Learning to Improve the Business

Abstract

This research investigates the impact of organizational learning and continuous improvement on service through UK enterprises. It looks at the current literature on these and related topics and then examines the attitudes and perceptions of a selected group of managers to see how they match up, and to ascertain how far along we are in moving into that new set of business practices attached to organizational learning and positive organizational learning orientation. In addition, the concepts of “continuous improvement” (CI) are defined and examined in concordance with lean manufacturing practices, such as “Just in Time” delivery (JIT) and cooperation across the entire supply chain.

Overview

In this day and age of rapid change, people must commit themselves to life-long learning. Managers must realize that businesses which want to compete in international markets must emulate the life-long learner and become Learning Organizations, embedding a positive learning orientation within the company culture and restructuring the company’s architecture to accommodate a non-hierarchical learning and sharing environment.

The future is not in “doing it all”. It is in building and maintaining networks which can do it all. Change is rapid, and businesses can only keep up if they become organic structures with good informed management orchestrating the processes of doing business. The processes themselves much change as dynamically as a river changes course after an earthquake, but with less destruction. This is what the new methodologies of lean manufacturing, continuous improvement and interactive development are aimed at.

With this as a background researchers are looking at the best ways to translate date into knowledge, and then share that knowledge across a whole network of cooperating enterprises, from the first glimmer of an idea through development and production and finally to distribution. The major change here from business fifty or more years ago is that waste must be eliminated, productivity must be maximized and everything the business does must be examined in the light of new philosophy which centers on doing business on a fragile planet ethically and still make a profit. Many of these new processes researched within this paper are aimed at those goals.

Aims of the Dissertation

“If your business is to survive in today’s rapidly changing environment, your should either manage change or change management.” (E-Coach 2008) This is a heading on one of the most valuable free resources on line. What this site provides is a series of articles explaining the strategy of learning organization, including the Japanese Kaizen strategy and Continuous Improvement planning, among others.

The site highlights the need for a fundamental change in how we do business, especially pointing out areas where companies historically have large waste of materials, manpower and intellectual power. This kind of waste is what has led us to the brink of the demise of our planet and to economic and political inequality which has created a global struggle for power. This waste is not good for business, not good for the public and not good for the planet. We need to change it.

It is the aim of this dissertation to assess the current state in the United Kingdom of the implementation of methods for creating a learning organization and the practice of Continuous Improvement, a recently created method for eliminating waste, maximizing man hours and taking advantage of the intellectual assets of the company. We want to identify the problems and the benefits organizational learning and the practice of Continuous Improvement in service in the UK and ascertain the percentage of implementation.

Objectives

The UK learned a costly lesson when the Colonies split off: not to stand in line wearing very visible red uniforms and be shot at. Since then, UK businesses have evolved and begun to embrace innovation. It is the main objective of this dissertation to identify problems and benefits of learning organizations as concerns the implementation of Continuous Improvement and assess the current state of adoption of these practices. We want to identify the impact of organizational learning and the promotion of continuous improvement in the delivery of service and products in organizations in the United Kingdom. By comparing this information with the success rates of the companies, we may be able to make accurate predictions for the future.

Introduction

“In an era of globalization, no organization can assume its competitive advantage is sustainable.” (Greenbalgh, Leonard 1998)

As the economy shifts to knowledge work, firms attempt to retain knowledge to avoid repeating mistakes or reinventing the wheel. Increasingly, organizations are focusing on managing and creating knowledge for competitive advantage (Garvin, 1991; Huber, 1991; Leonard-Barton, 1992; Levitt and March, 1988). There has been tremendous expansion in the field of organizational learning and innovation since Drucker (1964) first began examining the connections in the 1960s.

However, learning organizations were largely dreams until the last decade of the century, when business was becoming truly global and businesses were seeking ways to expand their rate of learning and innovation. Garrett (1990) probably actually developed the whole concept, but his earlier books were practically ignored, though his graphs and charts are certainly copied. It was Peter Senge who is credited with coining the term, “Learning Organization”, in 1990. (Smith, M. K. 2001)

From creating Learning Organizations to implementing Continuous Improvement strategy, the expansion of this subject of study has expanded rapidly over the past twenty years in an effort to keep up with the changing international business landscape. New ways of creating, sharing and applying organizational knowledge have been under intense development, testing and scrutiny to enable new and better methods for innovation, development, manufacturing, distribution and customer service. The global landscape is simply full of eager and able competitors, and organizations seek ways to preserve their current business and to develop new ones.

The earlier quote from E-Coach (2008) could be seen as a mantra for business in the twenty-first century: “manage change or change management.” This requires that organizations maximize their intellectual capital and learn to value and apply organizational knowledge to develop new ways of sustainable business development by applying more practical solutions to problems of business, the environment and socio-political problems.

Thesis Statement

It is expected that a careful examination of the development of learning organizations in the UK will show that there is a parallel between level of the development of organizational learning and management of organizational knowledge and the success or failure of the implementation of Continuous Improvement strategies.

Reasons and Methodology for the Literature Review

This literature review was undertaken in order to discover research which has been done and written about concerning the connection of organizational learning and knowledge management to innovation, and its connection to company profitability. This is important, because we expect to show a parallel between organizational learning and knowledge management and the implementation of new strategies called Continuous Improvement models.

In order to discover relevant digital literature several on line databases were used, including EBSCO, Academic Premium, several business databases, Jstor, Academic Elite, ERIC, the Gale Group, Highbeam Research and the databases and catalogues of libraries in addition to various Internet search engines for web documents. For digital searches, several combinations of key words were used as search terms. Using the three search terms: leadership, style, and innovation, the results were few and mostly irrelevant. So, different combinations of “learning organization”, “organizational learning” and innovation, netting several hundred results.

Most results were journal articles and books on business, leadership, organizational learning, leadership styles and innovation. Additionally, a further search within these results was done on innovation, because the previous literature checked made it clear that there is a dependence upon organization learning for the flexibility necessary to react to environmental turbulence by creating innovative responses. (Hanvanich, Sangphet, Sivakumar, K. and Hult 2003) Articles concerning education or medicine were filtered out, since they are often too specific to their genres to be useful in this study. The cited authors were searched in card catalogues to see what books they had in current publication.

