Teamwork is one of the rallying cries of the new management.
Many of the results have become legendary, like the ultra-successful 1989 launch of the LandRover Discovery, produced in 27 months, roughly half the time needed for the previously typical British car. Tony Gilroy, the father of the Discovery, was so impressed by the project that he applied the same principles at his new job, chief executive of Perkins Engines, where by 1994 900 project teams were busily at work revolutionising performance.
What's new about that? The concept of project-based, self-managed teamworking is is as old as management itself. The mining industry worldwide, for example, could only have developed through the work of project teams under strong leadership: often out on a geographical limb, combating fearsome difficulties of geology and climate, these teams accomplished heroic feats. They had to be self-managed, and they were multi-disciplinary, cross-functional, synchronous – all the fashionable elements of today's theory.
Gilroy's numbers, though, are new: highly exceptional by earlier standards – but not by those of Total Quality Management. Rank Xerox, for example, has appointed Quality Improvement Teams (often cross-functional and often drawn from several sites) wherever and whenever areas for improvement are highlighted. That included a QIT for management behaviour, taken on by managing director Bernard Fournier himself. His own behaviour isn't sacrosanct, either. Twice a year, the boss's own reports rate him on 27 criteria. After debriefing discussions with his team members, possible improvements are proposed.
That's a basic principle of teamwork: nobody's perfect – including the team leader – and everybody can be improved. The whole Xerox empire had compelling reason for seeking self-improvement. As the 1980s began, when compared to surging Japanese competition, its indirect/direct cost ratio was double: it used nine times as many suppliers: assembly line rejects were ten times higher: product lead-times twice as long: defects per 100 products seven times as many. All these deficiencies meant that unit manufacturing cost equated with the Japanese selling price.
The stark choice lay between total defeat and launching a programme to remake the company from top to bottom. After nine years of continuous progress, the positive figures became as striking as the old negatives. On the manufacturing side, defects per 100 products fell to a tenth of what they were, as did the number of suppliers. There was a 13-times improvement in the proportion of defective parts. These vastly improved figures underpinned remarkable rises in the vital statistic of quality: customer satisfaction.
Market share by volume, which had collapsed from one-time near-monopoly to around 10%, has recovered on a steady upward trend. That reversal of the Japanese tide is an achievement in itself. But so is the way it was done. Teamwork proliferated all over Xerox: but Rank Xerox (the Eurocentric arm), moving in parallel with the American drive for corporate reform, has embraced an even broader concept – one in which the whole company seeks to work as one large, collective team, with every player working towards interlocking, shared objectives.
It's called Policy Deployment, and described by PA Consulting as '…a fully integrated top-down, bottom-up management system through which the two or three critical breakthrough targets and means are identified and implemented with the full participation and alignment of all managers' – and even all staff. This system cascades down from 'theme to objective, to target, to measures, to means'. Derived from what's known in Japan as hoshin kanri, PD is the most pervasive aspect of the journey on which Rank Xerox embarked to combat the Japanese challenge.
The effort began under the title Leadership Through Quality in 1983 and is not planned to end – ever. 'Quality is not natural' says Fournier. 'If you stop pushing, in one year you would not recognise the company. You would lose a lot of strengths'. The corporate journey. began by sending a team of line managers to Japan to discover the harsh truths behind the lower prices of their competitors 'Facing up to those facts', says Fortune, 'marked the beginning of Xerox's recovery'.
Note that line managers did the study, and as a team; they wouldn't have believed anybody else. That involvement of line managers is central to Policy Deployment. PD is designed to focus everybody's attention on the 'business priorities' – at Xerox, customer satisfaction, market share, return on assets, and employee motivation. Every employee in Rank Xerox has a personal 'Blue Book' (so-called simply because the first edition had a blue cover). It sets out the company goals, records the objectives and strategy for meeting the four business priorities, and lays down the 'vital few actions'.
Each business team, and each individual, has four or five vital actions supporting each of the priorities. As the set of specific aims and actions cascades down through all departments to the individual employees, they all know specifically what they are expected to achieve – and each has been involved in deciding his or her own part. Every individual Blue Book, from Fournier's downwards, has one section in common: the corporate aims. Fournier admits that the exercise 'looks a little bit heavy', but says that in reality 'it's not that heavy: people like to know what's expected'.
