- As organizations face a constantly changing and continuously complex business environment, the role of quality must broaden to have a larger effect on organizational strategy and excellence.
- Leadership, the authors contend, must embrace anti-fragility, a unifying concept that expands quality’s role in strengthening an organization in the face of turbulence.
Today’s organizations are faced with challenges that are constantly growing in complexity and frequency. To survive, they must learn to adapt to this rapidly changing environment. It’s no secret quality can play a part in an organization’s ability to survive and thrive.
To do this, quality, too, must adapt to the changing business environment. In part two of a two-part series that began last month by capturing a conversation between Ted Marra, a strategic leadership professor and author, and Tony Bendell, an author, consultant and teacher in the quality discipline. This month, the two experts delve more deeply into how quality must change to remain relevant and valuable to organizations today.
Marra: The new version of ISO 9001, the international quality management system standard, seems to combine the Baldrige Performance Excellence Program and the European Foundation for Quality Management (EFQM) Excellence Model. Why is this change happening, and do you see this development as a step in the right direction?
Bendell: In the past, ISO 9001 was more about the basics needed in any organization. It was about meeting the minimum acceptable standards. Being primarily a compliance system, it never went far enough to help organizations reach their full potential. The excellence frameworks were better rounded because they brought customers, society and other areas of organizational focus into perspective much more clearly.
Part of the problem has been that everyone wants ISO 9001 lead auditor training. It’s the premier training on the ISO 9001 assessment or compliance system and has been in high demand by quality managers and internal staff.
This training, however, was never designed for these positions. It was designed for certification body auditors with a focus on auditing compliance to the standard. As a consequence, ISO 9001 has been viewed as an assessment. Business improvement and achieving your full potential as an organization is much more than just an assessment.
Furthermore, ISO 9001 is often relegated to middle management as simply another to-do or assigned duty. The excellence models, on the other hand, are more senior management oriented and, therefore, get more senior management attention.
Marra: Agreed. It seems that to be viable—except for small to medium-sized enterprises or organizations just starting out—ISO 9001 needed to become much more. The question was: In which direction should it go? If Baldrige and EFQM are the best frameworks for excellence, then there is no doubt ISO 9001 needed to move in that direction.
I don’t foresee a revolutionary new approach within the quality community that will transcend the excellence models anytime soon—if ever. If, you accept ISO 9001 as part of the foundation, or compliance, of an organization, then it remains relevant, but if it merely duplicates something that already exists, then its validity becomes questionable.
Marra: Topics such as agility, resilience, adaptability, creativity, innovation and learning are being used more among C-suite executives, but in many cases, they are not comfortable with these strategic concepts, nor do they know how to fully execute them. Can you identify how quality and the pursuit of excellence should relate—if at all—to these topics?
Bendell: Management is, in a sense, artificial—a human creation and, therefore, imperfect by design. Functional, task-based management, planning and control, are not the stuff of leaders but of the led. So, while middle management looks for structured deployment against well-defined management hot topics, executive management looks for inspiration and strategic focus.
Management guru Peter Drucker said, “Much of what we call management consists of making it difficult for people to work.”1 Gary Hamel, in his book What Matters Now, notes that much of what we refer to as management links back 120 years to Taylorism.2
People are promoted for all the wrong reasons—usually because of their performance as great middle managers in a functional silo, rising to the top but being relatively clueless about strategic decision making or strategic thinking in general. Is it any wonder then that many senior executives are uncomfortable with these types of strategic concepts and their potential impact or benefit to an organization?
Man-made systems are far simpler than natural systems when you analyze them. Consider a meadow—a natural system. It is complex. It regenerates. Animals come and go and feed in the meadow; sun, heat and water affect what grows and how well it grows.
Now consider a man-made system—a car. It appears complicated, yet it has a simple level of interface with the environment—primarily the surface of a road. Human organizations are somewhere between these two extremes and share characteristics of each. The processes, structures and systems are primarily man-made, but the cultural and human aspects are natural. The natural aspects are typically most anti-fragile and act as sources of organizational anti-fragility. (Amanda: I bolded this statement as it is important)
Organizations are faced with growing complexity, especially in terms of the number, types and complex nature of interfaces they have with the outside world through social media and digitalization. Still, an organization’s people must work around dysfunctional processes and systems to get the job done, and deal with inadequate or inflexible infrastructure to satisfy customers.
An organization is a dynamic entity that is constantly increasing in its complexity. The quality discipline cannot remain static in this increasingly dynamic and complex environment or a wider gap will continue to widen fueled by the rapid advancement of technology and networking.
Marra: I certainly subscribe to much of what you say Tony. While researching the top behaviors and practices of leadership that can doom an organization to underperform or fail most quickly, I conducted interviews with senior business management leaders in parts of Western Europe. These leaders indicated they intuitively believed these strategic concepts were vitally important to their organizations, but they needed support in understanding the why and how behind these concepts.
In my book, The Wisdom Chronicles: Competing to Win, I define a concept I call “renewal,” which is the seamless integration of learning, adaptation, creativity and innovation.3 Organizations that are able to master this, such as Proctor & Gamble, Nestlé, Nordstrom, Apple, Amazon and Google, are proactive and enduring.
