The Future of Organizational Quality

Some predictions about complexity, agility, and ethics

Published: Wednesday, July 27, 2011 - 06:00

Every few years the American Society for Quality (ASQ) conducts a Future of Quality study. The first phase of the 2011 study, which involves the use of a Delphi process to identify the key forces of change, has been completed recently.

Using input from 150 panelists in 40 countries, the study identified and prioritized eight forces of change, as follows:

1. Global responsibility
2. Consumer awareness
3. Globalization
4. The increasing rate of change
5. The workforce of the future
6. Aging population
7. 21st-century quality
8. Innovation

ASQ asked me to think about how these forces will impact enterprise management and hence organizational quality. With ASQ’s permission I am sharing those thoughts with you, as well as the ASQ study team. I am dividing my comments into three groups of three: in the first group are overarching factors I believe will be the big influencers, the next group addresses impacts of these overarching factors, and in the last group are my (wild) speculations about possible outcomes. I propose we all meet in about 10 years and have a good laugh about these insights and predictions.

Overarching factors

The three overarching factors are complexity, agility, and ethics or social responsibility. Let’s start with complexity. The complex nature of economic, business, and social systems will challenge organizations and their ability to survive and thrive like never before. Leading an enterprise in this uncertain environment will be equally complex. Given the ASQ forces of change, I see a real tension developing between global sourcing and competition on one side, and local pride and protectionism on the other. Cost and variety will drive the need for businesses and customers to be globally focused. Protectionism, social responsibility, and local well-being will drive local sourcing and a desire to buy locally. For businesses, especially global companies, there will be internal competitive pressures to source for price and availability and at the same time to support local communities and reduce the waste and energy consumption associated with packaging and preserving products and shipping them long distances.

These challenges naturally lead to the second overarching factor, agility. To address the pressures of complex economic, environmental, and social systems, organizations will have to be increasingly agile. Strategy will be complex, reaction times will need to be short, and execution will have to be quick to take advantage of opportunities and address challenges. Even with complex strategy and rapid execution, there still will have to be options for both agile changes to the strategy and agile execution of these changes.

The third overarching factor is ethics and social responsibility. I already touched on aspects of the likely demands of social systems in my comments on complexity. But well beyond those considerations is the global expectation, and indeed need, for organizations to act responsibly to protect the environment and to be good citizens in their local and global communities. I can easily foresee first the large-scale voluntary, and then possibly mandatory, reporting by organizations of their “social responsibility index.” This index would formalize some of the current corporate responsibility indices and combine carbon footprint, waste of all types, and societal service into an index that could affect business-to-business decisions (e.g., we only source from companies with an index greater than 95), consumer buying decisions, and maybe even tax credits and bases.

Impacts of overarching factors

I think the three areas that will be most heavily impacted by these overarching factors are innovation, work systems, and organizational core competencies. Let’s look at innovation first. The role of technological innovation comes to everyone’s mind, and certainly the pace will quicken and products of nanotechnology, biotechnology, and quantum technologies will lead to unimaginable advances and products. However, I would like to focus on process and business model innovation. We will need to develop extremely flexible, adaptive processes to meet the challenges laid out in the overarching factors and to address business and consumer needs and desires. And imagine the business model innovations that will be necessary to meet the demands of novel global and local, flexible, and co-located and distributed organizational workplaces and leadership teams. Every mix of processes and business models will be needed—possibly simultaneously.

The second key impact area, work systems, flows from the innovative processes and business models. Imagine how work will be accomplished, where work will be accomplished, and how flexible those work systems will need to be. Decisions about “in-house” (whatever that is) vs. supply-chain and partner contributions to producing goods and services will constantly be challenged, especially when we face global vs. local production factors as well. And that, of course, is all fodder for leading the enterprise and managing the workforce of the future.

Work systems go hand-in-hand with core competencies. What will an organization’s intellectual property protection look like, and what will the patent process look like when intellectual property is developed at warp speed? Will organizations even bother to legally protect their intellectual property and competencies? Will core competencies need to change with a frequency we can’t imagine today? What will organizational missions look like, and how rapidly will they need to be modified or changed? What will organizations need to do to identify potential blind spots so that their products, services, and competencies will sustain the organization? The days of an organization having a core competency that lasts a workforce generation are already over, but how will the speed of change impact our need to develop and protect core competencies for a competitive marketplace advantage? And finally, how will organizational core competency needs impact workforce needs and skills?

Speculation on other possible outcomes

In this final group, my speculation on possible outcomes of the forces of change will start with the future for educational institutions, in particular higher education. With the need for rapid change, lifelong learning, and rapid curriculum evolution, the functions of a traditional residential university education will be challenged. We already are seeing a dramatic growth in distance learning offerings. This trend will need to grow to adapt to educational needs. We will seek our educational offerings wherever they meet our current need, quite possibly at multiple “institutions.” The role of residential higher education degree-granting programs may well be more about social maturity and education than subject learning. Subject learning will be distributed, which could require a major redefinition of structure and management of educational enterprises.

The second potential outcome is perhaps the most Orwellian. With mass miniaturization, will we see the potential for home manufacturing, where we each have a little plant or machine to make personalized products and manufacturers sell us the plans or raw materials? What will that mean for manufacturers, and how would those new enterprises be managed? What will the workforce do, and what will core competencies look like? Maybe this sounds far-fetched, but I think of a simple current example of my dentist and the manufacture of crowns. That used to be the work of an artisan supplier working from molds and needing multiple “fittings.” Today a small laser-guided device makes the crown in real time in the dentist’s office and is immediately inserted in one appointment.

Finally, and far less speculatively, I believe enterprise management and enterprise quality will include significant components of regional enterprise collaboration. With a focus on social responsibility and accountability and on community responsibility, I believe we will see leadership partnering to establish regional enterprises that develop multiorganization supplier-customer relationships. Those relationships will not only be with traditional suppliers and partners but also partnerships among business, education, and health care organizations to build social responsibility index values and to build sustainable, healthy communities. Large, multinational enterprises would need models that work in the many communities where they have facilities. This expanded collaboration will challenge competitive situations and core competencies, but the outcomes should be exciting.

I’ll end where I started, with complexity. The ideas in this column may not represent what eventually happens, but they hopefully will stimulate others to think about the enterprise of the future and help us imagine the solutions to very challenging situations and unbridled opportunity.

About The Author

Harry Hertz

Harry Hertz retired in June 2013 from the National Institute of Standards and Technology (NIST), where he had served as director of the Baldrige Performance Excellence Program since 1995. For more than 15 years he was the primary architect of the Baldrige Criteria for Performance Excellence, responsible for expansion of the Baldrige Program and Award to healthcare, education, and nonprofits, including government. Hertz serves on the advisory group for VHA’s Center for Applied Healthcare Studies, and on the adjunct faculty of American University. He has a bachelor’s degree in chemistry from Polytechnic Institute of Brooklyn, and a Ph.D. from M.I.T.