Literature Review

Managing Change and Developing Innovativeness

Druker said that a key factor was the ability to manage change. (1954 p. 50) change is inevitable, and eventually even the most successful businesses will become obsolete, either because of new competition or new technology. He suggested thinking about the future as it related to three business strategies:

1. projection,
2. anticipation, and
3. innovation (1964).

Companies must extrapolate the future, anticipate change and promote innovation to keep up. (Hanvanich, Sangphet, Sivakumar, K. and Hult 2003) looked carefully at the effects of learning orientation on innovativeness, seeing it as crucial to successful adjustment to environmental turbulence, whether in technology or the market. Hanvanich et al. (2006) included a definition for learning orientation as the “extent to which the organization adopts organizational learning as a basic value necessary for future survival.”

Their study showed that, “Specifically, under low environmental turbulence, learning orientation and organizational memory appear to be related to performance and innovativeness; however, under high environmental turbulence, only learning orientation is a useful predictor.” (Hanvanich, Sangphet, Sivakumar, K. and Hult 2006) What this means is that good strategic managers cannot depend upon their experience in times of high market turbulence, but must depend upon the organization’s ability to adapt through the application of organizational knowledge and innovation that is embodied in its work force at all levels.

Dynamic capability, as defined by Teece, Pisano, and Shuen (1997), was seen as a key factor in any organization’s ability to adjust to this kind of an environmental turbulence. This research showed that a company’s ability to develop a positive learning orientation was the primary factor in their ability to develop innovative ideas. Hanvanich showed that an organization’s innovativeness was the primary factor allowing adjustment to environmental turbulence, so that it also affects a firm’s productivity.

Hurley and Hult’s research (1998) showed the parallel between innovativeness in the corporate culture the greater and the organization’s ability to learn. They also found that corporations which focus on learning, development and participative decision making had a much higher level of strategic development and innovation.

Learning Organizations and Learning Orientation

Prange (1999: 27) comments that one of the greatest myths of organizational learning is the ‘who question’, that is, ‘the way in which learning might be considered organizational’. There are those who argue that it is individuals, not organizations, who learn. However, since reorganizing an organization so it can become a learning organization effectively creates a new, more organic entity.

The most useful learning orientation is shown as intimately entwined within an organization’s cultural development, and the development of any organization is directly dependent upon employee development and a positive learning culture within the company which is also compatible with the company characteristics overall. Individual employee development comes first, but this, by itself, is not enough. The employees must also be taught how, and encouraged and enabled to share with their work group, and this will spread throughout the entire organization. This kind of company is characterized as having a positive learning orientation.

Salk and Shenkar identified factors which contribute to a positive learning orientation, and also the factors which will impede it. (2008) Their case studies identified hierarchical power as detrimental to the development of learning organizations. Whenever there were differences, resolution was extremely difficult, because of differences of perception among stakeholders. In joint ventures this became even more of a problem, especially if the two partners had very different learning orientations. (Peterson, Richard B.; Kameda, Naoki; Shimada, Justin, 1981)

The learning orientation of any corporate culture, that is the hierarchical power structure is the primary framework for its learning orientation. The power structure has a huge impact on the corporations learning orientation and company culture. A hierarchical top-down chain of command was a central power structure than the more flat structure with decentralized power centers, such as in Best Buy and Wal-Mart. These structures determine “how” the corporation learns.

There is a distinct difference between a company’s commitment to learning, and it’s learning orientation. How learning is promoted and how it is integrated within the company culture whether or not an organization is a true learning organization. This is because an organizational commitment to learning, while valuable to the organization, is simply not enough. Commitment to learning is very important, but it does not control the learning.

In addition , learning tools and guidance for using them, plus, a method for valid feedback, is necessary. It must be remembered that learning actually does not take place until it is shared. It is in this process of sharing pushes The knowledge gained from short-term memory to long-term memory. This makes it part of the already present structure, and makes it transferable to other applications. So within the organization, employees must be given the tool HR can provide the guidance, or supply trainers. Feedback does not have to be direct, raises or extra activities.

This illustration from Han, Kin and Srivastava’s article in the October 1998 Journal of Marketing shows us one of the holes in the research. Look at the end result: Organizational performance, and note that the diagram points out that organizational performance results from the three elements at the left: Customer Orientation, Competitor Orientation and Inter-functional Coordination. It shows us disruptive influence in the environment and the innovation, which will be responsible for the eventual organizational performance. However, nothing is said about learning orientation. It should be on the far left because it controls how well the company will ride out the turbulence and stay innovative and productive.

Flexibility

In nature, the most successful organisms on earth are also the most flexible, and man is, by far, the most flexible and adaptable of all. Our ability to adjust to change is the key to our survival as a species. For example, in times past the USSR used centralized decision making which is extremely wasteful. The five year plans were created in Moscow, thousands of miles from the affected areas. The knowledge of the local farmers was not even considered in decisions, and changing environmental factors were not accounted for. So, when farmers knew they would need more fertilizer, it was unavailable, because it was not in the central plan.

One year a late spring freeze killed young seedlings causing crop failure, and there was no additional seed. This centralized power is counter-productive and most western businesses no longer employ it. The power structure affects the availability opportunities for learning, since approval needed for creating, monitoring, modifying and providing opportunities must travel too far up the food chain. The rigid power structure simply prevents timely approval for such things.

Communication

Communication has a strong impact on the spread of any organization’s learning. Contact information across the organization, and communications hardware is a must to allow the sharing of organizational knowledge. This is generally done via an intranet, possibly a VPN or company website. Any company that desires to promote organizational must be willing to commit the resources to make it useful. This includes communications and data storage hardware, plus document management and tracking. Organizational knowledge is that knowledge which is accessible to all members as needed. If it cannot be found, it cannot be applied, and is, therefore, merely lost and useless data.

Corporate policy on communication: i.e. who is allowed to speak to whom during working hours on or off site must be defined in order to understand a company’s learning orientation. A strong social culture promotes communication across the organization and across levels within. Can a machinist pick up the phone and reach a safety specialist? This often ignored aspect of internal communication is easy to miss as part of the sharing mechanism for organizational. This part of company structure has the most impact on the actual sharing of learning and also on the application of that learning to new problems, which impacts the company’s innovativeness and its ability to adjust to changing environmental factors.

