Reverse diffusion of quality: Evidence from general motors UK and Poland
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Reverse diffusion of quality: evidence from general motors UK and Poland
Reverse diffusion of quality: Evidence from general
motors UK and Poland*
Dorota Dobosz-Bourne**
This paper explores the concept of a reverse diffusion of knowledge, that is, the
transfer flowing from a company’s subsidiary to its home plant. The article
presents the empirical evidence gathered in General Motors UK and Poland,
where the reverse diffusion of a concept of the built-in quality took place. Lastly,
the implications of our findings for future research are discussed.
Dieser Artikel erforscht das Konzept einer reversiven Diffusion von Wissen, das
heißt, der Transfer von der Tochtergesellschaft zu ihrer Mutterfirma. Der
Artikel liefert den empirischen Beweis, aufgrund von Daten von General Motors
Großbritannien und Polen, wo die reversive Diffusion eines Konzeptes der
integrierten Qualität stattfand. Zuletzt werden die Implikationen unserer
Entdeckungen für zukünftige Forschung besprochen.
Keywords: reverse diffusion, transformational and evolutionary knowledge
diffusion, built-in quality, car manufacturer, Eastern and Western Europe.
*
Manuscript received: 21. 10. 05, acceptet: 10. 06. 06 (1 revision)
**
Dorota Dobosz-Bourne, Dr./Lecturer, University of London, UK. Main research areas:
cross-cultural knowledge transfer, knowledge management, reverce diffusion, the notion of
quality and Personal Constract Psychology in business. Corresponding address: d.dobosz-
[email protected]
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Introduction
The idea of quality has travelled globally for many years because of
globalisation (Crosby 1979; Deming 1989). It has become a key factor of
increased competition in the global economy, which led to attempts by
international companies to transfer quality to different locations and cultures in
order to achieve high quality-standards globally. Car manufacture became an
important field for international knowledge transfer. A quest to achieve high
quality in car manufacturing has travelled along various management tools and
production models since 1911 (Tolliday 1998) and after 1990 it began to travel
to Eastern Europe, including Poland.
After the fall of the Berlin Wall and the collapse of Moscow’s domination in the
post-Soviet block, the relationship between Eastern and Western Europe has
changed dramatically. Suddenly, it was freed, having previously been restricted
economically and politically. The East embraced the change with not only hope
but also the image of Western Europe that it both had and aspired to. People
from Eastern Europe associated the West with luxury and well-being, as the
images they received were vastly different to the reality they lived in.
Previously, people in the East were usually the recipients of Western ideas via
tales from other people, or their occasional visits to the West. However, they did
not have the opportunity to take an active part in their creation or
institutionalisation. Hence, their knowledge of some ideas did not include the
whole institutionalisation chain. This seemingly small aspect played a crucial
role in the later development of post-command economies. Not knowing the
reality of the free market and other things in the West, people only knew the
images of the final effects and products of capitalism. Additionally, the drive to
make up for the lost years of stagnation under Moscow’s government resulted in
many cases of uncritical willingness to accept some Western concepts as miracle
cure’s for the problems of post-command economies.
One of the ideas that international companies attempted to transfer to Eastern
Europe was the idea of quality, more specifically the concept of quality in car
manufacture as something that can be procedurally built into the system – so-
called built-in quality. General Motors played a particularly significant role in
this process as it was a first car manufacturer from the West to open a plant in
Poland.
Since its start in 1996, General Motors’ plant was able to ‘pass on’ the notion of
built-in quality, a concept of Japanese origin, to the Polish plant, Opel Polska.
After this process was complete, and Opel Polska reached maturity and relative
independence, the relationship between the UK (and similarly other European
Opel plants) and the Polish GM plant became very interesting. One might say
that a pupil transcended its master. The successful institutionalisation of built-in
quality in Poland resulted in Opel Polska achieving a first place in a quality
rating among all General Motors European plants in 2000. This opened a new
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forum for knowledge transfer in the opposite direction, from the East to the
West of Europe. However, this process, which we will call reverse diffusion,
proved problematic.
Reverse knowledge transfer
Knowledge transfer is traditionally discussed in terms of ‘diffusion’
(Levitt/March 1988; Mohr 1969; Rogers 1995), a process which has ‘direction’.
This concept is mainly used when describing the transfer of innovation
(Deutschmann/Borda 1962; Rogers 1995). Diffusion of ideas has become a
crucial subject for multinational companies. Their ability to transfer knowledge
and practices globally often determines their survival or failure on the market.
Hence, many authors emphasise the importance of understanding the factors
determining its success.
Hirschman (Czarniawska/Joerges 1995) spoke of technology transfer and
development projects as a ‘pseudo-imitation’ technique. It involved building
projects as a replica of a successful venture in an advanced country. It enabled
the promotion of projects that would normally be discriminated against as too
risky and uncertain to be realised. Bartlett and Ghoshal (1998) emphasised the
need to diffuse world-wide innovations as an important reason for corporate
internalisation. The ability to exploit new ideas and products globally in a rapid
and efficient manner has become crucial for a company’s survival. Boyer et al
(1998) agued that imitation or direct transplantation of ideas is rarely feasible,
thus we should focus on the process of hybridisation, a complex interaction of
ideas with national and societal effects.
