CONTINUOUS IMPROVEMENT
GUIDING BEHAVIOUR TO SUSTAINING
LONG-TERM IMPROVEMENT
Strategy improvement study at Abbott LogisticsDate of submitting: February 6, 2007
PATRICK SCHROOTEN
University of Groningen, Faculty of Management & Organization
Msc BA Change Management De Maat 27, 7707 RM Balkbrug
0031 (6) 52 40 39 27 patricks8881@hotmail.com
Faculty Supervisors:
Dhr. de Witte, University of Groningen Dhr. Emans, University of Groningen
Company Supervisor:
ABSTRACT
Present study aims to identify to what extent it is possible to improve the current Continuous Improvement process so that this strategy will positively contribute in realizing Abbott Logistics’ vision? Existing literature provides a theoretical direction that learning and leadership play a key role in the implementation and sustaining process of CI. Twelve participants of two CI-initiatives were willing to collaborate in this study. The contribution of learning has been measured by interviews. The current style of leadership has been measured by Quinn’s Organization Culture Assessment Instrument. Next to learning and leadership, this study measured the status of CI as a change initiative with the Change Insight Tool of Kotter and Cohen (2002). From the outcomes of aforementioned tools can be concluded that learning is not common at Abbott Logistics. Especially the reflective elements that require feedback are sub-ordinate to fire-fighting behaviour. Furthermore, this study learns that the current result oriented style of leadership does not stimulate the development of CI. Current gap can be found between the vision and strategies compared with concrete actions to realize walk the talk. Participants perceive the lack of real direction, managerial commitment, communication, and leadership. Next to that, participants are insecure about the realization of the vision.
TABLE OF CONTENTS ABSTRACT 2 TABLE OF CONTENTS 3 1. INTRODUCTION 4 1.1 Company Background 4 1.2 Theoretical Direction 5
1.3 Aim and Research Questions 7
2. THEORECTICAL FRAMEWORK 8
2.1 Five-stage Implementation Model 8
2.2 Learning 9
2.3 Leadership 11
2.4 Organizational Development and CI 13
3. METHOD 15 3.1 Participants 15 3.2 Confidentiality 15 3.3 Instruments 15 3.4 Data-analysis 16 4. RESULTS 17 4.1 Current Situation of CI within Abbott Logistics 17
4.2 Interviews 18
4.3 Organization Culture Assessment Instrument 20
4.4 Change Insight Tool 21
5. CONCLUSIONS & RECOMMENDATIONS 23 5.1 Learning 23 5.2 Leadership 25 5.3 Organizational Development and CI 25 5.4 General Conclusions 27 5.5 Recommendations 28 6. DISCUSSION 32 6.1 Limitations 32 6.2 Strengths 32 6.3 Own Reflection 32
6.4 Consequences for Science 32
6.5 Consequences for Practice 33
REFERENCES 34
APPENDIX A: INTERVIEW QUESTIONS 37
APPENDIX B: THE ORGANIZATION CULTURE ASSESSMENT IINSTRUMENT 38
1. INTRODUCTION
‘Change is the only constant’ is one of Heraclitus’ most famous sentences. Heraclitus of Ephese, a Greek philosopher who lived around 500 years before Christ, became known because he saw the world as an area of fighting antagonisms. Day and night, life and death, and chaos and control are a couple of examples that can’t exist simultaneously. And however Heraclitus’ reasoning seems logical, his mythical fellow citizens did not understand his rationalized way of thinking.
Approximately two and a half thousand years later, Heraclitus’ famous sentence seems to be more appropriate than ever before. Globalization and the digital era are causing changing standards. Where a couple of years ago standardization and economies of scale seemed to be the key to success, nowadays the focus points have been transformed to innovation, quality, service and speed (Hammer, 1990). Where for many years organizations were focussing on becoming the strongest or the smartest, survival in the twenty-first century seems a matter of dealing with continuous change (Oldenkamp, 2002).
Survival in a changing area requires a critical look to old routines, flexibility to switch between routines, learning, and to think over existing borders. Complemented with an ongoing pressure to remain competitive, organizations are continuously searching for efficiencies and improvements. The search for a business approach to handle this pressure leads often to continuous improvement (Flinchbauch, 1998; Garvin, 2000; Schroeder and Robinson, 1991; Wu and Chen, 2006).
1.1 Company Background
This study explores the adaptability of continuous improvement at Abbott Logistics, the Netherlands. Abbott Logistics is a member of Abbott International, a global health care company that is specialized in nutritional products, pharmaceutical therapies, and medical devices. Abbott International is established in more than 148 countries and its head office resides in Chicago.
Abbott Logistics is responsible for the transportation of final products and customer service to affiliates outside of the USA, and the distribution of raw materials to European plants. It employs approximately one-hundred-and-fifty above average educated1 people and is recognized as a popular place to start working. It contains six departments that maintain the relationships with affiliates and the sources. These two mainstreams are extended with Quality Assurance, Treasury and Finance. Next to that, Abbott Logistics is a supporting organization and receives a yearly budget.
In 2005 Abbott Logistics launched a Business Excellence Program. Main reason for this launch was that their business and their responsibilities have grown rapidly in last years, while the organization in itself has been never changed in order to handle this. Aim of this program has been translated by their vision ‘To be recognized as the Global Centre of Excellence for Innovative and
Comprehensive Supply Chain Management and Financial Resources’. This vision should in turn be accomplished by five strategies that include:
- Customer Service; - Patient Safety;
- Training Development; - Continuous Improvement; - Accurate Information.
In order to commit to the CI strategy, two projects were launched. One project intended to investigate the possibilities to simplify the documentation process around shipments. The other project was also related to simplification, except this time to the credit and debit requests from affiliates. Despite those two initiatives, Abbott Logistics’ management acknowledges that the development of this strategy lags behind its expectations. Employees do not show the required behaviour and improvement suggestions remain ahead.
