1. business and industrial

"…but rather the one most adaptable to change."
How to set up and maintain an effective quality management
system in stormy times of change
Hans-Jürgen August
Siemens Convergence Creators
Autokaderstraße 29, 1210 Wien (Vienna), Austria.
E-mail: [email protected]
Abstract:
"It is not the strongest of the species that survives, nor the most intelligent, but rather
the one most adaptable to change" – Leon Megginson’s paraphrase of Charles Darwin's
findings applies to the evolution of species as well as to the evolutions, transformations
and even revolutions that we face in today's economy. Since the environment and the
stakeholders' expectations change ever faster, adaptability of processes becomes crucial
and may make the difference between sustainable success and failure.
Having gone through times of significant changes in a highly volatile business
environment with rapidly changing customer strategies and demands as well as fierce
competition on the markets (telecommunications/media), Siemens Convergence
Creators continuously had and has to find answers to a variety of economic challenges.
As a result of a substantial strategic repositioning and change of business models, the
company has developed from a mainly internal R&D service provider to a hardware and
software product and solution company with more than 90% external customers.
Aiming at improved operative effectiveness, nine country companies have been
integrated into one global system with a new legal company structure, while at the same
time maintaining and further strengthening the position as top quality supplier.
Against this background the question arises of how an integrated management system
should be designed and introduced in order to support the transformation of the
company most effectively.
In the past three years we have had the opportunity to find some answers. Starting in fall
2010 the complete process house was newly set up – an “in vivo” operation, since, of
course, the operational business had to be supported at the same time. As the
organization was able to build on decades of quality and process management
knowledge inherited from the predecessor organizations, the main challenges were not
related to process management know-how, but to cultural change and issues frequently
appearing in matrix organizations. The main enablers for the success of the
transformation were the close alignment with strategy and operations, the consideration
of cultural topics, the balancing of global and local concerns, the team spirit within the
global quality and process manager community, and the clearly communicated support
by the top management.
Keywords: Integrated management system, processes, organizational development,
corporate culture, change management, global integration.
Conference theme category: Adaptability.
Hans-Jürgen August: „…but rather the one most adaptable to change“ (paper 58th EOQ congress)
1 / 15
1 Introduction
In an ever faster changing business environment with globalization offering
worldwide opportunities but also fuelling fierce competition, fast and flexible,
customer-oriented and value-generating behavior is a key not just to success, but to
survival. Or as a respondent to a survey carried out by the Swedish Quality
Management Academy (SQMA, 2012) puts it: “If a company does not support the
demand from the environment, the company will not be around for much longer.”
Adaptability, including strategic realignment, organizational transformation and
redesign of operational activities thus becomes a basic competence of any organization.
This requirement is reflected in specific challenges related to the entity’s management
system, which in the words of Robert Kaplan and David Norton “can be defined as the
set of processes and practices used to align and control an organization” (Kaplan and
Norton, 2006). This relation is also a clear finding of the SQMA survey: “Two of the
ten highest-ranked challenges in the study regard the need to develop the organization’s
adaptability. The concepts behind ‘adapting the organization to rapid changes in the
environment’ and ‘delivering robust processes that are at the same time open to change’
indicate the close connection between these challenges.”
Processes are often seen as the backbone of the organizational body, reflecting the
strategy, supporting operations and keeping the enterprise in good shape. Of course
processes are not ends in themselves, but instruments to finally deliver value to external
stakeholders, such as customers, shareholders or the society. Since the environment and
the stakeholders' expectations change faster and faster, adaptability of processes
becomes crucial and may make the difference between sustainable success and failure.
What are the requirements for an integrated management system that meets these
challenges?
As the respondents to the SQMA survey point out, “we will need to have processes that
are at the same time robust and friendlier to change. Many find this a big challenge
since ‘robust processes have a tendency to be rigid’.” As Michael Hammer wrote, “few
executives question the idea that redesigning business processes – work that runs from
end to end across an enterprise – can lead to dramatic enhancements in performance,
enabling organizations to deliver greater value to customers in ways that also generate
higher profits for shareholders.” But from experience he also added: “Sadly, however,
casualties litter the way.” (Hammer, 2007)
So the key questions are: How can an integrated management system keep the right
balance between the backbone function and the required adaptability? And how can it
be sustainably implemented without impairing business operations?
