Archives For

This is not an article of inspiring business notions per se, it is more like a story but it links back to the industrial evolution that is still on-going. It is the story about the fictional meeting that I had with Aldous Huxley and Henry Ford. I have been always intrigued by how two famous figures in history, who have different notions about the world and life, would communicate with each other. And a movie provided me with the means I needed to make up a story about it.

The movie I have talked about is “Midnight in Paris” by Woody Allen. It tells the story of a man (Gil Pender) who wants to be a novelist and of what happens to him in Paris after midnight. He indeed experiences a magical journey. Our guy in this movie has this notion in his mind that Paris in the 1920’s is better than his present time and his reality. He yearns to be there, in Paris in those times. That is his golden age thinking.

And one night, his wishes are fulfilled. An old Peugeot comesand takes him to his golden age where he gets to meet his idols such as Hemingway, Fitzgerald, Stein, Picasso, Dali, etc. He gets the opportunity to share drinks with them and talk to them, observe the relationships between them. And I was inspired by the same idea. How it would be to go back in time and talk to some famous people.

Midnight in Detroit

Henry Ford

So please bear with me here. Let’s get in this Ford Model T and slide through time and go to Detroit in 1930’s. I will now introduce the characters in this story.

On one hand, we have Henry Ford, the revolutionary industrialist of the 20th century, who is one of the pioneers of the moving assembly line and mass production.

On the other hand, we have Aldous Huxley. An English writer and the author of the famous dystopia “Brave New World”.

Aldous Huxley

Now you might wonder why I imagine sitting down and talking with them. That’s because Huxley uses a lot of allusions regarding Henry Ford in Brave New World. And I thought that it would be fair to let them speak their mind since they have contradictory ideas and different visions of future. Huxley’s accusations to Ford and Ford’s own defense form the basis of the conversation. But in this hypothetical conversation, I have the upper hand. Because I am from the future, well relatively, from their future and I know by fact what happened after them.

Chapter 1: Huxley’s Accusations

After we sat down at a café in Detroit, Huxley started to talk about his book, Brave New World. I will briefly narrate the conversation to you. It is a dystopian novel. It describes a totalitarian regime where Ford is seen as the deity figure. It takes place in the year 632 After Ford. And that is Huxley’s first salute to Ford. Even the expression “Our Lord” has been transformed into “Our Ford”. And Huxley accuses Ford for two things:

  1. The first one is mass production. It is not surprising that Huxley holds Ford responsible for it since Ford is the founding father.
  2. Secondly, Huxley was afraid that individuality would be buried beneath mass production and consumption.

Mass Production

We all know that mass production was enabled by moving assembly lines. However, the key to Ford’s technological revolution was not the assembly line per se, but the fragmentation of tasks and the standardization of components which made the assembly line possible. This breakthrough made tremendous changes in the work environment as well. Assembly line mechanization resulted in a rigid hierarchy among the assembly line workers and managers.

Aldous Huxley was terrified of by the uncontrolled mass production. He believes that this standardization would lead to the mechanization of human beings.  In his book, he depicted a World State where humans are artificially “manufactured” on assembly lines and the standard component was the embryo.

Out of one embryo, dozens of identical twins could be produced. The destiny of a human being was determined on the assembly line. For example, if you want an unskilled worker all you have to do is just to pour alcohol over the fetus and you would have stopped the brain from developing. What you get is a worker who does what it is told and work at positions which demand no intelligence. In Huxley’s point of view, assembly line workers were treated like them.

Loss of Individualism

And how does Huxley see Ford as a threat against individuality? He described it with two examples: mechanization of tasks and mass consumption. In Ford’s factories, assembly line workers were doing the same repetitive job day after day. The assembly line workers were alienated, mechanized and even dehumanized.

Huxley gave voice to this fear in his book by picturing identical tasks performed by identical twins. Everyone is replaceable, no one is special. These people, they only know what they are supposed to know about their job, no more no less. There is no room for creativity or imagination. And when it comes to mass consumption, Ford dreamed that his cars would be accessible to every citizen. This was his motive with Ford Model T. However, Ford’s vision has stumbled. He believed that customers are for the product. Whereas, today we know it should be the other way around. He even said that any customer can have a car he wants so long as it is black.

