Friday, July 7, 2017

Innovation vs. Quality Management: How Can they Co-exist?

Manufacturing firms know they must be flexible, creative and innovative if they want to survive in today’s fiercely competitive market. But can they do this while hitting productivity targets, which are also a key component of operations? How the dynamic between innovation and quality management, which are often at cross-purposes, influences new product innovation is the focus of a new study co-authored by Professor of Operations and Supply Chain Management Zhao Xiande. The study also explores how two organizational characteristics, centralization of authority and integration between functions, affect manufacturing innovation. 

For their study, Prof. Zhao and his co-authors looked at survey data from 238 manufacturing plants in the electrical and electronics, machinery, and automobile industries collected through an international joint research project named High Performance Management (HPM) round 3, which aimed to study the impact of management practises on plant performance within global competition. The plants are located across eight countries – the US, Japan, Italy, Sweden, Austria, Korea, Germany, and Finland, and since the three industries in the survey are in transition, there was a great deal of variability in performance and practices across the data set.

Manufacturers control productivity through quality management (QM), which can be divided into two categories: hard QM and soft QM. Their differences are similar to the concept of left brain and right brain thinking. Hard QM is like left-brain thinking – it refers to the more scientific tools and techniques focussed on controlling processes and products, while soft QM refers to the more human aspects of the system such as training, learning and internal cooperation or teamwork. Prof. Zhao and his co-authors aimed to determine the influence that each type of QM has on new product innovativeness and the speed of new product introduction.

Their findings show that soft QM plays a key role in product innovativeness, which requires that employees are involved, empowered and trained for quality. In addition, a corporate structure that is decentralized, and has strong integration between functions, is beneficial for fostering product innovativeness. The speed of new product introduction relies strongly on hard QM, with soft QM as underlying support. In addition the researchers found that centralization of authority is a double-edged sword – it is helpful for implementation of hard QM but harmful for implementation of soft QM.

The results of the study can be found in the paper titled “The Impact of Organizational Context on Hard and Soft Quality Management and Innovation Performance,” which has been published by the International Journal of Production Economics. Prof. Zhao’s co-authors are Jing Zeng of Deloitte Tohmatsu Consulting LLC; Wenqing Zhang of the Labovitz School of Business and Economics, University of Minnesota; and Yoshiki Matsui of the International Graduate School of Social Sciences, Yokohama National University. Read the paper here

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