Application 2 – Annotated Bibliography

TOTAL QUALITY M ANAGEM ENT, VOL. 10, NO. 1, 1999, 37 ± 45

Total quality management and business

process re-engineering: A study of

incremental and radical approaches to change

management at BTNI

FRANCES M . H I LL & LEE K. COLLI NS School of Management, The Queen’ s University of B elfast, B elfast B T7 1NN, N. Ireland, UK

Abstract The paper reports a case study (an elem ent of a wider project) undertaken at a Norther n

Ireland subsidiar y of a UK telecomm unications company, which is one of the few organizations in

Ulster to have implemented total quality managem ent (TQM ) and large-scale business process re-

engineering (B PR). The com pany’ s latest re-engineering project is discussed in the context of certain

theoretical issues. These include: the nature of B PR; the circumstances in which the im plementation

of B PR is most likely to be eþ ectiveÐ in particular, whether or not a crisis is a necessar y trigger; the

most eþ ective mode of im plementation; the role of infor mation technology and what, if anything,

B PR is likely to achieve. Of major interest is the interaction between TQM and B PR, and how the

com pany has made eþ ective complementar y use of these two approaches to change managem ent in

the pursuit of business excellence. In part, this has proved possible because both are under pinned by

a long-ter m vision and change strategy, comprising many integ rated elements.

Introduction

The case study described in this paper represents one element of a more com prehensive

project concerning the management of change in general, and two speci® c approaches in

par ticular. One aim of the project is to investigate the awareness, understanding and use of

business process re-engineerin g (BPR ) in Northern Ireland industry. Another, is to examine

the interaction of radical (BPR) and incremental (total quality management (TQM ))

approaches to change management. The way the two strategies are managed, and whether

and how they can coexist in real-world business contexts, are issues of major interest.

Theoretical issues

From the perspective of practising managers, especially those in small and medium-sized

enterprises (SM Es) which proliferate in Northern Ireland, the literature on BPR and TQM

is not particularly helpful, as it very often raises more questions than it answers. Considerable

debate surrounds the very nature of B PR (Stevens, 1994); the circumstances in which the

Cor respondence: F. M . Hill, School of M anagement, The Q ueen’ s U niversity of Belfast, Belfast, BT7 1N N , N. Ireland. Tel: 44 123 2 335011 ; Fax: 44 1232 248372 ; E-mail: f [email protected]

0954 ± 4127 /99/010037-0 9 $7.00 � 199 9 C arfax Publishing L td

38 F. M . HILL & L. K . COLLINS

use of BPR is most appropriateÐ in particular, whether or not crisis is a necessary trigger

(Bashein et al., 1994; H amm er & Champy, 1993; Ryan, 1994); the most eþ ective mode of

im plem entation (clean versus dirty slate approaches) (D avenpor t & Stoddard, 1994; Hall

et al., 1993; Patching, 1995; Teng et al., 1994); the role of IT ( prerequisite /enabler /driver)

(Davenport, 1993a; Davenport & Short, 1990; H ammer & Champy, 1993; Kelada, 1994);

and what, if anything, BPR is likely to achieve (G uimaraes, 1994; Kennedy, 1994; M um ford

& H endricks, 1996). Another interesting aspect of the literature concerns the diþ erences

between TQM and BPR, and whether or not they may be used to complement one another.

The polarities of this debate are that: (a) TQM and BPR are two separate approaches to

organizational change, diþ erentiated by the scale of im provement /innovation each can

produce and the risks involved (Davenport, 1993b; Jackson, 1994); and (b) B PR is merely a

standard tool of TQM and the cultural change and discipline generated by TQM represent

an essential foundation for successful process re-engineerin g (Armistead & G rant, 1996;

Burdett, 1994).

The case study

The company

The case study, which inter alia aim ed to investigate the issues just highlighted, was

undertaken in the N orthern Ireland subsidiar y of British Telecommunications plc. This

subsidiary, BTNI, is a semi-autonomous unit, largely because of par ticular conditions

prevailing in the Province. To quote the quality support manager: `̀ (BTNI) is run as a stand

alone company. We have to ® ght our ow n corner and win our ow n battles’ ’ . In its ow n right,

BTNI is considered to be a `leading edge’ organization with regard to the management of

quality and change, both in the U K and in international terms. It has won the following

awards: the Northern Ireland Quality Award (twice); the Supreme Irish Quality Award; the

parent company’ s overall quality award (four times); and the British Quality Award. W ith a

turnover of around £258 million , it is among the top 10 companies in Northern Ireland, and

is viewed as an exemplar by many local organizations. In addition, BTNI is one of the few

companies in U lster to have undertaken both TQM and large-scale BPR.