So the question related to quality becomes: If these are the strategic concepts that can make the competitive difference and are truly the basis for building an enduring organization—what and where is quality’s contribution?
In other words, consider agility. I define agility as the capability of an organization to identify, assess and act on opportunities or potential threats faster and better than the competition. Where does quality fit into the concept of agility or renewal or anti-fragility?
Marra: Does anti-fragility represent the next evolutionary step in the quality discipline?
Bendell: The quick answer is, “It should,” but we are not there yet. We still must engage the quality profession and get it to move on, or this opportunity will be lost. Anti-fragility provides a unifying concept that encompasses all aspects of the quality discipline as we know it and have defined it. It joins up the concepts and strategic dimensions of quality and excellence, rather than seeing them only as tools.
Part of the challenge is that the quality movement has been preoccupied with one-dimensional micro thinking and tools as ends in and of themselves. Six Sigma and lean, for example, are often thought of as tools, or only slightly better, as toolkits. Focusing on tools alone doesn’t work because they are typically one-dimensional. Just focusing on making an organization lean or optimizing process efficiency through Six Sigma, for example, can make the organization more fragile. Similarly, the theory of constraints may increase system fragility by increasing system flow.
Instead, an organization’s focus should be on decreasing fragility and developing anti-fragility more broadly, rather than being obsessed with efficiency and effectiveness alone. Organizations must look at the bigger picture and link the concepts of quality together. The concept of anti-fragility does that.
Consider a hospital emergency room. It can run 24 hours a day, seven days a week at maximum capacity to gain the most efficiency and reduce operating costs per hour by spreading those costs over a longer period. In the quest for greater efficiency, however, greater stress is placed on the systems, which raises the risk of catastrophic failure—and a loss of life. So, fragility and risk increase.
These examples raise the questions: Where does process quality fit, what does it add, and how can it prevent failure?
Marra: A new generation of quality professional may be needed. Creativity labs should be employed to allow people in quality the freedom to find new ways of linking to what’s most important in helping an organization achieve competitiveness and growth.
Here is an example. Suppose your process for resolving customer complaints takes 30 days. Your boss tells you your ambitious goal is to reduce that by three days, or 10%. What do you have to do differently to make that happen? Short answer: essentially nothing. The process basically remains the same. The paperwork just sits a little less time on certain people’s desks, or some people must fill out forms a little more accurately the first time.
Now suppose your boss tells you that he or she wants the average resolution time of customer complaints cut from 30 days to 10 days. Whoa! You can’t just do things the way you have always done them and expect a different result. That’s what Albert Einstein famously called insanity. In fact, as Michael Negroponte of the Massachusetts Institute of Technology Media Lab said, “Incrementalism is innovation’s worst enemy.”4You have to completely redesign, re-engineer, rethink and reinvent the process. This is when creativity and innovation bubble up.
Marra: From reading the literature, one could easily interpret—possibly incorrectly—that resiliency = anti-fragility. Why would that be an incorrect interpretation?
Bendell: Part of the situation is that these terms are often poorly defined. In fact, if you look them up on Wikipedia, there is a wide disparity of meanings. The bottom line is that it is confusing. Who do you believe? More importantly, how do you want to define it for your organization?
Take a simple example like teamwork. Often, this is a value or belief of many organizations, yet what it means and how it is defined at Apple may be very different from what it is at Nordstrom or the Royal Bank of Scotland.
Resilience is the capability to withstand stress, or being robust, but this may not be how others see it. For example, the Thames Barrier in London is resilient, but we know that sooner or later, a wave will stress the barrier beyond its capability.
What if, instead, every time a wave hit the Thames Barrier, it got stronger and higher? Taking it a step further, suppose the Thames Barrier went out looking for waves so it could continuously fortify itself to a new level of strength? Now you are talking anti-fragility—going beyond resilience.
Technology can be a great thing—especially in IT, but while all technologies start off anti-fragile, over time they become fragile. No matter how hard IT management—the chief information officer or others—tries to create a system that does it all, it never can think of all the potential requirements.
Consequently, IT leaders end up fighting the IT system they created. It becomes relatively inflexible and is resilient to progress. The cloud offers some advantages, but vendors try to lock in their clients by defining requirements that make it costly and time consuming for the client to change.
Take this a step further with payroll systems. Suppose the client system is hosted on the cloud—which is or should be less fragile than hosting it on a local server. While that may be the case for an individual client, fragility is actually increasing globally as the cloud becomes increasingly stressed with content, changing requirements and frequent demands.
So we trade off—a reduction in local fragility for a smaller but higher impact and increase in global fragility. This needs to be managed. Unfortunately, it currently isn’t.
Marra: I see resilience as one of the critical success factors for creating an enduring organization. It is the capability of an organization to withstand a shock or major disruption and return to a normal state of stability more quickly than its competition.
Implicit in this definition are cycles of learning, audit trails that ensure institutional memory on previous disruptions and the methods used to address them. It may be that resilient organizations have developed the equivalent of SWAT teams that come together to address the new disruption. The team reviews what has been done in the past, but is not governed by it. Instead, it uses lessons learned to develop a better, faster and more innovative solution to dealing with it.