2 Organizational development and strategic repositioning
The historical roots of Siemens Convergence Creators go way back to the year 1961,
in which the predecessor organization “Zentralstelle für Forschung und
wissenschaftliche Arbeiten” (“central unit for research and scientific work”) was
founded in Vienna as a Siemens unit. The focus of the activities was on research and
development (R&D) for telecommunication systems. The unit, which was part of
Siemens AG Austria, but more and more engaged in the development of products and
solutions for Siemens’ global headquarters, grew continuously over the following
decades. In 1978, the unit was renamed “Siemens Programm- und Systementwicklung /
Hans-Jürgen August: „…but rather the one most adaptable to change“ (paper 58th EOQ congress)
2 / 15
Siemens Program and Systems Engineering (PSE)”. By then, more than 400 employees
worked at the Vienna location and, among others, contributed to the development of
most successful telephony switching systems. The late 1980s saw PSE’s engagement in
emerging telecommunication technologies, such as mobile and intelligent networks.
At this time, European companies usually had their R&D units in Europe, mainly at
their domestic locations. Siemens PSE’s services were almost entirely accounted on a
time and material basis. In the late 1980s and the early 1990s, at the dawn of the internet
era, globalization entered a new phase. Communication systems not only made it
possible to transfer data - e.g. the results of software development - from any country of
the world to another, but also did so at almost no costs.
Kenichi Ohmae’s book “Triad Power – the Coming Shape of Global Competition”,
published in 1985 (Ohmae, 1985), introduced the paradigm of three world regions Western Europe, the US and Japan - to dominate the world’s economy. But just some
years later, global economy started to change dramatically. The fall of the Iron Curtain
and the rise of emerging economies opened new markets and fuelled global
competition. Software development was one of the businesses in which competition
became fierce very soon. Siemens PSE’s offerings got under price pressure, since
Austrian, i.e. Western European, hourly rates competed with those in emerging
countries like India or Brazil.
Answering these challenges, Siemens PSE soon established development centers in
Eastern Europe. Subsidiaries in Budapest and Bratislava were founded as early as in
1991, Prague followed one year later. In 1995, the first Croatian location was opened in
Zagreb, a Romanian development site in Braşov followed in 2001. For an improved
coverage of the German market, a company in Hamburg was acquired in the same year.
At this point in time Siemens PSE employed far more than 4000 software and hardware
development experts and industry consultants. About two thirds of the revenue
originated from telecommunications business.
While Siemens PSE continuously had grown over four decades, the new millennium
began with extraordinary challenges. The collapse of the dot-com bubble affected
Siemens PSE’s business. In the following years, Siemens re-organized its
telecommunications business: Siemens’ mobile phones division was sold to BenQ,
effective 1.10.20051. The telecommunications infrastructure business was merged with
the corresponding Nokia business, effective 1.4.2007, forming Nokia Siemens
Networks2. In 2008, Siemens placed its Enterprise Communications in a joint venture
with the Gores group (the latter holding 51%)3, and in the same year 80.2% of the Home
and Office Communication Devices were sold to Arques Industries4. Hence, Siemens
PSE implicitly developed from a Siemens-internal service provider to one serving
mainly external or joint venture customers.
In terms of internal re-organizations (see fig. 1), Siemens PSE was merged on 1.1.2007
with former “Siemens Business Services (SBS)”, “Siemens Information Systems Ltd.
(SISL)” in India, Greek “Development and Innovation Projects (DIP)”, and Swiss
“Business Innovation Center (BIC)”, building the new organization “Siemens IT
Solutions & Services (SIS)”5. In 2009, those parts dealing with internal R&D services
for Siemens businesses were bundled in the new organization “Siemens Corporate
Technology Development Center (CT DC)”. In 2010, the major part of SIS was merged
with Atos Origin to form the new company Atos6. The part of the business focusing on
telecommunication, media and satellite products and solutions was bundled in a separate
Hans-Jürgen August: „…but rather the one most adaptable to change“ (paper 58th EOQ congress)
3 / 15
entity, called “Siemens Communications, Media and Technology (CMT)”, the direct
predecessor of Siemens Convergence Creators.
1.10.2005
1.10.2006
1.10.2007
1.10.2008
1.10.2009
1.10.2010
Siemens CMT /
Convergence Creators
Siemens
PSE (Europe & China)
Siemens CT DC
SISL (India)
BIC (Switzerland) & DIP (Greece)
Siemens IT Solutions & Services (SIS) (global)
SBS (global)
Siemens Mobile
Phones sold to
BenQ
Figure 1
ATOS
(Merger Atos Origin & SIS)
Siemens
Networks
merged with
Nokia Networks
(NSN)
Siemens Enterprise
Communications and
Siemens Home and
Office Communications
in Joint Ventures
Organizational changes at Siemens Convergence
predecessor organizations and in its environment.