The need for change

The need for eþ ective change management dates back to the mid-1980s when the parent

company was privatized. Its former monopoly status and Civil Service ethos did little to

equip the company to survive and prosper in a market-place which was changing at a rapid

rate and becoming increasingly competitive. It quickly became apparent that a new culture,

skills and value system were neededÐ the customer could no longer remain `out of sight and

out of mind’ .

It will not suý ce to have customers that are m erely satis® ed. An unhappy customer

may switch. U nfor tunately, a satis® ed customer may also switch, on the theor y that

he could not lose, and might even gain. Pro® t in business comes from repeat

customers, customers that boast about your product and ser vice, and that bring

friends with them (Deming, 1982, p. 141).

Accordin gly, this subsidiary, which with around 2600 employees is the smallest of the nine

geographical `zones’ that together cover the whole of the U K, began its formal total quality

journey in 1986. Senior management, with involvement from the corporate chief executive

T QM AND BPR 39

oý ce, drew up the company’ s vision statement and quality policy, and its ® rst cost of quality

exercise was undertaken. This revealed that BTN I was overmanned, ineý cient and expensive.

Benchmarking exercises indicated that BT had approximately 10 times more staþ than some

of its major competitors. A t this point the company could be described as being `in crisis’ .

Its response to this crisis is interesting and informative.

Response to crisis. M any writers believe that companies which regard themselves as being in

crisis have no option but to re-engineer. It is also argued that the potential risks of BPR make

it a last option for businesses, used only for company turnaround. R yan (1994), for exam ple,

states that, in reality, crisis is the necessary trigger to push companies into such radical

change. Talwar (1993) takes the op posite view, arguing that high-performing companies are

more likely to undertake B PR. This is consistent with Bashein et al. (1994), who consider

that re-engineerin g in a crisis may be inappropriate, as crisis can promote fear and even

panic, neither of which is conducive to focused BPR. A t BTNI, rather than im mediately

rushing into re-engineering, senior management developed a complex and long-term change

strategy, key elements of which were BS 5750 /ISO 9000 accreditation, total quality and,

® nally, process re-engineering.

B TNI’s improvem ent jour ney. Once the vision statement and quality policy were in place, a

Quality Council was established to drive the company’ s im provement eþ or ts. Figure 1, which

maps the company’ s improvement journey, is revealing. A s can be seen, early moves towards

TQM in the mid-1980s proved less than successful, when compared with the rate of

im provement achieved after BS 5750 accreditation. This was awarded for the company’ s

maintenance operations in 1988 /89 and for installation in 1991, followed by ISO 9001

accreditation for all parts of the company in 1993. BTNI’s experience is consistent with the

point made by W ilkinson and W itcher (1993), who note that TQM often makes surface

changes to behaviours, while underlying processes, which maintain suboptimal performance,

remain untouched. Some claim that TQM structures do not provide an eý cient means of

gauging the extent to which an organization delivers value to its customers. Fur thermore,

writers such as D avenpor t (1993a), Burdett (1994) and H all et al. (1993) believe that to

redesign an organization which is not in control is a recipe for failure.

The company’ s registration eþ orts were traumatic for staþ , who, confront ed with the

im perative for change, were required to accept that a Civil Ser vice environment was no

longer appropriate; that their work would be checked and monitored by others; and that they

Figure 1. B TNIs improvement jour ney.

40 F. M . HILL & L. K . COLLINS

would be accountable for their behaviours and performance. However, these eþ or ts marked

a major upward shift in the company’ s attempts to change, as registration to the standard

introduced considerable discipline and control into its operations. Never theless, further

cultural and structural changes were required. W ith regard to cultural change, this was

eþ ected in part through a custom er care initiative in 1990, followed by self-assessment using

the M alcolm Baldrige National Quality Award model in 1992. In 1993, the company switched

to the European Quality Award model of self-assessment. In 1989 /90 a major restructuring

had also taken place, which involved the removal of a layer of senior management. Thus,

behavioural change was reinforced by structural change.

The company is subject to a high degree of external regulation to protect consumers’

interests. Such regulation forces prices down, even while costs are increasing. Since the

company can do little about pricing, it has to reduce costs. One means of doing this was

through a series of `release’ schemes, whereby employees could opt to leave the company

voluntarily. However, it is also true that cost reductio n was a major motivation for the

company to embark upon BPR , coupled with the fact that the company was having to do

more with less.

