Quality Management Journal Book Reviews - July 2002 - ASQ

Quality Management Journal Book Reviews - July 2002

Contents

How Organizations Work: Taking a Holistic Approach to Enterprise Health.

Alan P. Brache. 2001. New York: John Wiley & Sons. 240 pages.

Reviewed by James B. Kohnen, St. Mary’s College of California

Alan P. Brache has observed that the leaders of organizations have difficulty making lasting changes that truly resolve problems. To rectify this situation, he has developed an “enterprise model” that takes into account the variables that influence performance, which he presents in his book How Organizations Work. He presents his material using the Socratic method, which serves to engage the reader and provide a framework on which an evaluation of the organization can be made. The model is comprehensive and reflects contemporary organizational theory that describes open systems of external and internal variables that determine how its culture will deal with the issues that contribute to its health.

The model is introduced in the opening chapter and explained in the following 10 chapters. The presentation concludes in the 12th chapter with the reassembly of the parts into the holistic enterprise model. At the end of each chapter there are a few notes that cite other studies to support the author’s contentions that the information presented is sound; however, the work is based primarily on antidotal data gleaned from the author’s own observations. Sometimes the elements of the model are supported by fictional experiences or stories the author has concocted to make his point. They are interesting but would present a stronger case for acceptance of the model if they were related in some way to reality.

While the Socratic method is an effective teaching technique, repeated questioning breaks the continuity of the presentation. This is especially true of the boxes of “self-assessment questions” that seem to pop up like unwanted Web site screens when they are least expected. After several encounters, the tendency is to mentally delete them and move on, although they become increasingly frustrating.

On the positive side, the enterprise model offers several observations not usually seen in generic organizational theory presentations. The recognition of the effect of the upstream supply chain on an organization’s vendors is insightful. Price, availability, and quality do affect the ability of vendors to provide a reliable supply of goods and services at the price, time, and specification demanded by all organizations in the supply chain. Likewise, the organization’s customers are driven by their customers to provide value-added services to the goods and services that are provided to them.

The relationship between leadership, strategy, and business processes is also well defined. A clear distinction is made between these different aspects of controlling the organization in both the long and short run. Yet, the importance of synchronization of these different functions at each level of the organization is clearly illustrated.

Finally, the importance of the holistic approach is noteworthy. Issues, problems, and opportunities for management decisions do not occur in a linear stream that is independent of the organization. The daily experience of an executive or manager involves a multiplicity of events that are related to one another because of the organization, not independent of it. To this extent, the comprehensive nature of the enterprise model is worthy of consideration in today’s complex environment in which enterprises operate.

Brache has done a credible job of translating his experience into a comprehensive enterprise model of how organizations work. Beyond that, he has provided a mechanism to evaluate how capable an organization is to cope with the challenges it faces for survival in the changing environment in which it exists. The antidotal data presented in How Organizations Work provide a starting point to what Brache claims will “ensure lasting performance improvement.”

 

The Jack Welch Lexicon of Leadership: Over 250 Terms, Concepts, Strategies and Initiatives of the Legendary Leader.

Jeffrey A. Krames. 2001. New York: McGraw-Hill. 224 pages.

Reviewed by Kristina Jensen, University of Phoenix

Perhaps there is no better business “dictionary” than The Jack Welch Lexicon of Leadership by Jeffrey A. Krames. Krames has crafted another superb, yet unique business biography of one of the greatest corporate leaders of today. This book is quickly being considered the reference for managers, vice presidents, and CEOs, and for anyone who wants to learn the lingo, philosophies, and strategies of a born leader.

As one of “the most admired, copied, and studied CEOs” of the 20th century, Jack Welch has had countless books and articles written about him because of his unbridled vision that drove the GE Corporation to overwhelming success. But this book is refreshingly different. Going beyond corporate management concepts, this “Welch encyclopedia” of sorts was compiled as the ultimate leaders’ handbook. It not only documents Welch’s leadership philosophies and references his strategies, it also spotlights his innovative, paradigm-shattering concepts while providing real-life applications for leaders facing today’s challenging global environment.

The first third of the book is a Welch primer, giving readers a taste of the Jack Welch way. After a brief biography in Part 1, “The Evolution of a Leader, The Welch Years,” the legacy that is Jack Welch begins to unfold. The author offers a no-nonsense synopsis of Welch’s successful (and not so successful) initiatives, his bulletproof strategies, and his vulnerabilities. Readers are then prepared on how to use the book most effectively—as a self-guided tour into Welch’s world of leadership. There are recurring themes and models throughout, including specially designated “ssssss” (“Six Sigma”) sections signifying key concepts. Six Sigma was a quality initiative successfully implemented by Welch that helped build and maintain outstanding levels of organizational performance, success, and leadership.

This book is a collection of theories, models, and philosophies gathered into a “lessons-learned” and “leadership lore” reference guide of processes, initiatives, and strategies invented or adopted by Jack Welch. The best way to underscore this book’s value is to highlight a few outstanding concepts invented or effectively introduced by Welch. These are, after all, the same concepts that have made his organizational leadership a lasting contribution to the business world.

One of Welch’s signature concepts, which people most closely associate with GE’s leader, is “boundaryless.” Welch coined the term to define the breaking down of internal organizational boundaries, such as those between various functions, and the destruction of external boundaries, such as those that stood between GE and its customers and suppliers. Welch’s aim was to increase productivity by destroying the barriers and bureaucracy he felt were suffocating the company. In a boundaryless environment, communication flows more freely, and decisions and ideas are seamlessly shared. In the process, people enjoy a sense of accomplishment, and therefore feel more satisfied with their jobs. After the two decades Welch spent making GE “boundaryless,” GE successfully shed its century-old bad habits, rigid hierarchy, and hefty bureaucracy, giving way to the freeflow of ideas, business growth, and learning.