Creators,
its
Against the background of the business environment and organizational changes the
entities’ strategy was redefined at the very beginning of the new organization in 2010,
focusing on own products (license business) and specific solutions, meeting complex
and high customer demands.
Today, Siemens Convergence Creators develops products and solutions in nine
European and Asian countries (Austria, China, Croatia, Czech Republic, Germany,
Hungary, India, Romania, and Slovakia), serving customers worldwide.
3 Strategic development of the Integrated Management System – environment
and requirements
Starting point
The integrated management system (IMS) at the start of Siemens Convergence
Creators’ predecessor organization Siemens Communications, Media and Technology
(Siemens CMT) was the result of four decades of continuous development of the
process system, yet with a governance system reflecting a more or less decentralized
approach.
In general, the local (country) entities had developed their own process houses, re-using
parts of the one available at the headquarters in Vienna. In the course of time, these
process houses evolved into more or less independent systems. The only bond was the
“Software Engineering Methodology (SEM)”, which describes rules for the
Hans-Jürgen August: „…but rather the one most adaptable to change“ (paper 58th EOQ congress)
4 / 15
development of software, hardware and the management of projects, and which was
maintained and hosted centrally. Other processes and procedures were just valid locally.
In general, the description of processes and procedures was available in text form or, in
some cases, as flow charts.
Strategic goals
It is very clear that a company’s processes serve to support the implementation of the
strategy, translating even the company’s vision, mission, values, and, of course, the
strategic goals into operative activities. In the fall of 2010, therefore, it was decided to
completely redesign the integrated management system, including the governance
policy, the content of all processes, the way of defining and describing them, as well as
the underlying IT system.
Influencing parameters and conditions – the role of corporate culture
When designing a process house, a variety of influencing parameters and boundary
conditions have to be considered. The integrated management system of course should
reflect the company’s strategy and ensure compliance with legal and other requirements
to which the organization subscribes (such as standards). Needless to say that it must
also be adequate regarding the type of business and the size of the company.
A key factor to be considered very thoroughly is the corporate culture. Why is this so
important?
“We understand culture as characteristic collection of assumptions, values, convictions,
and symbols that influence and guide the behavior of the employees”, state Roman
Lombriser and Peter Abplanalp (2010, translation by author). Klaus Doppler and
Christoph Lauterbach (2002) write: “Corporate culture can be defined as the entity of all
norms and values which constitute the spirit and the personality of the company.” And
they add: “Norms and values are control systems. They channel the behavior of people.”
(Translations by author.)
Following the model of Ed Schein (Schein, 1990), organizational culture consists of
three more or less visible levels:
•
Artifacts and behaviors are what any visitor at the company’s site can
immediately perceive: the tangible, audible, visible elements of the culture such
as architecture, dress codes or the way to communicate.
•
Values are the organization’s values and defined rules of behavior. From a
corporate and management system point of view, Schein’s values comprise
topics such as the company’s vision, mission, and values as well as the process
definitions and other explicit regulations.
•
Assumptions are the implicit, usually unconscious culture elements. They are
taken for granted, and making them tangible usually requires considerable effort
and may even resemble ethnographical research. In connection with the redesign
and harmonization of a global process house, these assumptions have to be
considered and analyzed, since they may conflict with the values (including
processes and regulations) defined centrally, usually at the headquarters.
An important aspect of implicit culture is that people – the employees of a company, the
members of an organization or a society in general – act according to common values
Hans-Jürgen August: „…but rather the one most adaptable to change“ (paper 58th EOQ congress)
5 / 15
and quite automatically following inner convictions. The more literally “goes without
saying”, the less has to be said, i.e. to be defined by process descriptions, regulations
and other explicit means to steer the behavior of people. This applies to societies and
cultures in general as well as to companies. Since any explicit regulation causes
organizational costs, e.g. for working out documents, performing trainings, monitoring
compliance, even for penalizing, any over-regulation should be avoided (Kohlöffel and
August, 2012). On the other hand, designing a management system too lean may cause
misunderstandings, conflicts, and effectiveness losses, jeopardize quality and finally
lead to severe business troubles. Hence it is crucial for the effectiveness of any company
to shape the integrated management system in a balanced way, considering all
requirements and aiming at a perfect fit to the respective corporate culture.