1.2 Theoretical direction
Continuous improvement (continued as CI) is a philosophy once developed in the United States and further optimised in Japan (Schroeder and Robinson, 1991). It is normative science2 that represents a way of working, thinking and generating ideas throughout the whole organization that seems effective. CI is principally initiated by a planned incremental change and could be seen as an approach in itself, or it could be integrated into a Total Quality Management Program as well (Bessant et al., 1994). The roots of the term philosophy lead to the Greek word philosophia (φιλοσοφία), which means ‘love of wisdom’. It is generally described as the admiration of, and striving for knowledge and wisdom and represents the study of meaning and validation of our thinking and beliefs about the most general and universal aspects in live. CI’s increasing popularity is mainly caused by the rise of the Japanese manufacturing industry after the Second World War. One of the first and most well-known writers of CI is William Edwards Deming (1900-1993). Most introductory books on Operations Management contain a discussion of Deming and his 14 points to commit quality management (Hales and Chakravorty, 2005). Deming (1981) describes them as ‘obligations’ expected of top management.
Despite CI’s increasing popularity, existing literature determines also another, more critical, side of the CI-approach. A remarkable point is that most successful CI-implementations were accomplished in production settings and that there are not that many success stories known about CI in office settings. Furthermore, often read is that this approach is based on tools and instruments, and consequently neglects (other) behavioural influencers. One more critique is that existing literature only distinguishes the split between incorporating the principles of CI or not.
Consequently, existing literature ‘forgets’ that CI is an evolving and learning process that requires time. Moreover, CI incorporates elements across the organization as a whole and could therefore be considered from a social, manufacturing, organizational design, or a behavioural point of view. A final point of critique is that although CI is practically oriented, existing literature is generally prescriptive and research concerning successful CI implementation is limited (Bessant et al., 2001; Mitki et al., 1997; Savolainen, 1999).
Knowing the roots and the critics of CI, it is task to identify one or more generic elements. From a literature review of eight well known CI-researchers (e.g. Bessant, and Imai), Kaye and Anderson (1998) identified five themes that seem to be essential in order to achieve and sustain CI. The first theme is leadership and represents the demonstration of commitment and involvement of senior management and all organization’s managers. The second theme is strategic focus and represents customer focus and the alignment of CI with the goals of the organization. The third theme is an organizational culture wherein improvements are encouraged, complemented with the focus on employees. The fourth theme contains processes, reliable information, and the focus on quality. The fifth theme contains learning by reflecting and the sharing of this learning.
However the results of Kaye and Anderson seem convincing, several writers acknowledge that CI starts with learning and leadership. Based on a variety of case examples, Bessant et al. (2001) concluded that CI is a developmental process that requires learning. Bessant et al. (2001) link this process ‘analogous to the concept of ‘double loop’ or ‘generative learning’ identified in the literature (Argyris and Schön, 1970, Senge 1990)’. Mitki et al. (1997) even state that CI seems to integrate the three types of learning that are identified by Schein (1993), better known as cognitive learning (knowledge and insights), skills learning and emotional conditioning.
1.3 Aim and Research Question
A critical view on aforementioned reasoning concludes that several writers interweave Kaye and Anderson’s five essential themes. Culture, processes, leadership, and the strategic focus are associated with leadership, while learning remains on itself. The role of leadership is perhaps even more decisive, because leadership seems to stimulate learning (Buch and Rivers, 2001). The current situation of CI at Abbott Logistics, complemented with the theoretical direction resulted in the aim of this study that contains:
To what extent it is possible to improve the current Continuous Improvement process so that this strategy will positively contribute in realizing Abbott Logistics’ vision?
The aim of this study is carried out by three research questions. The first question aims to identify the contribution and facilitation of learning. The second question aims to identify the contribution of leadership at the implementation process of CI at Abbott Logistics. The third question aims to identify the progress of CI in general. Did Abbott Logistics align the facilitation around CI and does its management walk the talk in realizing this strategy as a part of the stated vision? The questions are:
1. To what extent did Abbott Logistics succeed in the stimulation of learning and the creation of a culture wherein it is common to learn?
2. What is Abbott Logistics’ current style of leadership and does this style of leadership contribute to the stimulation of Continuous Improvement?
3. How did Abbott Logistics create organizational readiness for Continuous Improvement and what are the consequences for the development of the change process?
2. THEORETICAL FRAMEWORK
Given the theoretical direction, it can be concluded that learning and leadership play an essential role in the evolving CI-process. The second chapter of this study has been split up in four theoretical parts. The first part will dive deeper into the implementation process of CI. The second part will stress related information about learning. The third part contains the role of leadership, while the fourth part will deal with the organizational development of CI.
2.1 Five-stage Implementation Model
One of the previously described critiques of CI contains that existing literature is limited about the implementation of CI. Bhuiyan and Baghel (2005) and also Mitki, Shani and Meiri (1997) indeed describe that organization’s most important purpose should become quality by involving all levels of the organization, self-management, a multi-skilled task force and organizational learning, however also these writers ‘forget’ to mention how this should be realized. And there are more examples. Choi and Likert (1995) identify CI as a process that develops through continuous incremental changes and involves people from all levels in the organization. Irani and Sharp (1997) refer to more tangible conditions that CI can only succeed on a sufficient amount of resources as time, money, and effort. Furthermore, they state that the adaptability and commitment of CI is a matter of social influence that recognizes the power of social networks that include a free flow of information wherein people meet, interact, and influence each other. Additionally, Lillrank, Shani, and Lindgren (2001) suggest the stimulation of CI by a reward system that includes money, social recognition and career opportunities.
Mainly to handle the roots of these critiques, the CIRCA programme has been ‘set up to investigate how continuous improvement can be introduced and sustained in UK industry.’3 Based on more than 100 case studies, one of the outcomes of this research project was the development of an implementation model for CI (Bessant et al., 2001). This model contains the following stages:
1. Awareness of CI;
2. Introduction of the basics principles of CI; 3. Link CI to strategy;
4. Autonomous innovation; 5. Become a learning organization.
CI starts when current fire fighting seems not appropriate anymore and real innovation(s) seem to be the only solution. This results in the introduction of the basic principles of CI that contain structured processes and universal CI education across the organization. A next step is spreading and generating knowledge that improves the current situation. After that, the CI activities should being linked to strategic goals that implicitly stimulates inter-departmental learning. Subsequently, autonomous innovation should lead to the empowerment of individuals and groups to experiment. Final aim of the CI implementation process requires that the organization becomes a learning organization. A learning organization can be described as a place ‘where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together’ (Senge, 1990).
Comparing aforementioned stages with the earlier described status of CI, it can be concluded that Abbott Logistics is facing difficulties between the second and third stage. Aim is to discover the reasons behind this. The next sections will outline learning, leadership and the organizational development around change. This chapter will conclude with a conceptual model of the expected relations.
