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Integrating continuous
improvement and innovation into a
corporate culture: a case study
Zahir Irani and John M. Sharp
Research Institute for Design, Manufacture and Marketing, University of Salford, Salford
M5 4WT, UK
Abstract
Continuous improvement, as the name implies, adopts an approach to
improving organisational performance, with small incremental steps, over
time. In this approach, it is not the size of each step which is important but
the likelihood that the improvements will be ongoing. Many companies are
now complementing continuous improvement with innovation, which is seen
as the successful exploitation of new ideas, and there appears to be a clear
synergy between these two philosophies when integrated under an
appropriate corporate culture. In this paper, the authors describe a case
study of a small~medium subcontract jobbing shop situated in the industrial
heart of North West England. The paper explains how, despite considerable
setbacks and hardship, the company managed to keep its continuous
improvement ideas and 'best practice' beliefs intact throughout the UK
recession of the early 1990s. The paper goes on to describe the corporate
culture within which an approach to continuous improvement and innovation
has allowed the entire workforce to continue their quest for total quality.
© 1997 Elsevier Science Ltd
organisations have introduced these principles as part ability of a jobbing shop manufacturer to quickly re-
of their TQM initiative; in others, it has followed an tool or re-equip its production facility establishes the
adoption of lean manufacturing concepts; while some responsiveness of the organisation, and its ultimate
organisations are using them as tools to increase survival (Inness, 1994).
employee involvement through empowerment and
teamwork. Velden's key processes are schematically mapped
in flowchart format, and are represented in Fig. I.
In this paper, the authors report on a case study of This flowchart represents all key activities carried out
a subcontract jobbing shop, and describe the efforts in the organisation and provides a top level analysis
made by the entire workforce in their pursuit of TQM. of possible improvement areas. Furthermore, pro-
The paper goes on to describe how the company man- cesses are considered by those at Velden to be generic
aged to embrace the principles of continuous to 'best practice' subcontract engineering, and this has
improvement and innovation, through the develop- allowed Velden to identify non-value adding activities
ment of an integrated corporate culture that clearly and remove them from the internal/external supply
facilitates change. chain, thus resulting in an environment of continuous
business process re-engineering (Burlton, 1995; Har-
mon, 1995).
2. A DYNAMICJOBBINGSHOP
The company was formed in 1973 and, although
Velden Engineering (UK) Ltd is a dynamic, part-time, developed into a thriving engineering con-
ambitious, private limited company, with 'best prac- cern supplying many local companies. By 1976, the
tice' ideals and world-class aspirations. Velden's core partners realised the opportunity for expansion and
business is precision subcontract engineering, which growth and re-sited the business into a small unit on
primarily involves manufacturing a wide variety of the current site. After approximately ten years of trad-
parts, products and assemblies for a large number of ing as a partnership Velden became limited in 1984,
customers in diverse industries. This sector of the and was employing 50 people. Five years later, the
engineering industry has traditionally adhered to the company achieved a significant milestone and took
simultaneous change in needs of their many cus- on its 100th employee. The directors had the foresight
tomers. to recognise that quality would be one of the major
hallmarks of the 1980s, and took the opportunity pro-
Subcontract jobbing shops such as Velden sell time vided by the Department of Trade and Industry (DTI)
and expertise on a variety of conventional and com- to achieve certification to the British Standards for
puter controlled machines. This primarily involves a Quality (British Standards Institution, 1987). This was
'make to order' inventory policy, with most parts hav- approved, and resulted in Velden becoming the first
ing a very low level of standardisation and therefore UK subcontract jobbing shop to gain accreditation to
few common components. However, to produce these British Standard 5750 Part 2, ISO 9002, in October
differing and often complex parts a highly flexible 1987 (Kitchen, 1989).
