The Organizational Master Plan Handbook

A Catalyst for Performance Planning and Results

H. James Harrington, Frank Voehl

• Publisher: Productivity Press
• Year: 2012
• Print ISBN: 9781439878774
• eBook ISBN: 9781466558885
• Topic: Business
• Subtopic: Management
• Index: Business

For visionary leaders, an Organizational Master Plan and associated technologies have become essential components of strategic decision making. Written for leaders, planners, consultants, and change agents, The Organizational Master Plan Handbook: A Catalyst for Performance Planning and Results explains how to merge the four planning activities tha

1

Overview of the Problem

When only top management own the plan, they have to spend most of their time pushing it or it won’t get done.

—H. James Harrington

World War III has begun. This time it is not a war of battleships, bullets, and bombs—this is an economic war. The weapons are televisions, steel, cars, and clothes. This is a war where we have no allies. Every country in the world is out to capture more of its share of the US and world markets. We are being attacked with tires from Brazil, cars from Japan, radios from Taiwan, clothes from China, cosmetics from France, shoes from Italy, beef from Argentina and Australia, and so on.

US business entered the 1980s with a deep-seated resolution to stop the flood of import products and as a result, a group of new admirals and generals took over to reestablish our industrial leadership. These were people like John Akers of IBM, F. James Mc Donald of General Motors, Jim Olson of AT&T, and John Young of Hewlett Packard. Industrial leaders like these laid out strategies to provide a thrust to lead the United States back to the prominence it once had, but it takes years to reestablish a reputation once it has been destroyed or at least tarnished.

Think ahead. Don’t let day-to-day operations drive out planning.

—Donald Rumsfeld (former US Secretary of Defense)

General Motors (GM)—one of the most powerful and respected organizations—filed for bankruptcy in 2009. Why did this happen? What did they try to do that didn’t work? To help understand this, I will report on an interview I had in 1988 with GM’s corporate president, F. James McDonald, which was documented in Dr. Harrington’s book The Quality/Profit Connection (published by Quality Press in 1989).

General Motors celebrated its 100^-year anniversary on September 16, 2008. It was on this date in 1909 that William C. Durant founded General Motors Company, predecessor of the current General Motors Corporation. Durant’s first acquisition for General Motors Corporation was the Buick Motor Company.

In 1988, GM had 151 facilities operating in 26 states and 90 cities in the United States and 13 plants in Canada. It had assembly, manufacturing, distribution, sales, or warehousing operations in 37 other countries. GM also had equity interest in associated companies that conducted assembly, manufacturing, or distribution in several countries. The average worldwide employment totaled approximately 748,000 men and women in 1984.

In January 2009 GM claimed to employ 244,500 people globally, which was a drop of 503,500 employees from their 1984 head count. Just 6 months later, that number fell by at least 20,000 as GM announced the closing of 14 plants and three warehouses. On the dealership front, between GM and Chrysler, nearly 3,000 franchises have closed their doors. GM had dropped from the Number 1 seller of cars to Number 2 and was moving fast down to becoming Number 3. The US government stepped in and invested millions of taxpayer dollars to try to keep GM operational to no avail. Now GM, once the pride of the U.S. companies, has gone bankrupt.

Here is an excerpt from Dr. Harrington’s interview with F. James McDonald.

Harrington: What were the circumstances leading to the current focus of GM on quality improvement?

McDonald: Efficient, small, high-quality vehicles from Japan and the availability of these vehicles at just the right time in history were watershed events in the US auto industry. Their perceived quality became the benchmark for all cars—in effect, customer standards changed dramatically. And that change swept through the entire line of products.

Harrington: Do you have an official quality policy?

McDonald: Actually, the new quality consciousness at GM began with the development of a quality ethic for all GM units and operations. The essence of this ethic boils down to this: Quality is the number one operating priority at GM today.

Harrington: To what sections of the business is it being applied?

McDonald: Quality improvement is being applied to all areas of our business. Specific quality objectives and strategies must be included within each unit’s five-year Business Plan. All departments within a business, and of course each employee, contribute to meeting those quality objectives.

