CHANGE

MANAGEMENT

REPORT

TABLE OF CONTENTS

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1. INTRODUCTION..............................................................................................3

2. LITERATURE REVIEW..................................................................................4

2.1 Drivers of Change............................................................................................4

2.2 Meta Change Model........................................................................................5

2.3 Total Quality Management Principles.............................................................6

3. CASE ANALYSIS..............................................................................................7

3.1 Analysis of Approaches To Change And Difficulties.................................7-8

3.2 Change Tool – Total Quality Management (TQM)...................................9-10

4. RECOMMENDATION...............................................................................11-12

5. CONCLUSION..................................................................................................13

6. REFERENCE LIST.....................................................................................14-15

1. INTRODUCTION

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Every business in the world is continuously changing to survive in the

competitive environment. All companies need to be prepared anytime

for receiving the challenges or pressures that change presents and

trying to overcome these in order to gain benefits. The pressures or

forces to change in a business may arise internally, from

management or organisational team, or from external likes change in

economic development.

As a business consultant for the company, my responsibility is to

provide a report to the Interlock’s Executive Chairman, Mr. Stuart

Young with an analysis of the appropriateness of the approaches to

change and potential difficulties (Q2), and a focus on the Total Quality

Management (TQM) system (Q5).

According to the case, there are several forces currently influencing the organisation to

change, including innovation pipeline, TQM system, quality control, organisational

structures, leadership status, and HR administration and entering then new market -

Japan.

In the second section, a list of drivers of change and continuous transformation model

will be outlined firstly. Next, the principles of the selected changing tool – TQM will be

explained in detail. In the case analysis section, the main focus will be divided into two

parts which are TQM and approaches to change and potential difficulties. In the final

section, a series of recommendations will be provided.

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2. LITERATURE REVIEW

2.1 DRIVERS OF CHANGE

In an international customer-driven environment, competitive advantage depends on an

organisation’s ability to concentrate on its unique skills and capabilities, and build on

and exploit these in a framework and culture of continuous improvement and

innovation. (Graetz, Rimmer, Lawrence & Smith 2002, P16)

I. Opportunity

The major force to change is that Mr. Stuart recognised the new market opportunity for

expansion and increase company revenues by selling the product around the world. For

instance, Mr. Stuart Young decided to target a new market – Japan as the new exporting

market because Japan has economic growth and political stability. Through operating in

the global marketplace, Interlock can obtain more profits and benefits such as the

company products can often fetch prices higher than in other export markets.

II. Innovation

The second force to change is innovation occupies a higher rank than quality in the

mind of customers especially in the Japanese market. To illustrate, Mr. Stuart is

emphatic that it is innovation, not quality that has made Interlock industries so

successful in Japan and thus, Japan Interlock manufacturer are highly desperate in

innovation. This phenomenon was caused by the daily change in fashion so customers

want the new and fashion products more than the best quality products. So, Mr. Stuart

realized that it is an excellent example to make change.

III. Quality

Another influencing force to change is the level of quality. For example, Mr. Stuart

recognized the major drains on business is the cost of poor quality and it has driven

Interlock to adopt a policy of eliminating if faults in the company’s system. Therefore,

Mr. Stuart believed Interlock could learn the advantages of Japan’s best system –

achieve a zero defect rate.

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2.2 META CHANGE MODEL

Sustainable change is reliant on a company’s the ability to appreciate its strategies and

the factors in different situations. (Burnes 2000, P251) Therefore, every company

requires a framework or model to make change. Looking at the case, Interlock was

using the continuous transformation model for staying ahead of its rivals.

In the strategic planning process, the major thing is to scan the competitors, economy,

and technology in the relevant environment. For example, Interlock realised the some

factors such as customer requirements changing due to product customisation,

minimisation of product defects and so on.

After environmental scanning, companies can move into the stage of developing new or

innovative products. Similarly, Interlock was encouraged to focus on R&D area and

innovation pipeline after recognising the importance of the innovative design on product

range.

In the third stage, Interlock could refer to refitting the innovation pipeline strategy,

TQM system, and operations process. Also, Interlock introduced workforce training to

their employees in order to reach a high level of skill and knowledge. After series

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A B

Processes for fine tuning

Multi-skillingProduct

development

Strategic planning process

Refitting

changes and test in the market, it should enter the process of removing the unfavourable

items.

