Room for Improvement

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Abstract

In June 2012 ESKA Graphic Board started with developing Continuous Improvement (C.I.), currently some structures and systems for C.I. have been put in place at ESKA. The goal of this Master Thesis is to provide a design for the Improvement Organization of ESKA to achieve that Continuous Improvement becomes part of ‘normal operations’. First the current state of Continuous Improvement at ESKA has been researched, deploying 3 different means of assessment; a questionnaire based on the behavioural C.I. model of Bessant, Caffyn and Gallagher (2001), by scoring ESKA using the C.I. Maturity model of Bessant et al. (2001), and by conducting interviews with factory workers and staff. The 3 types of different results were crosschecked and indicated that ESKA is situated at the second level of C.I. Maturity. This is the ‘Structured CI’ level; which means that the foundations for further C.I. development have been laid. Furthermore ESKA scored well on ‘Leading the way’ but scores low on ‘Strategic Focus’ and ‘Improvement of improvement’. To obtain the next level of maturity (level 3 – ‘Goal oriented CI’), it is determined that it is necessary for ESKA to develop the ‘Strategic Focus’ ability. A 5-step Continuous Improvement Strategy Formulation process model is presented, which is based on existing strategy formulation models from academic literature. This model is subsequently deployed to draft a first version of the C.I. Strategy for ESKA Graphic Board. The design of the C.I. Strategy has been extended with a description of the implementation, communication, involvement of employees and the reviewing of the newly developed C.I. Strategy, practical implications for ESKA have also been described.

Room for

Improvement

Adding Strategic Focus to Continuous

Improvement at ESKA Graphic Board

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Summary

In June 2012 ESKA Graphic Board started with developing Continuous Improvement (C.I.), at that moment began with providing a structure for different types of Improvement Projects. The categorization of Improvement Projects contained three different Improvement Projects, first daily improvements, second ESKA Improvement Activities and third ESKA Six Sigma projects. Furthermore employees have had training in a problem-solving method, an idea-management system was put in place, and the first ESKA

Improvement Activities were initiated. All in all, ESKA had taken and implemented the first steps towards Continuous Improvement.

Since it is ESKA’s goal to further develop Continuous Improvement at the organization, the following Research Question has been stated:

“How should the Improvement Organization at ESKA Graphic Board be designed, such that an

environment is created where improvement efforts are considered to be part of ‘normal operations’?” In this research question Continuous Improvement is defined as “an organization-wide process of focused and sustained incremental innovation.”

The subsequent step is to determine the current state of performance on Continuous Improvement at ESKA. To do this as objectively as possible, the behavioural model of Bessant et al., (2001) has been used to assess the current state. This behavioral model lists 8 abilities and 35 corresponding behaviours related to C.I., these abilities and behaviours were distilled from CIRCA; a multi-year research at over 70 C.I. companies in the United Kingdom. The behaviours have been used in a questionnaire were respondents were asked to score to what degree the behaviour describes the situation at ESKA. Furthermore the C.I. Maturity Model, another result from CIRCA, has been used to determine on which level of C.I. Maturity ESKA is situated. Finally semi-structured interviews have been held with factory employees, based on the abilities and behaviours.

The results from the different methods are all consistent; ESKA is currently situated at the 2nd level of C.I.-Maturity. The 2nd level is described as: “There is formal commitment to building a system which will develop CI across the organization.” Results from the questionnaires provide more detailed information on the performance on abilities and individual behaviours; ESKA scores well on ‘Leading the way’ and low on ‘Strategic Focus’ and ‘Improvement of Improvement’.

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Based on current strategy formulation models a C.I.-Strategy Formulation Process Model has been developed. This model has been used in cooperation with ESKA to draft the first C.I.-Strategy (see appendix VIII). The design has been extended with knowledge on implementation, communication, getting employees involved and reviewing the strategy. Finally the practical implications for ESKA and actions which needs to be undertaken are:

1. Develop C.I. Strategy 2. Plan reviewing

3. Plan implementation (and communication)

4. Execute implementation (e.g. host kick-off meeting) 5. Continuous communication

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Preface

As a Technology Management Master student, this Thesis is the final exercise towards attaining my Master Degree. For the Technology Management study it is customary that writing the Master Thesis is combined with performing a research at an organization, this Master Thesis is combined with a research of Continuous Improvement at ESKA Graphic Board. Therefore this Thesis has a double function, serving both as a Master Thesis for the University of Groningen, but also as a company research at ESKA Graphic Board.

The process of writing this thesis has not always been a smooth ride, nor did it always progress as planned, for me however this only contributes to the value of the final outcome; acquiring the MSc degree. The writing of this Thesis at ESKA Graphic Board enabled me to further research a topic which is of great interest to me; Continuous Improvement. I would like to thank ESKA Graphic Board and its employees for providing me with the opportunity to do so. Furthermore I would like to thank all

employees of ESKA, especially those who contributed to this research and provided me with much needed information; special thanks go out to Jan-Henk Timmermans, who has been my supervisor during this project.

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Figures

Figure 1: The Conceptual Model ... 15

Figure 2: The four bubbles model, source: de Jager et al., (2004) ... 16

Figure 3: Research Method Model ... 20

Figure 4: The Dynamic Process Model, source: Kaye, Anderson (1999) ... 26

Figure 5 Standardization and Improvement, source: Imai (1967) ... 29

Figure 6: Basic task design vs. Improvement Task, source: Berger (1997) ... 30

Figure 7: The Framework, based on: Bessant et al. (2001) ... 37

Figure 8: Improvement project categorization model, source: ESKA Graphic Board ... 39

Figure 9: Median scores of the 8 abilities (scores on a scale of 1-5) ... 44

Figure 10: Deliberate, Emergent and Realized Strategy, source: Carpenter, Bauer & Erdogan (2011) ... 55

Figure 11: Closed-loop management system, source: Kaplan and Norton (2008) ... 59

Figure 12: Manufacturing Strategy Formulation Process model, source: Platts et al. (1997) ... 60

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Tables

Table 1: different types of improvement efforts at ESKA, source: Company presentation; “ESKA

verbeterorganisatie” ... 9

Table 2: The eight C.I.-abilities, source: Bessant et al. (2001) ... 25

Table 3: The C.I. Maturity Model, source: Bessant et al. (2001) ... 27

Table 4: Highest scoring C.I. tools, source: Terziovski and Sohal (2000) ... 29

Table 5: Cultural dimensions and TQM values, source: Detert et al. (2001): ... 32

