An organisation's management philosophy must be reflective of the state the company / product / division is in. For instance, in the 1950s and 1960s, companies in the United States were focussed on mass production where the retainment of results was imperative.
They thus adopted a top-down management style of control. In the 1970s and 1980s, the Japanese developed a total employee involvement management style as they were looking for incremental improvement (Kaizens). While the US lost its leadership during this period, it bounced back in the 1990s with breakthrough management.
According to Professor Shoji Shiba, a world-renowned expert in breakthrough management, globally, industry has seen three eras of change and management -- process control, incremental improvement, and breakthrough management. Each of these eras emerged in response to industry's need to survive, making the earlier management philosophy a basic requirement.
Process control, for instance, focussed on synchronising and minimising all parts of an industrial process, making mass production possible. This led to the era of mass manufacturing. These methods are still used by the most sophisticated businesses across the world , thus turning into the hygiene factor.
This was followed by the era of incremental improvements, referring to small steps to improvement. Developed in Japan in the 1970s and 1980s, this process focused on delivering incremental improvement in products and services.
Incremental improvement is based on the business logic of customer orientation, that is, focused on customer satisfaction. It focuses on total participation of employees and expects small but critical improvements in the organisation -- Kaizens.
The key player in this process is the shop floor worker. The focus of the philosophy is to gain total employee involvement and deliver an improved product to the customer.
While these philosophies continue to serve the purpose, they are not enough for a company to survive in an era of 10x change -- thus making it imperative for them to seek new businesses and embrace breakthrough management.
While incremental improvement requires only the standards to be altered, breakthrough management requires a change in the business, keeping the basic values of the organisation unchanged. Who else but the top management can change the organisation's business? Who else but the top management understands the core values of the organisation better than anyone else?
Thus, adopting the breakthrough philosophy requires a paradigm shift in the mindset of the top management -- unlearn all that they have learnt in the past and learn new management practices. The entire orientation becomes forward-focused rather than being backward-focused, that is, the orientation is 'how can we' and 'what is going right,' rather than 'why can't we' and 'what went wrong.'
A company pursuing a breakthrough idea has to continue to deliver its existing product or service in order to survive. The top management thus has to spend some time on the control process and incremental improvement to ensure that the existing business is not killed.
While doing so the top management needs to build a dream team, led by a person having an emotional bonding with the breakthrough idea. This means creating an 'ambidextrous organisation' -- an organisation within an organisation to create hypothesis and experiment for exploring the breakthrough idea. This once again requires an unwavering commitment of the top management.
The 'control' process is based on Theory X -- wherein management assumes employees are inherently lazy and will avoid work if they can. Because of this, workers need to be closely supervised and comprehensive systems of controls developed. A hierarchical structure is needed with narrow span of control at each level. It suggests the power of standardisation and control of workers in pursuit of mass production.
'Incremental improvement' is based on Theory Y -- which assumes that employees may be ambitious, self-motivated, anxious to accept greater responsibility, and exercise self-control and self-direction. It is believed that given a chance, employees have a desire to be creative and forward thinking in the workplace.
This essentially means having a process that requires knowledge assimilation, continuous improvement and worker development in pursuit of something new. This kind of management requires the use of tools such as Kaizens and is normally focused on the shopfloor worker bringing about change.
But for an organisation to achieve a 'breakthrough,' a CEO has to break away from rational or logical thinking and believe in intuition, at least in certain circumstances. This is Theory Z propounded by Shiba.
It is usually a crazy idea or an idea that sounds crazy to start with that leads to the development of innovative products or services. After all, who would have thought that one day we would be able to fly -- an airplane must have sounded like a crazy idea, as must have the Internet or mobile phones.
Shiba has been training companies in India to realise breakthrough. He, along with the Confederation of Indian Industry (CII) formed the first CII Learning Community (CII-LC) with six companies that have achieved many breakthroughs over the past three years.
After the success of the first CII-LC, Shiba set up the second Learning Community with another five companies, which are also working towards achieving breakthroughs in not only products but also business processes, business models and so on. CII is working towards expanding the Learning Community network to benefit a large number of companies.
Dr Surinder Kapur is chairman, CII Mission for Manufacturing Innovation, and chairman and managing director, Sona Koyo Steering Systems.
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