On new product programs, resources are allocated very early when our ability to influence the outcome is greatest. This includes the front loading of people from all disciplines including marketing, product engineering, manufacturing, assembly, quality assurance financial, and materials management. This includes early sourcing decisions so our suppliers can work with product development teams on potential problems and improvement.

Harrington: What activities were undertaken to start the quality improvement process and when did it start?

McDonald: At GM today, we have this kind of strategic vision, and that vision is simply to offer world-class quality in every market segment. By world class, we mean parity with, or superiority to, the best in the field—product for product.

To assist the operating units in this effort, the corporation has issued four key success factors for quality, which help focus the GM quality ethic and its six mandates. Research has shown that these key success factors must be addressed in business planning and implementation strategies if meaningful quality improvement is to occur.

Let’s take a look at what the key success factors and the associated objectives are.

• Management commitment. Managers at all levels must be committed to continuous quality improvement and demonstrate their commitment by word or action.
• People-development process. Every employee, regardless of function or level, must have the encouragement, support, and opportunity to be a contributing member of the quality improvement effort.
• Quality performance processes. Each task and activity must have processes and tools to ensure conformance to specifications and to provide for continuous quality improvement.
• Customer satisfaction. General Motors must be the world leader in quality, reliability, durability, performance, service, and value, as confirmed by customer-defined measures and marketplace response.
  We have also identified the major activities to carry out improvements on any given project and have found that they work quite well.

Harrington: What is the role of top management in the improvement process? McDonald: Achieving true quality maturity is totally the responsibility of top management in our company. Others may carry it out to one degree or another, but those at the top must be willing to go the whole route.

We believe that the whole top management team must be aboard. Even the most inspiring leader can’t hope to reach the organization without total commitment from everyone at the top.

Harrington: What is the role of the employees and the union in the improvement process?

McDonald: We are absolutely convinced that eventual success depends heavily on the employees. As we discussed, one of our key success factors for quality improvement concerns people-development processes.

For instance, we’ve trained more than 30,000 GM workers in statistical process control (SPC) techniques. And I must say, to see these tools put to work right on the line is one of the most rewarding experiences I’ve had at GM. So, I think we’re on the right track on the employee side—even though we still have a ways to go.

Harrington: What problems did you have in implementing the improvement process?

McDonald: We’re now in a sort of middle ground on the quality cycle.

Currently, techniques such as SPC at the point of manufacture are providing outstanding improvement, as verified by the more recent new products. Statistical techniques are helping to ensure that the process is being controlled. The whole focus must be on process control, not inspection of the parts.

But prevention within manufacturing can take you only so far along the journey. Greater success must come from moving the focus upstream to design and engineering, for example, by combining the talents of design engineering, processing, and manufacturing, and having them work together as a team instead of individually. That’s the place to start if you’re serious about doing everything right the first time. Our product development teams on new products that we have previously mentioned are addressing this in a fine manner. We are also initiating this concept in our daily operations.

GM’s reorganization of its North American passenger cars and its worldwide truck and bus operations addressed changes necessary to ensure quality improvements, accountability for results, and effective allocation of resources. The reorganization was quality driven from the beginning.

On reviewing McDonald’s comments, Dr. Harrington acknowledges that he was saying all the right things and doing all the right things, but what went wrong? Are we telling management to do the wrong things? Is the quality message one that leads an organization into bankruptcy?

We believe with all our hearts that what McDonald was saying were the right things:

1. He recognized that the playing field had changed and the organization had new benc...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• Management Handbooks for Results
• Preface
• Acknowledgments
• About the Authors
• Other Books by H. James Harrington and Frank Voehl
• Chapter 1 Overview of the Problem
• Chapter 2 What’s in an Effective Planning Process?
• Chapter 3 The Organizational Master Plan
• Chapter 4 Change Management as Part of the Organizational Master Plan
• Chapter 5 Trend Analysis
• Chapter 6 The Business Planning Process
• Chapter 7 The Strategic Business Planning Process
• Chapter 8 Strategic Improvement Plan
• Chapter 9 Developing the Strategic Plan
• Chapter 10 The Operating Plan
• Chapter 11 Organizational Master Plan Summary
• Appendix A: Definitions and Abbreviations
• Appendix B: Improvement Tools
• Appendix C: Problem Analysis Cycle
• Index