B PR

Authors such as H age (1980), Kelada (1994) and Zairi and Sinclair (1994) view organiza-

tional improvement activities as points on a continuum, ranging from incremental improve-

ment to radical innovation. Dewar and D utton (1986) state that an innovation’ s position on

this continuum `̀ depends upon perceptions of those familiar with the degree of departure of

the innovation from the state of knowledge prior to its introduction’ ’ ( p. 1423). W hile TQM

may bring changes which snowball to become a signi® cant depar ture from what went before,

Davenport (1993a), Seddon (1995) and Hill and W ilkinson (1995) all agree that, due to its

focus on existing processes, TQM will rarely lead to radical innovation. This leads on to

another debate, namely whether or not BPR is becoming a substitute for incremental

im provement. One perspective on this is that, since the external environ ment is becoming

more volatile, so a more radical approach to change is required. The position of m anagement

at BTN I on these issues is interesting. They accept that environmental change created a

`̀ window of opportunity’ ’ (Pettigrew, 1985), and the lever for radical change, but disagree

that incremental im provement is no longer appropriate. H owever, they believe that TQM

alone could only take the company so farÐ periods of radical change are also necessar y.

Process focus. The restructuring of 1989 /90, although not so dramatic as that which took

place elsewhere in the U K, did permit BTNI to adopt a process focus. In 1991 a corporate

project group was set up to de® ne core and sub-processes throughout the company. These

were identi® ed as business processes (focus on the external customer), support processes

(help the business processes to function) and component processes (functions common to

both business and support processes) (Bartram, 1994). The aim of this exercise was to try

to ensure that work was organized around key processes. Such processes for BTNI include

the installation and repair of telephony. The development of a process focus was facilitated

by the fact that as part of its TQM eþ ort, BTN I had already documented end-to-end-

processes. In late 1993 the whole company took re-engineerin g to be one of its major

workstreams. High-pro® le directors were used to tackle process problems that could yield

signi® cant improvements (Fineman, 1996). A recent example of this was the development of

the work manager system ( W M S). This process change involved replacing a manual system

of allocating work to ® eld engineers with an electronic system. Although not yet in its ® nal

T QM AND BPR 41

form, this system is widely regarded as being the most sophisticated work allocation system

in the world . All single and multi-line repair work and single line orders and appointments

are covered by W M S. Strategy, structures, processes, technolog y and people have all had to

change because of the new process. It is perceived by management and non-management

personnel alike as being truly radical change. Moreover, the evidence suggests that the W M S

project is an example of inductive thinking as advocated by Hammer and Champy (1993)Ð the

company identi® ed a powerful technological solution, the electronic transfer of documented

information, and then sought business problems to which it could be applied. Technology,

then, was both a driver and an enabler of BPR (Davenport, 1993a,b; Davenport & Shor t,

1990; H ammer & Champy, 1993).

Intuition versus methodology. One of the BPR debates initiated largely by both H ammer

(1990) and Champy (1993), and developed by authors such as K lein (1994) and Davenport

and Stoddard (1994), concern s the use of an intuitive approach, versus a methodological

approach, to change and re-engineering. The case of B TN I is also noteworthy in this

context. The W M S redesign project was inherited from the parent company, which required

im plem entation across all of its nine zones, with each working to a centrally de® ned vision.

Since BTN I was the last zone to re-engineer, it did have the bene® t of a methodology that

had evolved elsewhere in the corporation. However, because of its unique structure and

circum stances, BTNI also had to customize the redesign to suit its particular situation.

Furthermore, the system itself and its im plementation had to be ¯ exible. W ith W M S, BT

was attempting to imitate human beings and what they do. U nder the old system the

distribution oý cer would allocate `tours’ (collections of four or ® ve jobs loosely prioritized

for that day) to engineers, which they would then go and complete. In doin g this he drew

upon his intim ate knowledge of the staþ , their skills, the area, various trouble spots and even

road traý c patterns. The new system , therefore, had to encapsulate this intimate knowledge;

it also had to have the capability to serve the needs of a largely rural and geographically

dispersed population. Strategies had to be designed to support the system and its ongoin g

development. Such strategies were often in place before being formally authorized. U sing

change management skills and techniques acquired largely as a result of TQM experience,

the implementation team had to take risks in pursuit of excellence.

