An Australian Fiefdom

by Onno van Ewyk

AWA has a long history of comfortable existence in Australia - in many ways the electronics company symbolises all that is good - and bad - about Australia's manufacturing industry.

A comfortable existence can, however, have its price, as any of us who fail to exercise regularly will realise. The recession, aided perhaps by the opening up of Australia to international trade, hit AWA very hard - it rewarded its shareholders with a five-year dividend gap.

In the human body, a comfortable existence leads to a build-up of fat clogging the arteries. In an organisation, it can lead to the build up of barriers of another sort - barriers between departments.

In announcing AWA's return to profit - and fitness - this year, the Managing Director, John Dougall, spoke of "wearing down of the fiefdoms of the past". He also said that staff were in "turf protection mode" during the changes that he had put in place.

Bringing AWA from a nearly $7 million loss (last year) to a $7 million profit this year meant amongst other things reducing the company's 124 business units to just five. The late Total Quality Management guru, W Edwards Deming, wrote in his 1981 classic "Out of the Crisis" that one of the fourteen cardinal rules of business improvement was to "break down the barriers between departments."

Deming argued that variation was the poison that prevented US (and by analogy, Western) organisations from competing successfully with the Japanese. Although he didn't coin the phrase "Total Quality Management", he is widely recognised as the movement's founding father.

TQM emphasises a view of the organisation as a series of 'processes', rather than a hierarchy. Tools such as flowcharting, process mapping and customer/supplier mapping can be used to derive a view of a business or a business unit which emphasises the real relationships between parts of the organisation, rather than (as in the AWA of old) the political alignments of its feudal lords.

Yet other TQM techniques allow individuals and teams within the organisation to propose and implement streamlining changes across departmental boundaries. Eventually, the whole organisation works more closely together, and also has a closer relationship with both suppliers and customers.

So will the changes wrought at AWA be sufficient to ensure the company's future? Another TQM insight is that business improvement must be viewed as a never-ending process. And as two of AWA's five new business units failed to turn a profit, Mr Dougall no doubt has yet more improvements to deliver.

11/11/1994


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This is one of a series of articles written by Phil Cohen and Onno van Ewyk, HCi . Most of the articles were also published in the Australian Financial Review. This article may be reproduced only with the permission of HCi Consulting (email HCi ). Copyright HCi, 1993-1998.