The access to key people is also a strong factor in the company’s learning orientation. It is this which makes learning opportunities available and also which makes the resulting learning available to the company. When any worker discovers a learning opportunity which requires a change in schedule or procedures permission must be obtained in order to make that change. The opportunity could be lost if the employee has no access to the right people.

These people who hold the power of granting permission are usually holders of organizational knowledge also. For example, a work team manager might have experience with an outside company, at a time when the organization opens negotiation with that company for software development. If the project manager or architect cannot access the person who has the necessary knowledge, his knowledge is wasted.

There should be certain people at all organization levels who are accessible to anyone, while others may be part of a hierarchical decision structure. The degree of accessibility to the people with organizational knowledge or decision making power needs to be assessed in measuring an organizations learning orientation.

Last, but far from least, is the physical architecture of the company structures. For example, is the manufacturing facility close or far from design or marketing centers? This impacts the sharing of organizational knowledge. A design team may need to know how a change in design will modify the manufacturing process before engaging in extensive research and development. If the changes in manufacturing processes are too extensive, expensive or time consuming, they need to know before they waste time, effort and company resources. If the manufacturing center inconvenient, then cooperation is also inconvenient. Technology can help.

Video and Voice over IP and even 3D modeling technology and process simulations can all be used in place of face to face sessions. The physical layout of the buildings may also create discouraging barriers to sharing and learning. Common meeting areas accessible to all departments can encourage the exchange of information and cross fertilization of new ideas. Even cafeterias being used by all levels of employees can affect the learning orientation in addition to the positive effect on morale when workers do not feel isolated. This has a strong impact on sharing and even applying knowledge to problems.

Finally, a recent change in how many businesses operate provides additional definition for the company’s learning orientation, because it is part of how learning is acquired and shared. Knowledge is power. If organizational knowledge is shared with partners or even with clients can make profound changes in how the company does everything. However, under-protection of organizational knowledge can result in wasted or lost resources and loss of strategic advantages, while over-protection can result in the loss of flexibility for application. However, this kind of sharing has become essential to some companies.

Inter-Organizational Knowledge Sharing

There is a growing tendency for engaging in inter-organizational learning, for example in an attempt to reduce “design-to-deliver cycle times” (Scott, 2000). Collaboration between connected organizations can really enhance organizational learning (Dodgson, 1993; Grant and Baden-Fuller, 1995; Hamel, 1991; Nonaka, 1994). Inter-organizational collaboration a large variety of knowledge (Dodgson, 1993). Organizations can collaborate with customers, suppliers and competitors, thereby creating their own learning networks. (Powell, 1987) this strategic action allows organizations to share and “internalize the skills and capabilities of their partners”. (Badaracco, 1991; Hamel, 1991). This creates new knowledge and spreads across cooperating organizations.

Organizations may stick with “arm’s-length contractual” relationships (ACR) because they feel the need to control. In this case, a minimum amount of information concerning costs and future plans will be shared with current and potential buyers and suppliers. This keeps suppliers insecure and promotes their efforts to constantly improve their competitiveness. The customer must monitor the supplier on a continual basis. Companies can use “heavy goods inwards” inspection to ensure quality goods. Sako calls this “competence trust” (1992).

The other extreme is OCR (Open Contractual Relationships), which depend upon high level of trust, cooperation and a commitment to a long-term relationship. This results in agood quality and service, growing or stable orders and other less tangible benefits. (Sako, 1992). This allows the development of a tightly integrated supply chain and assembly line, resulting in a minimum of waste. Excess inventory is eliminated, and no time is wasted on inspections. With this kind of relationship the purchaser places “trust” in its in the competence and honor, fostered by its own best interests, of the supplier. This is a direct form of stake-holding between the two firms, and usually is not embarked upon until the supplier is thoroughly assessed for competence, dependability and quality. (Carr and Truesdale, 1992).

Continuous Improvement Strategy

According to Richard Chang (1995), there are 10 core threads that make up continuous improvement strategy. They include the following:

Intense customer focus

This results in added value for the customer and product and service attributes, and this enhances customer satisfaction, becoming the foundation of the organizations, quality improvement system. Continuous to monitoring the emerging customer and market requirements. Unending attention is paid to emerging customer and market requirements, customer-satisfaction determination and measurement, and customer responsive­ness.

Hands-on senior management involvement

Senior management becomes personally in the creation of strategies and the systems required in order to achieve quality leadership, as well as monitoring the communication quality improvement after personally deciding upon the expectations for improvement and setting the priorities. Leadership must become functioning role models. Just as senior management needs to look after the instilling of quality improvement philosophy, reinforcing the focus upon the customer and supporting the development of work forced to participation.

Deployment of strategic objectives

Strategic objectives, and the goals of quality improvement are systematically link and deployed among all functional workgroups and teams. All of these are linked to the efforts of teams to improve the entire system. Specific roles and responsibilities are developed for employees at all levels. As each becomes involved with the responsibilities for creating and implementing the plan strategies to achieve the quality improvement goals.

Continuous Process Improvement

The organization undergoes repeated cycles of planning, implementation and evaluation, engendering both incremental and innovative improvements in the processes connected with products and services, both new and existing. Close attention is paid to customer values and internal operations.

Empowered involvement of satisfied employ­ees

It has been found that the key requirement for improving customer satisfaction and operating performance at the same time, lies with empowering the employees and involving them in the entire process. Operating policies will be created that focus upon the needs of the customer, problem solving and decision making. This philosophy drives the process.

Long-Term Orientation

Long-term commitments are made with key stakeholders, such as customers, employees, suppliers and stockholders. This results in quality leadership. The future is oriented on anticipating changes that may affect the organization. In both short and long term. These include technology, customer requirements, changes in regulations and fluctuating markets.

Targeted Measurement Data

Fact-based measurement data drives the decision-making process by management and employees. This includes those decisions concerning customer satisfaction, product and service quality, benchmarking, and competitive comparisons. Data is linked to key customer satisfaction and performance indications are tracked for operations. All of these are analyzed to determine the trends, identify lessons learned and influenced the ongoing quality planning and efforts at improvement.

Market Responsiveness

The time cycle for introducing new or improved products has been shortened on a continuous basis in order to meet the increasing demands of a fluctuating and competitive marketplace. There been major improvements in organization for the work product and delivery of service processes, and also in the ability of the organization to track and anticipate the direction and intensity of important market shifts.