That last point is definitely and importantly true of any team. PD has clearly achieved a high level of awareness at Rank Xerox. Questioned about their knowledge of the priorities, 98% of the respondents were 100% correct. The approach is the essence of all teamwork: it seeks to bind together the purposes of the individual and the organisation. By definition, this can't be done in a regimented manner, and it can't be dictated from the top. 'In addition to being a top-down cascade', explains Fournier, 'the closed loop also gives bottom-up'.
Each team puts on a presentation that recounts what's stopping the achievement of targets. The quality questions then come into play (What's the problem? What are the root causes?) before the action plans are formed and followed up. In 1992 that follow-up achieved a more formal status. The idea behind 'Business Excellence Certification' is that each unit, working as a team, 'self-assesses' its progress on action plans along a seven-stage scale, ranging from 'nil-done' to 'world-class'.
Scoring 3, for instance, means 'some work done, results not yet visible'. Working out positions on this scale doesn't end at self-assessment. Then comes the certification visit when senior management examines the claims. 'You say you're 4', might be asked on a particular count. 'Show us the evidence'. Does the unit, perhaps, think itself good in an area where actually the performance is accidental, with no foundations to sustain the improvement? As with individuals, so with their teams: the object is continuous improvement.
Advances on general quality measures and on detailed yardsticks, though, are the outcome of such programmes, not their essence. The essence is human. 'Quality definitely drives you to go for more and more empowerment', says Fournier, 'to diminish the number of layers and increase the span of control'. In 1993, 15 people reported to him as chief executive officer: previously, when he was general manager in France, his team numbered only seven or eight. Self-managed work groups, he points out, by definition lead to fewer managers, and this form of team-working has been spreading throughout the Xerox operating companies – as through much of world business.
The spread of self-standing teams is linked to the evolution of Xerox from copying to 'The Document Company', with copying only one of the several independent businesses that contributed to a 1993 turnover of $15 billion. The chief executive world-wide, Paul Allaire, is dedicated to the principle of a genuinely decentralised 'architecture'. In this construction, the managers down the line run distinct businesses. Though that means fewer managers in total, the key team leaders need a direct line to the ultimate boss, and he to them.
Fournier's resulting number of reports would traditionally be thought much too high. One 1982 case is typical. When the guard changed at one great company under a thrusting new boss, he insisted that nobody should have more than six people reporting to him: his predecessor had nineteen. That's certainly far too large a number for effective teamworking: but 'reports' don't necessarily form a team in the new, more horizontal style of organisation. At the top, there's generally a nucleus, an executive committee, whose numbers can often be counted on the fingers of one hand.
The ideal number for a management team varies according to circumstances – though, if you jump to conclusions from the well-established Belbin classification of team roles, you will settle for seven. The seven would be respectively (1) coordinator (2) ideas man or woman (3) critic (4) implementer (5) external contact (6) inspector (7) team-builder. In fact, you can manage with fewer people, since some can double up on roles (or even treble up).
The main point, though, is that all seven functions must be fulfilled by somebody. Note that the functions don't include 'leader'. The team needs a leader, but that doesn't mean (as it too often does in practice) abrogating all seven functions to one person. That's the negation of true teamwork. The major role of leadership is to ensure that all the necessary functions are being properly exercised, and to pull them together, so that the team truly functions as a unit.
That dovetailing is the justification for Policy Deployment. The process aims to counteract a constant threat: the more members there are in a team, and the greater the number of possible links, the greater the probability of people being sidelined, and the more stultifying the task of coping with the sheer complexity that must result. The PD principle of having teams within teams within the overall corporate team is designed to keep things as simple as possible – and the proof of that pudding will be what happens at head office.
At Rank Xerox, HQ was once wildly unproductive: 'a lot of central time was spent managing the centre, not the company'. Under the new, reformed regime, Fournier was at pains to regroup the centre and to reduce the omnipresence of the former 'huge monster', which used to duplicate the functions at the operating units. After division into various groups, and clarifying roles to eliminate 'confusion between support and direction', headquarters became very small: for example, leaving only some 150 people at Rank Xerox's international HQ in Marlow. You can hardly gainsay the philosophy that this enshrines:
1. The exercise of authority is a two-way process.
2. Head office cannot manage sharp-end operations.
3. The shorter the lines of reporting, the better.
4. Strategy is the responsibility of those who must execute it.
5. Second-guessing managers on day-to-day issues is foolish in principle and practice alike.
The improvements generated by Xerox's long years of effort are plain. The real issue isn't the rights or wrongs of Policy Deployment or TQM. It's whether you can manage an organisation – any organisation – without making teamwork its governing principle, teams its basic units, and shared objectives its guiding light. That guidance isn't a matter of words alone, although those of Rank Xerox's guiding light statement are unexceptionable:
'Quality is the basic principle for Rank Xerox. Quality means providing our external and internal customers with innovative products and services that fully satisfy their requirements. Quality improvement is the job of every employee'.