Table 6: Median scores of the 8 abilities, ranked from highest scoring down (scores on a scale of 1-5) .... 45

Table 7: Highest scoring behaviours (scores on a scale of 1-5) ... 45

Table 8: Lowest scoring behaviours (scores on a scale of 1-5) ... 46

Table 9: Median scores of behaviours corresponding to C.I. Maturity level 2 (scores on a scale of 1-5) .... 47

Table 10: C.I. Maturity levels and corresponding behaviours ... 52

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1. Introduction

1.1. Introduction to ESKA Graphic Board

ESKA graphic board has been founded in the year 1994; it was the result of a merger between ‘Kappa Karton’ and ‘Beukema & Co’. Although the current organization is relatively young, the production facilities of ESKA have been producing cardboard for more than 100 years. In 1998 the name was changed to Kappa Graphic Board, because ESKA became a part of Smurfit Kappa. In 2006 with the help of an external investor, the organization separated itself from Smurfit Kappa, and ESKA Graphic Board was founded.

Nowadays ESKA graphic board is supplier and producer of high quality graphic board for hardcover books, binders, albums, files, games, puzzles, displays and luxury packaging. ESKA graphic board has a leading position in the worldwide market for this type of graphic board. ESKA annually produces more than 250.000 tons of graphic board. According to the annual report of the Royal Dutch Association of Paper and Cardboard producers of 2011, the total production of all Dutch paper and cardboard producers added up to 2.748.000 tons. The total solid board production of the industry was 643.000 tons, of which

approximately 40% was produced by ESKA Graphic Board.

ESKA’s products are produced on two sites with in total three advanced carton machines and two paper machines, the finished product of ESKA is fully recycled from waste paper. Besides the two production facilities in the North of the Netherlands, ESKA Graphic Board also has four service centers (ESC), in Spain, Singapore, Italy and the USA. Worldwide ESKA Graphic Board employs 450 people. ESKA Graphic Board has an annual revenue of approximately €150.000.000, the revenue of all paper and cardboard producers in the Netherlands in 2011 added up to €1.746.000.000.

1.2. Introduction to the problem

ESKA Graphic Board operates in a stable environment, i.e. the environmental dynamism is low.

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1.3. Structure

The structure of the Master thesis will be that in the first chapter an introduction to both the organization and the problem will be provided, the second chapter will describe the current problem and situation at ESKA Graphic Board briefly; the third chapter will describe the research methodology. The fourth chapter will describe the literature on the research subjects and the fifth chapter will describe the more in-depth analysis of the current C.I.-state. In the sixth chapter the design of the Improvement Organization will be described. The seventh chapter will sum up the conclusions and chapter eight will describe the

recommendations for ESKA Graphic Board. Further discussion on the research subject can be found in chapter nine. Finally in the tenth chapter the used references for this research can be found.

An important mark before reading this research concerns the use of numbers that corresponds with the behaviours. To safeguard the readability of this Master Thesis the choice has been made not to fully describe every behaviour. Of course behaviours that are important have been fully described, however sometimes a behaviour is only indicated by a number. The full description of the behaviour corresponding to that number can be found in Appendix I, where all behaviours are fully described with their

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2. Problem reconnaissance

In the second paragraph of the previous chapter the problem faced by ESKA Graphic Board has been briefly described. In this chapter a more elaborate description of the problem will be provided.

2.1. Current state

In the summer of 2012 ESKA has expressed the aspiration to further develop their Improvement Organization. The start for this endeavor was given by a presentation1, by the CEO, stating the current situation concerning improvement efforts and future plans with regards to the Improvement

Organization. In this presentation a characterization of the current state was provided, this characterization consisted of the following points:

A lot of informal consultation, which is not documented

Focus mainly on technology and not on process/production or quality No link between projects and management team (MT) goals

No time available for projects/improvements due to nature of operations There is no connection between the different consultations regarding content There is a large gap between daily activities and activities of two weeks Limited transfer of information between shifts

Besides these points that describe the current state of the Improvement Organization at ESKA Graphic Board, the presentation also provided a categorization of the different types of improvement activities at ESKA. Currently the improvement activities are categorized into three types. An overview of these improvement activities and properties of these improvement types can be found in table 1.

2.1.1. Preliminary interviews

As part of the problem reconnaissance some preliminary interviews with information gatekeepers have already been held. The general impression of these preliminary interviews seemed to be that there is a lack of a structured approach to deal with improvement efforts, which could lead to results of

improvement efforts not being optimal.

A specific example from these interviews is a statement made by an interviewee, who stated that currently projects are not selected based on a specific set of criteria. This can lead to the execution of so called ‘nice-to-have’ projects, rather than executing projects that are (potentially) more beneficial to ESKA. Another example, which appeared from the preliminary interviews, is the difficulty ESKA currently faces with scheduling time for employees to do improvement activities. An explanation for this problem might be found in the nature of the work of (most) employees; which is in shifts. Whatever the cause, the mentioned scheduling problem might be an important problem which may need addressing in the final design of this thesis.

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Looking at the information available at the start of the research, it can be stated that there is a real problem. Both the preliminary interviews and the information from the company presentation provide a first view on the problem, the underlying problems and related aspects. Later on in this research the problem will be subjected to a more in-depth analysis.