Diffusion is a special type of communication in which participants create and
share information with each other in order to reach mutual understanding
(Rogers, 1995). It is a process consisting of four main elements:
1. a new idea,
2. is communicated through certain channels,
3. over time.
These are the factors which are likely to influence the difficulty or ease of the
diffusion process. Different researchers emphasise different attributes which
might influence the knowledge transfer. Rogers (1985), for example, places
almost exclusive emphasis on the attributes of innovations. Bartlett and Goshal
(1998) and Mohr (1969) consider the social system and communication channels
as crucial. Nonaka (1995) and Arrow (Szulanski, 1996) stress the characteristics
of the situation, such as time. Others (Szulanski, 1996) try to draw on all of
these factors and create eclectic models enabling the measurement of their
relative influence.
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Edwards and Ferner (2004) distinguished between forward (FD) and reverse
(RD) diffusion. They offered this separation as a way to analyse the process in
which knowledge is transferred, not only from the country of its origin to the
foreign subsidiary, but also in the reverse direction. According to Mikl-Horke
(2004) bi-directional diffusion also implies the intermingling of old and new, of
outside influences and inside perspectives (ibid. 115). Edwards and Ferner
identified two kinds of reverse diffusion: evolutionary and transformative.
Evolutionary RD occurs when an optimal mix of practices is achieved within
existing modus operandi. It does not affect the assumptions concerning the way
in which the organisation operates, but seeks to improve its operations through
the process of learning from this organisation’s subsidiary plants.
Transformative RD is directed towards a much more significant impact and
seeks to move the organisation towards a new modus operandi.
Reverse diffusion, despite being introduced by Edwards and Ferner in 2004, is
nearly absent from literature and so far was not followed by any research to
address this phenomenon. This paper presents a case study exploring the reverse
diffusion of the idea of built-in quality in General Motors Europe, and discusses
the implications of these findings for future research.
Global transfer of quality in car manufacture
Quality represents an idea that became the main factor of increased competition
between global companies. This resulted in the attempts of international firms to
convey high-quality standards in all their foreign divisions and their attempts to
transfer quality to different countries (Crosby 1979; Deming 1989; Ishikawa
1986).
Quality, according to Schremerhorn (1999), is the degree of excellence defined
as the ability to meet customer needs 100% of the time. Other definitions of
quality include compliance with specifications (Crosby 1979), pride of
workmanship (Deming 1989), minimising the gap between supplier standards
and recipients’ expectations (Zeithaml et al. 1990), or even ‘delighting’ the
customer by surpassing his/her expectations regarding the final product and
customer service (Moran/Riesenberger 1994).
The search for quality improvements led to various operating philosophies
evolving over the years. During the past two decades, simple inspection
activities have been replaced or supplemented by quality control, quality
assurance and now by Total Quality Management (TQM) (Dale et al. 1997).
There is an apparent lack of a generally accepted definition of TQM. According
to Crosby (1979), it is ‘zero defects’ or ‘right the first time’. Deming (1989)
called it ‘plan to check action’ and Juran (1993) speaks of ‘fitness for use’. The
British Quality Association (BQA) has provided three alternatives to these
definitions. They focus on ‘soft’ qualitative characteristics, ‘hard’ productive
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characteristics and the third definition consists of a mixture of both ‘soft’ and
‘hard’ characteristics (Thiagarajan/Zairi 1997; Wilkinson 1992).
According to the first definition of ‘soft’ qualitative characteristics, TQM is seen
as being consistent with open management style, delegated responsibility and
increased autonomy of staff (Wilkinson 1992). This side of TQM is concerned
with creating customer awareness within an organisation. The factors of soft
quality are intangible and difficult to measure as they are primarily related to
leadership and employee involvement (Thiagarajan/Zairi 1997).
‘Hard’ quality represents the production/operations management perspective. It
places emphasis on the production aspects, such as systematic measurement and
control of work, setting standards of performance and the use of statistical
procedures to assess quality (Wilkinson 1992).
As mentioned before, one definition of TQM is a mixture of ‘soft’ and ‘hard’
aspects of quality. It combines the need for a scientific approach with the view
that all employees are part of one team. Oakland (1995) sees this way of
managing quality as the key to improving the effectiveness, flexibility and
competitiveness of the business as a whole. According to this approach, TQM is
conceptualised in a form of three interdependent factors: management
commitment, statistical process control, and teamworking. Another critical
aspect in this view of TQM is the concept of the quality chain, indicating the
interdependence of customer-supplier links throughout the organisation. Hence,
TQM focuses primarily on the requirements of the customer, internal or external
to the organisation (Oakland 1995). The aim is to make quality the responsibility
of all employees, rather than a specialist department, and in this way, quality
becomes something ‘built into’ the process rather than inspected (Wilkinson et
al. 1992). Good quality of the final product becomes an inevitable result of such
system and culture. The benefits of such an approach are potentially huge.
According to Oakland (1995), one third of an organisation’s efforts is spent on
repair and dealing with checks. By moving the focus from the production
process to the customer (internal and external), TQM creates customer
awareness within the organisation. It is a way of involving everybody in the
process of improving their work, by which high quality and meeting customer
requirements become inevitable and leads to quality being built into the process
(Wilkinson et al. 1992).