Which corporate culture do we encounter at Siemens Convergence Creators? Let us
discuss this on the basis of a well-known model of organizational development phases
(Glasl and Lievegoed, 2004):
Link company with
environment
Association phase
Develop holistic
organism
Integration phase
Differentiation phase
Pioneer phase
Figure 2
Set up control and
steering
Informal, personcentered
organization
Power
bloc?
Environmental
problem
Human
relations
Transparency
Organizational development phases according to Glasl and Lievegoed
(own drawing).
Usually the “pioneer phase” is the one most companies start from. Led by a charismatic
person or a small team pursuing a clear vision, the company understands itself as a large
family or a tight-knit community. Improvisation substitutes planning, steering is done
mainly via verbal instructions; the authority of the leader(s) is not questioned.
Customer-orientation and extreme speed and flexibility are main competitive
advantages. In the course of time and growth, the organization faces problems, such as
lack of transparency, chaos, arbitrariness and power struggles.
To cope with this, most organizations set up clear structures and regulations, based on
clear steering hierarchies. Standardization, precise definition of functions, tasks and
responsibilities let the organization turn into a “mechanistic” system reflecting Frederik
Winslow Taylor’s “Scientific Management” approach (Taylor, 1911). The typical crisis
related to this “differentiation phase” emerges from bureaucracy, hypertrophic
Hans-Jürgen August: „…but rather the one most adaptable to change“ (paper 58th EOQ congress)
6 / 15
controlling and thus loss of flexibility and willingness to cooperate. Disregard of
customer orientation leads to severe problems on the markets.
In the third phase, the “integration phase”, steering is not done mainly by strict and
inflexible regulations, but strongly based on a common orientation of the management
as well as the employees pursuing the same company vision, strategy and goals.
Customer orientation again is seen as key to success, the organization is processoriented (Hasper and Glasl, 1988), responsibility is delegated to sub-entities, and central
functions support the implementation of the strategy and operations. Although this type
of organization is already quite elaborated and mature, it might encounter problems if it
is too self-referential.
This issue is solved in the last phase of Glasl and Lievegoed’s model, the so-called
“association phase”, in which the organization’s boundaries dissolve to a certain extent,
and cooperation with external stakeholders is fostered. An issue may appear if this
collaboration leads to power blocs (e.g. along the supply chain) with monopolistic
aspects or even illegal agreements.
Applying this model to a European company with the structure and positioning of
Siemens Convergence Creators it is very clear that an “integration phase” or
“association phase” type of organization is the only promising one. In fall 2010, when
the predecessor company Siemens Communications, Media and Technology was
established, the organization was already more or less in the state of an “integration
phase” company, yet with some remainders of the “differentiation phase”. Close
customer interaction (especially on project level) already matched “association phase”
characteristics. In terms of cultural development, it was clear that a strong emphasis had
to be put on customer orientation, flexibility, smooth cooperation between all units,
innovation, and working together as a global team.
Accordingly, the following core values were defined:
•
•
•
•
•
•
ONE CMT/CVC
Trust
Customer orientation
Speed
Innovation
We care
Questions we dealt with when defining the basic principles of the new process system
are also reflected by those posed by Gary Hamel in his article on management
innovation in general: “Just how far can you push autonomy and self-direction in your
company? Is there some set of simple rules that could simultaneously unleash local
initiative and provide focus and discipline?” (Hamel 2006)
Summarizing, a variety of requirements, environmental conditions and corporate
intentions have to be taken into account:
Hans-Jürgen August: „…but rather the one most adaptable to change“ (paper 58th EOQ congress)
7 / 15
Corporate Strategy
External: Market and
business type
Explicit values
•
•
•
•
•
•
ONE CVC
Trust
Customer orientation
Speed
Innovation
We care
Integrated
Management
System
Implicit culture
•
•
•
•
Market dynamics
Competition
Degree of globalization
Internal: Employees’
competences
(professional, methodological, social, personal,
leadership competences,
sector knowledge )
(immanent in organization,
developed over decades)
Basic Conditions
Corporate Culture
Deliver unique customer benefit with
innovative, high-quality products & solutions
External Requirements
Legal requirements, customers,
standards, shareholders
Figure 3
Design of Integrated Management System: Requirements, influences,
intentions, environment.
Cornerstone requirements for Siemens Convergence Creators’ Integrated Management
System
Considering all strategic and operational objectives as well as all environmental
conditions at Siemens Convergence Creators, the following main requirements for the
process house were derived:
1. All processes and regulations described and accessible in one common
handbook.
Objective: Common understanding throughout the global company, easy access
supporting a high degree of acceptance.