2.2 Learning
This part forms the theoretical framework for the first question that aims to identify to what extent Abbott Logistics has succeed in the stimulation of learning and the creation of a culture wherein it is common to learn.
Observing the development of human life, it becomes clear that human beings are equipped with an inherent need to discover. It is therefore not that surprising that no one has to push a child to learn to walk or stimulates to talk. However human’s natural driver is curiosity, unfortunately, society is arranged on individual prestige and success. As soon as a child meets organized learning, its natural curiosity becomes limited which consequently oppresses human’s natural instincts (Senge, 1990).
is more than gaining knowledge and insights and that this should be extended with the development of skills and a positive attitude (Swieringa and Wierdsma, 1990).
So learning is more than consciously generating knowledge. Learning is selecting, spreading, constructing, saving and developing information in the brain of humans, groups (collective) and the structure and culture of organizations and intends to change behaviour (Bolhuis and Simons, 2000; Swieringa and Wierdsma, 1990). Two influential persons concerning individual and organizational learning are Argyris and Schön (1978). Based on the work of Bateson (1972) they propose a model of learning that contains three levels. Level 1 is single-loop learning. At this level corrective actions or simple adoptions take place without changing current processes or instructions. Level 2 is double-loop learning, better known as reframing current standards. This is the creation of opportunities by re-considering organizational operations from other perspectives. Level 3 is triple-loop learning and involves radical transformations. Typically, this might involve an organization that changes its core business(es), including all the implications for organization’s structure, culture and other practices. In general the higher the level, the more complex learning becomes (Georges, Romme, and Van Witteloostuijn, 1999). Senge (1990) compares the levels of growing complicatedness with adaptive learning and generative learning. The former refers to dealing with change, while the latter refers to encouraging creativity and extending your capacities to become capable.
Besides knowledge and insights (intelligence), learning includes the development of skills (can), courage and wants, and someone’s being (personality and attitude) (Schein, 1993). Knowledge is related to content and applicability and refers to what people know about something. Skills refer to previous experiences with tools and techniques and someone’s capability to use them. Attitude is the sum of norms and values and can be defined as a learned representation of an individual that influences someone’s thoughts, actions and behaviour. Even though intensity levels vary, every attitude comprises the integration of cognitive components, emotional components, and components of capability (De Boer, 2003; Tönis, Zonneveld and Haan, 1996). The cognitive component represents the ability to transfer knowledge about the attitude and is related to cooperative feelings of an individual or group. It also represents knowledge about appropriate skills. The behavioural component is related to specific skills and is most of the times based on personal behaviour. This component is especially related to the training ability and the performance of an individual in its environment. The capability or sensibility component represents the awareness of emotions and influences personal values that result in certain behavioural patterns (Tönis et al., 1996).
coaching, reflecting and feedback (Walstra, 2004). As a result, attitude development is facing a longitudinal and repeating process that is most of the times underestimated.
2.3 Leadership
This part forms the theoretical framework for the second question that intents to identify Abbott Logistics’ current style of leadership and aims to answer if this style of leadership contributes to the stimulation of Continuous Improvement?
Kotter and Cohen (2002) define leadership as ‘the process of creating a vision for others and having the power to translate it into a reality and sustain in it’. Kotter and Cohen (2002) stress the importance of real leadership by separating leadership and management. A leader is someone who states the direction by a vision and the strategies, creates commitment, motivates and inspires, and realize changes. A manager is more operational and focuses on planning, budgeting, structures, responsibilities, control and solving problems. Kotter and Cohen (2002) concluded that based on these eight steps, and the difference between leadership and management successful changes require 70 to 90% leadership and 10 to 30% management.
A common made link in existing literature is the one between leadership and culture, wherein different cultures require a different style of leadership. One of the most known models is the Competing Value Framework Quinn wherein types of leadership are related to organization’s culture. The model identifies the dimensions hierarchy-, clan-, market-, and an adhocracy culture. Based on Quinn’s ‘cultural’ model, Aardema (2005) developed an extending thinking model that represents the focus of organizations’ leaders. The model of Aardema is presented in figure 1 and will be outlined on the next page.
Soft
Human oriented
Environmental oriented
Informal, values, bottom-up information, demand, serving stimulate/ consolidate renewel, exploringInternal External
Organization oriented
Result oriented
formal, norms, top-down targets, offer, market control strategy, prestigeHard
Based on Aardema 2005 and Quinn, 1988
Organization oriented
This way of thinking became dominant in the beginning of the twentieth century. It characterizes itself by control and structure and is also known as ‘scientific management’ (Taylor, 1911) or Classical School (Aardema, 2005). Formal rules and procedures result in standardization aimed to limit human influences. Cameron and Quinn (1999) define this stream as a hierarchy culture. Underpinning lays the striving for economies of scale where security and predictability should result in efficiencies (Aardema, 2005; Cameron and Quinn, 1999).
Human oriented
The human oriented thinking stream rose as a reaction on the non-human organization oriented thinking. This stream characterizes itself by high trust, openness, teamwork and a concern for people. Leaders in such kind of organizations are mentoring, facilitating and nurturing in order to develop loyalty and teamwork. Cameron and Quinn (1999) define this stream as a clan culture and Aardema (2005) classifies this stream under the Human Relations School. Underpinning lays the believe that people not always decide on rational grounds and also considering previous experiences and intuition (Aardema, 2005)
Result oriented
This stream became popular during the seventies of the former century. Aim is to be competitive, achievement oriented, no-nonsense, aggressive, and result oriented. Prestige is one of the main drivers by competition between firms but also among employees. Cameron and Quinn (1999) define this stream as a market culture and Aardema (2005) classifies this stream as the Rational Goal Model. In organizations that include this stream of thinking it is common to trigger employees with materialistic or financial benefits (Cameron and Quinn, 1999).
Environmental oriented
2.4 Organizational Development and CI
This part forms the theoretical framework for the third question that aims to identify Abbott Logistics’ contributions related to organizational readiness for Continuous Improvement and to identify the consequences for the development of the change process.
Although Schroeder and Robinson (1991) and Choi and Likert (1995) suggest that the still rising Asian economy could primarily be explained by the Total Quality Management movement (TQM), the approach that includes CI is facing difficulties during the introduction and its continuation. It seems that 90% of the TQM initiatives by American organizations do not result in the desired outcome. Though this number seems extremely high, organizations in the UK and in Europe show a rate of 80% (Burnes, 2004:4).