Table 1: different types of improvement efforts at ESKA, source: Company presentation; “ESKA

verbeterorganisatie”

Daily improvements ESKA Improvement activities

ESKA 6 Sigma projects Level of

improvements

Daily, mainly technical Short cycled Breakthrough

Method Direct improvements CoThink-RATIO event DMAIC phases & 6-sigma When to apply? Applied daily in process (potentially)

reoccurring problem

Complex problem with great impact

Frequency Daily 2 x a week 4 hour 3 x a week 6 hour

Timespan 1-3 days 2-4 weeks 3 to 12 months

People involved Operators, PA, TD, PC (Multidisciplinary) team & line management

Multidisciplinary team and MT

Type of organization

Daily operation Activity / Event Project Knowledge level Technical Employees with

RATIO-event training

Core team of internal project leaders, six sigma Supervision Line management or

operations management

Line management & improvement coach

Improvement coach / MT

Triggered by Daily problems & KPI’s (24h)

Eliminating waste and disruptions

Breakthrough driven (profit >50K)

Number 5 - 10 per day 2 - 4 at a time 2 at a time

Initiated by Operators Line management MT

Selection method

shift supervisor/ group leader

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2.2. Future state

In order to improve the current situation a draft for the future Improvement Organization at ESKA was presented in the same presentation (of June 2012) that provided the issues regarding the current state. According to this presentation the goal for ESKA’s future Improvement Organization is to: “Facilitate improvement activities and projects, by selecting the right problems and the appropriate solution

method.” The foundation for the future Improvement Organization at ESKA is a typology of three types of different improvement efforts.

The differentiation between improvement efforts (see table 1) is the first step towards a general approach to deal with improvement efforts in a structured way. However, according to the Operations Manager at ESKA what is most necessary is an ‘umbrella’ approach to manage the three different types of improvement efforts.

As one of the interviewees stated2: “We have to get used to working together in teams on improvements”. Although at first glance this seems a simple statement, the statement illustrates the essence of the problem. Currently it is not ‘normal’ for employees to team up and work on improvement activities, whereas the future state must be a situation where employees see improvement project and team work as part of their daily and ‘normal’ work tasks.

2.3. Use of Tools

In past times ESKA has attempted to enhance the results of improvement activities by training staff in problem solving techniques with the help of a problem solving method “CoThink RATIO events.” For larger projects the Six Sigma methodology is applied, supported by two employees with Black Belt qualifications. For the small daily improvements the Deming or PDCA-circle is applied. Employees have been trained in tools and methods to perform the different types of improvement efforts. However it is unclear to what degree and if so, how the tools and methods are used to guide the improvement efforts. This might also contribute to the fact that results of improvement efforts are not optimal.

The future state has to be a state where all the different types of improvement efforts are managed in a manner that facilitates a successful outcome. The final design should provide means to ensure and facilitate the application and effective use of available methods, tools and knowledge to guide the improvement efforts. All activities regarding the design of the Improvement Organization should in the end lead to a situation where improvement activities are part of ‘normal’ work tasks; a culture of improvement.

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3. Methodology

In the methodology chapter the methods utilized when researching and writing this Master thesis will be discussed. In this chapter not only the research method is discussed, but for instance also methods to ensure reliability and validity. In addition to the methodical aspect of the thesis, this chapter will start by defining the problem statement, research objective and research question with coherent sub questions.

3.1. Defining the problem

To prevent indistinctness with regards to the subject and goals of this research, this paragraph will be dedicated to formulating essential elements of this thesis. The paragraph will start with the problem statement, secondly the research objectives will be formulated and finally the research question with associated sub-questions will be formulated.

3.1.1. The problem statement

In the previous chapter a first reconnaissance of the problematic situation at ESKA Graphic Board is provided. Derived from this initial reconnaissance and the mentioned preliminary interviews with information gatekeepers, the problem statement is formulated:

“At ESKA Graphic Board, improvement efforts are lacking a selection procedure, and are insufficiently visible, monitored, and managed. The Improvement Organization and improvement culture have not been sufficiently developed, leading to ‘poor’ results of improvement efforts.”

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3.1.2. Research objective

In addition to the problem statement the objective of the research is formulated prior to the start of the actual research. It is important to keep in mind that this research objective is not final. Depending on the outcome of the analysis phase, the research objective fitting to those specific parts of the research might slightly differ from this initial research objective. Initially the research objective is to:

“To design a durable Improvement Organization, within ESKA Graphic Board, that enables a clear and consistent way of dealing with improvement efforts, finally leading to an environment where improvement efforts are considered to be part of ‘normal operations’. “

3.1.3. Main research question

Through a process of exploration and with the use of the problem statement and the research objective as input a Conceptual Model (see paragraph 3.2) and the research question and sub-questions were drafted. The process of exploration consisted of reviewing of published sources, company sources and interviewing information gatekeepers, in accordance with Blumberg, Cooper and Schindler (2005). The outcome, the main research question and associated sub-questions are:

“How should the Improvement Organization at ESKA Graphic Board be designed, such that an environment is created where improvement efforts are considered to be part of ‘normal operations’?” Sub-questions:

I. How to evaluate the current performance on Continuous Improvement of ESKA? II. How does ESKA Graphic Board currently perform on Continuous Improvement? III. On which parts of Continuous Improvement does ESKA need to improve? IV. How should the selected problem area(s) be improved?

V. How should Continuous Improvement be safeguarded at ESKA Graphic Board?

3.1.4. Research Constraints

The research question is bounded by some constraints, the constraints stated in advance of the research mentioned below. However, during the course of the research some factors that are initially placed in the conceptual model might be better addressed by including the factor in the list of constraints. An example of this phenomenon is for instance the factor ‘strategy’; this is placed in the conceptual model since it is likely to be related to the research subject. However, as can be seen in this paragraph, the choice has been made to treat the factor as a constraint. The list of constraints:

I. Durable

As explicitly stated in the research objective the solution must be durable. This means that the solution must enable Continuous Improvement instead of intermittent improvement efforts. II. Fitting to corporate-level strategy

Although strategy is one of the aspects in the conceptual model, the choice has been made to not include the aspect in the research. Because of the importance of strategy, the ‘fit to strategy’

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III. Supported by employees

Since no change can occur without willing and committed followers (Bennis,2000) it is important that the solution provided by this research is a solution that is supported by employees.

IV. Pragmatic solution

The goal is to provide a solution that is not bureaucratic but enables and improves the improvement efforts in a pragmatic manner.

V. Organization wide

Finally the solution must be applicable organization wide and not be limited to either of the two production locations or be limited to other specific parts of the organization.

3.1.5. Definitions

This sub paragraph will describe definitions of various terms used in this thesis.

Improvement Activities The aggregate of all types of improvement projects/activities, at ESKA these are categorized into three types of improvements: ‘daily improvements’, ‘ESKA Improvement Activities’ and ‘Six Sigma projects’. For an elaboration on the three categories see table 1.