production capability is required, which implies ver-
satile manufacturing equipment, flexible employees Velden's early exposure to 'best practice' provided
and a genuine need to continuously improve in order it with a solid foundation built on world-class manu-
to remain competitive. Typical components and facturing beliefs, together with a dedication to meet
assemblies within a jobbing shop environment tend to and exceed customer expectations. The synergy
be diverse, and have uncomplicated bills of material between 'best practice' and 'motivated employees'
(BOM) and product structures. Furthermore, they are resulted in a workforce capable of generating new and
nearly always made to specifications supplied by the innovative ideas (Kraft, 1990). The company con-
original equipment manufacturer (OEM). Product tinued to grow and remained consistent with business
volumes tend to be small and erratic, since they often plans (strategic and financial) whilst also recognising
depend on the need of customers to off-load capacity the need to complement the traditional 'famine and
or to place orders for specialist requirements, e.g. feast' of subcontract engineering with its 'own' pro-
breakdowns. Product change is always customer ducts (Irani et al., 1996). This would not only help
driven, and close links between the manufacturer and balance subcontract capacity fluctuations but also pre-
customer help to reduce the consequence of change. vent an overdependency on subcontract work. This
Manufacturing lead times tend to be short and product resulted in an early attempt by Velden to develop its
change, if managed properly, can be prevented from own product (Kitchen and Irani, 1995). However,
seriously affecting throughput production flow. If the these early strategic moves to reposition itself in the
customer or marketplace requirements change, the market place were not welcomed by the firm's large
200 Tedlnovaf~nVol.17No.4
IntegraUng conlJnuousimprovement and innovation
.~ Re4
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OEM customers for fear of reduced priority and poss- ever, this period of sustained stability was shattered
ible long-term shift in Velden's core business. These overnight by the recession of the early 1990s.
factors, together with the market demand for spare Although Velden had sailed through previous down-
capacity at the time, forced Velden to put its early turns, the resulting impact of this recession was
ambitions of developing its own product on the tremendous, with long-term schedule orders being
'back burner'. cancelled overnight, thus forcing order-book and turn-
over levels to plummet. Furthermore, Velden's pos-
The 'boom' period being experienced during the ition appeared even worse because of its relentless
mid to late 1980s provided Velden with an environ- efforts to manage and maintain a realistic master pro-
ment for achieving month-on-month success. How- duction schedule (Jeffreys, 1989; Kitchen, 1989); i.e.,
TedumadJmVel.17No.4 201
Z. Irani and J.M. Sharp
as a result of its 'best practice' efforts the firm had how business should be conducted, and about how
few overdues and therefore no backlog order situation employees should behave and be treated (Oakland,
to cushion the impending fall (Kitchen and Irani, 1994). Velden's cultural framework includes its guid-
1995). ing philosophy and core values and beliefs, which are
all combined into a mission statement. This public
With a clear emphasis on survival, considerable commitment provides a vivid description of what the
effort was made by the entire workforce to reduce organisation will be like when true success has been
operating costs and eliminate any wasteful activities. achieved. The mission statement should act as a con-
However, trading conditions deteriorated, and the cise development from core values and beliefs, and
board of directors began to express their nervousness should convey what the organisation's role in society
and anxiety. Furthermore, the bank was beginning to is. Velden's mission statement clearly translates its
lose confidence. With 'innovate or liquidate' ringing philosophy into tangible goals that will move the
in everyone's ears and on very limited resources, the organisation forward and make it perform to its opti-
Velden team identified a niche market and refined mum. The company's mission is to "survive, expand,
earlier attempts at developing its own product. Within and prosper by developing people to provide a pro-
a three-month period, Velden managed to success- fessional, responsive, efficient, green, total quality
fully design, manufacture and launch a number of golf service, with absolute commitment to customer first".
and leisure vehicles into the market place (Irani et al.,
1996). Employee dedication and enthusiasm con- The company's guiding philosophy forms an inte-
tinued to develop, and was channelled through self- gral part of its culture, and drives the organisation
directed work teams (Benson et al., 1994; Coleman forward. This is subsequently shaped by the leaders
et al., 1993). Such initiatives significantly contributed within Velden through their thoughts and actions. The
towards the successful development of highly innov- company culture reflects the vision of the organisation
ative products (Kitchen and Irani, 1995). rather than that of a single leader, and has evolved
over time, although core elements have been main-
As a result of the success of the new product, the tained. The company's core values and beliefs rep-
golf part of the business subsequently proved itself resent the organisation's basic principles, about what
by generating more sales (turnover) than Velden's is important in business, its conduct, its social
previously largest subcontract customer. This was responsibility and its response to changes in today's
clearly a milestone in the development of an emerging competitive environment. It acts as a guiding force,
lucrative business. with clear and authentic values which are focused on
employees, suppliers, customers, society at large and
stake holders.