The complexity and dramatic nature of the change dictated that process employees were

involved from the outset. This include d inviting and facilitating ever yone involved in the

existing process to outline what they currently did and how they could do it better. Teams

were then set up, each looking at four or ® ve new process ideas. Cross-fertilization of ideas

and increased communication made one-time impossible ideas appear feasible. M anagers felt

able to eradicate barriers to change and bring new ideas to the fore. Again, all of this was

facilitated by the company’ s prior TQM activity. To some extent, then, customization and

the need for a ¯ exible system did permit an element of innovative, if not breakthrough,

thinking, which H am mer and Champy fear can be sti¯ ed by the use of a methodology.

Clean versus dirty slate approaches. Another theoretical debate concern s the im plem entation

of BPR and the relative merits of the `clean slate’ versus the `dirty slate’ approaches. In

theory, the `clean slate’ approach allows a new process to be modelled without contamination

from the status quo. Thus, it facilitates inductive or discontinuous thinking (Davenport &

Stoddard, 1994; Hall et al., 1993). The `clean slate’ approach requires the separation of those

responsible for scrutinizing processes from those charged with identifying the role of IT. Such

separation, which necessitates good comm unication, helps to prevent the creative thrust of

BPR being biased or hindered by curren t system lim itations, processes, people or activities.

42 F. M . HILL & L. K . COLLINS

The `dirty slate’ approach as highlighted by Davenport and Stoddard (1994) is rather more

pragmatic. They state that `̀ designs could take into account the opportunities for enabling

the new process (new technology, skills, organisational structures) as well as the constraints

that disable it’ ’ ( p. 123). In BTNI many radical changes, such as its electronic customer

services system (CSS), had already taken place before the commencement of the W M S

project; moreover, aspects of W MS were embedded in existing software. This `patchwork

quilt’ or project by project re-engineering, whereby each step permits a review and reassess-

ment of the techniques used in the one before, does have suppor t in the literature. H owever,

others argue that this is not true invention, because the existing state of the organization has

an impact on the new process design. For example, Davenport (1993a,b) notes that if an

organization chooses not to change many of its existing systems, the possibilities for

process innovation may be restricted. On the other hand, Davenport and Stoddard (1994)

acknowledge that the `dirty slate’ approach, although more diý cult in design, is also more

realistic, ® nancially viable and easier to im plement.

A t BT it was considered that the obliteration of existing processes as advocated by

Hammer (1990) was not only im practical, but potentially disastrous because of the possible

threat to invisible assets such as reputation and customer con® dence. Furtherm ore, the long-

term change strategy adopted by BT and BTNI involves one element or change building

upon another, in line with environmental ¯ ux. For example, the implementation of CSS

highlighted the opportunity for the change aþ orde d by W M S within the same broad process.

By adopting the `dirty slate’ approach, BT had a clear idea of all the signi® cant enablers and

constraints before the im plementation of W M S ( W illcocks, 1994). Thus, IT specialists were

not separated from the main team in orde r to preser ve `clean slate’ implementation, but

rather were integrated into the overall project team. The `dir ty slate’ approach was regarded

as a means of reducin g both risk and time given the complexity of the organization.

Outcomes. The W MS project has changed signi® cantly the way in which work is allocated

to, and carried out by, engineers in the ® eld, who are now multiskilled. Using company vans,

they leave and return to their own homes each day, the engineers giving the company 15

minutes (of their time) in the mornin g and again in the evening as travel time. Jobs are

downloaded directly from the system. In this way the need for technician centres, staþ and

car parking has been reduced signi® cantly, while the working day has been lengthened,

resulting in greater productivity. Engineers connect to W M S via a ® eld terminal and the

telephone network. BTNI works on a just-in-time principle, whereby work is allocated just

before the job goes into jeopardy. This means that the system estimates the duration of the

job, travel time and adds a window of 20 minutes durin g which the job will reach the

engineer. The ser vice is then delivered and the engineer comes back to W MS with a

completion. The system provides a second 20-minute window to allow for problem s. If

necessary, Control can telephone the engineer and send assistance. Should a job take longer

than anticipated, the next appointment, which had been `soft pinned’ to the engineer by

W M S, will automatically be allocated to another engineer in the area. Eng ineer timesheets

are also updated automatically, with accurate performance levels available in minutes. G ood

and bad performances are easily identi® ed, and ® eld managers can coach engineers on the

job, using more accurate and varied perform ance information. M anagement structures and

role s have also changed, with m any managers working from home like the engineers.