2. As much as possible defined on global level, as much as necessary on local
level.
Objective: Smooth interworking, sharing of best practices (former local
solutions may become global best practices), and reduction of process definition
and maintenance efforts.
3. Balance between lean processes and quality assurance. Trust in corporate culture
as steering instrument.
Objective: Ensure stable quality and avoid misunderstandings, but leave enough
space for flexibility, speed and quick response to customer needs.
4. Web-based, mostly graphical depiction.
Objective: Easy access to process descriptions; processes are understandable “at
first sight”.
5. Smooth transition from country-specific legacy systems to new process system.
Objective: Avoid impairment of operations and keep any disturbances as small
as possible. Any change should be recognized as improvement for operations.
Hans-Jürgen August: „…but rather the one most adaptable to change“ (paper 58th EOQ congress)
8 / 15
4 Strategic development of Integrated Management System – implementation and
major challenges
Implementation of Siemens Convergence Creators’ Integrated Management System
Starting at the situation described at the beginning of this chapter, a team consisting
in its core of the headquarters’ and all countries’ quality managers was built to
transform the existing system. The drafting of the process landscape as well as the
definition of some cornerstones of the system was done centrally (by the globally
responsible quality manager and a process expert quality manager in his team), while
the major tasks of the country quality managers (one per country) was to contribute best
practices and to integrate as many country regulations as possible into a global, generic
definition of the respective process or regulation. This also follows the advice given by
Michael Hammer and Steven Stanton: “Our rule of thumb is that companies should
standardize their processes as much as possible without interfering with their ability to
meet diverse customers’ needs” (Hammer and Stanton, 1999). In our case, also local
demands had to be considered. Thus the country quality managers coordinated their
local colleagues, letting them check e.g. country-specific legal requirements.
1.10.2010
Def. of
process
landscape,
key processes,
roles and
owners
1.10.2011
Mapping of local
processes to global
ones
Enactment of
CMT key
processes in
all countries
ONE CMT
Handbook
globally
available
A
1.10.2012
Migration of all country content into ONE CMT /
CVC Handbook (one IT system)
Process reviews and harmonization,
intensive leverage of synergies
Link from ONE CMT
Handbook to local
processes (all
European countries)
Integration of Indian processes into ONE CVC
Handbook
ONE CMT
Handbook as
single entry point
for all European
countries available
ONE CMT / CVC Handbook as comprehensive
process definition repository for all countries;
all global and local definitions available;
considerable reduction of number of
processes (globally by ~ 75 %)
A
Start of new
organization “Siemens
Communications, Media
and Technology”
Figure 4
1.10.2013
Continuous
process
improvement
& strategic
adaption
A
Setup of new company
“Siemens Convergence
Creators” with own
legal entities
Development of IMS – timeline.
As shown in figure 4, the activities started in fall 2010 (the Siemens financial year starts
on October, 1st). The first steps focused on defining the general structure of the process
landscape, setting up the required IT system, and deriving the key processes from the
company’s mission and strategy: Accordingly, competence management, innovation
management, product lifecycle management, sales and the core value-adding process,
called “deliver process” were determined as Siemens Convergence Creator’s key
processes.
Hans-Jürgen August: „…but rather the one most adaptable to change“ (paper 58th EOQ congress)
9 / 15
Roles and responsibilities were defined and assigned. Apart from the overall responsible
“process framework executive” (being the globally responsible quality manager), socalled “process owners” and “process managers” were established. The task of the
process owners is to ensure the alignment of the process with strategy and operational
needs. To make sure that this objective is met, process owners are managers with direct
access to the company’s CEO or CFO (usually direct reports). Process managers are
responsible for designing the process in detail, continuous improvement, measuring the
process’ performance etc. The role of the process owner at Siemens Convergence
Creators thus meets requirements stated by Michael Hammer and Steven Stanton
(1999): “The most visible difference between a process enterprise and a traditional
organization is the existence of process owners. Senior managers […], process owners
are the living embodiment of a company’s commitment to its processes.”
Within a few months, these processes were put into force in all countries, and, of
course, accompanied by training activities. The major challenge in this phase was the
step-by-step migration and the co-existence of the new global system and the inherited
systems of the countries’ organizations. Since daily operations were not to be disturbed
by this transition, strong efforts were put into keeping the overall system as stable as
possible at any time. The achievement of this goal was also confirmed through an
external certification audit (ISO 9001 in all European countries, ISO 14001 in some
countries, performed by “Quality Austria”, member of EOQ), which was passed
successfully in June 2011 (the external audit dates are marked “A” in figure 4).