2.3 TOTAL QUALITY MANAGEMENT (TQM) PRINCIPLES

TQM refers to systematic policies, methods, and procedures used to ensure that goods

and services are produced with appropriate levels of quality to meet the needs of

customers. (Collier & Evans 2010, P279)

TQM model is related to the system of lean production which was developed in Japan

and it is based on Quality Statistical Process Control. Typically, TQM is led from the

top of any organization and it is therefore very important to avoid the situation where it

simply stays at the top. (Kanji, Gopal, Barker & Raymond, 1990)

TQM is about continuous performance improvement. To improve

performance, people need to know what to do and how to do it, to

have the right tools to do it, to be able to measure performance and

to receive feedback on current levels of achievement. TQM provides

this (Kanji & Asher, 1993) by adhering to a set of general governing

principles. They are:

Delight the customer

Management by fact

People-based management

Continuous improvement

Each of the principles can be used to drive the improvement process.

To achieve, this each principle is translated into practice using core

concepts, which show how to make the principle happen. These

concepts are:

customer satisfaction

internal customers are real

all work is a process

measurement

teamwork

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3. CASE ANALYSIS

3.1 ANALYSIS OF APPROACHES TO CHANGE AND DIFFICULTIES

I. CHANGING MANAGEMENT STYLE

In this case, Interlock redefined its management structure and the relationship with

employees by introducing the Just-In-Time (JIT) system. Although there is a resistance

to change from a certain group of people, Mr. Stuart still insisted to execute the JIT

system by locating the right people in the right positions. For instance, Interlock

implemented the flat management structure where redesign the responsibilities of senior

management and delegate authorities to the team leaders in a team-based work group.

A new form of organisational structure in Interlock which specialised in HR Quality

programme has strengthened the organisational skills and capabilities whilst becoming

increasing competitive in the marketplace. For example, the factory manager has a

meeting with all team leaders in every morning and then later all team leaders have

meetings with their team members. It has enhanced the efficiencies of information

delivery and communication system between upper management and executed labours.

However, there are some resistances to change new system because most workers do

not adopt the specific cultural changes. For example, most people were saying JIT

system might work in Japan but will not in New Zealand. There are several issues lead

to these resistances, including educational levels, behaviour patents, personal traits,

attitudes, social values and different expectation in job security or potential career

development and benefits. (Vikas, 2010

II. CHANGING INNOVATION SYSTE

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The function of changing in innovation generates a strongly competitive advantage for

Interlock. For example, Mr. Stuart has developed the concept of innovation pipeline and

decided to spend 10% of sales in R&D which directly contributed to the company.

Moreover, the use of patents has also helped Interlock to occupy a predominant position

in the market. Therefore, innovative products and patents has become a sustainable

competitive advantage of Interlock.

Although new innovative strategy has shaped Interlock into a flexible company, it also

created an enormous cost for the company. Because of improving customisation

is very often regarded as an activity which is going to increase cost.

(Kanji & Searstone, 1990) The major difficulty comes from the costs of

constantly expenditures in R&D and some unavoidable payments in renewing patents or

protecting patent.

III. CHANGING LEADERSHIP

Mr. Stuart plays an important leadership role in changing the organisation. For example,

he tried to looking for future development of company by seeking new market

opportunity in foreign countries. Furthermore, he has significantly international working

experience and it might be an advantage to help him improve in his leadership

management.

Consequently, Mr. Stuart has achieved a superior triumph for Interlock by using a series

change which based on his belief and experience. For instance, he realises the change

situations quickly and identifies the new goals and system immediately. He chooses the

people who believe in his approach to change and allocate the right people into the right

positions. Also, he involves himself in each process especially his new concept of

innovation pipeline. Furthermore, he went to Japan almost 26 times for building a

strong business relationship with Mr. Shibutani. What he all over did was establishing

clear directions, aligning people and motivating or rather inspiriting them. (Dunphy,

Griffiths & Benn 2003, P263)

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Nevertheless, his strong leadership also produced a weakness for Interlock which is too

much dependent on Mr. Stuart. There should be a large shift in the overall management

after his retirement.