Companies that have successfully implemented TQM and made quality the
responsibility of all employees are recognised in the U.S. by being awarded the
Malcolm Baldridge Award. The framework used in this prestigious award
defines a total quality system as consisting of seven categories: 1) leadership, 2)
information and analysis, 3) planning, 4) human resources, 5) quality assurance,
6) results, and 7) customer satisfaction (Schmidt et al. 1992).These criteria
largely reflect quality management techniques developed by Juran (1993),
Crosby (1979) and Deming (1989) (Shetty 1993).
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Quality Management award is also present in Europe in a form of The European
Foundation for Quality Management (EFQM) Excellence Model which has its
origins in TQM (Sandbrook 2001). The model provides a framework for
managing quality and continuous improvement in an organisation. It is
composed of five ‘enablers’ (leadership, people, policy and strategy, partnership
and resources, processes) and four ‘results’ (people, customer, society and key
performance) (Ruiz-Carrillo/Fernandez-Oritz 2005). The model has also the
added advantage of providing a set of measures for ‘hard’ and ‘soft’ quality.
The concept of the built-in quality in car manufacture is a good example of an
idea that has been subjected to both forward and reverse transfer across cultural
and linguistic borders (see Figure 1). The first attempt to transfer this idea took
place between America and Western Europe in 1911 (Tolliday 1998). Despite
the failure of this process, further attempts at forward quality transfer occurred
when Ford and General Motors established their subsidiaries in Japan in the
1930s.
Figure 1.Global transfer of quality in car manufacture
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Japan’s search for new managerial ideas and practices begun after the World
War II. The country struggled economically and the Japanese car manufacture
suffered due to the poor quality of its suppliers and a domination of American
car producers on the market. The search for ways of improving this status quo
led to the modification and later adoption of ideas of Deming and Juran about
the use of statistical process control and teamwork (Tuckman 1994). Their work
led to the notion that fault prevention (not detection) was the key to achieving
good quality results; continuous improvement was the ultimate goal. This notion
of quality was well received in Japan and further developed into the concept of
quality as something that can be procedurally built into the system, and adapted
to local conditions. Despite a fairly limited response to these ideas in the USA,
their impact on Japan was profound (Cusumano 1989) and resulted in the
introduction of the concept of built-in quality by Eiji Toyoda in 1960 (Tolliday
1998).
The success of the Japanese car manufacturers in the 1970s stimulated the
export of Japanese cars and led to a first attempt at reverse knowledge transfer
when the Japanese car producers introduced their plants to North America (Abo
1998; Adler et al. 1998; Tuckman 1994). Furthermore, the Japanese tried to
transfer their concepts of built-in quality, and its technology, to Western Europe
along with companies such as Toyota, Nissan, Honda and General Motors
(Inkpen 1998; Saka 2004).
In 1990s the concept of the built-in quality travelled further, this time from
Western to Eastern Europe. The collapse of Moscow’s political and economical
regime in Eastern Europe in 1989 marked the economic transformation of the
Eastern bloc into a free market economy. This transformation was accompanied
by the steady growth of foreign investment and the flow of Western economic
ideas to the emerging market of Eastern Europe.
This process was particularly interesting and dramatic in Poland. Polish car
manufacture prior to 1989 was relatively underdeveloped in quality standards as
opposed to, say, the textile industry, which had a strong industrial tradition and
its quality standards were relatively high (Kozminski 1993). The car
manufacturing sector in the command economy was stimulated by the surplus of
demand over supply with no competition. The quality of vehicles was a
secondary issue as the production was directed to meet overwhelming customer
demand. The Polish workforce was highly educated but it lacked in discipline
and the understanding of principles of quality management (Kozminski 1993).
Therefore, despite the ability of the workforce to handle modern technology and
equipment, quality in Polish car manufacture remained poor and has never
reached Western European standards.
A transition from the command to a free market economy was embraced by
Poles with hope and enthusiasm. However, the drive to make up for the lost
years of stagnation under Moscow’s government resulted in many cases of
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uncritical willingness to accept some Western concepts as a miracle cure for the
problems of the post-command economies. The arrival of companies such as
General Motors not only brought the opportunities to acquire Western expertise
of car manufacture and business management but, perhaps more importantly, it
also provided Polish people with a platform to enter the Western arena of
vehicle production. Poles displayed great openness to these new ideas and
practices. They wanted to adopt them with a sense of urgency and leave an era
of the command economy behind them. For some people, proving themselves as
an equal partner to Western European countries, became a matter of national
ambition (Davies 2001:300). It took just four years to fully institutionalise built-
in quality along with other management and manufacturing practices in the
Polish GM plant (Dobosz/Jankowicz 2002; Malone/Kirk 2000). In 2000, Opel
Polska achieved first place in the General Motors Europe quality ranking,
proving itself a mature car manufacturing plant.
In 1994, Tuckman suggested the development of Eastern Europe into a possible
future source of management expertise in car manufacture. He compared the
potential emergence of Eastern Europe with that of Japan several decades ago.