Kotter (1996), professor at the Harvard Business School and owner of a consultancy firm, provides several clarifications why change initiatives fail. Based on more than 100 case examples, Kotter mentioned:
1. too much complacency;
2. the lack of a sufficiently powerful guiding coalition; 3. the underestimating the power of vision;
4. undercommunicating the vision by a factor of 10; 5. permitting obstacles to block the new vision; 6. failing to create short-term wins;
7. declaring victory too soon;
8. neglecting to anchor changes firmly in the corporate culture.
As a result, organizations fail in the implementation of new strategies and quality programs underperforming its expectations. In order to handle the disappointed outcomes, Kotter developed eight steps to successful change. Kotter’s previously outlined separation between leadership and management are based on these steps and are essential in these eight steps to successful change. The steps include:
1. sense of urgency; 2. create the guiding team; 3. develop vision and mission; 4. communicate the change vision; 5. empowering action;
6. generate short-term wins;
The steps are an evolving process wherein some successive steps occur simultaneously. Next to that, the road of successful change requires all eight steps. ‘Skipping even a single step or getting too far ahead without a solid base almost always creates problems.’
The expected relations from the introductory theoretical direction, complemented with the theoretical framework are modelled in figure 2.
Figure 2 functions as an optical simplification of the theoretical framework. The model shows the linkages from the theoretical direction. Leadership incorporates the elements culture, strategic focus and process. Next to that we have seen that the style of leadership could play an essential role in the CI development process. Learning occurs in the triangle knowledge, skills and attitude, wherein existing literature stresses the importance and tangible role of a positive attitude.
According existing literature both elements, learning and leadership, should have a positive contribution to the five-stage implementation model of Bessant et al. (2001). The model includes the five stages: (1) awareness of CI, 2) introduction of the basics principles of CI, (3) link CI to strategy, (4) autonomous innovation, and (5) become a learning organization.
CI Behaviour
FIGURE 2
Conceptual Model
CI Knowledge Learning + Attitude for CI + + + CI Skills + Five-stage Implementation Model LeadershipCulture StrategicFocus Process
+
+ CI Behaviour
3. METHOD
In order to improve the current state of CI at Abbott Logistics it is necessary to determine a diagnosis and investigate the possibilities for improvement. Aim of study-related data gathering is to identify prevailing perceptions about previously outlined relations.
3.1 Participants
Abbott Logistics introduced CI by launching two project groups. One group investigated the documentation around shipments, while the other group investigated the debit and credit requests. Both groups consisted of six participants, a group leader and a CI facilitator. Participants of these groups represent most departments and were selected to participate since they were assessed as representative employees. Due to the fact that these participants are known with CI and had the possibility to gain some experience(s), twelve employees, selected from both project groups, were willing to collaborate in this study. Next to these participants, the translation of the results is influenced by own observations, one and a half a year of work experience at Abbott Logistics, and conversations with colleagues and managers.
3.2 Confidentiality
In order to create a clear representation of the current state, full collaboration of the participants was essential. Collected data refers to selective individual perception in the form of symptoms with a negative or positive reference to a certain situation. Therefore all participants were informed up front, that provided information will be handled confidentially and only used for this study.
3.3 Instruments
Data collection for the learning part is based on qualitative research by in-depth interviews with participants of both groups. Data collection for the leadership part is based on the Organization Culture and Assessment Instrument of Cameron and Quinn (1999). To identify CI as a change process in itself, progress of the development of the CI strategy in general has been measured by the outcomes of the ‘Change Insight Tool’ of Kotter and Cohen (2002). The three instruments will be outlined below.
Interviews
a way that they should provide insights the elements of learning that contain knowledge, skills, attitude and the influence of these elements on behaviour.
The first item intended to indicate participant’s knowledge about CI by asking to a more detailed explanation of the approach. An additional question was how the participant got this knowledge and aimed to identify Abbott Logistics’ contribution. The second item aimed to gain insights in the skills of every participant by referring to the methods used during the projects. Were the methods useful and how were they introduced? The third item aimed to identify participant’s attitude by asking to the willingness to learn and improve, their contribution to personal development, ambitions and the usefulness of CI for Abbott Logistics. Next to these questions, the third item contained a question that was related to participant’s attitude to new initiatives in general? The fourth item aimed to gain insights in possible changes in participant’s behaviour. Perhaps did participants change, but not according the expectations of Abbott Logistics’ management? Did participants change their behaviour and to what extent did CI influence their daily responsibilities and what have changed then? A list including the interview questions can be found in appendix A.
Organization Culture Assessment Instrument (OCAI)
To identify if the current culture, all participants were asked to fill in the earlier described OCAI develop by Cameron and Quinn (1999). Participants were asked to divide 100 points among the four answers at each of the six categories about the current culture. The average (round up to five) of the total points for each culture indicates participant’s perceived culture. A list including the questions of the Organization Culture Assessment Instrument can be found in appendix B.
Change Insight Tool
Next to the interview and the OCAI, every participant was asked to answer the questions of the ‘Change Insight Tool’ developed by Kotter and Cohen (2002). This tool measures the status of a change initiative by comparing the current status with Kotter’s earlier described eight steps to successful change. The ‘Change Insight Tool’ contains nine items that each consist of three questions where the answers ‘yes’ or ‘no’ indicate the status of each item. Based on the answers, a personal advice will be generated. The questions of the ‘Change Insight Tool’ can be found in appendix C.
3.4 Data-analysis
advice for improvement. All advices were collected and striking and general advices form the basis of the recommendations. Next to the outcomes of the instruments, recommendations are based on one and a half a year of work experience at Abbott Logistics, suggestions from the interviews, dialogs with managers and examples from other organizations.
4. RESULTS
This paragraph starts by describing the introduction of CI within Abbott Logistics. After that, the results of the interviews, the OCAI and the Change Insight Tool will be presented. The most remarkable findings concerning the interviews are presented in table 1 and can be found on page 18. The same counts for the most remarkable findings concerning the Organization Culture Assessment Instrument on page 20 and the Change Insight Tool on page 21. A more detailed explanation, the conclusions, and recommendations can be found in the next chapter
4.1 Current Situation of CI within Abbott Logistics
CI was introduced within Abbott Logistics during a site meeting. The change manager spoke approximately 10 minutes to all employees about this new initiative. After this brief introduction, employees were divided in three groups and were invited for a more in-depth presentation. The subjects for two projects were decided and the participants were selected based on operational experience and their current department. From this selection, four potential participants were invited in front to discuss the theories and tools that were planned to be used during the projects.