Continuous Learning And Development

Considerable investment has been made in the development of employees and organizational learning, and these are viewed as extremely important. It is this kind of learning orientation, which is required the performance goals set by the organization. New initiatives have been created in order to meet the learning and development needs of an increasingly diverse workforce. These are required to achieve the organization’s per­formance improvement goals. As needed new programs will be developed to meet the new demands, including more flexible training programs when required.

Internal And External Partnerships

Cross departmental teams have been created and collaboration is ongoing with unions, external partners, customers and suppliers in order to accomplish the quality improvement goals. Operational strength can be increased through the establishment of strong partner­ships, both internally and externally, allowing us to create new market opportunities.

Bessant and Caffyn defined CI as “the planned, organized and systematic process of ongoing, incremental and company-wide change of existing practices aimed at improving company performance” (Boer et al., 2000). (Pinnington and Hammerslee 1999) It becomes an ingrained part everyday work processes for all members of the organization. It is necessary to develop excellent communication, problem solving, measurement and feedback, education and the sharing of knowledge across the enterprise cross functional teams and interdepartmental cooperation, and the creation of new strategic planning, including the deployment of the necessary supporting policies and incentives. (1997).

Definition of continuous improvement groups’ role and their connections with orga­nizational performance is explained by the extension of stewardship theory (Davis et al., 1997). The stewardship theory of management conceptualizes subordinates as collectivist, pro-organiza­tional and trustworthy. Davis et al. (1997, p. 43) tell us that managers have higher order needs (Herzberg et al., 1959; Maslow, 1949) and are by organizational goals, rather than personal achievement.

Kaizen

Kaizen in Japanese means “improvement”. It was developed by Toyota to improve its auto manufacturing. Kaizen strategy requires continuous efforts for improvement and involves everyone across the organization, or even both organizations.

Kaizen Mindset

• We can and should improve everything.
• There should be at least one improvement made in the organization every day.
• If you don’t like something, improve it.
• Even when things are working properly, they can be improved. Think outside the box.
• The strategy for improvement is driven by the customers needs. Any action of management should be designed to increase customer satisfaction.
• You should first imagine the ideal customer experience and day and try to improve it
• Quality comes before profit – business can only prosper if customers are satisfied.
• Being able to admit problems and seek solutions is the sign of a good corporate culture.
• Don’t think why things can’t be improved, think how they can be improved.
• Problem-solving and cross functional systems are two sides of a collaborative approach.
• The company should place the emphasis on the process and create an environment where people will feel compelled to improve it.
• Never provide enough chairs for everyone, and people will arrive on time. Kaizan has no reason to be in times of plenty.
• When there are problems with workers or suppliers it is better to improve them than to try replacing them. Replacement will only bring in new problems. (E-coach 2008)

ACR-OCR: How They Affect Improvement Strategy

ACR

The models of customer-supplier relations directly impact the CI process and inter-organizational learning. The usual forms of customer-supplier relations using competitive or ACR, problem solving and CI our internal policies to the company, and this is not communicated to the customer. The supplier is also secretive, unwilling to admit any difficulties, because that would be an admission of failure.

Admitting to problems may be seen as incompetence and could cost the supplier a contract. When there is a problem under this system, the supplier may intentionally allow less than the highest quality to be delivered, hoping that the “goods in” inspection will not detect it. Using ACR, it is solely the supplier’s responsibility to identify and correct problems, improve activities and carry the entire cost. (Womack et al., 1990).

Any interest in the internal processes of the supplier by the buyer is often seen as “customer meddling” and is most unwelcome. Under ACR, the supplier has no long-term relationship to cultivate, but communicates absolutely the minimum of information to the buyer concerning costs processes and problems. There is little or no trust between the two companies. The buyer often plays suppliers against each other, making them very reluctant to share any information. This competition and lack of trust is a disincentive to sharing information across the organizations.

OCR

Shared learning is a core feature of OCR allowing continuous improvement and lean supply to function. (Lamming, 1993). With OCR, the “open book” approach promote sharing between the two parties, ensuring that the supplier is aware of the customers needs, processes and problems and vice versa. They can offer each other help, and come up with cooperative solutions that benefit both companies. Visits from the customer to the supplier for problem solving is commonplace, as are the reverse from supplier to the customer. This creates a high level of “competence trust” between the customer and supplier (see Table I).

According to Womack et al. (1990), CI reduces costs related to OCR. This may take the form of incremental improvements, new tooling or processes, or redesign of components. The customer and supplier share information about the costs and techniques, over an open channel of communication, as shown in Table I. Together, they create strategies for savings and quality improvement, with provisions for acceptable profit for both parties. Risk is shared. The supplier has a financial incentive to improve the production process, and keeps profits from any of its cost-saving innovations and CI activities. Improvements in OCR are more often and faster than in ACR, because of CI activities, especially the continual incremental improvements in production processes.

In competitive ACR, savings created by either side would be kept secret. , but OCR can join knowledge and skills together and create long-term problem-solving solutions and savings. Benchmarking performance and visiting sites are only some of the improvements. (Garvin, 1991; Leonard-Barton, 1992). Prior experience can modify the organization’s ability to operate coif protectively. (Cohen and Levinthal, 1990; Hamel, 1991).

How quickly knowledge spreads through an organization depends upon the organization’s limitations, and its architecture, (Levitt and March, 1988), “where customers, suppliers and competitors are potential sources of ideas from articulation and observation” (Garvin, 1991). Inter-organizational learning is closely connected to continuous improvement (CI) activities along the supply chain.

Inter-organizational learning should be considered through an examination of continuous improvement (CI) activities along the supply chain. (Maire-Kirnen 2002) Different forms of customer relations will have strong impact on this process.

As noted by Imai (1986), external as well as internal problem solving mechanisms are important to CI. Traditionally, “goods inward” inspection made companies less dependent on the competence and integrity of their suppliers. Relationships based on OCR (Sako, 1992), with no goods inward inspection, required in problem solving. There are ways for cooperating companies to resolve problems resulting from their interdependency.