“In this regard, aspects of Eastern Europe are not just seen as mirroring of the
state sector of the west – where the development of a market philosophy is but a
rehearsal for the larger production – but that the product is almost the prehistory
of that of Japan. The reputation of East European cars is often compared with
that of Japan a few decades ago – the early imports of Toyotas with the current
reputation of the Skoda or Lada. Potentially, we are seeing the opening of a new
phase in industrial development and the international division of labour – a
periodization that could perhaps be Fordism, Toyotaism or Skodaism”
(Tuckman 1994:746).
Now, ten years later, the presence of Eastern Europe in the global car
manufacturing arena became a fact, and multinationals such as General Motors
are eager to take advantage of this. The potential benefits stemming from the
reverse knowledge transfer from Poland to other Western European GM plants
were already appreciated by the company in 2000, when the first attempts at this
process took place between Poland and Germany. However, the matter did not
become urgent until 2001 when the American General Motors headquarters
closed the Vauxhall Luton plant in the UK. Subsequently, two German Opel
plants begun to fear they may share this same fate in the future in the light of
newly emerging competition from behind their eastern border (Nowak 2005).
Financial and quality problems experienced by companies in Western European
plants led to an inquiry by General Motors Europe headquarters in Zurich into
company operations in the UK and Germany. As it happened, one of the
Zurich’s directors was an ex-Opel Polska director, who set up the Polish plant
and witnessed the development of the local staff there. Being familiar with the
level of expertise of the Polish staff he decided to establish the reverse diffusion
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of knowledge between Poland and the UK as a response to the findings of this
inquiry.
Research design and data collection
According to Szulanski (1996), knowledge transfer should be viewed as a
distinct experience depending on the characteristics of everyone involved where
the identity of the recipient can determine the outcome of the process. Hence, it
is important to address the sociological concepts pertaining to different cultures
as well as the psychological concepts pertaining to individuals involved in the
knowledge transfer between two cultures. The analysis of the cultural factors
behind the knowledge transfer and the individual construction and meaning of
the concept of quality will enable the identification of the factors behind the
success or failure of this process, as defined by the organisational actors
themselves.
This research aims to understand the meaning of the concept of quality in two
different cultures and trace the process of reverse knowledge transfer of this
idea. The research paradigm adopted in this paper is that of constructivism
(Berger/Luckmann 1976; Kelly 1955). From this perspective, we can only
interpret reality and not directly apprehend it in any absolute sense. No
construction of reality is irrevocable as the alternative construction can always
be offered (Bannister 1981). The purpose of constructivist enquiry is to gain
sufficient understanding in order to predict future outcomes (Jankowicz 2000).
The study focuses on qualified descriptions and empirically generated theory
about the phenomena under scrutiny. The organisation is treated as a social site,
a community, and therefore traditional methods of studying communities, such
as ethnography, phenomenology or hermeneutics are especially useful. People in
organisations as well as the researcher are seen as active sense makers, and
while theory may provide important sensitising conceptions, the key concepts
and understandings are created by the participants of the research
(Alvesson/Deetz 2000).
The research was carried out at three General Motors plants involved in
knowledge diffusion between the UK and Poland, that is, the Vauxhall Luton
and Vauxhall Ellesmere Port, and Opel Polska plant in Gliwice, Poland. The
study consisted of the ethnographic interviews (Alvesson/Deetz 2000) with 33
key informants (Tremblay 1982) chosen on the basis of their direct involvement
in forward and reverse quality transfer between the UK and Poland. On the
British side, there was a group of 16 managers, consisting of people involved in
the managerial activities at the Vauxhall plant as well as the creation of the
Polish plant, Opel Polska. On the Polish side, there were 15 Polish managers
trained by the English ones, which included three Poles who were later
employed by the Vauxhall UK as expatriate managers. The sample also included
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two German engineers in managerial positions in Opel Polska. All managers had
corresponding roles in each of the two places. Sample size was determined by
the information supplied by respondents according to ethnographic
methodology, meaning the sample is enlarged until it results in a clear,
unanimous picture of the phenomenon under scrutiny.
The interviews took place in all three locations selected for the study and were
conducted over the period of 2000 - 2002. They were accompanied by the
guided visits to every shop at the Vauxhall Luton and Opel Polska. The author
was also present at the Vauxhall Luton in December 2000 during the dramatic
events that followed the announcement about the plant’s closure. However, the
interviews and conversations carried out during this period were not recorded as
requested by the respondents. All remaining interviews (approximately 60 min.
each) were tape-recorded and fully transcribed. Following the ethnographic
mode of data analysis (Hammersley/Atkinson 1995), the transcribed interviews
were content analysed and resulted in a written account of the process by which
the idea of built-in quality travelled between England and Poland, as interpreted
by the author. In order to maintain the confidentiality of all interviews the names
of the respondents are coded. Their quotations used in this account give the
organisational position of an interviewee and location(s) where he/she was
employed.
Built-in quality travels to Poland
The process of setting up a new green field site in General Motors is supported
by the intensive forward diffusion of knowledge between the new plant and one
or more mature GM plants. This transfer is aided by several institutions. One of
them is the institution of a home plant, which represents a mature, brown field
GM plant that will serve as a model for a green field site. The home plant is used
as a location for an on-site training of a new staff as well as a source of experts
who are often lent to a new plant as expatriate managers. The institution of an
expatriate manager, called International Service Person (ISP) in GM’s jargon,
plays a crucial role in forward and reverse knowledge transfer.