All participants were invited to participate in the Toy Story. Within this game every participant represents a different department in a production setting. Aim of this game is to optimize efficiency without influencing customers’ expectations. Playtime was approximately six hours and after the game there was one hour scheduled to discuss the tools that would be used in both projects.
Nonetheless the investments, contributions and participants’ enthusiasm, at the moment of this study, CI is facing little interest. Both projects stalled when concrete, formulated changes required action. Question, and basis for this study, is to identify the reason of stalling.
4.2 Interviews
Each interview contained four items. The items contain the triangle of learning elements better known as knowledge, skills and attitude. Most remarkable opinions are collected in table 1. Most items contained more than one question, hence, the sum of the amount per item could be more then twelve. A description of respondents’ answers can be found below.
TABLE 1
Interview Items related to General Opinions
Items # General Opinions
1. Knowledge 2
10
- Previously gained knowledge (former job, study, internet) was more sufficient than Abbott Logistics’ initiatives
- Toy Story was extremely sufficient to learn the principles of CI (lean-production, quality, customer focus, cooperation, etc.)
2. Skills 12
7 8
- Methods were extremely useful to discover the process - Facing difficulties to operationalise the tools
- Methods were difficult to understand
3. Attitude 10 12 8 5 9 12 8
- Sceptic, ‘just one of many initiatives’
- After the introduction people were positive to cooperate - Contribution became less because it was next to my daily job
- Without extra attention, positive attitude for CI and change in general - Stuck in my current job
- Personal goals are a theatrical performance
- Lack of coaching to stimulate individual career path (HR)
4. Behaviour 5
9
- Translated the methods to personal activities
1. Knowledge
However some participants were familiar with CI by study or previous functions, ten participants got their knowledge from the information Abbott Logistics provided. In contradiction with the site meeting, the Toy Story appears to be very useful and perceived as an ‘eye opener’. One respondent perceived the preparations as ‘a total waste of time’ and explained CI as ‘logical reasoning’. There were four participants who also joined a one day introduction upfront, which reminded some to their time as ‘unprepared students’. They missed some handouts and additional information on paper. Most knowledge was gained during the projects, however as the attention on CI became less, development stabilized.
2. Skills
All participants admit the usefulness of the tools. ‘Because of the tools we discovered the real problem’ was a frequently given response. Another often heard response was that ‘the tools were responsible for the structured processes’. However the perceived positive contribution, there were just five participants who could mention the names of the tools, while a lesser amount still did not know how to use the tools.
3. Attitude
4. Behaviour
Reactions on this item were diverse. Eight participants saw the CI initiatives as a start of something that could really work. Responses suggested ‘the project scope was too small’ and the perceiving of ‘a loss of several opportunities to realize a real change’. As a result, some participants lost attention and became less interested. Behavioural development by CI can be found in the fact that five participants translated the tools to their daily activities. A clear example is that two participants ’weekly discuss the improvements with their affiliate/ source’, since they became known with CI.
4.3 Organization Culture Assessment Instrument
The scores are collected in table 2. The outcomes show a clear picture of the perceived dominant culture at Abbott Logistics. A culture that aims to control by using formal rules and procedures that result in standardization aimed to limit human influences.
Type A style indicates a Clan culture/ Human oriented culture
Type B style indicates an Adhocracy culture/ Environmental oriented culture Type C style indicates a Market culture/ Result oriented culture
Type D style indicates a(n) Hierarchy culture/ Organization oriented culture
4.4 Change Insight Tool
Each Change Insight Tool contained several items in order to identify organization’s conditions to realize the change, and in this case to integrate CI in Abbott Logistics’ culture. Each item represents one of the eight steps that, according Kotter and Cohen (2002), are necessary to realize a successful change. Some items are complemented with information from the interviews. Most remarkable opinions are collected in table 4. Most items contained more than one question, hence, the sum of the amount per item could be more then twelve.
TABLE 3
Steps related to Perceived Presence
Steps # Perceived Presence
1. Establishing a sense of urgency
7 5 6
- Increased sense of need and urgency surrounding CI - Missing the urgency
- Effort and energy are not directed to CI 2. Build the guiding
team
9
7
- The organization has not succeed in the assembling of an effective and well-functioning guiding team
- Participants’ interests appear to be not aligned and resulted in varying contributions during the project 3. Developing a vision
and strategy
8 - However the vision and strategies seems clear, participants facing difficulties in visualizing and internalizing this vision to their personal situation 4. Communicate for
Buy-in
5
12
- It appears that communication is not always on time, adequate or written in a way that it considers people’s anxieties
- Window dressing
5. Empower action 11
8 10
- Personnel and HR-systems are not in line with CI - Managers do not fully cooperate in order to realize CI - New ideas are not rewarded, neither collected nor tested 6. Create short term
wins
5 8
- Communicating quick results and progresses can be improved - It is not common to recognize hard working or support emotionally and show commitment
7. Consolidate gains and produce more
12 12
- There appears to be a lack of emotional support to sustaining CI - Victories are declared too soon which results in the
return of old routines
1. Establishing a sense of urgency
The opinions are divided. Approximately half of the participants feel a lack of urgency, while the other half feel an increased sense of need and urgency around CI. The former half suggests that it becomes really difficult to implement successful CI, while the latter half seem to be convinced that ’this approach could really work’. Both halves are present in both projects. By the limited contribution of resources (time and prioritizing), the six participants interpret this limitation ‘as a lack of urgency from higher management’.
2. Build the guiding team
Responses point out that the organization failed in the creation of an effective guiding team. This team includes the facilitator and the project leader. One participant was a bit frustrated about ‘the expert-role’ from the facilitator. ‘The influence of this person was too big and we were supposed to follow this person’s direction’. Nine participants expected that this team functions as ‘a stick behind the door’, creates support and stimulate a sense of urgency among participants.
3. Developing a vision and strategy
All participants know that Abbott Logistics has a vision and a mission. These statements are hanging on big boards in the building, however, eight participants are facing difficulties to explain the meaning of this vision to their individual situation or department. The vision and the translation of the strategies to the several departments and individual goals is not clear at all. At least seven participants refer to a ‘lack of communication’.
