Why is management commitment so important

Concludes, first, that firms with high top management commitment produce high quality products despite variations in individual constructs, and, second, that in firms with low top management commitment, four other constructs, i. Ahire, S. Report bugs here. Please share your general feedback. You can join in the discussion by joining the community or logging in here. You can also find out more about Emerald Engage. Visit emeraldpublishing. The cofounders spent a year interviewing potential customers before writing the first line of code.

They established a development process driven by customer needs rather than engineering talent. And, recognizing that product and service consistency was crucial to a corporate clientele, they hired MBAs and seasoned executives and trained them in highly structured operating and sales procedures. Even dress codes and office color schemes were legislated from above. The Siebel and Trilogy cases are not meant to imply that one model is inherently better than the other. Sam Walton, for example, continues to influence the daily behavior of Wal-Mart employees more than any living executive does or could.

But it does mean that, before making important decisions about, say, operating processes or partnerships, they should always ask themselves, Is this a process or relationship that we can live with in the future? They may also find it prudent to make their commitments in stages in order to maintain flexibility. They can hire a potential employee as a consultant before bringing her on full time, for example, or run a trial project for a potential customer before committing to a deeper relationship.

They make investments, issue public statements, hire and fire employees, establish partnerships, and so forth. But these later actions no longer define the organization. Building on the Past: Reinforcing Commitments As a business matures, managers make five kinds of critical reinforcing commitments that support the status quo.

These commitments help the company operate more efficiently, but they also constrain its ability to change. They also include occasional big bets, such as making a major acquisition, integrating backward to produce components for core products, or publicly stating a bold new goal that furthers the existing strategy.

Whether small steps or big leaps, reinforcing commitments are essential to building an efficient and disciplined company.

They also decrease costs; maintaining a current customer, for instance, tends to be much cheaper than landing a new one. And they help temper risk; refining an established process or technology is safer than adopting a new one. At the same time, reinforcing commitments inevitably make organizations more rigid and less adaptable. For an analogy, consider how a road system evolves. At first it is merely a network of cart paths marked in the dirt. As the paths become more established, they are remade as dirt roads and, finally, paved as highways.

Reinforcing commitments are the actions that turn informal corporate pathways into formal highways. On the one hand, they make a business much more productive—you can drive much faster on a highway than on a cart path. On the other hand, they make it less flexible—the road determines your destination and your route.

Problems arise when the environment shifts—when economic or trade conditions change, when a powerful new technology emerges, or when a new regulatory regime is imposed. Suddenly, the old route is no longer the best route.

And the reinforcing commitments that enabled you to flawlessly execute your business model now trap you in that model. Penney, and Montgomery Ward, to purchase inexpensive textiles from his firm.

While calling on his new American customers, Kim learned that the U. S government was planning to establish a quota for textile imports and would likely set percentage allocations for foreign suppliers based on their recent market shares.

The company would emphasize quantity over quality, pursuing strong revenue and market-share growth at the expense of profitability, and it would invest comparatively little in resources such as brand and technology. It would also cultivate a close relationship with the South Korean government to secure cheap funds and protection from competitors. In exchange for favorable subsidies and permits from Park, Daewoo invested in industries the government targeted for growth—heavy machinery, shipbuilding, chemicals, automobiles, and consumer electronics.

Daewoo expanded aggressively in each industry, competing through high-volume production rather than leadership in brand, quality, or technology. Success was measured in terms of revenue growth, not profits.

It soon became clear that two decades of heavy investment by the leading chaebol had resulted in overcapacity in many domestic industries.

At the same time, Daewoo was caught in a competitive vise. Chinese exporters were undercutting it on price, and Japanese firms had superior technological acumen and brand strength. They continued to expand the company aggressively, as though still confident that the government would bail them out in case their bets failed. They continued to court South Korean politicians.

They invested heavily to build and acquire production and marketing capacity in developing countries such as China, Vietnam, India, Sudan, and several nations in Eastern Europe, where Kim forged personal bonds with local politicians to secure favorable trade and investment terms.

The South Korean government intervened—not to save Daewoo but to dismantle it. Kim fled the country to avoid criminal prosecution. The pressure to persist in making reinforcing commitments in the face of disruptive shifts in technology, regulation, or competition is great. But, as Daewoo discovered, it must be resisted. To change a company, managers have to deliberately take bold actions to break and remake their old commitments—they have to make new transforming commitments that force their organizations out of the status quo.

They may, for example, exit a legacy business, publicly commit to a new goal, fundamentally shift their performance measures, or fire powerful executives who oppose the new direction. Of course, managers who have spent their careers buttressing a success formula can be overwhelmed by the challenges of transforming it. Reinforcing commitments are comfortable and familiar; commitments that transform are anything but.