Opel Polska received a German plant in Eisenach as its official home plant.
However, the initial on-site training also took place at Vauxhall Luton.
Correspondingly, a group of ISPs allocated to set up Opel Polska consisted of
English as well as German managers. As a result, the development of the built-in
quality in Opel Polska was influenced by the notions of quality embedded in the
GM plants in these two countries (see Figure 2).
The British managers brought in and developed the ‘soft’ part of quality in Opel
Polska. This part of knowledge diffusion had its roots in the Japanese concepts
of quality and people management, which are at the core of the notion of built-in
quality. Henceforth, the ideas and practices brought by the British to Poland
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represented the idea that all organisational members should be responsible for
the quality of their work, and that defects should be prevented rather than
repeatedly repaired. They were also responsible for establishing a built-in
quality culture in the plant, something they failed to achieve in the UK GM
plants (Saka 2004).
Figure 2. Diffusion of the built-in quality in General Motors Europe
Corresponding to the notion of the built-in and ‘soft’ quality, there was an
influence upon Opel Polska that led to the development of the ‘hard’ side of the
quality system in the plant. This process was strongly influenced by the German
managers who served as a link between Opel Polska and the German plants. The
operations that took place between these locations were concerned with the
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‘hard’, measurable aspects of car production. Henceforth, the German team was
responsible for establishing in Opel Polska the processes of lean manufacturing
and standardisation amongst others.
The Japanese and German ideas of quality management had an impact on
different areas of the quality system in Opel Polska. The Japanese ideas
influenced and stimulated the development of quality of the whole system,
whereas the Germans determined the quality of the final product. Despite
affecting different aspects of the quality assurance system in Poland, these two
effects worked as a complimentary forces leading to the unique blend of
approaches developed in Opel Polska (Dobosz/Jankowicz 2002).
The notions of quality in Opel Polska and the Vauxhall Ellesmere
Port
Quality is a concept defined by General Motors as something that can be
procedurally built-in to the production process. The system is designed in a
manner that prevents defects from occurring and shifts the responsibility for
faults from the individual onto the system. The emphasis is placed upon
customers, both internal and external, and on the prevention of potential defects.
There are three main components of quality as understood by GM:
1. the quality of the system;
2. the quality of the final product as defined by the customer; and
3. the quality of workmanship.
The quality of the final product is almost equivalent to customer expectations. It
is the product as seen in the eyes of the customer. Her/ his decision as to whether
or not to buy a GM product means for Opel people having a job or not. Thus,
customer satisfaction lies at the core of any [General Motors] definition of ‘good
quality’.
The quality of the system consists of the mechanisms that enable employees to
deliver a product of high quality. The idea of creating a system that
‘automatically’ leads to good quality is called built-in quality, and is a definition
of quality that GM teaches its employees. The system of quality assurance,
which gives ‘built-in’ quality to the product is supported by a number of
techniques such as:
1. problem-solving techniques (e.g. the Practical Problem Solving Technique);
2. strategies supporting defect prevention (e.g. automation, Andon);
3. techniques enhancing employee motivation (e.g. performance related
remuneration, teamwork, empowerment through Kaizen);
4. standardisation supported by visual management.
The last area of quality is quality of workmanship, often described as the most
important part of quality. The quality of people and their workmanship is
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considered by the GM people to be the absolute base factor that determines the
overall quality of results achieved in the plant.
These three elements – quality of the final product, system and workmanship -
function interdependently and create a whole system of built-in quality, which is
understood to be an overall approach, engaging every member of the
organisation into creating high-quality products and satisfied customers, both
internally and externally.
Opel Polska is a good example of a car plant where these three elements were
successfully introduced and implemented. However, in order to shed some more
light on this issue we will listen to the opinion of the Polish ISP.
“Gliwice is not a good example for describing the approach to quality. There
were 2,000 people chosen from 20,000 applicants. And they were brainwashed
right from the beginning. In this plant, if someone does not believe it, they will
go crazy. The approach implemented in Gliwice is like in Chinese communism,
and there is no discussion. Do not accept, do not shift defects. There are no
situations where someone hid something. People were introduced to it right from
the beginning and I believe in it too. If I didn’t believe in it I would go crazy in
the environment where this is the rule. (…) This also corresponds with the
corporate visions of GM such as say what you believe, do what you say. If there
is a problem you have to say it openly, it happened, too bad. This exists in
Poland but in other plants no one cares about it too much. In here [Ellesmere
Port] supervisors accepted that but there was only one manager who acted
according to it.” (Polish ISP,Opel Polska, Vauxhall Ellesmere Port)
The Polish plant is a typical green-field site where the concepts of quality were
implemented right from the beginning. This also applies to the quality of
workmanship, itself enhanced by the high number of applicants, which allowed
General Motors to choose candidates matching their desired profile (i.e. young,
willing to learn and accept new ideas).
The implementation of built-in quality in Ellesmere Port was rather different.