The question for the quality professional is: What are you doing to help make your organization more resilient?
Marra: If the senior leadership team of an organization wants to build a world-class organization, should anti-fragility be considered as a concept to be integrated into its thinking and organizational design?
Bendell: Yes, it should be. Far too often, leadership doesn’t do a particularly good job of exploring alternative-future scenarios. They must consider good and bad future scenarios and, even more importantly, consider and address the interests of their key stakeholders.
When problems happen these days, they’re a new type of problem. The fact is that unexpected, unpredictable events with significant negative impact, known as “black swan events,” occur and are occurring with greater frequency around the world. One question should be: When they occur, do leaders learn anything¾whether it’s how to better address the damage caused, better minimize or contain the collateral damage, or improve their responsiveness and approaches.
Organizations must develop acute alertness as never before. History and theory show, for example, that supply chains are prone to problems, which can disrupt the flow of product to the market significantly. These problems can be addressed more quickly and easily than changing the infrastructure of an organization.
Marra: Organizations must create the right business model—one that possesses a renewal capability and a world-class strategic information architecture that can sense internal and external environment changes, and one that creates and delivers value to all key stakeholders. The concept of anti-fragility certainly complements that and may possibly extend it further.
Marra: As you look ahead, where do you see the quality movement going? Is there a destination that seems to be coming into view or is it still a bit foggy?
Bendell: Quality must get to a new and higher level. New ideas and people who don’t follow the conventional rules, and attitudes stemming from the inspection mentality of the Industrial Revolution need to be redirected if the quality profession wants to maintain its potential relevancy to business.
Let’s face it: The requirements of a business today have changed and continue to change. Quality has not kept up—it remains too static in a dynamic environment. The gap between the real needs of a business today—the critical success factors—and quality as we know it presently seems to be widening.
It is time for fresh thinking—not only about what quality is, but also what it should and could be to enhance its relevance and add value, not just be relegated to a necessary evil or a ho-hum function within an organization.
Marra: I agree the quality movement must be reenergized, maybe even reinvented to make it more indispensable at a strategic level. The excellence models move it in that direction, but traditional quality professionals, including those with strong ISO 9001 backgrounds, must come on board.
If quality professionals remain compartmentalized from anything strategic, they will miss the opportunity to fully participate with the leadership team or reach their full potential to contribute to the competitiveness of an organization.
You can continue to come up with new variations of the same approaches—Six Sigma, lean, theory of constraints and more—but they all still speak to the basics of having an operational focus. The challenges to quality are:
- To be viewed as not only relevant, but as a participant in the strategic matters of an organization and a clear value add to its long-term competitiveness
- To create and deliver value to key stakeholders while also being dynamic, flexible and continuously innovative.
The human body is probably one of the greatest examples of anti-fragility because it can be analogized to an organization. The immune system of the human body is a system of many biological structures and processes that protect it against diseases, just as an organization’s systems and infrastructures should protect it in the face of disruptions.
The immune system, if functioning properly, must have a capability for the early detection of pathogens (such as disease and foreign tissue) and distinguish these things from the body’s natural healthy tissue.
The immune system works at two levels. The first is the static or innate immune system. This is where quality operates in organizations today. There is, however, a second level immune system called the adaptive immune system. This is the part of the system that learns from each encounter with pathogens and learns each time how to fight them off better and faster.
One of the major challenges for quality is how to migrate to that second level of an immune system for an organization—an adaptive system—which continuously learns and improves to become stronger and faster in fighting off the strategic challenges and problems organizations encounter with ever-increasing frequency.
To do this, a system to sense these challenges is required to ensure that an early warning system is in place. This system should be internally and externally focused.
In the end, as the business environment continues to change, so must the quality discipline to remain relevant and provide the most value possible. As we explored how to do that in this conversation, readers of this article may agree or disagree with many of the comments. That was our objective—to stimulate thinking in new directions and to explore new frontiers.
References
- Lawrence J. Peter, Peter’s Quotations: Ideas for Our Time, Quill/William Morrow, 1977, p. 124.
- Gary Hamel, What Matters Now, Jossey-Bass, 2012.
- Ted Marra, The Wisdom Chronicles: Competing to Win, Technics Publications, 2015.
- Joe Pulizzi, “113 Expert and Best Business Quotes of All Time,” Content Marketing Institute, June 29, 2008,http://contentmarketinginstitute.com/2008/06/113-expert-and.
Ted Marra is a strategic leadership professor emeritus for the Cotrugli Business School in Zagreb, Croatia. He holds a doctorate in strategic management from Amhurst University in Denver. Marra is the author of The Wisdom Chronicles: Competing to Win (Technics Publications, 2015).
Tony Bendell is managing director and principal trainer for Services Limited and the Anti-Fragility Academy in Lowdham, United Kingdom. He has a doctorate in quality and reliability management from the London School of Economics and Political Science. Bendell is the author of Building Anti-Fragile Organizations: Risk, Opportunity and Governance in a Turbulent World (Gower, 2014).
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