MTP Machine Time Performance is the manufacturing KPI used by ESKA, and is similar to the Overall Equipment Effectiveness (OEE). MTP is represented as a percentage of time during which actual production takes place. This percentage is obtained by dividing the ‘production uptime hours’ by the ‘available

production time’. The ‘production uptime hours’ are obtained by subtracting time lost on: production problems, grade change, web paper break, inline laminator break, breakdowns and scheduled downtime from the ‘available production time’.

KM8 ESKA’s largest graphic board producing machine, other (smaller) graphic board producing machines are the KM1 and KM2. Machines which produce paper which is glued to the upper and lower side of the graphic board are PM7 and PM8. PM7 and KM8 are located at Hoogezand, KM1, KM2 and PM8 at Sappemeer.

KM8+10% A large improvement project aimed at increasing the MTP of the KM8 from 80% to 90%

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Efficiency Describes the ratio between the use of input to achieve the desired output, e.g. improving production efficiency describes how to achieve the same (or better) production output with less input (energy, raw material, man-hours).

Effectiveness Describes to what extend the means is able to provide the desired outcome, e.g. eating soup with a spoon is much more effective than eating soup with a fork.

Ability The term ‘Ability’ comes from the behavioural C.I. model of Bessant et al. (2001). In this model an ability is a group of behaviours all related to a specific subject (like ‘Strategic Focus’). All abilities in this Thesis are refered to by number, for a full list of the abilities and corresponding numbers see table 2. Behaviour The term ‘Behaviour’ also comes from the behavioural C.I. model of Bessant et

al. (2001). In this model a behaviour is an action related to C.I. performed by employees of the organization e.g. “people use appropriate tools and techniques to support CI.” Like abilities, behaviours are also refered to by numbers. The example given has the number 2.1, the first number (2) indicates that the behaviour is a subsidiary of the second ability (see table 2), the second number (1) indicates that it is the first behaviour of the corresponding ability. A full list of behaviours with corresponding numbers can be found in Appendix I. Improvement Organization This is a term that can be found in for instance the goal this research.

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3.2. Conceptual Model

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Kaye and Anderson (1999) identified 5 important and common themes related to Continuous Improvement, after further analysis 10 key criteria were identified. These themes and key criteria are derived from literature and complemented with supporting elements of best practice (based on surveys conducted at 18 firms). From the 5 themes the following 4 are represented (not necessarily literally) in the conceptual model, these are:

Leadership Strategic focus

Organizational culture & focus on employees Process, standardization and measurement

Of the 10 key criteria of Kaye and Anderson (1999), 6 are represented in the conceptual model, these 6 key criteria are:

Senior management commitment

Leadership and active commitment to the program Integrating activities into strategic goals

Establishing a culture for Continuous Improvement Focusing on the people

Establishing measurement and feedback systems

In addition to Kaye and Anderson (1999), B. de Jager, Welgemoed, Bessant, and Francis (2004) present 4 elements of Continuous Improvement. Various factors in the conceptual model are strongly related to these elements. These elements are represented in the so called ‘four bubbles’ model (see figure 2).

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Contrary to Kaye and Anderson (1999) and De Jager et al. (2004), Rantanen (2001) focuses not on the positive influences, but on obstacles to productivity improvement. Although the subject is approached from another angle, this approach also brings to light elements that are influencing and related to the subject of improvement. The obstacles were obtained by subjecting Finnish small industrial firms in two regions to a questionnaire and having them score several obstacles on a scale of 1-5, with 1 being a not meaningful obstacle and 5 being a very meaningful obstacle.

The three obstacles (with their corresponding CM-element) that scored highest are: Lack of time to improve productivity – Time allocation

General lack of resources in the firm – Time allocation/Finance/HRM

Workers’ shortcomings with knowledge and education on productivity - HRM All these highest scoring obstacles are represented by factors in the conceptual model.

Although the literature above does not provide infallible evidence for the Conceptual Model it does show that many of the factors in the model are also described as important factors in academic literature. The relevance of factors is also strengthened by the fact that some factors are mentioned in various

researches and by multiple researchers. Furthermore, support for the model is not solely provided by research identifying positively related factors, but also by research aimed at identifying obstacles to (productivity) improvement.

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3.3. Validity and reliability of the research

In order to ensure the quality of this Master thesis both the validity and the reliability of the research must be safeguarded. This paragraph will describe both these aspects and also elaborate on objectivity.

3.3.1. Validity

Validity can be divided in internal and external validity. Internal validity concerns to what extent the conclusions of a study are warranted, which is achieved by minimizing bias. In this study bias is minimized by using multiple methods of data collection (interviews, observations, reviewing company documents) as suggested by Bromley (1986) and Yin (1994). External validity concerns the issue of generalization of the study, or to what extent can the results of this study be applied to other (similar) cases. Since this study is a case study, the main goal of the study is not generalization, but rather the opposite; particularization. According to Stake (1995) “particularization is taking a particular case and come to know it well, not primarily as to how it is different from others, but what it is, what it does. (…) The first emphasis is on understanding the case itself.”

3.3.2. Reliability

In addition to the validity, the reliability of the study must also be safeguarded. This means that when the same subject is researched using the same methods, the same results should emerge. However, according to Golafshani (2003), the difference in purposes of evaluating the quality of studies in quantitative and quantitative research is one of the reasons that the concept of reliability is irrelevant in qualitative research. On the contrary Lincoln and Guba (1985) assert that: "Since there can be no validity without reliability, a demonstration of the former is sufficient to establish the latter". Following this line of reasoning the applied method of triangulation (using multiple methods) to ensure the research’s validity will also ensure the reliability of the research. This is supported by Golafshani (2003), who states that “Triangulation is typically a strategy (test) for improving the validity and reliability of research”.

3.3.3. Objectivity

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3.4. Data gathering

Not only should the reliability and validity of the research be safeguarded, the reliability and validity of the sources of information should be safeguarded as well. In this research two different types of data sources will provide the majority of data needed for the research. However this does not mean that other sources of data and methods of data gathering will not be applied. This paragraph will elaborate on the two most used sources of data, gathering methods and ways to safeguard reliability and validity.