The plant was set up in 1964 and, prior to the concepts of lean manufacturing
and built-in quality being introduced, the plant operated successfully for a
number of years. There are still many people employed at the plant who started
there in 1964. Therefore, changing the work attitudes, a dilemma for most
brown-field sites, is a major challenge General Motors has to face.
“If people have done something for 30 years in the same way and may have
been successful economically, they've made a lot of volume, and all of a sudden,
you come along and say, ‘I'm sorry, but this is not going to allow you to survive
in the future’. They look at you and say, 'You are crazy. We've always done it
like this. It's been OK’. (…) And that's the most difficult challenge anybody has
to have, to take a brown field workforce, a brown field culture, and try to change
it. That is very difficult and very frustrating. I spent two and a half years trying
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to do it and let me tell you, all the hard work of this green field was nothing
compared to the frustration of trying to change an old, traditional group of
people.”(English Manager 1, Nissan UK, Opel Polska, GM Europe Zurich)
The most important difference between the Vauxhall Ellesmere Port and Opel
Polska lies perhaps in this element of quality – the workmanship. The
willingness to learn and accept new ideas in the UK plant is very low.
Furthermore, the nature of people’s motivation is different. The picture of the
employees in these two countries that emerged in this study indicated that Polish
employees are more motivated by their work-related achievements and the fact
that they work for General Motors. Contrastingly, English employees are more
concerned with the quality of their life, and the relative importance of work
itself is much lower in England, due to higher job security compared with
Poland.
Reverse diffusion of quality
The development of the second element of quality as defined by General Motors
– the quality of the system – was the main reason behind the reverse knowledge
diffusion from Poland to England. As mentioned before, the process started in
2001 as a result of poor financial and quality results in the Vauxhall Ellesmere
Port. Initially, the process was to take place through a project team sent from
Poland to the UK. However, after the time-scale of the project was extended
several times, the company decided to bring in the Polish staff in a role of ISPs
for a longer period. The first Polish ISP was sent to Ellesmere Port along with a
group of Polish staff as a support. Soon after, a similar team of another Polish
ISP and support staff was sent to a German plant. However, the latter group was
not included in this study.
The Vauxhall Ellesmere Port is more developed technically and better equipped
compared to the plant in Poland, as it has been expanded and refitted for the
production of a new Vectra in the UK. There is also a difference in the level of
implementation of lean manufacturing in these two plants.
“For example, the wheel. The employee does not have to take it from the shelf.
There is a special machine, which passes the wheel on and the worker has to
slide it on and attach the screw. And all of this is automated. Additionally, the
wheel is sequenced so s/he does not have to worry whether s/he is putting on the
right or wrong wheel. This production line [in Ellesmere Port] is more
automated so it’s easier for people. There are also more people on the line; the
stations are more dispersed. Their work is more detailed so it’s easier for them.
(...) In Poland they try to save money on everything, on equipment, on people.
We employ less than 2,000; they have 3,500”.(Polish Manager 1, Opel Polska,
Vauxhall Ellesmere Port)
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The elements of the quality of the system that were missing in the UK plant
were:
1. problem-solving techniques;
2. standardisation and visual management;
3. organisation and planning of work and production.
The process of reverse diffusion was targeted at these elements in particular. The
Polish staff was introduced as a team supporting problem-solving and defect
tracking in production of the Vectra. The Polish ISP took on the position of a
Material and Control Production Manager. His role was to stabilise the
functioning of the Material department. This would involve the introduction of
production planning and control, and standardisation of the operations.
Due to different official positions, and what follows different levels of authority,
given to the Polish experts their way of introducing new ideas in the UK plant
varied. The Polish ISP had a relatively strong position in the company, which
gave him authoritative power to implement some of his decisions. Several
people initially rejected his strategy of implementing new working practices
such as planning of production, thorough organisation and documentation of
individual work, and visual management.
“I sacked 4 out of 5 managers. There is only one left. If he doesn’t perform, he
will be replaced too. And then I will start with the middle level. Even though I
am here for just 12 months, it’s enough time to remove this acrimonious
structure. (…) There are no mechanisms, which would discipline them. Pure
communism. If they come to work or not, they will receive the same bonus at
the end of the year. If they produce 5 or 500 cars the pay is the same.”(Polish
ISP, Opel Polska, Vauxhall Ellesmere Port)
The strategy adopted by the members of the Lean Manufacturing Support Team
was dramatically different to this demonstrated by the Polish ISP. The rest of the
Polish experts adopted the role of advisers. The decision of whether or not to
adopt their advice was left entirely to the British staff.
“I tried to approach them in a friendly way, not to impose anything. It is always
the case that if you try to force someone to do something they will object it. My
position here is also too low for me to dictate anything.”(Polish Manager 1,Opel
Polska, Vauxhall Ellesmere Port)
This group of Polish employees developed a more cooperative style. They tried
to assist problem analysis and suggest techniques they were familiar with. They
believed that if the technique proved useful, the adoption of it by local staff
would follow. They also organised training introducing the UK staff to various
instruments assisting communication and problem solving.
The Lean Manufacturing Support Team succeeded in the introduction of several
ideas. They managed to implement a technique called PPS (Practical Problem
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Solving). The production line adopted the method of reporting problems
introduced by the team that improved the tracing of problems and defects, and
what follows the identification of a root-cause and fault prevention.