Of preferred supplier status (PSS) is one example. Once a long-term relationship is established “competence trust” develops between supplier and buyer concerning the quality of goods supplied (see Table I). there may be an initial cost related to involvement in methods, practices and problem solving. However, companies can reduce their supply base to a smaller number of trusted, quality suppliers who are willing to participate in cooperative problem solving activities.

Turnbull et al. (1993) and Lamming’s (1993) suggest that fewer, more talented and larger suppliers that will survive which can engage in joint problem solving and CI activities under an OCR agreement. There are also practical implications for using CI along the supply chain, including the shared knowledge and risk benefits. There is currently a debate over what constitutes appropriate organizational design for CI along the supply chain. (Berger, 1997; de Leede and Looise, 1999; Lindberg and Berger, 1997).

Just in Time (JIT) Processing and Lean Manufacture

What is JIT?

“Just-in-time manufacturing means producing the necessary items in necessary quantities at the necessary time. It is a philosophy of continuous improvement in which non-value-adding activities (or wastes) are identified and removed.

Putting this concept into practice means a reversal of the traditional thinking process. In conventional production processes, units are transported to the next production stage as soon as they are ready. In JIT, each stage is required to go back to the previous stage to pick up the exact number of units needed.” (E-Coach 2008) and

The benefits of this kind of system include reducing operating costs, increasing performance and throughput, raising quality, improving delivery and resulting in increased flexibility and innovation level

JIT Components

• Production Leveling : eliminating most large slack times or overloads
• Pull System: rather than Push, pulling only what is needed at the time
• Kamban (label or signboard) system for communication
• Good Housekeeping: everyone cooperating in keeping the process clean
• Small Lot Production
• Setup Time Reduction
• Total Preventive Maintenance (TPM) : a system of quality control which deals with production problems before they occur.
• Total Quality Control (TQC) A specialized system of quality control which anticipates and prevents quality problems.
• JIT Purchasing : Purchasing only on an as needed – when needed basis, reducing inventory.
• Line Balancing : all production lines are steady, with no overtime on some lines and idle workers on others.
• Flexible Manufacturing : Ability to make different products with quick change management.

Kamban – a Communication Tool in JIT Production System

This is a very important communications tool involving signs and transfer of responsibility. It records materials delivered and work done at the same time, including self inspection.

Lean Manufacturing

The idea is to do more with less of everything: money, time, equipment, waste and workers. The basic premise behind the manufacturing is to completely eliminate waste. It involves new production control techniques, created in Japan for cut Toyota, such as the Toyota Production System, Production Scheduling, JIT, KANBAN and 5S. It can improve everyday production improve everyday production, lower costs and eliminate waste. (Lean Manufacturing 2008) The basic elements are waste elimination, continuous workflow, and customer pull. The focus is on the areas of cost, quality and delivery, forming the basis for a lean production system.

Other Research Found

Garcia and Prado (2000) conducted a study on Continuous Improvement Processes and their current implementation. This dealt mostly with programs where suggestion boxes were put out. However, there was little correlation, and great variation among the companies, including the level and type of learning orientation and command structure within the company.

They had mixed results. There was not enough correlation among enough of the participants to make many conclusions, except that programs which presented even minor rewards for participation from employees fared better and programs which kept suggestions confidential until they were accepted as good worked better. Using suggestions worked better is the suggestions went directly to managers. There were few suggestions at all from managers or departments. Most came from the rank and file or teams.

There are a number of articles and studies that show how large companies have established systems that allow employee contribution to continuous improvement (Hammersley and Pinnington, 1999; Lawler III et al, 1995; Mohrman et al, 1996). But, this has little impact on small to medium enterprises.

Some Examples of Learning Organizations

Often if an organization can be said to be a learning organization the mission statement will show the organization’s learning orientation, as it does in the case of the Harvard Business Review (2008):

“Our mission is to improve the practice of management and its impact in a changing world; the world may change, but the mission does not. We also maintain our devotion to expertise: We believe that there are tested and untested ideas; that there are better and worse ways to lead and to manage; that it’s possible to prove which is which; and that we serve you best by publishing experts themselves rather than translating their ideas into journal­ism.”

Ernst & Young

At Ernst & Young, knowledge development is a valued asset and there is active promotion of innovation and entrepreneurship. They have created or contribute to varied programs around the globe, showing how much the development resources around the world, especially human resources, is valued. Ernst & Young promotes teamwork internally and with partners and clients, even in other industries. Ernst & Young has developed a practice of forming partner relationships with other industries for product and service development. The synergy thus developed with partners has helped them rise to the top, as suggested by a study of International Joint Ventures. (Dhanaraj, Lyles, Steensma & Tihanyi, 2004)

Toyota

Toyota is responsible for an amazing amount of innovation in the auto industry. They are, in fact, responsible for kaizen strategy, and many other components of lean manufacturing. This development took the American auto industry by surprise, some years back, since the Japanese are historically known for very rigid hierarchical structure within their companies. It was a quantum leap for any culture, and seriously amazing for this firm. In a country were the chain of command has historically been extremely vertical, Toyota has created a flattened structure, where every employee has input to the processes upon which he or she is working.

“Many Japanese automakers have cooperative relationships with their suppliers that go back decades. In these relationships, the auto companies and their suppliers collaborate on ways to increase value added by, for example, implementing just-in-time inventory systems or cooperating in the design of component parts to improve quality and reduce assembly costs. These relationships have been formalized when the auto firms acquired minority shareholdings in many of their essential suppliers to symbolize their desire for long-term cooperative relationships with them.” (Hill, Charles W. L. 2006, 489-491)

Methodology

In order to show this connection between organizational learning and knowledge management, the literature was first searched, and this was analyzed. The subjects of organizational learning, knowledge management and continuous improvement strategies in that order were covered an attempt was made to extract what has been learned from the current research.

Once the research in the literature was analyzed, we were able to create primary research which will serve as a comparison, so that we can either support or refute what was learned from the literature. In the form of either a questionnaire or interview will be distributed among middle-management and higher management in medium to large businesses and the results were analyzed and compared with what was learned from the literature. We then looked at the profitability, growth factors and overall success of the companies involved and compared this of continuous improvement strategies.

From this we should be able to develop theories and extrapolate future development of the implementation of these continuous improvement strategies, and make a logical prediction concerning the future success of companies using it. We should then be able to make suggestions concerning future research in this area. This strategy was chosen after a brief look at the literature showed that there was definitely a relationship between organizational learning, knowledge management and the implementation of Continuous Improvement strategies. The literature also showed a proven connection between organizational learning and successful innovation, and an additional parallel between innovation level and profitability.

