The new approach for quality control, Six Sigma, caught attention through its focus on process excellence, and the clear goal of achieving specified levels of defect-free output. Terms such as black belt and green belt sigma for the trained facilitators who worked full time on achieving defect free processes helped to give a new aura to what might have been old knowledge. However, even the best quality will not save an exorbitantly priced or obsolete product.
Globalization Changed the Business Scenario
Globalization involved not only selling products and services all over the world. It also involved getting products and services from all over the world. And countries like China and India are able to work at much lower costs compared to developed nations, and also have the needed technical competence to deliver quality products in traditional manufacturing and service areas.
Global corporations found that by getting the work done in China and India, for example, they could not only tap emerging new markets in these countries but even deliver products in their own countries at more competitive prices. This led to the much despised phenomenon of outsourcing. Though outsourcing is not popular, it became an economic necessity for business survival.
Emerging Technologies Threaten Traditional Products
Emerging technologies such as nanotechnology and biotechnology, and new developments such as cloud computing in information technology, are likely to prove quite disruptive to traditional industries. They could provide completely new solutions, provide existing solutions at much less costs and even change in a major way what customer lifetime value need and want.
Changes Needed in Management Approach
Business management has come to focus on core competencies, total quality management and such internal issues. Even where they foresaw major changes, they believed that the firm should select new businesses based on existing core competencies – technological, marketing or other – that made them more efficient and effective. However, where these core competencies are likely to prove irrelevant in a changing scenario, such a focus cannot sustain the continued and fast growth.
Approaches like Six Sigma can lead to lower costs for achieving the same quality. However, where radical new technologies can deliver a quality that is simply not possible with traditional technologies, such cost cutting attempts also become out-of-place.
Breakthrough management is a concept pioneered by Dr Shoji Shiba, who taught at Sloan School of Management, MIT from 1990 to 2004. According to him, the need now is to think radically and be willing to take new risks, rather than focus on core competencies, lean processes or TQM. Only firms willing to ditch their existing businesses might be able to achieve exponential growth in a business scenario of rapid change.
Markets can also get saturated and companies might find that they cannot continue expanding with their existing operations. They will then need to start thinking of new businesses. In a global and fast changing scenario, it might not be enough to limit the new business choices based on core competencies.
Breakthrough management is a term that is currently mainly associated with approaches such as Six Sigma quality that seek to understand customer requirements in specific detail and achieve process excellence that makes it possible to achieve negligible defect ratios. In the process, these approaches add to customer value without adding to costs.
In a business scenario of rapid change, however, these approaches can prove inadequate to sustain exponential growth. Instead, businesses might have to take new risks and enter completely new businesses disregarding their existing core competencies. The term breakthrough management takes on a very different meaning in the new context.