How Strategic Direction Stems from Total Quality Management Efforts

When dealing with the concept of Total Quality Management (TQM) as it has been addressed in recent Collegiate Chapter columns, it becomes apparent that any managerial team effort toward TQM makes it necessary to clearly define and effectively communicate the vision of one's company. Without a clearly defined company vision, it is not possible to accomplish a Total Quality Management organization.

In his article, "Quality and the Role of Strategy," which was published in the Managing Service Quality Journal, Roger Handley stated that he believes each business seems to have something at the foundation of its existence that dominates managerial thinking with respect moving the company forward to accomplish its mission. He believes that management must fully understand what strategic area drives the company forward in order for it to succeed. "Failure to understand this will lead to strategic ineffectiveness and dissatisfied customers," stated Handley.

Looking deeper at this theory, Handley outlined 10 different ways in which a company's strategic direction can be fundamentally grounded.

1. A product/service driven company sets its goals around a product concept that does not vary much over time. Any changes in the product are variations and modifications of the existing product. Any future product offerings evolve out of the existing product.

2. The market-driven company focuses on one type of market. The organization constantly monitors the market and seeks new opportunities based on customer needs. When these needs are identified, new products are developed. Often the only thing that the new product line has in common with the old one is the customer category. "NHS Hospital Supplies responds to a variety of needs, and it product scope ranges from bedpans to sutures and from gauze pads to electronic imaging systems. While these products are unrelated to each other, they are all used in a hospital," stated Handley.

3. The user/customer-driven typeof company is very much like the market-category-driven firm except that this company has focused on a particular type of end-user. For example, Handley points to Johnson & Johnson's mission of producing items for "doctors, nurses, patients and mothers."

4. A production capacity/capability-driven company strategy is often desired by an organization that has made a very large capital investment in its production operation. The mission of this company is to get the facility operating at full capacity. "The drive is to look for opportunities that can utilize whatever the production capacity can handle," stated Handley. "Paper companies, because of the enormous capital tied up in their mills, are examples of organizations which usually pursue a capacity-driven strategy."

5. A technology/know-how-driven company "invents or acquires hard or soft technology or know-how. It then looks for applications," said Handley. This kind of organization can become involved in many different types of products, all of which blossom from the development of a new technology. This type of company will usually serve a wide variety of customers in many different market categories. Two illustrative examples are Du Pont and 3M.

6. A sales/marketing-driven company "has a unique way of attracting orders from its customers. Such a company will only offer products and pursue customers that can be brought together through that selling method." Examples can include companies like Avon and Tupperware, catalogue driven companies such as LL Bean or Web-based companies like Amazon.com.

7. The distribution-driven company works in the opposite way as that of sales/marketing-driven companies. Here, the company has a unique distribution method in having products reach the customer. Any product or service offered by the company must fit this distribution method. Handley explains that department stores and telephone operating companies are good examples.

8. The natural, resource-driven company builds its strategy around having access to various natural resources. Oil companies are often given as a primary example.

9. A size/growth-driven company "has only one criterion: an appetite for size and growth," stated Handley. Conglomerates that are built primarily through mergers and acquisitions are prime examples.

10. Return/profit-driven companies have only one focus as well—that of maximizing return on investments.

It is interesting to note that Handley has found that, more often than not, there will be many conflicting views within the organization as to just what the driving force behind the business is. "Unfortunately, if there is lack of consensus and clarity, the organization will zigzag its way forward."

Once management does come to consensus with respect to what the driving force of the company is, Handley suggests that a number of other questions must then be addressed. Namely, "What should drive the business in the future? Should we continue with the same driving force? If we explore a new one, which should it be? What implications will it have? And, what will the company look like if we change the driving force?"

It is important that top management think strategically when defining a vision for the company. A movement toward TQM spurs the need to think about customer requirements and transform the organization into something that can consistently meet and exceed them. TQM can be an effective force in not only defining and communicating a clear vision for the organization, but one which helps inspire others to achieve it.

Greg D'Amico is a member of the faculty and coordinator of the undergraduate program in graphic communications at Kean University, Union, N.J., and the author of Customer-Centered Production, published by NAPL, now in its second edition.