And Huxley was afraid that one day he would open his eyes and all he could see in the street would be black colored Ford Model T’s. Production shapes the society to the image that it sees fit and the society consumes it without any questions. The standardization of all aspects of life including feelings, result in the loss of individuality. People in Huxley’s dystopia, they have no other ideas than what they are thought, they consume what they are provided and there is nothing to differentiate one from another.

When finally Huxley finished talking, he sat back comfortably in his chair, but Ford was looking disturbed, even upset. And he started talking in his defense.

Chapter 2: Ford’s Defense & References to Today

“But I am thinking of service… The present system does not permit of the best service because it encourages every kind of waste.”

Does it sound familiar? He is talking about Lean Systems. Of course, the lean philosophy and its tools still have a long way to be introduced in the states when Ford has said that but the principle is the same. Today, we are still looking ways to improve efficiency through elimination waste.

And what about this one? “…I think that it would be found more economical in the end not even try to produce an article until you have fully satisfied yourself that utility, design, and material are the best.”

This quote can fit to Total Quality Management, Design for Six Sigma, you name it.

And Ford’s final remark in our conversation: “Our big changes have been in methods of manufacturing. They never stand still. We give our energy to the improvement of the making.”

This is CONTINUOUS IMPROVEMENT. Ford has great trust in industrial progress and anything could be made better.

After Ford spoke, I left the table; leaving these two continue their debate. And while I was walking to my reality I thought about what they said and I compare them with today’s industrial state. It was gently raining and well, it was a long walk home.

Chapter 3: And Today…

If it was the Fordist era before, now we are in the Post-Fordist era. Fordism used to alienate workers and did not require for them to think but today it is all about taking initiatives even at the shop floor. Mass production has evolved into mass customization which is enabled by flexible production systems. Standardization is still one of the most important keys to success but adding customized elements that differentiates the products is the reason why we choose to purchase one singular item. Everyone may have an i-phone, right? But you can choose any type of casing for your phone, different in color, sytle… And that particular casing would differentiate you from other i-phone users.  Today individuality is supported by customization. 

I have two more quotes here before I conclude the story, one is from Huxley and one is from Ford. Could you guess which quote belongs to whom?

  • Power and machinery, money and goods, are useful only as they set us free to live.
  • Technology should not be used as though man were to be enslaved to them.

Well, it is kind of tricky to say because essentially both say the same thing. The first one is Ford’s and Huxley said the second one. These two men finally agree on something but one’s vision of future becomes another one’s worst nightmare.

Chapter 4: Conclusions

In order to wrap it up, in the movie our protagonist had an insight. The present could be a little unsatisfying because life itself is a little bit unsatisfying. But he decided to stay at his present embrace his reality with all its imperfection and perfection. After all it is his own time.

We can also relate this to the conversation I have just narrated. Was the Fordist system perfect? Of course not. Post-fordism is imperfect as well. But that does not necessarily imply that we are moving towards Huxley’s Brave New World. The important thing is to always try to move forward, try to improve the current state. Because there is always a better way. There is always an immense opportunity for innovation, for improvement. And today’s industrial progress is all about them.

If you enjoyed this article just a little tiny bit you might find these books interesting: Brave New World by Aldous Huxley and My Life and My Work by Henry Ford

 “The world today can really be described as a knowledge society. The ability to handle the knowledge has changed significantly during the last decades; the computers have made it possible to store it and Internet has made it possible for it to travel all over the world in no time. This has of course led to new possibilities for the companies, but also higher demands to succeed.”

What can be said for sure is that it is more important than ever for the companies to get the most out of themselves to survive and using the knowledge they got is a very important part of this. But one common problem in many companies is that the management does not know what the individuals in the company really know. This quote from an executive at HP really tells a lot about the situation in many companies: “If we only knew what we know, we would conquer the world”.

It can be easy to think that with all this new technologies it should be easy to know and share the knowledge that exists. But knowledge and organizational learning is more complex than that. One of the main reasons for this is that there exists different kinds of knowledge and different kinds of knowledge require special attention.

So, what is Organizational Learning?

Organizational learning is the science about how organizations learn and distributes knowledge within the organization. But organizations are of course built up by individuals and organizations learn through individuals acting as agents for them.

When looking at literature concerning knowledge types and organizational learning there are some different ways to divide and classify the knowledge. The most prominent types of knowledge are tacit knowledge and explicit knowledge.