So far, so good: except that you could substitute any other company's name. It's the specific behaviours which generate the results. For example, what do team members learn from each other, and teams from other teams? With operating companies across the world, Xerox has ample opportunity for useful comparison across its own frontiers. In fact, when managers do see where their peers are excelling, the 'buy-in' to change becomes much easier. Thus, in the vital matter of customer retention, Austria had the best practice, developed after looking at Belgium. 'They stole from Belgium and, in the spirit of continuous improvement, developed a much better one'.
Great sports teams also interchange ideas and examples to improve both individual and team performance. That performance will be measured, as in business, by achievement against objectives. At Rank Xerox, 'continuous improvement in customer satisfaction' – including that of internal customers for internal services – is the unchanging target. Before the quality journey began, Rank Xerox had a 'market-oriented reputation, but we weren't market-oriented enough, not market-driven'.
Going for major improvement in customer satisfaction was made a priority in 1986, with bonus payments linked to measures of satisfaction. Measured in various ways across five markets in 15 countries, 75 parameters are involved. In 1989 the customers rated Rank Xerox first on only nine of these: the next year it was 32, the year after that 45, and then in 1992 the score hit 60 out of 75 – on which Fournier commented drily that it 'still gives us some way to go.'
That is part of the essence of continuous improvement: the gap never goes away. Yet only 3% of customers were left dissatisfied. You can't get much better than that.
To have 97% satisified employees, however, is a much more formidable task: probably, nobody gets near it. The dissatisfactions expressed by Xerox employees are the same across Europe and in the US: pay, communication, organisational change, career opportunities and job security – meaning fear of job loss.
There's a dilemma here. Insecurity is the enemy of effective teamwork, because it damages morale. But teams are failing in their task (and won't have high morale, anyway) unless they act on the knowledge that, whatever the chosen activity, somebody, somewhere is doing better. Raising performance to that level will cost jobs: Rank Xerox and Xerox world-wide have shed tens of thousands of employees during the battle for survival. But leaving inferior performance to fester also loses jobs: because uncompetitive companies, by definition, can't compete.
Aiming at constantly rising indicators and permanent improvement requires strenuous effort, which can look discouraging. In the right company, though, the effort only encourages more effort. In the wrong company, forget it. But there's one vital point to remember. All genuine total quality processes succeed. That's because they operate on the fundamental principle of identifying and correcting the causes of less-than-perfect performance – and doing so continually, across the board.
Teamwork like that practised at Rank Xerox thus takes in everything: product, process, organisation, leadership and commitment. Former US Air Force General Bill Creech calls these 'The Five Pillars of TQM' (the title of his book). All five must be mobilised. More: they must interconnect in a way that permeates the whole outfit and influences all its members.
That's much easier described than done. In his book, Creech has plenty of praise for Xerox and its chief executive, Paul Allaire, but reserves final judgment. Just as the performance of England teams in more than one sport was hamstrung by top-heavy committee management, and by blinkered one-man leadership on the field, so corporate efforts to practise genuine teamwork have been vitiated by what Creech calls 'centocracy' – which Allaire identified at Xerox as the 'structure, practices and values of a classic big company', which is 'staff-driven' and has an 'extremely functional organisation.'
Creech notes that 'we have more and more centocracies getting all steamed up over "teams" and believing they have the idea down pat. However, it's virtually always the cross-functional, committee-like kind they adopt – which leaves their centralised system and style otherwise undisturbed.' Allaire's object is to escape from centralism: with its organisation of separate divisions, of business teams within the divisions, and self-managed work teams on the front line, Xerox aimed to 'install a team-based, product-based, quality-oriented, decentralised management system and structure.' Will the effort succeed?
Today, there's no successful alternative. And the task shouldn't be as difficult as the corpocratic centralists find. As Fournier says, quality is not natural: but teamwork is – see any company's history. The two-man team of Joe Wilson and Peter McColough created the greatness of Xerox: and such great teams often lie behind great companies, for partnership, the elemental form of teamwork, is as powerful in business as rugby's unison between scrum-half and stand-off, or between the three back-row forwards. Absence of teamwork is the unnatural behaviour. Remove the artificial barriers, and – as Rank Xerox proves – the natural results come flooding through.