The concept of boundaryless is considered a significant contribution to business. In fact, “boundarylessness” is often used to describe Welch’s contribution to leadership. Welch said his boundarylessness lead to “an obsession for finding a better way—a better idea—be its source a colleague, another GE company, a company across the street or on the other side of the globe, that will share its best ideas and practices with us.”

Of all the concepts associated with Jack Welch, the quality revolution he started with the Six Sigma initiative is what he calls his “badge of honor.” Six Sigma was actually pioneered by Motorola as a system for building and maintaining productivity, success, and leadership performance in business. Yet Welch considered it an honor because, although GE learned the Six Sigma concept from Motorola, it was Welch’s idea in 1995 to fully implement and adopt the program with his own passion. Even Welch never envisioned how successful GE would become. Welch hated the idea of quality programs, seeing them as a business fad, like total quality management (TQM) which would reintroduce bureaucracy to the company. But Welch was soon convinced otherwise. He realized that Six Sigma “is not about sloganeering or bureaucracy or filling out forms... [Six Sigma is] a route to get to the control function, the hardest thing to do in a corporation.”

Six Sigma was the largest corporate program ever initiated, setting a new benchmark of excellence that would generate phenomenal new sales, earn record profits, and save the company billions year after year. The success of the Six Sigma initiative simultaneously cemented Welch and GE as true industry leaders.

Readers are treated to a roadtrip back through Welch’s strategic business moves, management strategies, and groundbreaking organizational initiatives that provide unprecedented access and insight into his remarkably successful career. Designed to impart the valuable substance without all the industry fluff, The Jack Welch Lexicon of Leadership is truly a unique reference guide for leaders in the way it defines Welch wisdom. Business leaders from every industry sector already regard this book as an insider’s guide to success. It’s no wonder then, that Jack Welch’s visionary concepts and ideas have made him the most effective CEO in history.

 

The Human Equation: Building Profits by Putting People First.

Jeffrey Pfeffer. 1998. Boston: Harvard Business School Press. 368 pages.

Reviewed by Maria Schultz, St. Mary’s College of California

The Human Equation: Building Profits by Putting People First by Jeffrey Pfeffer is a management book directed at the leadership of today’s organizations. Citing numerous studies, the author’s own experience, and individual organizations as evidence, Pfeffer points to a direct correlation between successful financial performance of a company and its management practices that treat its employees more sensibly and humanely. Pfeffer is a professor of organizational behavior at Stanford University Graduate School of Business. He has written several management books and has consulted in the United States as well as other countries.

After publishing Competitive Advantage Through People in 1994, through the course of his work, Pfeffer acquired a better understanding of causes and concerns that affect human resource issues and their effect on the economic well being of an organization. Intrigued and troubled by the trends he observed in management, as well as some reactions to his previous book, Pfeffer wanted to explore some explanations to the discrepancy between theory and research, and what companies were actually doing. He saw a trend in research pointing in one direction—evidence that there is a strong connection between how organizations treat their people and the economic results achieved. Management practices of the majority of organizations, however, moved in the opposite direction—willingness of organizations to downsize or reorganize. He needed to prove that he and others with similar views were wrong about effective management practices, or that management wisdom as practiced by many organizations and represented in the business press was inconsistent with logic and data.

Pfeffer points out that many organizational leaders do not practice common sense, do not behave strategically, and are not logical and thoughtful when implementing policies. He believes that most companies desperately seeking financial success are doing the opposite of what they should. Claiming to be searching for a committed and motivated work force, instead of putting their employees first, these companies are losing the connection between their people and the organization by implementing solutions to competitive challenges that weaken and destroy the organizational culture. At the same time, as they proclaim that “people are our most important asset,” these organizations are determined to cut labor costs and often downsize, outsource, use a contingent labor force, reduce training, and freeze hiring and salaries when more effective, already proven strategies are available. Using short-term fixes, they try to copy each other and concentrate on being in the right industry, having the latest technology, being the right size, even when evidence shows that doing what everyone else is doing will not guarantee them competitive advantage. Long-term economic success comes from possessing things that are core to the organization and are not easily copied. An organization’s culture and work force might be the only source that differentiates one organization from another. It is a source of competitive advantage that, according to the author, is often overlooked or simply ignored.

The author believes that the most successful organizations are those that recognize the value of their employees, their skills and competencies, and their efforts on behalf of the organization. As evidence, he refers to several successful companies, such as Norwest, Wal-Mart, and Southwest Airlines, that place their employees first. He also teaches a valuable lesson using Apple and Kaiser, two companies that, by copying management strategies of other firms, focused on the wrong issues when confronted with strategic challenges and thus lost competitive advantage. They tried to reduce costs by reducing the size of their labor force. Although this was not the only bad strategy that affected the outcome, the author believed that like these two organizations, many others try to solve operational issues with “quick fixes” that give short-term solutions but do not solve long-run problems. These fixes divert attention from the actual problem, and because they are easier to implement and easily measured, are often more welcome than implementing a long-term strategy that takes people into consideration and is harder to apply.

The author refers to overwhelming evidence throughout the book, validating his own belief that how an organization treats its people has an effect on its financial success. Although proven as contributing to success citing employment security, selective hiring, self-managed teams and decentralization of decision making, compensation contingent on organizational performance, extensive training, reduced status distinctions, and sharing of financial information, as being the main force behind the high-performance organization, the author points out these practices are openly ignored and not implemented.

I found this book extremely valuable. It should be on the required reading list of all managers and organizational leaders. Concentrating on long-term organizational strategies that take into effect the organization’s most valuable resource—its work force—does not only make common sense, but it makes economic business sense. The well-being of the organization as a whole should be at the forefront for every manager.

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