3.2 CHANGE TOOL – TOTAL QUALITY MANGEMENT (TQM)

An analysis of TQM implementation in Interlock Company will be divided into five

components which as shown in Figure 1.

Figure 1 Total Quality Management (TQM) Model

From: http://www.edrawsoft.com/TQM-Diagrams.php

I. Customer focus

Interlock tried to offer the products based on customers’ requirements by designing the

updating fashion patents. For example, Interlock shows the prototype to customers for

comment first and then alter the design based what customers exactly want before

entering the final production.

II. Total participation

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Participation is a decisive role in TQM process because an effective TQM process

requires a well corporation between top management and executed workers. There is a

total participation when Mr. Stuart implemented the new innovation system. Moreover,

Mr. Stuart also involves himself in the process with his workers to manage each stage’s

development.

III. Process improvement

Interlock has been continuously changing in many ways, such as innovation pipeline

system, research and development, and workforce upgrading. For example, it spends a

strong percentage of sales to invent various patents of products. Also, Mr. Stuart highly

encouraged his workers to upgrade themselves through multiple skills training or further

educational commitment.

IV. Planning process

A well-designed planning is vital for a company to achieve its goals and objectives.

Interlock tried to set up a strategic plan which related different department of overall

operations in order to achieve the goals of zero deflects, high quality and innovative

patents,

V. Process management

In the TQM implementation process, control management will be a challenging task for

a manager because it strongly requires experience and capability. Mr. Stuart has created

a workplace culture that support TQM framework and constant innovation. (Dwyer,

2002) For example, Human Resource Quality Circle programme for the factory teams.

As a result, TQM was very successful for Interlock because it solves all of the key

concerns of its target market and also has so much in common with the management

philosophies of that market. Besides the TQM model, there is an alternative option for

Interlock which is Organisational Development (OD).

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OD focuses more on changing and improving three key aspects of organizations:

strategies, design components, and processes. (Boonstra & Thomas, 2004) Target the

effectiveness to achieve the goals as the main point for selecting the framework tool,

TQM is more suitable than OD.

4. RECOMMENDATION

The following recommendations are based the major difficulties that outlined in the

analysis section:

ISSUE 1: RESISTANCE TO CHANGE

Continuously changing in the environment by following new trends or updated

information is vital for companies for surviving. Nevertheless, there may have a group

of people refuse to change with new system and management structure in Interlock. For

example, most workers do not believe the concept of JIT system due to the different

culture and working conditions. So, the resistance from those people might become a

barrier to improve or change continuously; and thus, it might become a lost in economic

aspect.

Firstly, the top management should be honest to admit the resistance and explore the

reasons, and then later create an approach to eliminate the resistance that will be

acceptable to all parties. (Kanter, 1985) For example, apply a survey within overall

company and build personal meeting to explain the future direction, main strategy, and

forecast results.

Secondly, a successful application of changing in management system or operating

function requires high communication and effective performance between employees

and upper lever management. By addressing the resistance, building trust relationship,

provide greater control to employee, and monetary motivation will be some better

choices to get the desired outcome. (Kopelman, 1976)

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ISSUE 2: COSTS OF PROTECTING PATENTS

Interlock used patent rights to prevent competitors from copying or stealing its ideas.

Protecting the invention of a new product or improving the grade of products

relates to the use of more expensive materials or processes will raise

product costs and diminish the returns. (Kanji & Searstone, 1990)

With regards to the Interlock case, the company needs to pay a fee of

AUS $5000 per patent. By reducing product costs, economies of scale

can be an important source of solution. Economies of scale refer to

the ability of companies producing in large volumes to achieve

specialization and gain more returns from the stimulated sales.

(Charles & Gareth 2010, P109) Eventually, Interlock can maintain the

balance of profit and loss through achieving the desired economies of

scale.

ISSUE 3: LEADERSHIP

The culture of continuous improvement in an organisation, particularly on an individual

basis, is not easily achieved and therefore some effective training and leadership is

essential. (Kanji, Gopal Barker & Raymond, 1990) Another concern in

Interlock it its leadership. Mr. Stuart’s leadership style actually is a

part of the competitive advantage of Interlock mainly the business

relationship with Mr. Shibutani.