4. Communicate for Buy-in
Communication, other than the sharing of information, also influences emotions. It appears that communication in general seems to be sufficient, although it can be improved concerning progresses within the CI projects. Both projects terminated at the point were action was required. Many participants do not know ’the status, nor the importance, neither the continuation of these points of action and the projects as a whole’. Furthermore, there seems to be a big difference between the things communicated and what actually happens or has been performed which all participants describe as ‘window-dressing’.
5. Empower action
just as operational extensions of the computer, without any room for development. ’Every idea becomes translated as an idea of the manager, without any sign of appreciation to the rest of manager’s department’.
6. Create short-term wins
Five participants recognized that Abbott Logistics does not make use of short-term wins. Short-term wins are required to build credibility and to stimulate participants. There appears to be a lack of tangible efforts that influences participants’ enthusiasm and emotional support. Next to that eight participants noticed that important achievements are rarely celebrated.
7. Consolidate gains and produce more
It appears that many initiatives are deemed to stop in advance before completed. An often heard reaction was ‘that is typical Abbott Logistics. Many ideas, an enthusiastic start, but when it is time to really take actions, everybody is busy with daily activities’. This implies that those who should take action are satisfied about the status quo or are in reactive mode instead of sustaining long-term improvements.
8. Anchoring in culture
All answers suggested that CI is far away of Abbott Logistics. The opposite is a narrower observation. Fire fighting, a lack of resources to stimulate CI, and the early elimination of initiatives is the reflection of the current culture. Rational reasoning without emotional support is the driver for action. Next to that, at least five participants think from their own department and do not see the consequences of their actions for other departments.
5. CONCLUSIONS & RECOMMENDATIONS
The present study aims to identify if it is possible to improve the current Continuous Improvement process so that this strategy will positively contribute to the realization of Abbott Logistics’ vision? The questions and the outcomes of the instruments will be discussed below. Subsequently a general conclusion will be presented, complemented with the recommendations.
5.1 Learning
To what extent did Abbott Logistics succeed in the stimulation of learning and the creation of a culture wherein it is common to learn?
providing knowledge and skills and is relatively easy to accomplish. However, the real change has to be completed by humans and is a matter of attitude (Swieringa and Wierdsma, 1990; Walstra, 2004). We have seen that an attitude consists of deeper norms and values. An attitude is the construction of someone’s view of the world and the basis for emotions and interacts with several levels of personality (Walstra, 2004). It is therefore not that surprising that Bohner and Wänke (2004) states that an attitude represent the sum of evaluations and together influence someone’s opinion.
At Abbott Logistics, participants’ knowledge in general seems to be sufficient. The organizational aim was that every participant should have a basic level of knowledge about CI. Based on the answers from the interviews it can be concluded that this aim has been accomplished. Remarkable was the (mis)conception that CI should be linked to a project-structure. Furthermore, most of the presentations in the preparation conclude with financial improvements. It is therefore not that strange that most participants related the aim of CI to money instead of improving quality.
The required skills to make use of the methods seem to be underdeveloped. However the principles of the methods seem to be clear, most participants were facing difficulties to operationalise the tools. This could primarily be explained by the fact that there was no time planned in front of both projects to gain experience with the tools.
Participants’ first experiences with CI were positive, however when time evolved, it became a time-consuming event and tended to drag. Many participants were convinced about CI’s effectiveness and possible results, however daily activities seem to have higher priority. The sceptical attitude in front of both projects CI was not that strange. Given the current status of both projects many participants seem to be true that also these projects would stop prior to completion. Next to that, we have seen that an attitude is related to coaching and feedback. During the interviews it became clear that Abbott Logistics did not provide such information.
Conclusion
5.2 Leadership
What is Abbott Logistics’ current style of leadership and does this style of leadership contribute to the stimulation of Continuous Improvement?
The model of Aardema (2005) incorporates many elements of which it from a scientific point of view is questionable, if the combination of those elements is provides reliable relations. Aardema (2005) describes the elements more as paradoxes. Next to that, all companies incorporate characteristics of other thinking streams.
The scores in table 2 on page 20 provide insights in the current dominant culture. The outcomes of the OCAI discovered that the existing culture shows the most similarities with a result oriented culture. Second is the organization oriented culture, third the human oriented culture and last the environmental oriented culture.
Comparing the timelines of the four thinking streams with the rise and characteristics of CI, it is assumable that CI can be classified in the environmental oriented thinking stream. Common in CI and the environmental thinking stream are the focus on quality and improvement and the participation from employees and customers. Complemented with the information given in the theoretical direction plus leaders’ striving to function as an example in ‘walk the talk’, it is assumable that the environmental oriented style of leadership plays a key-role in the CI-development process. A style wherein leaders are constantly focussing on renewal, innovation, and learning opportunities.
Conclusion
Given the current status of both projects and participants’ perceivings, it can be concluded that the style of leadership that is associated with a result oriented culture does not stimulate the development of CI. Especially the realization of leaders’ walk the talk is doubtful.
5.3 Organizational Development and CI
How did Abbott Logistics create organizational readiness for Continuous Improvement and what are the consequences for the development of the change process?
Next to the lack of urgency, the creation of an appropriate guiding team was not that successful. This could primarily be explained by the former assumption that an emotional change will always follow after the structural facilitation of CI (Swieringa and Wierdsma, 1990). There is sufficient time been spent to knowledge and skills, however the emotional change (feel and experience) is simply been forgotten. Next to that, some participants were not that pleased with the input and the role of the members of the guiding team. Former experiences with members of the guiding team did not optimally contribute to a confidential atmosphere.
The vision is a mystique puzzle and many participants do not know the meaning or the content of this vision. A vision represents the ultimate striving for an organization with a clear content and organization wide acceptance of how to realize this vision. It is a nice statement for the outside world, even so it is not carried by the members of the organization.
Communication is extremely important at CI to reduce resistance, guide fears and uncertainties. The power of real communication is most of the times underestimated and many employees overestimate the value of an email. Face-to-face communication about improvements is limited and hardly accepted by managers due to the simple fact that the daily responsibilities ask all the attention of the employees. Another remarkable fact is that Abbott Logistics’ employees receive dozens of emails a day and grant themselves no time to really read and understand all emails. This has been proven during this study when some simple requests were replied two weeks later including an excuse that refers to the current workload.