3.4.1. Scientific literature

Scientific literature can provide necessary knowledge and contains theoretical insights in the research subject and other related subjects. The knowledge and theoretical insights derived from scientific literature will be the foundation of the theoretical framework of this research. In order to ensure reliability and validity of scientific literature, the literature used will mostly be articles published in scientific journals, which therefore have been subjected to peer review safeguarding the reliability and validity. Furthermore monographs, editorial volumes and other sources of scientific literature (such as conference papers) might be used as well.

3.4.2. Company Information

Since this research is specific for the organization of ESKA Graphic Board, information from the organization is an important part of the data. The types of documents might differ greatly among each other, ranging from presentations for the ESKA board to documents containing information on the key performance indicators of the last period. Gathering company information at ESKA Graphic Board for the most part can be divided into three categories; questionnaires, company documents and through interviews. Since the description of the questionnaires requires information from the literature review, this will be discussed in sub paragraph 5.1.1. In order to ensure the reliability and validity of company documents, documents used by and intended for the management team are used. Numerical production data is gathered from the firms ERP-system called “Corvu”. Furthermore the company documents are validated by means of triangulation. The reliability of company documents is warranted by comparing the views and statements of these documents with the views and statements in scientific literature on Continuous Improvement. By doing this an eventual bias of ESKA Graphic Board or its employees (the authors of the company documents) will be brought to light.

Finally the interviews will also be used to gather organizational information. According to Verschuren and Doorewaard (2010) people, and thus for this research employees, are an important source of information for two important reasons;

People can provide a very wide diversity of information The information can be gathered in a relatively quick way

Company information from ESKA Graphic Board is important (as stated in the ‘company documents’ subparagraph), however a large part of this data is not documented, but has a more tacit form. To gather this information, employees of ESKA Graphic Board who hold this tacit knowledge (information

gatekeepers) will be interviewed. The interviews held with employees will be of the semi-structured or conversational type interviews. Using this form of interviewing, there is some structure, provided by a pre-determined list of questions, but the interview also has the flexibility to adjust to important subjects which may not be in the pre-determined list of questions. Probes might be used to obtain a more explicit or extensive response (Atkinson, 1968). An important issue is the prevention of bias when doing

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organization instead of just one employee. Ensuring a heterogeneous group of interviewees can also assist in preventing bias. Finally the triangulation of data gathering methods helps in ensuring the reliability and validity of the information.

3.5. Research method

This paragraph will elaborate further on the chosen method of research. The chosen method for this research is the action research method. According to Rapoport (1970) Action Research aims to contribute both to the practical concerns of people in an immediate problematic situation and to the goals of social science by joint collaboration within a mutually acceptable ethical framework. This research method fits this Master thesis research since this research is twofold and thus in accordance with the definition of Rapoport (1970). This research entails a practical part were employees (at ESKA) face an immediate problematic situation (lacking Improvement Organization). On the other hand this research also follows the scientific method en rules aiming to deliver a Master thesis. To ensure a proper outcome for both parts of this research the action research method has been chosen. Furthermore Cardno and Piggot-Irvine (1996) state that: “action research processes encourages (…) to make use of a systematic, problem-based approach for improvement”. Which fits very well to this research since the focus of this research can be described as ‘how to improve?’ The action research model (Cardno, Piggot-Irvine, 1996) has been used as an outline to determine the steps which need to be undertaken. In figure 3 an adapted version of the action research model is represented showing the 3 stages and different steps for this research. The circles described in the following subparagraphs all refer to the research model (see figure 3).

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3.5.1. Problem reconnaissance circle

The first of the three circles of the research model focuses on the problem reconnaissance. In the

problem reconnaissance phase of the circle a preliminary problem analysis of the problem is carried out. A preliminary literature study is also performed to strengthen knowledge concerning the research subject and related subjects. The result of this first analysis of the problem can be found in chapter 2. The following step is to plan further action by drafting the research methodology, concerning important research topics such as research goal, research question, sub questions, etc. The result of this planning action can be found in chapter 3. Finally the input from the previous steps will be used to generate the Conceptual Model (CM), which depicts the perceived factors related to Continuous Improvement and their relationships. Finally, evaluation of the steps of this circle is used as input for the next research circle. However, a full and complete evaluation will only be possible at the end of the research.

3.5.2. Research circle

The second circle of the research model is the actual research circle. In this circle the focus lies on the actual research. An important phase in this circle is the analysis of the literature. In this phase of the second circle knowledge on the research subject will be collected from scientific literature. Enriched with the knowledge of the literature review a deeper analysis of the current state at ESKA Graphic Board will be performed as the next step. The results of the company research and the literature study will then be combined in the third step; the result step. This is an important phase in the second circle since these results will ultimately be an important part of the input for the new design of the Improvement Organization. Finally the performed steps and actions undertaken will be evaluated. It might stem from this evaluation that knowledge on certain factors appearing in the results is insufficient, which means that additional research of scientific literature might be needed to provide sufficient knowledge. To enable this, an ‘iteration step’ has been added to the second circle (dashed line, fig. 3).

3.5.3. Design circle

The final circle of the research model is the design circle. After the results of the research are studied, the design phase can start. The steps in the design circle are based on the steps taken in the design method of Pahl and Beitz (1984), which in turn is based on the rational model. The model of the design method of Pahl and Beitz (1984) entails 5 different steps. For the purpose of this research the method has been ‘downsized’, only the first three steps of the design circle are based on the design method.

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opposite, to achieve sustainable success it is of great importance that the design is constantly monitored, periodically evaluated and if necessary adjusted.

3.6. Scope

The subject of this research will be the entire organization ESKA Graphic Board, however ESKA Graphic Board production takes place on two locations in the North of Groningen. Because Hoogezand is the location where most of the production takes place and because the journey towards Continuous Improvement is initiated at this location, this thesis will focus on Continuous Improvement at this plant. The Continuous Improvement process of the other plant at Sappemeer will not be part of this research. However, there is no reason to assume that lessons learned at Hoogezand could not be used and implemented at Sappemeer, since both locations are part of the same organization.

Besides the two production locations ESKA also has Service Centers for the major European, North American and Asian markets, these service centers are not within the scope of this thesis.

