CWQC has been changed to TQM. TQM concept was also defined in the first ISO standardized quality vocabulary in standard IS0 8402:1987. This ISO definition – although it is rather complicated – is well aligned with most other TQM definitions: TQM is a management approach of an organization based on the participation of all its members and aiming at long term profitability through customer satisfaction including benefits to the members of the organization and society. Later in TQM concept the value also to organization’s all other stakeholders (or interested parties as it is stated in the ISO 9000:2000 standards) is emphasized.

Today the term TQM does not any longer exist in the ISO 9000 standard vocabulary. One reason may be that it was seen too much as consultant-used term and therefore not very suitable to be used in the international standard, and in fact, TQM was not really used in the ISO 9000 standard texts. Also in general nowadays TQM is no more very popular term in quality literature, and ISO 9000 standards are now using concept QM (Quality Management) that according to its formal definition and also in practice is equal to quality of management. Also meaning of the above mentioned TQM definition is essentially exactly the same. Thus, as the conclusion one can say that TQM = QM, and the attribute “total” is no more needed, it may only cause confusion.

Sometimes in the context of TQM also the term “Total Quality” has been used and defined e.g. like as “A strategic integrated system for achieving customer satisfaction that involves all managers and employees and uses quantitative methods to continuously improve an organization's processes”. Difference between this concept and ISO 9000 “Quality Management System” concept is, however, nonexistent. Therefore this term is not necessary and it is neither any more used in practice. Both QM and TQM are based on the good management principles as described in my previous blog-text.

References:
ASQ:
Glossary
Google Definitions:
Total Quality Management
Total Quality Control
Total Quality
Quality Management

Good management principles

ISO 9000 standards and performance excellence models as well as the other recognized references for quality management are based on principles that reflect the fundamental ideas of a good management. The different reference materials call these principles with different names and use different phraseology in the principle statements but, however, they are very similar in the meanings. Each organization should define its own principles from the basis of its business requirements and development situation but generally recognized principles (see the list followed) may be used as references. These principles form a good foundation for a systematic and comprehensive quality integration.

ISO 9000 - Quality management principles:

• Customer focus
• Leadership
• Involvement of people
• Process approach
• System approach to management
• Continual improvement
• Factual approach to decision making
• Mutually beneficial supplier relationships

Malcolm Baldrige - Core values and concepts:

• Visionary leadership
• Customer-driven excellence
• Organizational and personal learning
• Valuing employees and partners
• Agility
• Focus on the future
• Managing for innovation
• Management by fact
• Social responsibility
• Focus on results and creating value
• Systems perspective
  

EFQM - Fundamental concepts of excellence:

• Results orientation
• Customer focus
• Leadership and constancy of purpose
• Management by processes and facts
• People development and involvement
• Continuous learning, innovation and improvement
• Partnership development
• Corporate social responsibility
  

Deming Application Prize – TQM Principles:

• Distinctive performance improvement through the application of TQM

• Challenging and customer-oriented business objectives and strategies under the management leadership
• Proper implementation of TQM to achieve the business objectives
• Outstanding results obtained for the business objectives.

• TQM understanding and enthusiasm
  
  
  • Aiming at long-term success through benefits to customers and other interested parties
  • Managing the organization putting 'quality' in its core
  • Top management leadership, vision, strategies, and policies
  • Participation of organization’s all members based on human resource development
  • Developing and applying effective quality management methods
  • Improving and transforming organization's constitution for sustainable success
    

Both standardization and excellence model organizations support the combined use of the ISO 9004 standard and the excellence models

Simultaneous use of the ISO 9000 standards and the performance excellence models has been interested also by the ISO standardization committee TC 176. Its subcommittee SC 2, through its Working Group 18, established task group TG 1.13 to develop guidance on "Promoting the use of ISO 9004 in combination with the European Foundation for Quality Management (EFQM), Malcolm Baldrige National Quality Award (MBNQA), and Deming Application Prize (DAP) management models as a path to Business Excellence". The guidance will be published as web pages in www.iso.org./tc176/sc2.

In this work especially the following performance excellence models have been examined and the ISO task group had a close cooperation with the responsible performance model organizations:

• Deming Application Prize (DAP): www.juse.or.jp/e/deming/index.html
• Malcolm Baldrige National Quality Award (MBQA): www.baldrige.nist.gov
• European Foundation for Quality Management: www.efqm.org
• Fundación Iberoamericana para la Gestión de la Calidad (FUNDIBEQ): www.fundibeq.org

The International Asia Pacific Quality Award (IAPQA), www.apqo.org/iapqa_profile.php , has a large coverage of Asian-Pacific countries. Is is using the Malcolm Baldrige Model.

Performance excellence models work well with ISO 9000 standards

In general, there are two recognized principal source materials that are useful for the development of an organization’s quality approach: ISO 9000 standards and performance excellence models (quality awards criteria). In any organization, it is beneficial to use them both simultaneously as general references for improving quality of management. They support very well each others because they have the same basic aim, excellence of the organizational performance, and very similar structure and contents. However, they have also differences that originate from their backgrounds. While the standards reflect a large international consensus for harmonization of the approaches for quality management and quality assurance, the performance excellence models are based on the development of a national competitiveness towards excellence. In the standards the views of quality experts are emphasized and the excellence models reflect especially the organizational management and leadership views. It is just due to both the similarities and the differences that their simultaneous use is beneficial for the company. Thus, it is very important for the development of the company-wide quality approach to understand the effective relationship of these important references of the professional quality management. Then also possible conflicts between them can be avoided.

The excellence model does not give any recipes for the development. The award criteria are for strategic performance assessments – particularly for self-assessments carried out by the top management in an organization – and the standards in searching standard guidance for the development of business performance after assessments. However, self-assessment activity is also an important element of the ISO 9004 standard. The standard even includes a simplified method for self-assessment that is based on the quality awards models. Nevertheless, advanced organizations can go directly to using awards models. That is also the recommendation of the standard.

Starting point for using ISO 9000 standards and performance excellence models should always organization's own business system including planning, controlling, and improving activities. General recognized quality management references may provide good support for these managerial tasks. They give also an appropriate basis for a variety of possibilities of the quality assurance. (see the attached diagram)