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1、Value-Creation through the Balanced Scorecard Oriented TQM Concept(Authors: Dr. Mike C. K. Lam and Mr. Q.S. Ren)Beijing Western Consultants ()AbstractThis paper tries to solve some of the issues concerning total quality management (TQM). Firstly, what does a TQM (business excellence) concept/model l
2、ook like? Are these TQM concepts/models theoretically sound? Would the judging frameworks and criteria of some quality awards such as Hong Kong Management Association (HKMA) Quality Award be the TQM concepts/models? Secondly, are TQM models related to other management concepts such as the Balanced S
3、corecard (BSC)? Thirdly could we integrate the TQM concept with BSC framework to form a value-adding concept? The main aim of this paper concerns with the processes of building up the Balanced Scorecard Oriented TQM concept theoretically, for which the bases are conjoining the Kanjis TQM model and t
4、he framework of the BSC with reference to the judging framework and criteria of HKMA Quality Award. Based on the concept of Systems Theory and model building technique, firstly we triangulated the Kanjis TQM model and the BSC framework to fit into the Systems Theory. Secondly, we compared these tria
5、ngulated models with reference to the judging framework and criteria of HKMA Quality Award systematically. Thirdly, after analysis, we proposed the BSC-Oriented TQM concept and its concept mapping for reference and further testing in the real world. The expected outcomes of this research are solving
6、 the above-mentioned research problems. The ultimate aim of this research is to form the conceptual model of BSC-Oriented TQM concept for further testing by practitioners and academics of TQM in order to gain more concrete experiences or the management knowledge of the world.IntroductionThe original
7、 or traditional approaches of quality management were very much process oriented. With the advent of Total Quality Management (TQM), organizations began to focus on the needs (requirements) and wants (exceeding the requirements) of customers both externally and internally (Wilkinson, 1992). There is
8、 no doubt that the issue of customers becomes the foci of all kinds of management tools and concepts. On the other hand, one of the basic concepts of TQM is the systems theory (input-process-output). That is to say, the inputs-processes-outputs (activities) of an organization are aiming at the fulfi
9、llment of the needs and wants of the customers such as the concept of To delight customers, which is the input or starting point of the whole value-adding chain of business processes so that the outputs are customers satisfaction/delight and thus the financial performance. If we accept this simple l
10、ogic of doing businesses, we still have to solve, at least, two major issues. Firstly, let us assume that we know our customers thoroughly. However, in accordance with Ansoff (1984), Strategy is a concept of the firms business, which provides a unifying theme for all its activities. The problem is h
11、ow could we organize all the activities of an organization under a unifying theme, which is, the strategy of an organization? Secondly, even though an organization has strategy, how could we know the implementation of the strategy is right? The answer of these two issues lies on the strategic manage
12、ment of an organization with the help of the BSC. According to Kanji and Asher (1995), the ultimate aim of TQM is to achieve business excellence (company performance) such as financial and non-financial results/measures. However, from our concrete experience and observation and reflections, the prac
13、titioners and academics of TQM are facing many problems. To name a few, firstly, what does a TQM concept/model look like? Would the judging frameworks and criteria of some quality awards such as the Malcolm Baldrige National Quality Award (USA) or Hong Kong Quality Management Association Quality Awa
14、rd (hereafter we call HKMA Quality Award) be the TQM (business excellence) concepts/models? Secondly, are these TQM concepts/models theoretically sound/ based?The researchers of this paper have been involving the research, training, education and implementation of TQM (Kanji, 1998) and the Balanced
15、Scorecard (Kaplan & Norton, 1992, 1993, 1994,1996 a, 1996b, 2000) to various clients in China, of course, including Hong Kong SAR (see ). We (including our teams of consultants) have both the explicit (codified) and tacit (uncodified) knowledge. Based on our practices of the concept of Ba (Nonaka an
16、d Konno, 1998), which is a knowledge creation process, and Kolbs Experiential Learning Cycle (Kolb, Rubin and McIntyre, 1979), we advocate that it is highly likely to integrate” or “conjoining” the framework of the BSC with the TQM models such as the Kanjis TQM model (1998) with reference to the fra