There was a very large body of were required to sift, and the process for searching the literature has been documented in the methodology for the literature review. Since this is a relatively new concept, much of the information is more available on Internet sites rather than in journals and books. However, sufficient quantity was found and analyzed, and supplemented by information from some rather good websites on this subject.

Design of the Primary Research

The questionnaire was created to after the completion of the literature review and analysis in order to maximize the efficiency of this method of information collection. The first problem encountered was the lack of available respondents. A great deal of research was required in order to finally acquire enough respondents for a reasonable sampling. This necessitated the use of a sampling of convenience, since a large enough quantity of participants was not available for any other kind of sampling. It was also required that we maintain confidentiality, as some companies these practices.

The questions were designed to ascertain the attitude of the company culture, as exhibited by the manager with whom the interview was conducted, plus identify which strategies are being use and to what extent. The questionnaire was modified after it was realized that the sampling would necessarily be small. The rewritten questions were aimed at qualitative analysis rather than quantitative, although some of the analysis is quantitative.

In all fewer than 40 participants were found. All of these were for medium to large companies, as it was found that smaller companies had not done much in this area, and therefore had nothing to say. Some of the questions for demographics were not really useful, since they were somewhat flawed as no provision was made to identify the architecture of multi-division companies and companies with subsidiaries, nor can we identify the manufacturing branches among them.

Considering the problems with sampling it would have been nice to have a much longer time to acquire a sample. More time might also have had a positive effect upon the design of the questionnaire. Perhaps if further research is done by persons who were involved with company structures at the time of the research, larger samples can be acquired. The number of questions was necessarily restricted in respect for the time of the participants.

The aim was to keep each interview under 20 minutes. It would be nice to get a further in-depth interview, but that would require a lot more time. However a longer survey might be possible using e-mail. Again, there was a problem requiring e-mail addresses, probably due to the current problems with spam. However, the questionnaire did an adequate job to support the findings from the literature.

Questionnaire on Organizational Learning and Continuous Improvement

This questionnaire is designed for business managers of medium to large organizations in order to ascertain their stance on organizational learning and implementation of continuous improvement measures, and to determine how much progress has been made in this area in the UK. It can be done as a phone interview, an emailed questionnaire, a posted survey on line or in person.

Thank you in advance for your participation. It will help to add to our research.

Demographics:

1. In which sector(s) does your company do business?______________________________
2. How long has your company been doing business? __________
3. Do you conduct business internationally? Yes_____ No _____
4. Do you have joint ventures with other companies? Yes_____ No _____
5. If yes, how many current _____ and total _____ approximately?
6. Do you have joint ventures with suppliers? Yes_____ No _____
7. If Yes, how many? _____
8. What percentage of your supplies come from these joint ventures? __________
9. Does your company have subsidiaries? _____ How many? _____
10. Are any of your subsidiaries suppliers for your other branches? Yes _____ No _____
11. What percentage of your supplies come from these subsidiaries? __________
12. How many persons does your company employ? __________
13. Approximately how much does your company declare in profits annually? __________

Organizational Learning: Please choose only one answer unless otherwise directed.

• How much does your organization value its intellectual assets, the knowledge of employees?
  • Totally _____
  • Very Much _____
  • That depends on how much is contributes to the company _____
  • We do not have any _____
• Would you characterize organizational learning as:
  • The information in our databases _____
  • Our data on customers, suppliers, contracts, orders and our patents _____
  • All of the knowledge embodied in our employees _____
  • The total or average educational level of our employees _____
• From where do most of your company’s innovative ideas come?
  • Mostly from employees who deal with customer and suppliers _____
  • Mostly from the managers _____
  • Mostly from our R&D department
  • From everywhere, including customers, employees and suppliers _____
• Have you heard of the concept of Continuous Improvement? Yes _____ No _____
• How would you characterize this concept?
  • It is a plan designed to maintain and improve continuously the current technological, managerial, and operating standards in the company.
  • It is a quality assurance plan to keep improving our product or service for customers.
  • This is the idea that a company benefits from the continuous improvement of its employees and its products.
  • This is a new business concept aimed at equalizing technological benefits around the world in order to improve our environment.
• What do you think of lean manufacturing?
  • This idea can be costly if we miscalculate the needs _____
  • This is a way to eliminate waste, lower the costs and improve production _____
  • This would require investing in robotics and laying off employees _____
  • This is not applicable to us as we do not manufacture anything _____

*Note: If your company is a manufacturer/ supplier, please skip to question 11 now.

• Does your company use Just In Time production or require this of your suppliers? Yes _____ No _____
• If Yes, how has this changed your business? Please mark all that apply.
  • Eliminates inventory _____
  • Eliminates obsolescence _____
  • Allows customization and flexibility_____
  • Improves quality _____
  • Sometimes causes delays _____
  • Keeps our suppliers happy _____
  • Lowers our cost _____
• How much business information do you share with your suppliers?
  • Only exactly what they need to supply our needs. _____
  • None _____
  • We share a great deal in a special agreement with suppliers to help them supply what we need _____
  • We are partners with our suppliers and share all information useful to both _____
• Do you have any special arrangements with suppliers for financial stability? Yes _____ No _____

*Note, if your company does not manufacture, please skip to question 15 now.

• Does your company supply Just In Time production?
  • Yes _____
  • No _____
  • Only for some clients _____
• If Yes, how has this changed your business? Please mark all that apply.
  • We sometimes have to use overtime when our client requires more than expected_____
  • It has made our clients more profitable and so they do not look for any other suppliers _____
  • We do this for all our customers, so we always have work _____
  • It has caused us to requires this of our suppliers_____
  • It costs us more money _____
  • It makes us more money_____
• How much business information do you share with your clients?
  • Only exactly what we or they need for us to supply their needs. _____
  • None _____
  • We share a great deal in a special agreement with clients in order to maximize the system _____
  • We are partners with our clients and share all information useful to both _____
• Do you have any special arrangements with clients for financial stability? Yes _____ No _____
• Do you employ work groups, teams or cross training?
  • Yes, all three _____
  • Only teams _____
  • Only cross training _____
  • Teams and Cross training _____
  • Work groups and cross training ___
  • No, None of these _____
• How does you company reward innovation? Please mark all that apply.
  • Bonuses _____
  • Recognition_____
  • Awards_____
  • It varies _____
  • Promotion _____
• How does your company promote Continuous Improvement? Please mark all which apply.
  • Suggestion Box _____
  • Bonuses and awards _____
  • Sharing knowledge _____
  • Empowering employees _____
  • Communication across the enterprise _____
  • Performance reviews _____
  • Quality Control checks _____
  • Promotion of teamwork _____
  • Employee participation in company profits _____
  • Communication with customers and CRM _____
  • Careful selection of suppliers_____

Data Analysis and Findings

Demographics

The information.

