Do Healthy Finances Mean World-Class?

Organizations that enjoy healthy finances tend to become complacent. “Life is good” tends to be the mantra. One only needs a significant event like the Samsung Note 7 fire hazard, the Takata airbag inflator recall, or the LG Electronics recall of portable air conditioners due to fire hazards, to name a few, to create a burning platform (no pun intended) for change. These events not only can dramatically impact healthy finances, but forever tarnish a company’s reputation and position in the marketplace.

Fortunately, most organizational disasters are prevented because there is usually an early warning of failure long before the resulting catastrophe occurs. It is essential to seek out indicators of failure and take timely action to avoid them so that management can have confidence in the organization’s chances for success. Through an effective World Class focus, all organizations can minimize this risk.

At Juran we have seen many organizations transform themselves into a World Class organization. These transformations took place by achieving quality leadership in their marketplace — along with the quality of the services and products as received by the customers. During these transformations the organizations evolved from little q (product quality) to big Q (business focus).

Creating a state of performance excellence (World Class) in organizations enables the global organization to avoid technological failures from harming the environment and ultimately its consumers (such as in the above examples). Transforming an organization from one culture to another is not an easy task; however when an organization creates significant, sustainable and beneficial change in a systematic way, transformation can happen.

The systematic approach which we call the Juran Performance Excellence Model can enable any organization to transform by showing what to expect. Transformation usually requires five organizational breakthroughs before a state of being World Class can be attained. Dr. Juran defined breakthrough as the organized creation of significant, sustainable beneficial change. The breakthroughs an organization must make to move towards being World Class (for protecting profits and consumer loyalty) are:

  1. A breakthrough in Leadership and Management
  2. A breakthrough in Organization and Structure
  3. A breakthrough in Current Performance
  4. A breakthrough in Culture
  5. A breakthrough in Adaptability and Sustainability

A breakthrough in Leadership and Management results in an organization characterized by unity of purpose and shared values as well as a system that enables participation of the workforce. Each work group knows what its goals are, and specifically what performance is expected from the team and the individual. Each individual knows specifically what he/she is to contribute to the overall organizational mission, and how his/her performance will be measured.

A breakthrough in Organization and Structure puts into practice a formal structure that integrates each function with all the others and sets forth relative authority levels and reporting lines (e.g., the organization chart and the means to manage across it). More and more work is performed by project teams. Job tasks may be described by team project descriptions rather than, or in addition to, individual job descriptions. Performance evaluation is often related to the accomplishments of one’s team instead of or in addition to, one’s individual accomplishments. Many organizations are beginning to experiment with an alternative to the function based organization in response to today’s “make it happen fast” world. The concept is a process organization, where reporting responsibilities are associated with a process, and accountability is assigned to a process owner. In a process-based organization, each process is provided with the functionally specialized resources necessary.

A breakthrough in Current Performance addresses the question: “How do we reduce or eliminate things that are wrong with our products or processes, and the associated customer dissatisfaction and high costs (waste) that consume the bottom line?” Breakthroughs in current levels of performance problems are attained typically using the methods of Lean and Six Sigma. These methods will place your ailing processes under a microscope of unprecedented precision and clarity, and make it possible to understand and control the relationships between input variables and desired output variables.

A breakthrough in Culture exerts an extraordinarily powerful impact on organizational performance. The culture determines what is right or wrong, legitimate or illegitimate, and acceptable or unacceptable. Consequently, breakthrough in culture is profoundly influential in achieving World Class status. Breakthrough in culture: a) creates a set of behavior standards, and a social climate that supports organizational goals; b) instills in all functions and levels the values and beliefs that guide organizational behavior and decision-making; and c) determines organizational cultural patterns such as style (informal versus formal, flexible versus rigid, authoritarian top-down versus participative collaboration, management-driven versus leadership-driven, etc.).

A breakthrough in Adaptability and Sustainability propagates the survival of an organization, since survival depends on its ability to detect and react to threats and opportunities that present themselves from within and from outside. To detect potential threats and opportunities, an organization must not only gather data and information about what’s happening, but it must also discover the (often) elusive meaning and significance the data hold for the organization.

Creating a breakthrough in adaptability and sustainability requires creating structures and processes that uncover and predict changes or trends in the environment that are potentially promising or threatening to the organization. This also creates processes that evaluate information from the environment and refer it to the appropriate organizational person or function for immediate action.

Don’t get complacent. Don’t wait for the “burning platform” to affect your organization and reduce or eliminate your presently healthy profits. Transform your organization to one that is recognized as truly World Class in financial health and quality health. Use the Juran Performance Excellence Model to help guide you there.

  • Kevin Caldwell, Executive Vice President, Senior Coach & Trainer at Juran

For more information please contact info@juran.com and simply let us know you’re looking to become World Class.