Explicit and Tacit Knowledge

Knowledge, as we usually think of it, is information or experiences that can be moved around, be explained by an individual to others and that that can be made explicit. Explicit knowledge can be written down and is therefore easy to share and debate. It is also easy to keep track of and it can be documented where the knowledge lies. Common examples of explicit knowledge are anything found in manuals or other types of documents.

The other type of knowledge differs from explicit knowledge by not being easily transferable just by writing it down or explaining it. Individuals having this type of knowledge may not even always be aware of having it. It can be described as intuition or personal experience and is therefore often referred to as tacit. Tacit knowledge is often considered as obvious to the individuals having it and is drawn from a set of personal experiences and sensory information.  A good example is speaking a language, something that for a native comes natural can be hard for a beginner to understand and equally hard for the native to explain.

Because of its nature, spreading explicit knowledge in an organization is, in reference to spreading tacit knowledge, quite easy. Explicit knowledge is spread with the help of formal organizational structures, defined processes, best practices, drawings and so on. Pieces of explicit knowledge within an organization can be gathered to a new whole, making it new knowledge but the new knowledge created does not exceed the organizations already existing knowledge base.

Spreading tacit knowledge is not as easy since it cannot be moved around without the individual that holds the information. Individuals become knowledge carriers. Tacit knowledge spreads in the same way as a craftsmanship was spread from a master to an apprentice in the olden days, by observations, imitations and practice. One problem that occurs here is that the knowledge is spread as tacit; it is equally difficult for the new holder to spread the knowledge further as it was for the old holder. The learning is not organizational but individual.

Organizational Learning Mechanisms

The importance of deploying knowledge throughout the organization is increasing due to rapidly changing environment and intense competition. It is not only spreading the existing knowledge in the organization but also acquiring and disseminating new knowledge is a crucial part of organizational learning. Organizational learning mechanisms are therefore of great importance since their prime objective is to systematically enable an organization to create, acquire, transfer and reflect on knowledge. Organizations may utilize several different mechanisms to interpret knowledge, to create new knowledge out of conversions between tacit and explicit knowledge, etc. Even extensive employee rotation and cross-functional teams are considered to be mechanisms that enhance organizational learning.

The Spiral Model

One of the most popular mechanisms is Nonaka’s Spiral Model (Nonaka, 1994). According to Nonaka, learning within an organization must include both tacit and explicit knowledge, as well as the interaction between them. Since organizational knowledge is achieved through a continuous dialogue between tacit and explicit knowledge, Nonaka proposes conversions between them (Nonaka, 1994). The four modes of conversion are the following:

  1. Socialization (From tacit knowledge to tacit knowledge): This form of conversion creates tacit knowledge through shared experience. The most important aspect of this mode is that it requires a certain level of individual experience and social interaction between individuals.
  2. Externalization (From tacit knowledge to explicit knowledge): It is argued that this mode of conversion is the most important and yet the least developed one. Articulating and translating tacit knowledge at the individual level into explicit knowledge to others in a comprehensible way is requires continuous dialogue.
  3. Combination (From explicit knowledge to explicit knowledge): Here the organization has to create the appropriate environment for communication and diffusion of explicit knowledge which ends up in the systemization of knowledge. Combination involves the reconfiguration of existing knowledge through processes such as sorting, adding, recategorizing, etc. in order to create new explicit knowledge. At this point, information technology is of most importance since explicit knowledge can be deployed by documents, databases etc.
  4. Internalization (From explicit knowledge to tacit knowledge): The process in this conversion is to understand and convey organization or group explicit knowledge into individual tacit knowledge. Internalization is particularly important because knowledge in tacit form is actionable by the owner. For instance, individuals can access the knowledge of the group and the organization by experimentation and learning by doing.

Figure 2: The Modes of Conversion – SECI Model (Nonaka,1994)

The SECI (see Figure 2) provides the amplification and deployment of individual learning, as well as crystallization of knowledge throughout the organization. A key issue here is to acknowledge that each type of knowledge can be converted and organizational knowledge creation can only start when all these four modes are organizationally managed.

The initiation of the learning spiral starts with the building of an appropriate environment for individuals to share experiences, ideas, perspectives (i.e. tacit knowledge) with others. This is the socialization mode and teams can be gathered to trigger the required social interaction between individuals.

Externalization forms the next step of the spiral model in which the use of metaphors, contradictions and analogies tacit knowledge is explicitly made clear to others in the team or organization in order to strengthen the learning.