Collected Data

The following charts represent the data collected from the questionnaire. This is the primary research which was gathered for analysis of the current situation in the UK concerning the impact of organizational learning and Continuous Improvement strategy on the company’s process and bottom line. The questions are designed to determine how much implementation has been done within the companies of the respondents and to uncover the prevailing attitude.

This question was designed to uncover the attitude of the respondent concerning the organizational knowledge of the company. It was expected that most of the answers would fall into category 1 or 2, with a few respondents qualifying the answer by using response number 3. After all, company executives cannot be expected to say that their company does not value their intellectual assets. That the second part of the question asks about the knowledge of employees is one way to mislead the respondents very gently, since the knowledge of employees is most of any company’s intellectual assets. Those who do not know what their intellectual assets are may think these are different. It was a bit of a surprise that any of the respondents replied with number 4, since all respondents were assumed to be well educated.

This question was designed to find out what the respondent knows about organizational learning. The more the respondent knows, the more likely it is that the company has implemented measures to encourage organizational learning. All of the responses are plausible, but answer number three is the best choice. It is interesting that more than 20% gave other answers. It is understood by most business managers that being in management requires that one should pursue life-long learning.

Most managers take business courses, read and attend seminars in order to keep up with what is going on in the business world. Since intellectual capital is a popular buzzword in business right now, and has been for the last decade or so means that all the respondents should know what it is. If they do not, and some clearly do not, then we should wonder where they have been during the last decade. Are they merely sitting on their laurels once having achieved management status?

From the information gained from the literature review, we know that the creation of a learning environment stimulates innovation, and that companies who have recreated themselves as learning organizations have documented that innovative ideas can and will come from everywhere within such an environment. Therefore, by learning where the innovative ideas come from, we can reasonably make an educated guess as to the level and quality of learning orientation within the company.

Response number four shows that many of the companies where our respondents work are well on the way to becoming true learning organizations, since half the respondents chose number four. Response number one is also an excellent response, because it is logical. Respondents who chose number three, quite a few, possibly do not recognize innovative ideas. The other possibility is that the channels for proposing change are not fully open. The one respondent who chose number three probably does not realize that managers are no more likely to have creative ideas than others. However, in the wrong environment, the ideas coming from management may be the only ones heard.

This is a simple and straightforward inquiry as to whether the respondent is familiar with the terms important in this research project. The next question asks the respondent to characterize this concept. We probably could have eliminated this question, except for the sake of identifying inconsistencies.

Number one is the standard answer, the common definition of this latest Japanese innovation. However, number two is close and quite plausible. The catchphrase “Continuous Improvement” has this special meaning in the current business and academic (MBA type) environments. Nearly one third of the respondents picked response number three, which is close, but it leaves out large segments of the organization which also need improvement. Response number two indicates that the respondents are guessing, while the one respondent who picked number four had no idea what this was and just picked something attractive politically.

This question is another attempt at identifying how well the respondent has kept up with the current research and development of sound business practices. There is something which applies in all of the first three answers. The fourth answer is totally irrelevant, since this practice applies to both buyers and suppliers, and benefits both. Obviously a large portion of the respondents did not realize this, possibly because they have not looked closely enough at the concept.

Fully half of the respondents have, at least, looked at this practice, and are well informed enough to identify it. Response three indicates that the managers are looking at what changes might be needed, but that it has been investigated, just not thoroughly enough for complete understanding. The two who chose response number one are looking only at the possible problems, and probably did not investigate beyond this. It is, however, encouraging that most respondents did show a passing acquaintance with the concept. This indicates that the results regarding implementation may be fairly accurate.

This is another simple straightforward question used to identify the percentage of companies using it. Manufacturers were asked to skip to question 11 at this point, as the next four questions are aimed only at the buyers.

These responses tell us what these respondents think of JIT. All of the responses are true. However, some are more important than others. The numbers will not match the number of respondents, because the directions asked them to pick all which apply. It is interesting that none of the responses garnered the entire complement of respondents. In fact, none of the responses got even 50% of the responses.

It is encouraging that response number five only got nine, only about 20% of the respondents. This is a problem which can occur with JIT. The low score here indicates either that the respondents consider the benefits far outweigh the costs, or they are not experiencing many delays. The number who picked response one is surprisinb, because it does not eliminate ALL inventory, but, perhaps, they read that correctly also.

This is a very serious question, because it indicates the level of cooperation and trust, both of which are required for successful Continuous Improvement and Just in Time manufacturing or supply. The six firms which do not share any information will not be able to successfully manager either strategy. The eight firms which chose response one will also not get enough cooperation to fully implement these strategies, and none of these or the previously mentioned will be building any trust with their suppliers. However, the 68% which share more information are well on their way to efficient management of these strategies.

Response number four is the most correct for this kind of management. By creating an environment of trust, they can cooperate with suppliers and streamline both operations, while optimizing quality control, since it takes place at source in a preventative plan, and this lowers costs for both firms.

The results here indicate that 68% of these respondents are learning to implement these strategies. This is a good percentage in light of the responses concerning implementation earlier. It indicate that the approximately 40% of companies which are investigating or implementing these strategies will grow.

This question is aimed at identifying those firms which have gone to the next step of cooperation: establishing a bond of financial cooperation to insure stability for both firms. It is disappointing that the number is smaller than those who say they are implementing Continuous Improvement, because this financial bond and the trust built helps insure success.