Regarding to the different customs and culture of Asia countries (Fletcher & Brown

2008, P81), their loyalty is on a person rather than a company image when building a

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close business relationship. Undoubtedly, damage must occur in the business

relationship with Mr. Shibutani when Mr. Stuart retired or quitted his position.

To address this problem, Interlock could turn the focus in the business relationship from

personal loyalty to company reputation. For example, Interlock can change its

leadership characteristic from “Charismatic style” (where emphasis on personal image

is major level for change) to “Task focused style” (focus on the core business and

overcome resistance in performance). (Stace & Dunphy, 1996) So, the relationship

between Interlock and Japanese market can put more concerns on the effective

production rather than the personal ability of leaders.

5. CONCLUSION

In this modern complex business world, the traditional working approach is no longer

acceptable. In order to remain competitive in their fields, companies must be prepared

to incessantly change and improve.

Interlock Company changed in many ways, including management style, quality control

program- TQM method, production process - JIT system, innovation pipeline, patent

design, continuous transformation model, leadership, product customisation and so on.

Due to the ability of Interlock to manage various issues simultaneously and to deal with

new challenges, Interlock created more opportunities and strengths for future

development.

In conclusion, with the information gathered from the case analysis and literature

review, Interlock can become more successful by solving the potential difficulties based

on the recommendation guideline.

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6. REFERENCE LIST

Boonstra JJ. & Thomas Cummings. (2004). Dynamics of Organizational Change and

Learning. Australia: John Wiley & Sons.

Burnes B. (2000). Managing Change: A Strategic Approach to Organisational

Dynamics. Edinburgh: Prentice Hall.

Charles W L. Hill & Gareth R. Jones. (2010). Strategic Management: An Integrated

Approach. South-Western: Cengage Learning.

Collier A. David & Evans R. James. (2010). Operations Management. USA: South-

Western Cengage Learning.

Dwyer J. (2002). Communication in Business. Frenchs Forest: Prentice

Hall.

Fletcher, R. & Brown, L. (2008) International Marketing: An Asia-Pacific

perspective, 4th edition, Pearson Education Australia.

Graetz F., Rimmer M., Lawrence A., and Smith A. (2002). Managing Organisational

Change. Australia, Brisbane: John Wiley & Son.

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Hildebrandt, Steen , Kristensen, Kai , Kanji, Gopal and Dahlgaard, Jens

Jorn. (1991). Quality culture and TQM, Total Quality Management &

Business Excellence, vol. 2(1), 1-16.

Kanji, G. K. and Searstone, K.(1990). Quality Control is the Way of

Thinking of Quality Assurance, Total Quality Management & Business

Excellence, vol.1(2), 259-268.

Kanji, Gopal K.(1996). Can Total Quality Management Help Innovation,

Total Quality Management & Business Excellence, vol.7(1), 3-10.

Kanji, Gopal K.(1994). Total Quality Management and Statistical

Understanding', Total Quality Management & Business Excellence,

vol.5(3), 105-114.

Kanji, Gopal K. and Barker, Raymond L.(1990). Implementation of

Total Quality Management, Total Quality Management & Business

Excellence, vol.1(3), 375-390.

Kanter R. M. (1985). Managing Human side of Change, Journal of Management

Review,vol. 74 (1), 52-56.

Kopelman R. E. & Thompson P. H. (1976). Boundary Conditions for Eexpectancy

Theory Predicitions of Work Motivation and Job Performance, The Academy of

Management Journal, vol. 19(2), 237-258.

Leibman S. Michael. (1992). Total Quality Management and Human Resource

Improvement, HR Magazine, vol. 37(9), 34-39. (Accessed September 30, 1992 from

ProQuest)

http://proquest.umi.com.ezp01.library.qut.edu.au/pqdlink?Ver=1&Exp=10-19-

2015&FMT=7&DID=707153&RQT=309&cfc=1

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Vikas Kumar. (2010). JIT Based Quality Management: Concepts and Implications,

International Journal of Engineering Science and Technology, vol. 2(1), 40-50.

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