When looking at the conceptual model, there are a lot of factors related to the design of the Improvement Organization at ESKA Graphic Board. It is not feasible to address all these individual factors in this Master thesis. Therefore a selection has to be made on which factors have the greatest desired effect on the design of the Improvement Organization. The selection of these factors will take place after further in-depth company and literature research. Besides the elimination of a number of factors, it can also be possible that in the course of this research additional factors appear that will become part of this research, or that some factors during the research fall out of scope.

The implementation of the design, which this research aims to provide, will also lie beyond the scope of this research. This research will provide the design and provide a mechanism for safeguarding the design. Since implementation is not a part of the research, the evaluation thereof can neither be part of this research. Although the discussion chapter might contain elements of a preliminary evaluation of parts of the research. This part of the scope is also visualized in the research model (figure 3), the steps that lie beyond the scope of this research are colored red.

An important acknowledgement is that elements that for whatever reason are not included in this research are not to be ignored. On the contrary, it might occur that some vital elements to the success of the Improvement Organization are not addressed in this research. The responsibility to address these elements than lies with ESKA Graphic Board.

3.7. Stakeholders

In this paragraph the stakeholders related to this research are listed. The stakeholders are: Rijksuniversiteit Groningen

Manager Technical Operations Production Employees

Black Belts (employees of ESKA) Production Manager

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4. Literature review

This chapter will describe the topic of improvement from the perspective of the academic literature. The academic literature, and therefore this chapter, will provide the foundation for the future design and recommendations.

When looking at the first part of the main research question: “How should the Improvement Organization be designed?” The most prominent word in this sentence is ‘improvement’. In academic literature improvement is a widely researched topic. A number of improvement methodologies are associated with the word ‘improvement’; some well-known methodologies are Lean Manufacturing, Six Sigma, Lean Six Sigma and quality related methodologies such as Total Quality Management (TQM).

All these improvement methodologies are aimed at a specific goal; Lean Manufacturing is aimed at eliminating waste in every area of production (Womack and Jones, 1996), Six Sigma is aimed at reducing customer defined defect rates (Linderman, Scroeder, Zaheer and Choo, 2003) and Lean Six Sigma, being a hybrid methodology of Lean Manufacturing and Six Sigma, both aims the elimination of waste and the reduction of defect rates. These methodologies do not directly fit to the objective of ESKA Graphic Board regarding improvement. What is needed is a more general and broader methodology which does not have such a specific aim, but focusses more on overall improvement. Following the definition of Deming (Juergensen, 2000) Continuous Improvement might be that methodology. Deming defines Continuous Improvement as “Improvement initiatives that increase successes and reduce failures.” The following paragraph will elaborate further on the subject of Continuous Improvement in order to determine the appropriability of this improvement approach for this research.

4.1. Continuous Improvement

Looking at the situation ESKA Graphic Board currently faces, the Continuous Improvement methodology seems appropriate because C.I. does not have a specific aim, but rather focuses on overall improvement. However, the choice for an appropriate philosophy or methodology should not be based on hunches, but rather on proper and well-founded considerations. Therefore this paragraph will elaborate more on the Continuous Improvement philosophy, to determine its appropriateness for this research.

4.1.1. History of Continuous Improvement

As early as the 1800s the management of several companies started to encourage improvements carried out by employees and rewards were handed out to employees making a positive contribution to

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4.1.2. Defining Continuous Improvement

Continuous Improvement is a philosophy described by Deming as entailing “improvement initiatives that increase successes and reduce failures” (Juergenson, 2000). Although Continuous Improvement is

frequently linked to quality improvement, e.g. by Kossof (1993), for the purpose of this research a broader definition will be used. An example of such a broad definition is the definition of Bhuiyan and Baghel (2005), who define Continuous Improvement as: “a culture of sustained improvement targeting the elimination of waste in all systems and processes of an organization.” Bessant and Francis (1999) also define Continuous Improvement in a broader sense, they define C.I. as: “an organization-wide process of focused and sustained incremental innovation.” In this definition innovation is not necessarily limited to new product (or service development). Innovation can take many forms e.g. increasing profitability through reducing internal costs (Bessant and Caffyn, 1997). Continuous Improvement involves everyone working together to make improvements without necessarily requiring large capital investments.

Improvement is achieved through the use of a number of tools and techniques dedicated to searching for sources of problems, waste, and variation, and finding ways to minimize them (Bhuiyan and Baghel, 2005).

4.1.3. Kaizen

The concept of Continuous Improvement is closely related to the Japanese improvement philosophy called Kaizen, or as Berger (1997) states; “The Japanese experience has served as one essential guideline for definitions and conceptualizations of what has become known as “Continuous Improvement” in Western writing.” Since Continuous Improvement is so closely related to Kaizen, both Kaizen as well as Continuous Improvement literature will be used. Imai (1986) does not specifically describe the relation between Continuous Improvement and Kaizen; however he does describe Kaizen as the umbrella covering improvement methodologies and methods such as Just-In-Time, Kanban, Total Productive Maintenance, etc. Methods such as kanban and Just-In-Time are examples of methods that are also an important part of Lean Manufacturing.

In his book on Kaizen Imai (1986) sums up the main features of Kaizen. According to Imai (1986) Kaizen is a long-term and long lasting but undramatic approach that uses small steps, in a continuous and

incremental timeframe to achieve gradual and constant change. Every employee in the organization is involved and the approach is a collective systems approach supported by group efforts. Kaizen focusses on maintenance and improvement and is sparked by conventional knowhow and state of art. Kaizen requires little investment but great effort to maintain and is oriented at people/employees rather than technology. Finally Kaizen is best suitable in slow growth economies and should be evaluated based on process and efforts rather than results.

This summarization of Kaizen shows that Kaizen shares a lot of characteristics with Continuous Improvement, which are mentioned in the subparagraph on definitions of Continuous Improvement. Furthermore the described interconnectedness of the different improvement philosophies,

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4.1.4. Enablers of Continuous Improvement

Even though the origin of the concept of Continuous Improvement is not academic, Continuous

Improvement has been studied from many perspectives (Bhuiyan & Baghel, 2005). A reoccurring angle for studying Continuous Improvement is by searching for factors that enable and facilitate Continuous Improvement. For instance the search for abilities and behaviours related to Continuous Improvement (Bessant et al., 2001; Caffyn, 1999), the search for essential criteria and related best practices (Kaye & Anderson, 1999) and the description of four elements of Continuous Improvement (De Jager et al. 2004). All these researches aim to identify enabling and facilitating factors for Continuous Improvement and consequently might be of interest to this research, since they may be able to provide a basis on which the desired Continuous Improvement approach can be build.