The Polish ISP managed to revive production planning in the plant. So far, the
production department used to agree the volume and the model to be produced
on a daily basis. This, however, was against the central planning procedure
adopted by General Motors, where production is centrally planned in Germany
for each GM European plant. This is closely connected to the system of material
purchasing and control, which has to match and sequence the material required
for the production according to the central plan. This element is considered by
the Polish staff to be the most significant change that has been implemented.
Additionally, the planning and documenting of individual work as well as visual
management were introduced.
Although both groups of Polish managers and their approaches to introducing
change were successful, the impact of the Polish ISP was more significant, and
resulted in a more fundamental change. Whereas the first group of managers
helped to streamline certain procedures, the Polish ISP introduced a new
approach to some operations such as production planning.
The ideas and practices related to standardised work and lean production were
the most difficult to introduce, as they require a disciplined approach to ones’
work and high levels of motivation. These elements seemed to be missing in the
UK plant, which have significantly hindered the implementation of the ideas
related to quality. However, according to the Polish ISP the failure in the
adoption of built-in quality does not need to have dramatic consequences for the
plant as a result of organisational politics.
“The plant in England will always get the model to produce and will be there
forever because it is in the UK. And the plant in Gliwice will always be at the
other side of the world and sometimes it will get the model but sometimes it
won’t. And there will be always people going there to learn.”(Polish ISP, Opel
Polska, Vauxhall Ellesmere Port)
The process of reverse quality diffusion to the UK is ongoing. It is also taking
place between the Polish and German plants. Whether Opel Polska will ever
become a home plant for any of its partners, time will show. The arena of car
manufacture in Europe is fascinating and fast changing, but our journey into it
has to end here.
Discussion and conclusions
The analysis of the existing systems of quality assurance in the Polish and UK
Vauxhall plants indicates some significant differences. The successful
implementation of the system of the built-in quality in Poland, the element
missing in the UK plant, creates scope for the reverse diffusion of knowledge
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between Poland and England. The team of Polish experts in the UK plant have
introduced the elements related to the quality of a system and ‘hard’ quality
elements, such as problem-solving techniques, enabling tracing the root-causes
of problems and defect prevention, standardisation, and detailed planning of
work at the individual as well as departmental level. The reverse quality
diffusion was planned as an evolutionary RD in Edwards and Ferner’s terms
(Edwards/Ferner 2004). Henceforth, it was aimed at improving the operations
and quality of the system in the UK plant by introducing some new practices and
ideas. However, the analysis of an overall system of quality assurance in
Vauxhall Ellesmere Port indicates that it contradicts the philosophy of built-in
quality. The ideas of quality embedded in the UK plant place the emphasis on
the final audit of a product and fault repair, which in itself is the contradiction of
built-in quality. Moreover, the study indicated that low levels of motivation and
the work attitudes of British employees might further hinder the development of
quality workmanship in the plant. Therefore, the factors contributing to the lack
of presence of the built-in quality are more complex than a lack of procedures or
lean manufacturing principles. They involve the organisational values embedded
in the culture, which were developed in the plant over the decades of its
existence.
These findings indicate that the evolutionary reverse diffusion, which is aimed at
introducing new practices without changing the existing modus operandi, is not
sufficient to address the problems existing in the UK plant. It could be argued,
that the implementation of transformative reverse diffusion would be more
appropriate, for transformative transfer is directed towards a more significant
impact and seeks to change the assumptions concerning the way in which
organisation operates. This process is strongly dependent on learning from the
subsidiary plant, in this case Opel Polska.
There is a clear difference in organisational implications of evolutionary and
transformative reverse diffusion. Evolutionary transfer, dealing with mastering
the existing organisation and its operations by slight improvements, does not
require the time and resources that would be necessary for the transformative
transfer. The transformative change, in order to be effective, would need to
involve the support and commitment of organisational decision-makers as well
as appropriate resources. Furthermore, the role of experiential learning,
especially crucial when transferring tacit knowledge (Nonaka 1995; Szulanski
1996) such as some elements of ‘soft’ quality, needs not to be underestimated.
As illustrated in this study, the attempt to introduce experiential learning by the
Polish staff in Ellesmere Port as well as organisational and structural changes
carried out by the Polish ISP, were sufficient to bring out some improvement in
the quality of the system. However, for the full diffusion of built-in quality to be
complete, the quality of workmanship would need to be transformed as well.
The establishment of an institution of a home plant indicates that learning from
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experience has a strong presence and organisational support in General Motors
when forward diffusion takes place. It could be argued, that this institution and
this type of on-site training are equally important in case of the reverse process.
The employment of these techniques could lead to increased professionalism
and expertise of staff as well as a continuous improvement of company’s
operations – an important element of the built-in quality philosophy.