17、mework and judging criteria of HKMA quality award as a kind of TQM (business excellence) concept for reference. The expected result of this research is solving the stated research problems of this paper and the ultimate aim is to form the conceptual model of BSC-Oriented TQM concept for further test
18、ing by practitioners & academics of TQM and BSC in order to gain more concrete experiences. (Please refer to Figure 1)Background of the StudyThe authors of this paper have been involving the research and the implementation of TQM (Lam and Yu, 1999, 2001), and the BSC (Lam 2002 a, b, c) for ten years
19、 (concrete experience). Moreover, the authors have been researching the theoretical bases of some TQM models such as Kanjis TQM model. Based on the Kolbs Experiential Learning Cycle (Please refer to Figure 1), the authors discovered (Observation and Reflections) that there are many similarities betw
20、een the Kanjis TQM model and the basic criteria of various quality awards and the framework of BSC. The authors of this paper attempt to build on the concept of BSC and Kanjis TQM model, for which, compared to the judging framework and criteria of HKMA Quality Award to form the BSC-Oriented TQM conc
21、ept (Formation of Abstract Model) for further testing. The driving force of this research is the notion of value creation or adding as we observed that too many organizations wasted too much resources of using different kinds of management tools or concepts. It would be very much value-adding if we
22、could conjoin few management tools or concepts under one concept or model such as the BSC-Oriented TQM concept we proposed in this paper. The ultimate aim is to invite practitioners of both the TQM and BSC to test the proposed concept/model and contributing to the management knowledge of the world.M
23、ethodologyBased on the simple concept of Systems Theory (Input-Process-Output) and model building technique, firstly we rearranged or triangulated the Kanjis TQM model and the BSC framework to fit into Systems Theory. Secondly, we theoretically compared these triangulated concepts systematically. Th
24、irdly, after analysis, we proposed the BSC-Oriented TQM concept for reference and further testing in the real world. Literature ReviewSystems Theory and/or Model BuildingAccording to Bonini et, al. (1999), real-world problems tend to be enormously complex such as the problems and the main aim of thi
25、s research paper. There are literally an uncountable number of inherent facts (tacit or implicit knowledge) in any empirical situation. Further, every potential course of action starts a chain of cause-and-effect or input-process-output, and interaction that logically is without end. A model is a si
26、mplified representation of an empirical situation. The original aims of researchers are not to construct a model that is as close as possible to reality in every aspect, rather than, researchers want the simplest model that predicts outcomes reasonably well and is consistent with effective action. T
27、he technique for describing and relating various variables such as exogenous, endogenous, intermediate, decision and expected performance variables or outcomes/measures (as per Figure 2), depends on large extend of the nature of the variables. The simple form of systems theory and/or model building
28、is as follows: Total Quality Management (TQM)TQM has been widely accepted by the business practitioners and academics to improve the quality, if not the organization effectiveness, of an organization continuously. However, there are many problems of applying the principles or concepts of TQM to the
29、real world situations. The major problem is the standardization of different TQM models/ concepts themselves, if not the unification of various TQM models/concepts. (This is one of the areas, which needs further research). There are many famous quality gurus such as a) Philip. N Crosby (Fourteen ste
30、ps to quality improvement),b) Joseph M Juran (Ten steps to quality improvement), and c) Edwards Deming (Fourteen points for management or the famous PlanDo Check Act / PDCA Cycle). Like many other management concepts or tools, TQM does have some problems. Firstly, the philosophies of these gurus or
31、their “steps / points” are not built on the techniques of model building as such. It takes time for the followers or believers of TQM to comprehend the big pictures of their profound philosophies. Nevertheless, for the sake of the purposes of this research, we deliberately selected the Kanjis TQM mo
32、del/concept for further discussion and investigation, as it is easily being understood. The model consists of the prime (Leadership), four principles (delight customer, management by fact, people-based management and continuous improvement) and eight sub-breakdown concepts (Please refer to Figure 3)
33、. As we argue that the ultimate purpose of all business processes is aiming at the fulfillment of the needs and wants of customers. On top of the traditional division of customers into external and internal, we would like to add one more dimension to understand the concept of customers: present (art