The following step in the spiral is the combination process. The explicit knowledge gained through the externalization process is disseminated, discussed and modified. Combination mode is triggered by coordination among the team members and documentation of existing knowledge.

In the final stage, internalization, every individual in a team gradually finds a chance to translate the shared explicit knowledge into tacit knowledge of their own. Again in this stage, interaction plays a crucial role and it triggers trial-and-error processes which make the conversion possible.

Well, Learn Then!

When it comes to classifying different knowledge types in a company, the widely spread division with tacit and explicit knowledge is good to be aware of.  To be able to spread the knowledge, one important prerequisite is that the management gives the authorities and encourages people to learn, gather and spread knowledge. To make this in a structured way it is also important to have a shared plan or view on how this should be achieved.

Sources researched for this article are shown below. They are pretty useful if you are looking for further information about Organizational Learning.

Argyris, C. (1982) Organizational Learning and Management Information Systems ACM Sigmis Database Vol. 13 Issue 2-3, pp. 3-11

Argyris, C.; Schon, D. (1978). Organizational Learning: A theory of action perspective. Addison-Wesley.

Berends, H., Boersma, K., Weggeman, M. (2003) “The structuration of organizational learning” Human Relations. Vol. 56, No. 9, pp. 1035-1056.

Bergman, B., & Klefsjö, B. (2004). Quality from customer needs to customer satisfaction. Studentlitteratur AB

Brown, S., Duguid, P. (2001) Harvard Business Review on Organizational Learning Boston: Harvard Business School Press ISBN: 97815785161 55

Christenssen, P. H., (2007) “Knowledge Sharing: moving away from the obsession with best practices” Journal of Knowledge Management Vol. 11 No. 1 pp. 36

Ellis, S., Shpielberg, N. (2003). Organizational learning mechanisms and managers’ perceived uncertainity. Human Relations. Vol. 56, No. 10, pp. 1233-1254.

Medeni, T.D., Medeni T. (2004) An Experience-based Tacit – Explicit Knowledge Interaction Model of Action and Learning. Proceedings of New Information Technologies in Education, Second Biennial International Workshop. Izmir, Turkey 20-22 October 2004.

Nonaka, I. (1994). A Dynamic Theory of Organizational Knowledge Creation. Organization Science. Vol. 5, No. 1, pp.14-37.

Nonaka, I. (1991). The knowledge creating company. Harvard Business Review , 69, 96-104

O’Dell, C., Jackson Grayson, C., (1998) “If Only We Knew What We Know: Identification and Transfer of Internal Best Practices” California Management Review Vol. 40 No. 3 pp. 154

Sanchez, R. (2005). “Tacit knowledge” versus “Explicit Knowledge” Approaches to Knowledge Management Practice. In R. Sanchez, The Handbook of the Knowledge Economy (pp. 191-203). Frederiksberg, Denmark: Department of Industrial Economics and Strategy

Schwandt, D. (1993). Organizational learning: a dynamic integrative construct. Washington DC: The George Washington University Executive Leadership in Human Resource Development Program

Smith, M. K. (2003) ‘Michael Polanyi and tacit knowledge’, the encyclopedia of informal education, www.infed.org/thinkers/polanyi.htm. (100210)

Spencer, B. (1997). Knowledge Advantage Conference Notes. November 11-12, 1997.

Sun, Z., Hao, G. (2006). HSM: A Hierarchical Spiral Model for Knowledge Management. Proceedings of the 2nd International Conference on Information Management and Business (IBM2006). Sydney, Australia 13-16 February 2006. pp. 542-551.

Thompson, J.D. (1967) Organizations in action: Social Science Basis of Administrative Theory McGrah-Hill, New York

Yukl, G. (2009). Leading organizational learning: Reflections on theory and research. The Leadership Quarterly. Vol. 20, No. 1, pp.49-53

“Quality Management evolves in time while forcing the customer to evolve as well. Or is it the other way around? Do companies change their perspective on managing quality because customers are getting smarter? How many roles can a customer assume and what are the effects of these roles in Quality Management?”