Both the articles of Bessant et al. (2001) and Caffyn (1999) describe abilities related to Continuous Improvement and behaviours related to these abilities. Both these articles base the enumeration of abilities and behaviours on CIRCA (Continuous Improvement Research for Competitive Advantage)

(Bessant and Caffyn, 1997). CIRCA is a research conducted at over 70 firms aimed at researching particular C.I. problem issues and share experience and development of the field of Continuous Improvement. In the article of Caffyn (1999) the Continuous Improvement capability model is deployed to develop a self-assessment tool regarding Continuous Improvement for organizations. In the article of Bessant et al. (2001) the capability model is deployed to build and sustain Continuous Improvement as an organizational capability. However since the models both have the same origin and the model in the latter article is more comprehensive, from now on the model as deployed in the research by Bessant et al. (2001) will be used. The article describes eight key routines or abilities, as depicted in the following table

# Ability Description

1 Understanding CI the ability to articulate the basic values of CI 2 Getting the C.I. habit the ability to generate sustained involvement in CI

3 Focusing CI the ability to link C.I. activities to the strategic goals of the company

4 Leading the way the ability to lead, direct and support the creation and sustaining of C.I. behaviours

5 Aligning CI the ability to create consistency organizational context (structures, procedures, etc.)

6 Shared problem-solving the ability to move C.I. activity across organizational boundaries

7 Improvement of Improvement the ability to strategically manage the development of CI

8 The learning organization generating the ability to enable learning to take place and be captured at all levels

Table 2: The eight C.I.-abilities, source: Bessant et al. (2001)

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classifying the abilities can help organizations to comprehend were they are positioned with regards to Continuous Improvement and in which areas they still have to develop further.

Instead of providing a set of abilities and behaviours, Kaye and Anderson (1999) present a list of ten key criteria for achieving and sustaining continuous improvement. The ten criteria are based on a literature survey and work by Bessant and Caffyn (1997), on which the Continuous Improvement capability model is based as well, but also on work by Huda (1992), Imai (1986) and others. Not surprisingly the list of Kaye and Anderson (1999) shows a lot of similarities with the earlier mentioned lists of abilities and behaviors (Bessant et al., 2001). The article does not only list ten criteria, the authors use the ten criteria to draft a dynamic process model for Continuous Improvement. A survey conducted at 18 organizations was

deployed to test the proposed dynamic process model, but the survey also provided the ten best practices for each key criterion listed. The dynamic process model (see figure 4) depicts the linkages and

interrelationships between the different criteria of which some function as drivers and others as enablers. The model shows that the role of management, stakeholder focus measurement and feedback and learning from results are important drivers. Whereas culture for CI, employee focus, integration of C.I. and focus on critical processes and standardization are the enablers for Continuous Improvement. Presented in the article by De Jager et al. (2004) are four elements of Continuous Improvement, these elements are represented in the so-called ‘Four bubbles model’ (see figure 2). The four bubbles model originated in a South-African mining company; Kumba, the organization tested the model at one of its smaller facilities to prove the validity and applicability. Although the model does provide some insights in the concept of Continuous Improvement, it is quite limited due to the simplicity of the model.

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4.1.5. Evolution stages/maturity of Continuous Improvement

The CIRCA project did not only provide the input that made it possible to draft the abilities and

behaviours model described in this chapter, the research project also provided a description of different stages in the evolution of Continuous Improvement. This model, the so-called Continuous Improvement maturity model (Bessant and Caffyn, 1997), describes five phases of Continuous Improvement. Bessant et al. (2001) present two different versions of the maturity model; the first model describes the evolution of Continuous Improvement by five levels and specifies the characteristic behaviour patterns for each C.I. level. The second model describes six levels of Continuous Improvement (addition of the level 0; no C.I. activity), and describes the C.I. levels, the corresponding C.I. performance and the corresponding practices. The former model is depicted in table 3 this model is also used by Bessant and Francis (1999) and Caffyn (1999). The advantage of this model is that since it relates the level of C.I. to characteristic behaviors rather than practices, the model can be linked to the key abilities and constituent behaviors derived from CIRCA (Bessant et al., 2001).

Level

Description

Associated behaviours

1 Pre-C.I. Interest

Problems are solved randomly; No formal efforts or structure for improving the

organization; Occasional bursts of improvement

punctuated by inactivity and non-participation; Solutions tend to realize short-term

benefits; No strategic impact on human resources, finance or

other measurable targets; Staff and management are unaware of C.I. as a process

2 Structured C.I.

C.I. or an equivalent organization improvement initiative has been introduced; Staff

use structured problem solving processes; A high

proportion of staff participate in C.I. activities; Staff has been trained in basic C.I.

tools; Structured idea-management system is in place;

Recognition system has been introduced; C.I. activities have not been integrated into

day-to- day operations

3 Goal Oriented

C.I.

All the above + Formal deployment of Strategic Goals; Monitoring and measuring of

C.I. against these goals; C.I. activities are part of main

business activities; Focus includes cross-boundary and even cross-enterprise

problem-solving

4 Proactive C.I.

All the above + C.I. responsibilities devolved to problem solving unit; High levels of

experimentation

5 The Learning

Organization

All the above + Extensive and widely distributed learning behaviour Systematic

finding and solving problems and capture and

sharing of learning; Widespread, autonomous but controlled experimentation

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4.1.6. Inhibitors of Continuous Improvement

In addition to the description of enabling and facilitating factors to Continuous Improvement, academic literature also describes factors that hamper Continuous Improvement. This literature can provide valuable insights as well, since it might provide input which can be used to remove obstacles present within the organization.