In a next step also the less important local processes were mapped to the global process
landscape, usually reviewed and revised, and finally linked to the global ONE CMT
Handbook. As a result, all European employees had access to all valid processes and
regulations via the global Handbook, even if the respective country regulation still was
described in some local repository. In terms of corporate culture this step was very
meaningful, because the availability of the common Handbook was an important artifact
reflecting the ONE CMT value.
The next – and final – transformation step consisted in reviewing all local content once
again, wherever possible covering it by global processes and regulations, and in the end
migrating the remaining content into the global Handbook also in terms of IT systems.
In parallel, also all processes and regulations of the Indian subsidiary were migrated to
the global system.
Currently, the main activities concerning the integrated management system are
focusing on further improving the processes according to the company’s values and
strategy. The spirit of Lean Management (see e.g. Womack and Jones, 1996) serves as a
guiding principle.
Major challenges and lessons learned
As stated above (see figure 3), the design and implementation of an Integrated
Management System depends on a variety of requirements, boundary conditions, and
influences. Since the corporate strategy and the external requirements were quite clear
from the very beginning, the content to be covered as well as the weighting of the topics
was easily determined. Also the skills for the definition of processes, procedures, and
other regulations were available, as the new organization was able to build on decades
of quality and process management knowledge and experience inherited from the
predecessor organizations. Processes were identified and designed using classical
approaches (see e.g. Wagner und Käfer, 2010; Schmelzer and Sesselmann, 2013).
Hans-Jürgen August: „…but rather the one most adaptable to change“ (paper 58th EOQ congress)
10 / 15
Hence, most challenges arose from cultural and organizational issues in a broader sense.
Basically, the implementation of the revised Integrated Management System resulted in
a change project – in many respects, and from our experience we can fully confirm the
results of the SQMA research, claiming that “to be able to manage and carry out change
and develop a culture for improvement work in the organization are two closely related
challenges” (SQMA 2012). Therefore it may be helpful to describe and discuss the
experiences gained at Siemens Convergence Creators following the “Eight Steps to
Transforming Your Organization” according to John Kotter (1995, 1996).
1. Establish a sense of urgency
The necessity to change the organization’s mission and strategy was clearly
conveyed by the top management. It is well-known that it takes time and efforts to
really change a culture. This is frequently illustrated using the so-called “change
curve”, which is based on psychological research by Elisabeth Kübler-Ross (2009).
It is also clear that the change curve is gone through at different speeds, and it may
even differ in shape depending on whether the respective person is a driver of
change (such as the top management) or a person confronted with the need of
change (Kohlöffel and August, 2012). Nonetheless, after the preceding
reorganizations and a time of uncertainty, the employees welcomed a clear strategy
and easily adopted the idea of being one team aiming at joint success. The positive
atmosphere and spirit also supported the development of an adequate new Integrated
Management System.
2. Form a powerful guiding coalition
As described above, the team to develop and implement the new Integrated
Management System consisted of the globally and locally responsible quality
managers and some driving process owners. Although there was some reluctance
among some of the country quality managers, we succeeded in building a quite
committed team within a few months. In fact, the countries’ quality managers
developed into advocates of the organizational change, being also involved in
activities of an explicitly set up culture change program. Key success factors for this
team building were certainly the general change spirit, the fact that most persons
involved already had worked together for some years and, finally, the balance
between central steering (and final decision making) and the consideration of not
just local needs, but also local best practices.
3. Create a vision
In terms of the Integrated Management System, the vision to set up and finally use
the ONE CMT Handbook was clearly defined and promoted by the headquarters,
but met some resistance, discussed in detail below.
4. Communicate the vision
Since the establishment of a globally valid Integrated Management System was a
manifestation of the organization’s values and intended culture, the communication
of the vision was strongly based on the communication of the organization’s
mission, strategy and values. The management system vision thus was accepted,
although at least in some countries the commitment was limited. The reasons for this
resistance include the – very understandable – reluctance to give up something that
has been developed over many years and proved successful on a local level.
Therefore it was all the more important to convince these colleagues that by
Hans-Jürgen August: „…but rather the one most adaptable to change“ (paper 58th EOQ congress)
11 / 15
abandoning their local system they would get the opportunity to shape the global
system. Other reasons for resistance relate to the next step:
5. Empower others to act on the vision
To understand the background of the challenges related to this step it is important to
know that during the first more than two years legal entities in many countries
hosted two different organizations, i.e. Siemens Communications, Media and
Technology (CMT) as well as Siemens Corporate Technology Development Center
(CT DC). Since the management systems inherited from former times – when these
countries had their own local ones – were still in place, three different systems were
maintained in these countries. As in the end the local CEO and CFO are held
responsible for their companies in terms of legal compliance, in some countries
preference was given to the legacy system. The issue was finally resolved when all
Siemens Convergence Creators units became independent legal entities.