Participants’ opinions indicate that actions are contrary with the vision of Abbott Logistics and this difference results in a theatrical performance. Empowered action requires managers’ commitment to act according the things the organization stands for, the often heard walk the talk. The opinion of most participants about window-dressing indicates that prestige and (financial) performances are more important than openness and honesty.
The creation of short-term wins and the consolidation and extension of gains seems to be made impossible by a lack of managerial support for CI. Mainly the emotional understanding and rewarding of employees’ contributions are rare. The longer the lack of managerial support, the more difficult it becomes to anchor a change in organization’s culture. Hard data and rational performance indicators seem to be the most important, while employees’ interest and development are underestimated.
Conclusion
5.4 General Conclusions
This study explores the contribution of learning and leadership to the CI-strategy at Abbott Logistics. Despite CI’s focus on the process and does not separate the kind of process, existing literature is limited about CI in an office setting. One of the possible reasons that literature is lacking concerning CI in office settings is that the advantages of change in an office setting are less observable and more difficult to measure. A related explanation is that improvements in a production setting are measurable in quantitative data and are better to visualize, than improvements in people’s knowledge, skills or attitude.
The critique that CI is based on tools and instruments is perhaps the reason that Abbott Logistics forgot the development of an attitude for CI or forgot the facilitation of stimulators. The lack of time, money, effort, bonuses or career opportunities are just examples, but indicate the importance to trigger people to explore.
Incorporating CI or not incorporating CI is a critique that has been confirmed by this study. CI is an evolving process that requires time and stimulating resources. An outsider might expect that Abbott Logistics incorporates this strategy, despite knowing the level and experiences with CI. For the outside world a tremendous term, however a closer look learns that this does not meet the reality.
The prescriptive existing literature is a critique that also could be confirmed. CI is not just an aspect of the organization or is (in-)tangible in a way that it is identifiable. It is the combination of essential organizational elements that together outline the foundation of its success. A possible explanation for the prescriptive literature is that the content and influence of the essential elements learning, leadership, culture, strategic purpose and process vary in each situation.
For the situation at Abbott Logistics, participants’ answers indicate a lack of managerial commitment, sponsorship, and leadership to realize walk the talk. Under the existing circumstances it is questionable if CI will ever result in a positive contribution to Abbott Logistics’ vision. Experiences as ‘window-dressing’ and ‘the lack of long term improvements’ explain a fire-fighting behaviour and that short term performances are really important. Furthermore, they provide a reason why initiatives are perceived as ‘one of the many that is deemed to stop prior to completion’. And these indications did not remain inconspicuous. The voluntary leaving of several young, ambitious people in 2006 should have rung some bells that Abbott Logistics is losing territory as a nice place to work, nor remains ahead in realizing its walk the talk for its employees.
5.5 Recommendations
Before continuing with my recommendations, I will discuss a couple of striking elements at Abbott Logistics that (implicitly) limit the development of CI and the drive to control the business in general. The theoretical direction provided the important value of leadership and learning, however this study learns that the critical elements culture, strategic focus and process are more on itself than that they belong to leadership or learning. Therefore, the described conclusions will be extended with a couple of elements that are not discussed in this study yet, but could become a barrier for Abbott Logistics to create a culture that will be sufficient to realize its vision. The elements are based on participants’ answers, own observations, one and a half a year of work experience at Abbott Logistics, and conversations with colleagues and managers. The following elements will be outlined:
- Lack of inter-departmental communication(s); - Retention and functional demands;
- Perceived high workload; - HR-department;
- New employees.
Lack of inter-departmental communication(s)
The first element can be classified under the critical element process and contains the lack of inter-departmental communication that tends to result in sub-optimalization. Employees do not know the consequences of their actions for other departments that result in an ‘us against them’ culture. Quality is the result of cooperation. Abbott Logistics functions as a spider in a web and its strength is its collective knowledge. Sub-optimalization limits collective learning and therefore the development of CI.
Retention and functional demands
Perceived high workload
The third element is related to the workload and can be classified under the critical element culture. The workload is perceived as extremely high. Many participants work more than forty hours a week to complete their operational activities. A day off means double work the other day, not to mention the workload during and after the holidays. In favour of the functional responsibilities, social interaction between employees of different departments is minimized. It could be questioned if it is normal that people feel guilty when they take a day off or have to deal with the consequences of their hard earned holiday? CI requires an examination of your way of doing business and continually wondering what can be improved. The daily operations require so much time that there simply is no time to do this, neither by the employees, nor Abbott Logistics’ management.
HR-department
The fourth element is also astonishing and can be classified under al the remaining critical elements process, strategic focus and culture. One of the principles of CI is personal development by coaching and feedback on previous experiences. Ambitions are important and individuals should be able to realize these. Abbott Logistics employs nearly two hundred people and it is questionable why there is just one HR-manager. Berenschot is one of the most authoritative consultancies in the Netherlands and investigates the HR-policy/ Headcount-ratio of more than 100 companies in the profit and non-profit sector every two year. Berenschot concluded a ratio of one HR-employee on 72 employees (IntermediairPW, 2005). Suppose that someone has serious problems, with employees or perhaps even with the HR-manager, this situation implicitly creates barriers. And what about career planning, personal goals, coaching and feedback processes? It is at least remarkable if these responsibilities are delegated to departmental (functional) managers.
New employees
The fifth and final element contains new employees and can be classified under the critical element culture. Education facilities are based on functional trainings that are related to the computer system, transport modes and other functional subjects. Most of those trainings are two or three times a year. In the meanwhile they learn a lot from their new colleagues and face the risk of this type of learning that information becomes confused. Teach this new one as much as possible so he can work as soon as possible in the operation. The workload can be divided between an extra colleague, and before he has had any training, he has met the daily work mile of Abbott Logistics. After a couple of weeks it becomes difficult to get really trained and during the training the new employee wanders about all the things he has to do after the training. Perhaps superfluous, but this limits the critical and inquisitive attitude to create new insights.
Recommendation 1: Do you really want CI
Before any initiative should be taken, the crucial element in this study is the question if Abbott Logistics’ management really want to implement CI. According the stated vision and mission that resulted in five strategies to become in control, management previously acknowledged the value of CI. Control should not be interpreted as tight rules and procedures, but should be interpreted in a way that the organization becomes flexible to handle changes. Several scenarios could occur and it is essential that employees know how to handle. This requires appropriate resources, extended with experiences, reflection and feedback. Considering the taken actions it is questionable if CI is the right approach for Abbott Logistics.