Rantanen (2001) describes the internal obstacles Finish organizations face when pursuing productivity improvement, which is closely related to Continuous Improvement. Thus the mentioned obstacles will give a good indication of possible inhibitors to the improvement process. The obstacles have been acquired by means of a questionnaire answered by 141 organizations in two regions in Finland. The top three of obstacles firms faced were;

Lack of time to improve General lack of resources

Worker’s knowledge shortcomings

The validity of these obstacles is confirmed by the fact that these obstacles seem to be the opposite of some of the behaviours related to C.I. (Bessant et al. 2001). The obstacles ‘Lack of time’ and ‘general lack of resources’ are the opposite of the behaviour “managers support the C.I. process through allocation of time, money, space and other resources” which is positively related to Continuous Improvement. In their research to find inhibitors and enablers of process improvement activities, Bateman and Rich (2003) find that ‘lack of resources’ is the most identified inhibitor by interviews with 40 ‘change champions’; managers responsible for the C.I.-program at their organization. The second and third most identified inhibitors are the ‘lack of focus on process improvement’ and ‘the need to change’. The second inhibitor is the opposite of a key ability related to C.I. (Bessant et al. 2001), which is “focusing Continuous

Improvement.”

Seen from this perspective the literature on inhibitors of Continuous Improvements does not present any new related aspects. The inhibiting factors are mostly the ‘lack of’ or opposite of the enabling factors. Although this might not lead to new insights in the subject of Continuous Improvement, it does strengthen and validates the related factors found in literature describing the enabling factors to Continuous

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4.1.7. Continuous Improvement tools

In their research among Australian manufacturing firms Terziovski and Sohal (2000) asked respondents by means of a questionnaire several questions regarding their C.I.-efforts. Part of the questionnaire was a list of 16 C.I.-tools, subsequently respondents were asked to score each tool on a scale of one to five, with one being not important to the Continuous Improvement process and 5 being very important to the C.I.-process. In table 4 the Continuous Improvement tools scoring an average above 3.5 are listed (average based on more than 300 respondents). Again this research confirms the importance of aspects such as supportive leadership and support from management. However the list also shows some aspects not mentioned in other lists of enablers, criteria and related aspects; some examples are face to face communication and regular shop floor visits by management.

Continuous Improvement tool Score (1-5) Supportive leadership 4.37 Support for managerial staff 4.3

Monitoring the C.I.-process 4.18 Face to face communication 4.03 Regular shop floor visits by management 3.81 Work in teams/work groups 3.74 Training of personnel in problem solving skills 3.69 Use of ISO 9000 3.51

Table 4: Highest scoring C.I. tools, source: Terziovski and Sohal (2000)

4.1.8. Continuous Improvement and standardization

Imai (1986) argues that before improving (by using the PDCA-cycle) it is necessary to standardize the current performance. Only if performance is relatively stable performance can be improved, naturally after an improvement performance will not be stable immediately. In order to improve further, performance must be stabilized first. Imai (1986) proposes to do so by deploying the Standardize-Do-Check-Action (SDCA) cycle. This SDCA cycle than actually becomes a method for safeguarding the progress, by preventing that the achieved improvement is lost. The need for standardization and improvement is depicted in figure 5.

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Opposite to the vision of Imai, that each organization pursuing Continuous Improvement should standardize operations, Berger (1997) argues that organizations should adapt their C.I.-approach to the degree of standardization of the ‘basic task’. Kaizen organizations in Japan are mostly organizations with highly standardized processes and products (Adler, 1993). However not all organizations have processes and products that are easily described by standards. The presented model differentiates between organizations on two dimensions, the first of which is ‘basic task design’. The distinction is made between individual and group tasks, with the notion that in highly standardized organizations the basic task design is individual by nature. In organizations with a lower degree of standardization, tasks tend to be

characterized by a more group organized design. The second distinction is made on the way the

improvement task is performed; this can either be parallel to day tasks, or integrated in the day-to-day tasks. Based on these two dimensions Berger (1997) presents a typology of designs for Continuous Improvement (see figure 6).

Figure 6: Basic task design vs. Improvement Task, source: Berger (1997)

4.1.9. Part of ‘normal operations’

In the research question and the research objective of this thesis the words part of normal operations have been mentioned. What this means is probably best represented by the fourth behaviour

corresponding to the third ability of the behavioural model of Bessant et al. (2001). This behaviour states: “C.I. activities are an integral part of the individuals or groups work, not a parallel activity.” The

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4.2. Organizational Culture

“The one common denominator that led to failure in all of our previous quality efforts (prior to the mid-1980s) was that we did not change the culture or the environment in which all these tools and processes were being used. We had a "flavor of the month" mentality.” 3

This quote is striking for this research since it not only shows the importance of culture for continuous improvement; it also describes a situation which shows some similarities with the situation of ESKA Graphic Board. Previous efforts have also been undertaken at ESKA as well, for instance the introduction of a problem-solving method called the ‘Co-Think method’. For a short period directly following the introduction of the method and training of employees the method was used, but after a while the use of the method slowly diminished. An explanation for this might be the lack of attention to the change of the culture, as described by this quote.

Smircich (1983) looked at five classes of definitions of organizational culture and rather than focusing on differences in definitions she came up with a definition that is consistent with most of the research. Organizational culture is defined as: “a set of values, beliefs, assumptions and symbols that define the way in which a firm conducts business.” As this definition shows the organizational culture influences the ‘way in which a firm conducts business’ which in ESKA’s case thus influences the quest for continuous

improvement as well. The importance of organizational culture is mentioned by other authors as well. Kaye and Anderson (1999) provide a list of ten criteria to C.I.-implementation and base a Continuous Improvement model on this list of ten criteria. One of these ten criteria is the following: “Establishing a culture for continuous improvement and encouraging high involvement innovation.” In the model of Kaye and Anderson (1999) this criterion is represented as an enabler of Continuous Improvement (see figure 4). Ahmed et al. (1999) also stress the importance of organizational culture, which is shown by the following statement: “becoming a learning and continuously improving company demands more than debate and resources; it requires an organizational culture that constantly guides organizational members to strive for continuous improvement and a climate that is conducive to learning.”

The list of abilities and behaviours of Bessant et al (2001) also shows the importance of organizational culture. Not directly because of the fact that culture is mentioned in the list, but more because of the nature of the list. The list is based on abilities and behaviours, Bessant et al (2001) argue that an

organization which performs well on the 35 behaviours will perform well on continuous improvement in general and that organizations on a quest for continuous improvement should focus on implementing these behaviours. In fact changing behaviours of employees can be seen as changing the culture of the organization. Bessant et al (2001) thus aim to achieve continuous improvement by changing the organizational culture.