6. Planning for and creating short-term wins
In our case, two important short-term wins supported the spirit of the team as well as
the acceptance by employees: First, the key processes identified as most important
for the implementation of the strategy were available very soon and proved
successful – not just in terms of pure functionality, but also in terms of being an
example of how the new corporate culture works. Second, the successful external
audit, performed after months of very extensive and even exhausting work,
rewarded everyone who had contributed to the setup of the global ONE CMT
Handbook.
7. Consolidate improvements and produce still more change
The approach of consolidating achieved improvements and pursuing the next goals
is reflected by the step-by-step migration of local content to the global Handbook
(see figure 4). This segmentation of the change process made each single step more
acceptable. Of course it also helped to keep the overall system operative. In
principle, it is like renewing a motorway without interrupting or even disturbing
traffic too much. This requires some night shifts and a step-by-step renewal of
traffic lanes and road sections.
8. Institutionalize new approaches
Defining an Integrated Management System of course is basically the
institutionalization of the new approaches and behavioral rules. On the other hand,
not everything that is defined as mandatory is also lived. To anchor the new system
in the organization’s culture, two main key factors were identified: Strong and clear
support by the top management and extensive trainings and opportunities to discuss
the processes. Similar to how the role of process owners is described by Michael
Hammer and Steven Stanton (1999), the process owners and quality managers at
Siemens Convergence Creators act as “evangelists”, promoting the process designs
and making their rationale and content understandable to all employees.
5 Conclusions
The transformation of the Integrated Management System described in this paper
was triggered by a considerable change in business environment, business scope and
strategy of Siemens Convergence Creators and translates a variety of requirements into
Hans-Jürgen August: „…but rather the one most adaptable to change“ (paper 58th EOQ congress)
12 / 15
a process landscape, reflecting the strategy and supporting successful operations. The
main goal was to create the ONE CVC Handbook, valid and accessible for all
employees worldwide. To ensure smooth interworking, the use of best practices and low
maintenance efforts, as much as possible was defined on global and as much as
necessary on local level. A web-based solution using graphical matrix diagrams (roles
vs. process steps) was implemented and well-adopted by the employees.
The implementation of the new process system presented itself as a demanding change
project, confirming Michael Hammer’s statement: “All change projects are tough to pull
off, but process-based change is particularly difficult. Contrary to wide-spread
assumptions, designing new business processes involves more than rearranging work
flows” (Hammer, 2007). The main challenges encountered relate more to structural and
psychological issues and less to questions of process content and design. They can be
attributed to two sources, which were identified as interacting to a certain degree:
When announcing and promoting the vision of implementing a new, globally valid
process handbook, the reactions differed from country to country. While in some
countries the idea was soon adopted, it was not fully accepted in others for almost two
years. Of course it is not easy to give up something that has been developed over many
years and proved successful locally. The second reason rooted in the fact that for more
than two years some country entities hosted three differing management systems, two of
different Siemens organizations, both headquartered in Vienna, and a third one inherited
from former times, when these legal entities had their independent management
systems. Since finally the local CEO and CFO are responsible for their companies, the
legacy system was considered the only really binding one.
The lesson learned includes that an organizational “servant-of-many-masters” construct
may hinder the execution of change programs, partly because it opens up possibilities
for evasion and tactical maneuvers. This finding supports also what Robert Kaplan and
David Norton say about shortcomings of matrix organizations: “Managers operating at a
matrix intersection had to juggle the dictates of two masters, which led to conflict and
delay” (Kaplan and Norton, 2006).
Nonetheless, the implementation of the new integrated management system, including
the smooth transition from the country-specific legacy systems, can be regarded as
successful. A most important indicator for this success is that customer satisfaction was
not affected, but, on the contrary, increased even during system migration.
We have identified six key factors for this success:
1. It was communicated clearly and frequently that the Integrated Management System
was derived from the company’s mission, strategy and values. This ensured the
mental connection to the company’s self-concept and goals.
2. Business and operations orientation underlined the supporting and value-generating
approach. Together with easy-to-use process descriptions it stimulated the adoption
of the new system.