3. A CULTUREBASEDON CONTINUOUSIMPROVEMENT
The success of Velden's corporate culture can be
ANDINNOVATION attributed to a number of key enablers (Irani, 1995)
Velden remains a privately owned company whose which have proven to be 'ingredients for success' in
radical ideas on employee empowerment and the both Velden's core and non-core business activities.
implementation of continuous improvement makes it Continuous improvement and innovation form the
stand out from the crowd. It appears to be ahead of genesis of these enablers. In addition, a modern hori-
the competition in many ways, especially when zontal management style, open culture and empow-
benchmarked against traditional British subcontract ered workforce all facilitate the search for continuous
companies (Hobson, 1993). The evidence is that improvements and promote innovation. These
Velden is an award-winning 'Inside (UK) Enterprise improvement initiatives cover everyday activities, not
Demonstration Company' for the Department of only to products and processes but to the quality of
Trade and Industry (Department of Trade and Indus- service, procedures and customer/supplier relation-
try, 1993) and was described as an 'exemplar com- ships, adding substance to Velden's commitment to
pany' when awarded 'Investors in People' status making 'Quality a way of life'.
(Donnelly, 1995).
As a result of Velden's continued persistence in
Velden's culture and philosophy is one that has striving towards TQM, the firm has developed a con-
been nurtured and developed over the last 20 years tinuous improvement procedure which provides a
and has not needed to undergo any major 'cultural step-by-step guide to ensure that all employees carry
changes'. However, it has not been without its prob- out all improvement initiatives in a way consistent
lems and sceptics. Culture in any company is the with core values and beliefs held within the company.
underlying belief that pervades the organisation about This procedure is schematically detailed in Fig. 2 and
202 TechnovaSonVoL17No.4
IntegraSngcontinuousimprovementand innovaSon
~ y Go-Ahead
Brainstorm Po~dbillties. I _ ell ..._ Corn/out
Select beet ideas for ~ Imo-m~nnant ~ ~ simple m a l l
first stdke. I ~r- ....... 7 - low cost
r - .... ~ improvements
Discuss major innovations / I . -; - . on your own
' coange at a
Ideas with Management / I i cn..a _ . and team
Directom. Consider 5M'e - ~ I , time. l e s t Inltla~lva.
~ m a n machine, matedal -- ; results .bef..ore !
method mlnuWs ' making lurmer |
II
be improved. 'Even if it 'alnt broke or working well,
con you suggest improvements'. Con you or the
team improve
anything else.
represents part of Velden' s strategic approach towards Most businesses today are faced with intensifying
the standardisation of all key processes, and has sub- competitive pressures. The demand for customised
sequently resulted in the development of over 200 solutions, fast delivery and 'sound' environmental
flowcharts. performance - - all in a global market - - is becoming
increasingly sophisticated and is growing rapidly. To
Although Velden has demonstrated its innovative ensure survival and continued prosperity, businesses
ability to develop its 'own' new products, it continu- must meet these challenges by providing a constant
ously searches for never-ending improvements both stream of new and improved products, advanced pro-
within its golf and its subcontract business (Imai, cesses and better customer services (Cooper and
1986; Inurritegui et al., 1995). This inevitably means Kleinschmidt, 1995; Griffin et al., 1995). This can be
that the pace of change at Velden is extremely fast. achieved through continuous improvement and
TechnovationVd. 17 No. 4 2 0 3
Z. Irani and J.M. Sharp
innovation. However, these processes are ripe with created within Velden and forms an integral part of
uncertainty (Wilemon and Barczak, 1991). the company culture. The success of Velden's
approach to continuous improvement and innovation
Innovation is not a new concept and is not synony- has depended a great deal on both the characteristics
mous with invention, although invention may be part of the individuals employed within the company and
of the innovation process. It is synonymous with the the operational climate created within the organis-
good management of all the company functions. It is ation. These factors ultimately reflect the corporate
a dynamic process and should be an essential part of culture. These contributing factors are summarised
any business strategy and everyday practice. The below.