The evolution of Quality Management (QM) starts with the industrial revolution where craftsmanship fell from its place and replaced by industrial practices. In literature it is argued that a customer has five roles: resource, co-producer, buyer, user and product. Of course, not all of these roles were attributed to the customers at the beginning. As Quality Management evolves the customers’ contributions to quality are expanded. During the days of craftsman manufacturing, the role of the customer was simple. The products were made or – at least adjusted – for each individual customer, charging the customer to act just only as a buyer. This buyer role hasn’t changed in Inspection stage of managing quality where uniformity in mass production was one of the most important focuses of QM for uniformity meant profitability in that stage, casting a shadow on customer satisfaction. Customer oriented service/manufacturing started to gain importance at further stages of QM as new approaches are embedded in quality measurement. The increasing variety of options that a customer may choose from also affected quality managers to consider the importance of customers. As the customers’ needs and expectations increase, QM shifted from only focusing on product conformity to practicing means and tools to achieve overall service quality. At this point, the customer is no longer just buyer but also acts as a resource and a co-producer that starts to orient firms by providing inputs regarding the factors that affect production. The outcomes of the service may be observed in the latter customer roles. The buyer role and the user role are the most fundamental roles. But the more the need to understand the customer is the more the customer acts as a product. Quality management strategies are designed and performed in order to make a transformation in customer.

Five roles of the customer:

At the beginning of the article, it is mentioned that customers may assume five different roles. I will try to exemplify these roles by talking about the influence of customers in financial institutions. Concerning financial institutions such as banks, the contribution of customers to the organizations is undeniable.

  • Customer as a resource: In human service settings, the customers are the primary physical resources for the organization. Therefore it is crucial for banks to successfully manage customer resources. Investigating and studying customers’ behaviors, needs and expectations are vital information that has to be adjusted throughout the processes in order to survive in competitive quality.
  • Customer as a co-producer: The customers’ role as a co-producer is particularly important in service arena. Applications such as internet banking, telephone banking, ATMs enable the customers to engage in co-production and enhance customers’ abilities as co-producers.
  • Customer as a buyer: Financial issues may sometimes be too complicated for certain customers. By giving and sharing adequate information and building a trustworthy, familiar relationships with customers could help banks to turn potential buyers into actual buyers.
  • Customer as a user: Customers possess the power to measure the gap between expectations and experience which enables them to determine customer satisfaction. Again the level of communication, shared information, meeting customer expectations play a primary role in the quality of service given to the customer as a user. Even the user-friendliness of ATM machines and internet banking affects the customers concerning the quality of service.
  • Customer as a product: Considering customers as products, transformation or change has to be initiated through either purchase of a product/service or use of a product/service. Giving an example of financial institutions, let us assume that a client with a high investment in a bank would be an outcome as a product for the services provided by the bank (e.g. portfolio management, investment analysis) would lead to personal gain or loss most probably affected by the choices of the client who is influenced by the employee. So the employee’s personal characteristics such as confidence and flexibility would play an important role in the customers’ satisfaction.

 Now, it all links back to Quality Management!

Up until this point you should have understood that customers will not accept everything that product and/or service providers shove into their throats. Customers, well most of them, are not stupid. Indeed they are getting smarter and more demanding. As a result, companies must manage their quality by managing their customers well. On a higher level, Quality Management could be explained through a model which is called “The Cornerstone Model”.

Image

 Figure: Quality Cornerstone Model (Bergman and Klefsjö, 2010)

Central in quality management, and hence in the figure, is customer focus. Customer focus further overlaps, and supports the other parts in the model.

All of the five customer roles could be interpreted using the cornerstone model. For instance, customer’s role as a resource would be embedded in Base Decisions on Facts cornerstone. The inputs they provide could help managers and employees manage their processes according to customers’ needs and expectation. Moreover, the inputs provided by customers as resources and as co-producers may help organizations to focus on processes as well as to improve continuously. The influence of customers as outputs (buyer, user, and product) could also be observed in the cornerstones. The positive transformation that a customer goes through because of a product/service could make the employees to be more committed to further improvements on quality. These roles are worth emphasizing because they shape the concept of a customer within an organization whether it is in manufacturing or service sector and reinforce the organizations to pursue continuous improvement in overall service quality in order to satisfy all of the five roles of the customer.

For more information about Customer Roles and Quality Management, browse through the articles below:

Customer Contributions to Quality: A Different View of the Customer-Oriented Firm. Cynthia A. Lengnick-Hall. The Academy of Management Review, Vol. 21, No. 3 (Jul., 1996), pp. 791-824.

Bergman, B. and Klefsjö, B. (2010). Quality: From Customer Needs to Customer Satisfaction. 3 Ed. Poland: Studentlitteratur.