Picture a group of climbers perched on a ledge while ascending an ice wall. The leader selects a location for an anchor, considering factors such as the terrain and type of ice, then climbs above the others to secure the anchor. The leader attaches a belay rope to the anchor to guide the rest of the climbers and prevent them from falling should they lose their footing. When managers need to lead their organization in a new direction, they too must first select an anchor—a strategic frame, a revamped process, an investment in new resources, a relationship with a new partner, or a revised set of values.

Then they secure the anchor, creating a pivot point that allows the organization to change course. Finally, they realign the entire organization around the new anchor, shifting the company onto the new trajectory. The dramatic transformation of the Thomson Corporation illustrates the process well. Today, Thomson is a leading global provider of specialized information to professionals in a wide range of fields, including financial services, law, education, scientific research, and health care.

But turn the clock back to the mids. The company was primarily a newspaper publisher. It had also integrated backward into the production of newsprint. Although the company had made forays into other businesses, including specialized information, packaged holiday tours, and North Sea oil drilling, its core business remained newspapers.

One could easily imagine Thomson executives persisting in their reinforcing commitments: acquiring more newspapers, refining the existing businesses, measuring success in terms of circulation, and struggling to respond as digital technology took off. Indeed, this is precisely what several other leading newspaper groups did. Why did the Thomson story end differently?

Because Thomson executives successfully implemented the three steps of transforming commitments:. Its selection illustrates an important point about anchors. Anchors need not be revolutionary—Thomson was already providing a limited amount of specialized information in the United States—but they do need to mark a clear break from the past.

But an anchor can also take the form of a new process, resource, relationship, or set of values. Larry Bossidy, for example, transformed AlliedSignal by using a Six Sigma initiative to change core operating processes. Leaders of the Brazilian cosmetics firm Natura committed to a new set of values—truth in cosmetics. To overcome the forces of organizational inertia—not to mention the skepticism that greets almost any change management effort—managers need to aggressively promote the new anchor and take concrete actions to secure it.

Brown also moved from Britain to the United States to be closer to the focal market. Actually collecting the data, summarizing the data, or reporting of the data can be delegated freely.

Communication is the key When communicating audit results to executive management, we must consider their interests in the operation:. How do we implement this approach? The simple part about this approach is that the internal auditor has no pressure to identify these steps. The internal auditor simply has to know what type of questions to ask. Audit the process and take notes of all of your observations mini process map :.

Pay attention to the answers. The following answers indicate that further investigation into the process is required and may require input from other managers more qualified to identify opportunities for improvement.

Furthermore, these types of answers indicate a lack of effective training:. Asking the right questions The people you are auditing are a wealth of information. By asking the right questions, the auditor will get all of the opportunities needed to report to management. How to change Another way to identify opportunities for improvement in a process is to try and do the process.

Simply take the work instructions and do the process according to the instructions with the help of the person you are auditing. Where are the opportunities? Most opportunities for improvement have to do with communication between departments or effective communication of the company objectives.

The art of questions What data have been collected within this process to provide management with information for continual improvement opportunities? A final note about improvement Many managers seem to feel that there is a limit to improvement. Acceptance I attended a management seminar presented by my colleague Peter Sanderson, who presented some interesting examples about acceptance and attitudes of management.

A copy of this seminar may be obtained by from peter cisssoftware. In , Sanderson went into a circuit-board manufacturer to quote an ISO quality system. After all, he would get a free ISO system. The surface area of the scratches would be about 33 square inches, 0. In fact, the car is still The bottom line is attitude The attitude of solving a problem alone vs. Final notes No nonconformities, variations from the standard, or mistakes are acceptable, no matter how small the ratio of output to errors can be.

Continuous improvement only becomes effective when all management buy into this methodology. Without leadership, the company achieves zero improvement and simply reacts to problems. Quality Digest does not charge readers for its content. We believe that industry news is important for you to do your job, and Quality Digest supports businesses of all types.

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So please consider turning off your ad blocker for our site. Kelly began consulting in , implementing, managing, training, and auditing ISO , ISO , and AS programs for semiconductor, aerospace, chemical, cosmetic, and distribution companies. Currently Kelly conducts third-party audits for several registrars; she conducts internal audits and facilitates management reviews as well.

Kelly also provides seminars for internal process auditing and how to conduct management reviews and set measurable objectives. Copyright on content held by Quality Digest or by individual authors. Contact Quality Digest for reprint information. Quality Digest employees work for free. Our offices are donated. We don't pay for electricity. Please turn off your ad blocker for our web site. Quality Digest. Featured Product.