Board Room Report (April 1993) suggests that innov-
ating firms tend to have a larger market share, higher
growth rates and profit, than non-innovators. Further- 3.1 Individualcharacterislics
more, a link has been demonstrated between R&D
Individual characteristics which encourage inno-
expenditure and subsequent sales revenue relative to
vation and continuous improvement include:
those of its competitors (Irani, 1995). In today's
highly competitive market, delighting customers is
most important (Griffin et al., 1995). Markets for pro- • a clear initial view of the results desired - - the
ducts are now characterised by a far greater ability to ability to clearly define the aims and benefits of the
'shop around' and choose preferred suppliers. This project being considered;
applies whether the buyer is an individual customer, • the ability to get support not only from manage-
a small business or a major enterprise. As a conse- ment but also from colleagues - - there is a need
quence, the requirement for a business to be competi- to build a coalition in which everyone shares equ-
tive and satisfy its customers as well as or better than ally in the belief that the project is worthwhile;
its rivals is fundamental to the success and growth of • courageous employees - - taking calculated risks
the business, resulting in the need to 'innovate' or when setbacks occur;
face the alternative, 'liquidate'. • the ability to handle interference or opposition to
the project - - resistance can be open but it often
Continuous improvement and innovation are at the takes a passive or covert form: criticism of the
very heart of Velden's competitiveness. These stra- plans, 'foot dragging', late responses to questions,
tegies are used as a means of achieving and sustaining or arguments over allocation of time and resources
its competitive edge, and form part of the overall amongst projects; covert resistance can be the
company culture and philosophy (Bates et al., 1995; most dangerous;
Griffin et al., 1995). Furthermore, continuous • leaders who are good at getting people into
improvement and innovation have helped to enable action - - to mobilise and contribute fully to the
complex engineering problems to be solved in Veld- project by using a participative management style;
en's core business of subcontract precision engineer- • the force of character to maintain the momentum
ing. The very nature of subcontract precision engin- of the project, especially after the initial enthusiasm
eering involves the manufacture of components that for it has waned.
are often too complex, specialised or cannot be com-
petitively made 'in-house' by the large OEMs, and
are therefore subcontracted out to the jobbing shops.
As a result, it is often those jobbing shops, such as 3.20rganisaUonal characteristics
Velden, that have to be innovative in their manufac-
turing processes in order to competitively manufac- Organisational characteristics which encourage
ture the required parts. innovation and continuous improvement include:
Continuous improvement and innovation are con- • a free flow of information which allows managers
sidered to be the 'life-blood' of many competitive to find ideas in unexpected places and pushes them
organisations, and there is nothing so stultifying to to combine fragments of information;
those companies - - or to the people in them - - as a • close and frequent contact between work sections,
belief that the old ways must be the best ways. An and an emphasis on lateral as well as vertical
organisation that tries to stand still may not survive. relationships;
These methodologies require a blend of creativity, • a tradition of working in teams and sharing credit;
clear thinking, and the ability to get things done. They • managers who believe in innovation and provide
require thinkers and doers to work closely together the necessary resources and support;
(Armstrong, 1989). Such an environment has been • managers who make time available for innovation.
204 TedlnovaSonVoL17No.4
Integratingcontinuousimprovementand innovation
TedmovationVol.17No.4 205
Z. Irani and J.M. Sharp
Kraft, P. (1990) How to motivate job shop employees. Zahir Irani has a BEng(Hons) in Manufac-
turing Engineering and an MPhil in the area
Plating and Surface Finishing 77(6), 16-17. of new product introduction, from the Uni-
Madu, C.N., Aheto, J., Kuei, C. and Winokur, D. versity of Salford in the UK. Since leaving
(1996) Adoption of strategic total quality manage- Velden Engineering (UK) Ltd. where he
worked for a number of years as a project
ment philosophies: multi-criteria decision analysis engineer, he joined Brnnel University and is
model. International Journal of Quality and now undertaking a PhD in the area of
Reliability Management 13(3), 7-72. MRPII justification.
Dr Sharp has been at the University of Salford for the past eight
years and teaches manufacturing management subjects. He is a mem-
ber of the "Design, Manufacturing and Marketing" Research Institute
at the University of Salford, and his research interests cover the area
of 'improving manufacturing business performance" with respect to
quality processes such as new product introduction, continuous
improvement and maintenance management.
Technova~ Vol.17k 4