Recommendation 2: Differ your Style of Leadership
As from aforementioned reasoning can be concluded, Abbott Logistics’ current style of leadership does not stimulate CI. It is based on procedures and control. Mistakes are numbered and people are result oriented.
In order to realize walk the talk, the second recommendation is to train managers and change leaders how to stimulate development and how to create appropriate organizational conditions. CI requires an environmental style of leadership that incorporates an open and learning attitude to meet customers’ demand. It is the leader in this kind of culture that explores and renews new demands and functions as a captain on his ship.
Recommendation 3: Departmental CI
Remove CI from projects to the departments and provide human capacity. The findings of the present study suggested that there are many ideas for improvement, while there is simply no time to test these ideas. As suggested before, there are two kinds of work. The first kind covers the daily responsibilities and the other kind handles exceptions. Remarkable is that although participants perceive an enormous workload, at least five participants mentioned that this is fluctuating a lot. Fire fighting energizes employees at Abbott Logistics, however CI aims to prevent a fire. From observations, one and a half a year of work experience at Abbott Logistics, and conversations with colleagues and managers can be concluded that the employees simply are not common with this way of thinking. Given this reasoning, complemented with the perceived high workload, resulted in the recommendation of a course of Time Management for every employee at Abbott Logistics.
create his own learning. The more departmental exceptions are solved, the lesser the perceived workload, the more individuals understand the principles of CI, the more individuals are searching for a new challenge. At this moment the inter-departmental exceptions (current project subjects) become interesting.
Recommendation 4: Introduce Competence Management
Many change-initiatives fail because of the assumption that an emotional shift in mind will always follow after the structural and organizational facilitation of the initiative. In practice, actually the opposite is true. Humans need to experience new behaviour, and perhaps more important, to unlearn old behaviour. This requires feedback, coaching and open communication so people can learn from each other.
Learning is changing behaviour in order to realize capability by knowledge, skills and attitude. Together, these three elements outline someone’s competence. We have seen that CI requires learning and an environment wherein its common to learn. We have also seen that learning is more than generating knowledge and that it also include experiences, feedback and coaching. Therefore I suggest the implementation of competence management. Aim of competence management is to assess which human competences are required to realize a vision or to remain competitive in current business. What are the core competences of the organization and what is our added value in the business chain? These core competences require continuous development and should become translated in departmental and individual requirements. One important organizational condition is that competence management should be stimulated by the HR-department.
An additional advantage is that individuals are challenged to develop, learn, and progress in their daily activities, which result in potential growth and a challenging job. Next to that, competence management contributes to a ‘lifelong learning’ and it creates the opportunity to influence an organizations culture from a positive and productive point of view. Core is to create an organization where it is common to develop yourself and create the possibilities to grow.
Recommendation 5: Become One
responsibilities. One or two employees of different departments switch for approximately one or two months. Main advantages are the increasing understanding of each other’s responsibilities, multi-functional employees, stimulation of learning and the increase of individual commitment to the entire organization.
To clarify this point I will refer to two examples: Managers of Shell are obligated to contribute to scenario thinking. They have to think about environmental variables and the organizational consequences if these variables change. In Japanese factories that include kaizen it became common to trigger employees in their creativity. One of those actions to realize this, is to relocate the most important employee of a team. The other team members have to cooperate to share responsibilities and keep the consequences of this loss as small as possible. With this simple activity, employees learn how to cooperate and to handle more functional responsibilities than their own.
6. DISCUSSION
6.1 Limitations
Abbott Logistics’ business is the one of nutritional products, pharmaceutical therapies, and medical devices. A business that could save lives, and a business wherein mistakes should be minimized. However, Abbott Logistics functions as a support centre and a spider in his web between affiliates and sources. Therefore, the (medical) core of its purpose should not be an excuse for the lack of accomplishment.
A limitation of present study is that observed results are gained in a tumultuous period wherein Abbott Logistics is facing a lot of trouble with the introduction of a new and almost fully automated warehouse in Breda. Next to these problems, the observed results are gained in a period wherein almost all positions Abbott Logistics’ top-management are filled in by new (not Abbott Logistics) people.
6.2 Strengths
One of the strengths is that present study contributes to the organizational goals of Abbott Logistics. In last year’s Class A audit by Oliver Wight, it was committed to pay more attention to CI current year. Next to this contribution, another strength of present study is that it gathered and describes employee’s opinion about the way Abbott Logistics contributes in its striving to realize the stated vision.
6.3 Own Reflection
myself. The final version is the result of many struggles, mainly caused by the lack of a clear research proposal. The result was a lot of extra work, misunderstanding from myself and my direct faculty supervisor and a waste of time. I have learned that a sufficient study requires an appropriate and extended research in front. I have also learned that it is not a smart strategy to start just somewhere or re-invent the wheel again. It was a hard but valuable lesson in research methodology.
6.4 Consequences for Science
Present study stresses the importance of learning and leadership as essential elements in the implementation of CI. Based on the theoretical direction, present study started to incorporate the essential elements culture, strategic purpose and process in leadership. This study learns that the incorporated elements themselves have a valuable contribution during the implementation process. The assumption that these elements could be integrated into leadership is therefore not reliable.
Next to the incorporation, this study learns that the style of leadership a result oriented stream of thinking does not stimulate the CI development process. Given the timelines of the different styles of leadership, compared with the rise of CI, might result in a subsequent study aimed to identify which style of leadership stimulates the development of CI?
6.5 Consequences for Practice
However Abbott Logistics does have an important role in the chain, it is the head office in Chicago that stipulates the borders. The recommendations in this study might be a contribution during the road to accomplish Abbott Logistics’ vision. However the link between short term performances, qualitative data analysis and financial rewards for top managers remains attractive. Nonetheless the consequences, the main advantage for Abbott Logistics’ employees is that this study translates their opinion about the way current business and the facilitation occurs. A last recommendation for those who really want to change, change is nothing more than a challenge with the future to implement the lessons of the past, or like Brian Tracey once said:
‘You cannot control what happens to you, but you can control your attitude toward what happens to you, and in that, you will be mastering change rather than allowing it to master you.’
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