3. Consideration of corporate culture helped finding the balance between lack of
guidance and overregulation. On the other hand, the management system also
serves as a means to further develop corporate culture.
4. Balance between global framework setting and local needs, also sharing local best
practices on global level, was a prerequisite for local acceptance.
Hans-Jürgen August: „…but rather the one most adaptable to change“ (paper 58th EOQ congress)
13 / 15
5. Very close cooperation of all quality managers (at the headquarters and in all
countries) and the key process owners based on mutual appreciation and friendly
relations among all team members helped to work as an international team and pull
together.
6. Clear support of the top management was crucial to the implementation of the new
system and making processes work. “A major challenge lies in the fact that
successful quality work requires genuine managerial engagement”, says the SQMA
paper. The “tone from the top”, perceived by all employees, is essential in all
change programs – this holds true also in this case.
The informal engagement of the middle management, not based on the assignment of
roles and tasks, but on a general willingness to actively support the implementation of
the new process house left some room for improvement. This observation is also in line
with the findings of the SQMA survey, where 14% of all respondents ranked “shifting
ownership of quality work from the quality assurance profession to management” as the
most important issue, and 35% considered it a top ten issue.
References
____________________________
Doppler, Klaus, and Christoph Lauterburg. Change Management – den
Unternehmenswandel gestalten. Frankfurt am Main: Campus, 2002.
Glasl, Friedrich, and Bernard Lievegoed. Dynamische Unternehmensentwicklung. Bern,
Stuttgart, Wien: Verlag Freies Geistesleben, 2004.
Hamel, Gary. “The Why, What and How of Management Innovation”. Harvard
Business Review (Feb 2006): 72.
Hammer, Michael. “The Process Audit”. Harvard Business Review (April 2007): 111123.
Hammer, Michael, and Steven Stanton. “How Process Enterprises Really Work”.
Harvard Business Review (Nov-Dec 1999): 108-120.
Hasper, Willem J., and Friedrich Glasl. Von kooperativer Marktstrategie zur
Unternehmensentwicklung. Bern and Stuttgart: Verlag Freies Geistesleben, 1988.
Kaplan, Robert S., and David P. Norton. “How to Implement a New Strategy Without
Disrupting Your Organization”. Harvard Business Review (Mar 2006): 100-112.
Kohlöffel, Klaus M., and Hans-Jürgen August. Veränderungskonzepte und Strategische
Transformation – Trends, Krisen, Innovationen als Chance nutzen. Erlangen: Publicis,
2012.
Kotter, John P. “Leading Change: Why Transformation Efforts Fail”. Harvard Business
Review (Mar-Apr 1995): 59-67.
Kotter, John P. Leading Change. Boston: Harvard Business Press, 1996.
Kübler-Ross, Elisabeth. On Death and Dying. New York: Scribner, 1997.
Lombriser, Roman, and Peter Abplanalp. Strategisches Management – Visionen
entwickeln, Strategien umsetzen, Erfolgspotenziale aufbauen. Zürich: Versus, 2010.
Hans-Jürgen August: „…but rather the one most adaptable to change“ (paper 58th EOQ congress)
14 / 15
Ohmae, Kenichi. Triad Power – The Coming Shape of Global Competition. New York:
The Free Press, 1985.
Schein, Edgar H. “Organizational Culture”. American Psychologist (Feb 1990): 109.
Schmelzer, Hermann J., and Wolfgang Sesselmann. Geschäftsprozessmanagement in
der Praxis: Kunden zufrieden stellen - Produktivität steigern - Wert erhöhen. München:
Carl Hanser Verlag, 2013
Swedish Quality Management Academy (SQMA). Quality challenges demanding
answers. Gothenburg: Swedish Quality Management Academy and Swedish Institute
for Quality, 2012.
Taylor, Frederick Winslow. The Principles of Scientific Management. New York:
Harper & Row, 1911.
Wagner, Karl Werner, and Roman Käfer. PQM – Prozessorietiertes QualitätsManagement. München: Carl Hanser Verlag, 2010.
Womack, James, and Daniel Jones. Lean Thinking. New York: Simon and Schuster,
1996; revised and updated edition 2003.
Notes
1
Siemens press release, 1.10.2005
Siemens press release, 14.3.2007
3
Siemens press release, 29.7.2008
4
Siemens press release, 1.8.2008
5
Siemens press release, 12.10.2006
6
Siemens press release, 14.12.2010
2
Hans-Jürgen August: „…but rather the one most adaptable to change“ (paper 58th EOQ congress)
15 / 15