This is the first of four questions aimed at the manufacturers. Respondents from companies which do not manufacture anything were asked to skip to question 15. The question is simply designed to see how many suppliers provide Just in Time delivery to their clients. Of the eleven manufacturers, two do not supply Just in Time delivery and one does so only for certain clients. They either do not see the value in it, or they have not successfully negotiated with clients, or they do not have sufficient level of trust to want to employ it.

These responses show that the ride using JIT has not been terribly smooth. Almost all of the respondents have had scheduling problems. Two other negative responses show that half of the respondents have required their own suppliers to employ JIT, while two more say it has cost them money. Most say it has made them more money. However, at this point we must remember that only 11 of the respondents were answering these questions, so these numbers are really much larger. The large numbers on responses two and three are quite encouraging. However, they are tempered by response numbers one, four and five.

These responses make it appear that the implementation of JIT may not be going as well as it should, and other problems may need attention.

The responses to this question show that they do have special arrangements with their clients for financial stability. Therefore, it becomes quite surprising that they don’t share more information with their clients. After all, financial interdependency works better if you share information. Obviously, something needs to be fixed.

More than half of these respondents do not share much information with their clients. This also indicates a low level of trust, which can help to explain the problems. If you were half of the respondents actually do share any significant amount of information with their clients. Just-in-time manufacturing is very risky without a certain level of trust somewhat risky, unless both participants had made financial arrangements which keep them interdependent.

This question is aimed at identifying some of the architecture of the work process among these companies. In a company which is trying to establish a good learning orientation, or where one has already been created, at least two of these strategies. In a company where Just In Time manufacturing and delivery are in effect cross training and allows the company to move people about as needed. Work groups and teams are very close to the same thing. However, there is a small distinction, the work group generally has assigned tasks, where the team often adopts roles as needed. The work group has a goal to accomplish, while the team has a problem to solve.

Workgroups may not be as flexible. It is interesting that not one respondent chose to say they did not use any of these options. More than half said they used all of them. Close to a quarter combined teams and cross training, which if one has to choose two of the three is probably the most flexible choice.

How a company rewards innovation is a key concept of fostering a learning environment. It is known that intrinsic rewards are much more powerful and extrinsic rewards. However, if intrinsic rewards do not translate to extricate eventually, and intrinsic rewards are not enough. Almost all of the respondents say they reward innovative ideas with bonuses and recognition. Nearly half have an award system. A small numbers say the very least, and an even smaller number offer promotions What is significant than one type of reward for innovative ideas.

This last question looks at the most important part of establishing continuous improvement strategy. Once the company is well on the way to becoming a learning organization, continuous improvement strategy becomes possible. In order for it to work, the learning orientation of the company must enable sharing across the enterprise. Organizational knowledge possibly the company’s most valuable asset, and this is found in all of their employees. Each employee brings their own knowledge to the company, and it is up to the company to create an environment where this can be shared.

It is encouraging that only a few respondents picked performance reviews and quality control checks as methods for promoting continuous improvement in the enterprise. This shows that companies are coming to understand that improvement is not something you impose, but rather it is something that you encourage, and your employees will create it. In fact, as has been shown in the literature, by cooperating with both customers and suppliers the company can leverage the knowledge of all three: their own employees, the employees of their suppliers and even their customers.

Conclusions From The Questionnaires

In looking at the results from the questionnaires, it can be shown that approximately 40% of the respondents companies are either implementing continuous improvement strategies and moving towards becoming true learning organizations, or they’re planning to do so. It appears however that the companies have not fully committed themselves to this transition. Considering the competitive world in which global business is done, he is not surprising that the trust level is rather low. This accounts for some of the problems in using continuous improvement process saying, and especially in making just in time manufacturing work. These strategies require a highly evolved learning orientation on the part of the company, which creates a climate in which innovation, if not commonplace, is less than rare.

However the second component of establishing strategies studied here is a high level of trust between the company and its suppliers and its customers. Once the necessary level of trust is reached, information can be shared across all the barriers creating a more organic structure between the customer, the company and the suppliers. This creates a streamlined process, which eliminates waste of any kind all three cooperating entities take some of the responsibility for the timely delivery of a quality product or service.

Takes a preemptive role in quality control. The company becomes employee and customer centered. The communication with the customer elicits a true vision of the customer’s needs. These needs are then filled by sending out the proper requests to the supplier and performing whatever service the company adds to the raw product.

This survey has shown that these companies are actively involved in moving in this direction. Perhaps it will just require a bit more time for that level of trust, which is necessary to be developed. It is hoped, that the participants will not give up on his system while they are making the necessary adjustments.

If the use of the survey correlated well with the findings of the literature review. In that companies which were having problems with the implementation of either Continuous Improvement, lean manufacturing including just-in-time delivery or any number of related strategies, had two things in common:

Trust issues were impeding the progress among the stakeholders. Information was not being shared at the level that is required for these new strategies to work properly.

Not enough provision had been made for financial interdependence and other measures which would stabilize costs among the stakeholders and promote honestly energetic participation.

Discussion and Conclusions

This study was valuable, even though the questionnaire was somewhat less useful than might be hoped. The sample was really too small, but it was valuable as qualitative research. The questionnaires showed that there is a definite trend towards lean manufacturing and that many companies are, indeed, embracing new ideas, especially ideas on Organizational Learning and Knowledge. Highly rigid hierarchical structures are going the way of the Dodo bird.

The research definitely points the way to a future of inter-organizational cooperation to promote pre-emptive quality assurance, lean manufacturing and employee optimization. Since the 1970s many leaders have developed new strategies, such as Toyotas development of Kaizen in their automotive plant. This has had surprising success and many other businesses are chasing the Toyota example.

One thing this new practice does is to take the best advantage of the business’s most valuable asset: its people. The people in an organization, from the night watchman to the CEO, hold the sum-total of all the company’s intellectual capital and they comprise the talent which will move that company forward or hold it back. Not taking complete advantage of this tremendous innovative engine is like sitting on a huge well, not drinking the water or using it to grow food, and watching your land, and everything on it, die.

The state that this planet is in puts us in a place where we cannot afford wasteful practices. Even the economic engines of the civilization are responding to the powerful forces of nature, politics and economics. It is encouraging that so many people on so many fronts are seeking and finding solutions, and that these solutions are, not only available, but profitable. If a company makes 10 billion in profits in a single years, but wastes sis billion in the process, that penny not saved has become intolerably large.

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