Performance-related pay for managers is now calculated on a yearly not a monthly basis, and

is paid for team , rather than individual, performance.

D espite the changes outlined, it is accepted at BTNI that full payback from W M S m ay

take many years to accrue, and probably not until more engineers and other areas of the

T QM AND BPR 43

business come on to the system. The aim is that, ultimately, every engineer in the company

will have their work allocated via W M S. H owever, both management and staþ ® rm ly believe

that BTN I’ s strategic capabilities have been (and will be) broadened as a result of BPR. For

example, the possibility for radically diþ erent alliances and work systems has been created.

It could be that in the future, engineerin g work is contracted outÐ perhaps to former BT

engineers who have becom e self-employed contractors using BT equipment leased to them.

The com plementar y use of TQM and B PR

Many writers such as W ilkinson and W itcher (1993) have argued that TQM tends to be

introduced within existing structures and not as a vehicle to transform them. A lthough those

inter viewed believed that TQM could only take BTNI so far before more radical change was

required , there was also a ® rm belief that the control and discipline of BS 5750 /ISO 9000

and the cultural change emanating from total quality, created the foundation which made,

and continue s to make, more radical change possible. M any necessary preliminaries to BPR

were, in fact, eþ ected as part of the TQM initiative, examples being process documentation,

process ow nership, benchmarking and teamworking. BS 5750 brought with it a 30-book

quality system, in which each m anager’ s job is described in detail. This means that in the

event of radical change, managers may easily be switched from one position to another, since

the ® les show what is to be carried out on a daily, weekly, monthly, 6-monthly and yearly

basis within each position. Processes are also continually monitore d to ensure that TQM is

achieving its goals. Furthermore, at BTNI TQM methodologies are being used to address

som e of the problems that have accompanied BPR. For example, homeworking has had

serious implications for the social dimension of workÐ primarily regarding interpersonal

communication and interaction. Engineers no longer have the `luxury’ of meeting up with

colleagues in the mornin g, of communicating personally with the distribution oý cer, or of

going to the Technical Eng ineers Centre for lunch. H ow ever, quality improvement team s

(QITs) have been set up to investigate the social aspect of change, and to suggest means of

facilitating communication and interaction. Management perceive this as critical, par ticularly

as W MS is still developing , because the danger rem ains that it may lose credibility with

process employees.

A lthough it is acknowledged that as approaches to change management TQM and BPR

are diþ erent conceptually, at BTNI both are perceived as means of supplying im provement

and, as such, may be used in an integrated manner. Accordingly, both incremental and

radical projects are driven and controlle d by a Quality Council in each division, a re¯ ection

of the company’ s determination that TQM and BPR will coexist and complement each other.

W hen radical change is required , a considerable amount of planning is necessar y to ensure

that embedded total quality systems and procedures are modi® ed as appropriate. It is

im portant that such systems and procedures (including ISO 9000) evolve constantly to

support BPR . The Quality Council ensures this consistency of purpose. It is interesting , too,

that at BTNI potential opportunities for the application of BPR are often uncovered through

the work of QITs and cost of poor-quality exercises. Furtherm ore, those interviewed at

BTNI believe that the discipline and practices of total quality help sustain a new process

state after re-engineering.

Conclusion

The W M S project undertaken at BTNI required huge investment and considerable cultural

and political change. H owever, the integration of BPR with TQM ser ved to make radical

44 F. M . HILL & L. K . COLLINS

change much less daunting than it otherwise m ight have been (see Grant & Armistead, 1996;

Davenport, 1993b; G uimaraes, 1994; Zairi & Sinclair, 1994). M oreover, the pattern of

increm ental improvement interrupted by phases of more dram atic innovation is now generally

accepted at BTNIÐ indeed, managers and workers currently believe that another wave of

radical change is imminent. W M S may be described as `partial re-engineering’ , but partial

in the sense that it was built upon and extended earlier large-scale changes, such as the CSS.

Complementary use of TQM and BPR has proved possible because both are underpinned

by a vision and long-term strategic plan, comprising many elem ents. The vision is to play a

leading part in establishing the parent organization as the most successful telecommunications

group in the world. The strategic plan is to create a company which has the capacity to exist

in a permanent state of change, achieving business excellence through improvement and

innovation.

Acknow ledgements

We are ver y grateful to all those employees at BTNI who provided information and /or

otherwise facilitated the conduct of our research.

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