According to Boyer et al (1998), reverse diffusion may be as equally as
important as the forward process. Toyota and other Japanese car manufacturers,
by transferring knowledge in the reverse direction, abandoned their payment
system that was potentially counter-productive (ibid. 377). Our study showed
that General Motors UK could benefit from transformative reverse diffusion and
introduce the system of the built-in quality in the Vauxhall Ellesmere Port
improving the plant’s quality and financial results. Additionally, Poland’s
membership in the European Union opened more avenues for the knowledge
flow to the West of Europe. However, as Poland entered global car manufacture
only few years ago, its position was not yet as well established as that of
Japan’s. Therefore, we can expect the willingness to learn from the Polish Opel
Polska plant in General Motors Europe to be rather low (Nowak 2005). As
argued by Muthusamy and White (2005) the new skills and knowledge learned
in the process of knowledge transfer depend on so-called ability-based trust, that
is, a trust in a partner’s ability. This aspect coupled, with goodwill, are necessary
factors in making the exchange of knowledge meaningful and productive (ibid.
434). The nature of reverse diffusion can prove to be challenging regarding this
dimension. While the willingness to absorb new managerial ideas and practices
was an understandable characteristic of the Polish staff, who had an ambition to
‘catch up’ with the West (Kozminski 1993), the same attitude could be
problematic to achieve in societies with a history of economic success such as
the United Kingdom. According to Styhre (1998), the acceptance of
management ideas is higher in groups, which run the risk of being excluded or
marginalised. This statement is well illustrated by the dramatic economic growth
of Japan after World War II and Poland post 1990. However, the consequences
of such a transformation can sometimes only be appreciated by others when the
process proves successful.
“Before, we [Volvo in Sweden] believed we were the centre of the world, but we
have discovered that there are things that are better in other places.”(Mr. Blue in
Styhre 1998: 202).
Reverse diffusion of knowledge offers a unique opportunity to keep up with the
developments and innovations taking place in the organisation’s subsidiaries. It
also enables the revival of systems such as audit-based quality assurance by that
of built-in quality, as demonstrated in this study. After the emergence of the
post-command economies on the free market, the reverse diffusion gains a
particular importance in the European context. The potential to aid the
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development of new core capabilities and gain competitive advantage by
employing reverse knowledge transfer has been proved by Japan’s car industry,
and should not be underestimated. Similarly, the potential for furthering
knowledge by the CEE societies must not be overlooked (Mikl-Horke 2004).
However, in order for the reverse diffusion to be successful, it needs to receive
the same attention the forward transfer does.
The difference in the nature of evolutionary and transformative reverse diffusion
(summarised in Table 1) draws our attention to the importance of apt evaluation
of a company’s situation and needs prior to the transfer. The role of change
agents taking part in this process should also be considered, as it will influence
the implementation and adoption of new managerial practices by local staff. The
importance of ability-based trust and willingness to learn as key factors in
determining the outcome of the reverse diffusion indicates that the development
of the appropriate relationship between both parties should start from the
beginning of their cooperation. By creating a climate of mutual respect and
learning, an environment can be built where the evolving nature of the
relationship between parties during a shift from forward to reverse diffusion will
become a natural consequence of organisational development, rather than
reversal of power relations.
The research presented in this paper raised many questions. It demonstrated the
importance of the reverse diffusion of ideas in the development of core
capabilities and gaining competitive advantage by organisations. The process of
RD has also great relevance to a discussion on globalisation and can contribute
to the views of Amin (1997) and Holden (2002). Moreover, its importance for
other industries, whether product or service, should be recognised in the context
of globalisation.
This paper also pointed at some significant differences between evolutionary
and transformative reverse diffusion and their organisational implications.
However, there needs to be more research conducted into reverse knowledge
transfer for us to better understand the factors determining its outcome, and
support our discussion with more empirical results. The abundance of data to be
explored, as well as the fascinating nature of this subject, leaves the author
hopeful that some exciting accounts of this process will soon follow.
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Table 1. Factors affecting reverse diffusion
Evolutionary RD Transformative RD
Factors calling Keeping up with innovations Transformation of existing modus
for RD and specialised knowledge operandi,
developed in subsidiaries, Organisational culture change,
Development of core Organisational revival of the brown-
capabilities and gaining filed sites in decline,
competitive advantage, Significantly worse performance
Slightly worse performance results comparing to the subsidiary
results comparing to the (need to catch up),
subsidiary (need to improve), General restructuring of corporate
Professionalisation of staff, strategies and structures (Edwards
Expertise development, and Ferner 2004),
Ongoing or short-term Long-term commitment
commitment
Drivers Standardisation of operations High degree of strategic autonomy
across borders, vis-à-vis HQ (Birkinshaw et al.
Good communication 1998),
channels and strong network Openness to new ideas and
between the companies willingness to learn (domestic),
involved, HQ’s support and allocation of
Focus on continuous appropriate resources,
improvement, Emphasis on experiential learning,
Structures and procedures Movement of personnel across
supporting RD borders
Depressors Fear of losing competitive Fear of losing power, position of
position (subsidiary), privilege and/or status (domestic),
Low ability-based trust, Low ability-based trust,
Economically dominant Economically dominant position of a
position of a domestic domestic country
country
Results Continuous improvement of Increased (or new) competitive
company’s operations and advantage and core capabilities,
performance, Standardisation of products and
Professionalisation of staff, operations across borders,
Up-to-date expertise and Institutionalisation of ‘best’ practices
innovations, in a local environment,
Increased competitive Organisational revival (brown-filed
advantage and core sites in decline)
capabilities
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