34、iculated) and potential (unarticulated). Now the concept/definition of external customers is quite straightforward. However, the concept/definition of internal customers is somewhat blurred. For the sake of the arguments of this paper, we deliberately define the internal customers as stakeholders of
35、 a company. Let us assume leadership or prime of the Kanjis TQM model, which is focusing on the notion of To delight the customers as the input of the systems theory. The processes consist of management by fact and people-based management and the outputs are delight customer or customer satisfaction
36、 and thus the business excellence (performance). What made TQM different from other management tools/frameworks is the common notion of continuous improvement (virtually all TQM models/concepts focus on the notion), which is the feedback loop of systems theory or one of the four competitive advantag
37、es (C.A.) as suggested by Kanter (1990). Having said that the major problem of the triangulated model still remains on the input, that is, what leadership consists of? Since most of the organizational structures are still hierarchical, therefore, we can broadly divide the responsibilities of the sta
38、keholders of an organization into three levels, namely, strategic, operational and functional. Strategic management (we shall discuss more in the strategic management section) is traditionally being regarded as major responsibility of top management and one of its outputs is strategy. Moreover strat
39、egic management has received increasing recognition in management literature including TQM. As a matter of fact that strategic management is within the prime or leadership of the Kanjis model; therefore, we deliberately extracted it out as a separate issue for further discussion in the following sec
40、tion. As most of the TQM models are not systematically built as such, at least, literally. Therefore, we triangulated the above-mentioned four principles of Kanjis TQM model (Figure 3) in accordance with systems theory (Figure 2) and the simple logic of cause-and-effect for the sake of comparison an
41、d analysis later on as per Figure 4. Strategic Management and the Balanced Scorecard (BSC)When we analyze the Figure 4, the key problem is how strategy is devised. According to Ansoff (1984), the idea of strategy has received increasing recognition in management literature. There are numerous papers
42、 have appeared dealing with corporate strategy (Strategic level), business strategy, product line strategy (Operational level) and marketing strategy (Functional level). This interest grew out of a realization that a firm needs a well-defined scope and growth direction, that objectives alone do not
43、meet this need, and that additional decision rules are required if the firm is to have orderly and profitable growth. Such decision rules and guidelines have been broadly defined as strategy or, sometimes, as the concept of the firms business. Michael Porter is one of the gurus of strategy. In What
44、is strategy? Porter (1996) states that organization effectiveness (O.E.) is not strategy. While organization effectiveness (maybe we can use process of systems theory to comprehend the meaning) means performing similar activities better than a companys rivals perform them (and probably the imitation
45、s of other companies processes). Strategy needs someone to take an overview, to conceive of the whole (maybe we can use both leadership and strategic management to comprehend the meaning) rather than just parts of the situation facing an organization. There are many ways to improve O.E. such as the
46、traditional TQM, time based competition, benchmarking, and business process re-engineering (BPR). Porter states clearly that O.E. is certainly necessary but it is not sufficient. Using the input-process-output of systems theory, input (strategy) is extremely vital for process (O.E.) and thus the out
47、put (customers satisfaction and thus company performance). Therefore, the ability to accurately analyse the various variables of inputs, careful monitoring of the processes and to measure that organizations performance, the outputs i.e. the satisfaction/delight of customers (non financial) and finan
48、cial measures, is essential if stakeholders are to encourage actions or changes (continuous improvement/ feedback), which lead to desirable performance of a company. Needless to say, for a change management concerning organization performance, a systematic measurement of the performance of organizat
49、ions is extremely important for stakeholders, change agents to evaluate the performance of an organization.Having reviewed the literature concerning the TQM concepts, we could find out that the role of leadership and strategic management become more and more important in the development of TQM models/concepts. Therefore, we need to understand the major contents of strategic management. Usi
