Do TQM principles need to change? Learning from a comparison to Google Inc.

Abstract

Total Quality Management (TQM) is recognised for emphasising customer needs and contributing to organisations' efficiency and effectiveness through process orientation and continuous improvement. Previous research has highlighted the risk that TQM might impede firms' ability to innovate and quickly adapt to changes, especially in rapidly changing environments. However, other researchers have concluded that some of the best practices of innovation management could be recognised as TQM elements. A recurring issue concerns the conceptualisation of TQM that is contributing to ambiguity, as there are various definitions. The question of whether TQM supports innovation or not is, therefore, unsettled. The purpose of this paper was to compare Organisational Characteristics for Continuous Innovation (OCCI) in rapidly changing industries with key TQM Principles in order to discuss the relationship between TQM and continuous innovation. The OCCI used for the comparison have been generated through an empirical study of Google in combination with a literature review of research on continuous innovation in fast-changing environments. A comparison with the OCCI reveals that there are many similarities with TQM principles but also some distinct differences, for example, in terms of orientation towards innovation. While TQM has become closely related to process orientation, OCCI are more related to semi-structure and ambidexterity. The conclusion is that TQM needs to change in order to also support continuous innovation. In order for TQM to contribute both to continuous improvement and continuous innovations, a partly new management paradigm is needed. However, even if TQM is changed, the brand ‘TQM’ is still associated with ‘quality’ and ‘continuous improvement’. A re-branding strategy might, therefore, be necessary.

Keywords:

• Google
• TQM
• continuous innovation
• dynamic capabilities
• management innovation
• corporate culture
• ambidextrous organisation
• open innovation

Notes

In Japan the concept TQC was used – sometimes described as ‘Company-Wide Quality Control’. However, in the USA, the concept TQC had a different and more limited connotation and hence, in the late 1980s the term TQM (Total Quality Management) was launched.

According to Ishikawa (1985, p. 19)

Dr Juran's visit (in 1954) marked a transition in Japan's quality control activities from dealing primarily with technology based in factories to an overall concern for the entire management. There is a limit to statistical quality control which has engineers as its prime movers. The Juran visit created an atmosphere in which QC was to be regarded as a tool of management, thus creating an opening for the establishment of total quality control as we know it today.

Google Inc. was selected as the company is well known for continuous innovation and is active in the rapidly changing Internet service industry.

The interviewees were given the opportunity to add new elements, although none chose to do so.

The empirical analysis of Google data resulted in one of the pre-defined organizational elements (Management and Leadership) contributing to two distinct organizational characteristics (‘Top management and Board’ and ‘Facilitating leadership’).

Dubois and Gadde (2002) provide a close resemblance to our methodological approach.

In line with their TQM background, they see culture as a result of intentional long-term activities from the top level, which should be part of a yearly strategy and deployment process according to a Hoshin-Planning methodology (‘policy deployment’).

Seen as an essential component of TQM.

Benner and Tushman (2002) conducted a longitudinal study of two industries, paint and photography and measured ‘process management’ in terms of ISO9000 certificates and ‘exploitative versus explorative’ innovation in terms of patents related to or outside of previous company knowledge.

In this case, measured as introductions of new digital cameras in the photography industry.

They comment that these higher levels of participation in innovation activities have been recognized in a number of fields, such as ‘lean manufacturing’, ‘total quality management’ and ‘learning organizations’.

Studies have been conducted on industries such as Information Services, Semi-conductors and Telecom services.

The case of Google is presented in more detail in Steiber (2012) and Steiber and Alänge (forthcoming).

By 2010, only 12 years after it started, Google had been the world's most valuable brand for four years in a row (BrandFinance Global 500, 2011). This was based on the initial innovation ‘Search’ and a following stream of new innovative products and services such as: Adwords, Gmail, Maps, Earth, YouTube, Android.

‘You never get enough time at Google – we focus 70% on big core, 20% on areas close to core and 10% on very different things’.

Similar to the principles behind ‘open innovation’ (Chesbrough, 2003).

Another possibility could have been to use a Japanese-inspired version of TQM (e.g. Shiba, Graham, & Walden, 1993) or ‘Western translations’ such as the US MBNQA or the corresponding European version by EFQM.

This definition of TQM is based on what pioneering Western companies tried to accomplish in the early 1990s. These companies’ view of the meaning of customer focus, leadership and empowerment is not necessarily identical to TQM versions that were practiced in other Western companies during the 1990s. The latter were primarily characterized by a process focus and continuous improvement and by, in addition, omitting part of the learning aspects and standardization issues that were central for Japanese role models, such as Toyota, and which were seen as essential in the pioneering firms.

However, TQM's Kano-inspired view of also ‘exceeding customers’ expectations in some areas valued by the customers’ opens up for innovations beyond what customers/users ask for.

There is, however, a similarity in terms of advocating very ambitious goals, but in TQM these goals concerned lowering the amount of defects (Six Sigma) or shortening lead time (Alänge, 1992).

As was also suggested by Dahlgaard and Park Dahlgaard (1999).

E.g. quality culture, learning organization, customer-driven organization, continuous improvement and a wide variety of so-called quality tools, such as QFD (Quality Function Deployment), Taguchi methods, SPC (Statistical Process Control), FMEA (Failure Mode and Effects Analysis), benchmarking (referring to a book by Zairi, 1999, of best practices in process innovation management).

For example ‘continuous improvement’ could in a control-oriented firm be interpreted as ‘Exploit existing skills and resources … Increase control and reliability’, while in a learning-oriented firm it could be interpreted as ‘Explore new skills and resources … Increase learning and resilience’.