TQM Read the case study-Oakland, J. S. (2003) TQM: text with cases. 3rd ed. Oxford: Butterworth-Heinemann.
Assess the effectiveness of the strategy of seven steps to 'Revitalising Quality' at BT Retail and evaluate the role and performance of management in its implementation.
BT was created in 1981 when the telecommunications arm of the British Post Office was reformed as a separate entity in preparation for privatization in 1984. Since then BT has operated in one of the most open telecomunications markets in the world. BT faces competition within the UK for local services from cable TV companies, while other network operators vie for its long haul national and international traffic. BTs day-to-day operations are subject to regulation by OFTEL, a government appointed regulatory body which has major impact on key aspects of BTs business. For example, in a number of key markets BT is required to keep price increases significantly below the level of retail price inflation. BTs very survival has depended on successful performance in this highly competitive yet tightly regulated environment. Following privatization BT faced the imperative of transforming itself from bureaucratic monopoly to customer-centric service provider, while growing income, reducing costs and minimizing loss of market share. Increasing competition in its UK home market encouraged BT to embark on a major international expansion program in the 1990s by developing a family of overseas joint ventures and alliances.
In 2000 after a decade of international expansion, BT decided to refocus on the UK and Europe and carried out a major corporate reorganization which resulted in the formation of BT Group and the demerger of mobile (MO2) and the directory publishing (Yell) businesses. The BT Group consists of BT Wholesale, responsible for BT's telecomunications network, BT Retail, providing communications solutions services to 21 million UK residential and business customers, BT Ignite, delivering sophisticated IT solutions for large businesses across Europe, and BT Openworld, specializing in the internet mass market. BT and quality - a brief history As BT emerged from the public sector it was realized that to be successful, a significant cultural change would have to be stimulated and managed within the organization. Accordingly in 1986 BT embraced enthusiastically the philosophy of total quality management (TQM) to drive continuous improvement through a focus on customer requirements, team working and problem solving. Led personally by the chairman, TQM was implemented through a series of workshops involving all managers and their teams. At the same time BT launched the BT Values to define the desired culture of the organization. Despite many organizational changes the five BT Values remain unaltered and continue to guide behaviors within the company. The BT Values are: We put our customers first. We are professional. We respect each other. We work as one team. We are committed to continuous improvement. BT is imbued with a strong management by objectives climate and this was refined in 1995 with the adoption of a balanced corporate scorecard approach to translate BT's strategy into action through a set of key objectives, measures and targets. Underpinning all of BT's operations is BT's management system. First registered to ISO 9001 in 1994, this is one of the largest single corporate-wide registrations in the world. The management system was later refined and improved to take account of environmental and people management standards and BT is also registered to ISO 14001 and accredited as an Investor in People (IiP). Achievement of ISO 9001 registration was not seen as an end in itself and after considering the Malcolm Baldrige National Quality Award framework, BT adopted the EFQM Business Excellence Model as a driver of organizational improvement. Since 1995 many BT business units have used the Business Excellence Model to identify strengths and areas for improvement as input to their business planning process. The extensive use of self- assessment against the Business Excellence Model has ensured that BT has a rigorous and structured approach to organizational improvement. That this approach was effective is demonstrated by the success of BT business units in national and international quality awards in the late 1990s. BT's Yellow Pages, National Business Communications and Northern Ireland units all won the British Quality Award. BT Northern Ireland won European quality prizes in 1998 and 1999 with Yellow Pages winning the European Quality Award in 1999. Following Yellow Pages' success BT ceased entering external quality awards; however, business excellence principles remain in everyday use, particularly for the periodic comprehensive reviews of business unit performance known in BT as health checks.
The relaunch of quality in BT Retail Formed in October 2000, BT Retail is the largest unit in BT Group with almost 60 000 employees. Its role is to provide communications solutions to 21 million customers in the UK
- from consumers to the largest businesses and its vision is ‘Connecting your World, Completely'. BT Retail's first CEO, Pierre Danon, possessed a strong personal commitment to quality improvement that stemmed from his experiences at a previous European Quality Award winner, Xerox Europe. Pierre and a new leadership team were building a ‘new' customer centric distribution business with a remit to ‘deliver a superb experience to a huge customer base'. They recognized the benefits and necessity of taking a quality approach to support achievement of some very challenging goals. It was also acknowledged that the major business and organizational changes that took place in 1999 and the early part of 2000 had inevitably meant that many people in BT Retail had not been focusing on quality quite as much as in previous years. Within a few months of BT Retail's inception the Revitalizing Quality program was launched to drive an unremitting focus on improvement. The ongoing drive and commitment of the CEO and the leadership team has been pivotal in driving the success of this quality program. The approach to ‘Revitalizing Quality' is based on seven steps to ‘real' quality: put customers at the heart of what we do; reduce the cost of failure; develop and deploy strategy; get the basics right - quality for everyone; quality approach to major change; get the workforce involved; innovation. A brief summary of how each of these steps has been approached is described below. Put customers at the heart of what we do All quality programs have to have, at their center, a very clear focus on customers. Delivering customer satisfaction is the primary goal for BT Retail and the approach is inherently simple - listen to customers and respond to what they say. BT Retail has a wide range of methods for listening to their customers, ranging from market research to asking thousands of customers detailed questions about how they felt about a specific transaction with BT. From this data BT Retail has built quantitative models of the drivers of customer satisfaction (Figure C1.1) which enable them to ensure that internal measures are aligned with what customers really want. One major shift in approach made early in the life of BT Retail was to change which senior managers were targeted (and bonused) against a customer satisfaction measure. Tradition- ally customer satisfaction had been the responsibility of the customer service manager with revenue being the responsibility of the channel managers. Now, everyone who deals with customers has a customer satisfaction target, normally with the same importance as financial targets. BT Retail also changed their primary customer satisfaction measure from ‘overall satisfaction' to ‘satisfaction compared with competitors' so that benchmarking is built in to this key measure.
As well as this fundamental shift in measurement methodology a number of strategic change programs were introduced to enable process and system improvement.