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General Description of “World-Class”

In this chapter the committee describes the concept of world-class in general terms, drawing on examples from industry, academia, and government. The committee also defines the phrase world-class as it applies to research and development (R&D) organizations and identifies the major components of the definition, including a list of attributes likely to be shared by world-class R&D organizations.

USE AND MEANING OF THE TERM WORLD-CLASS

Webster's Collegiate Dictionary defines the phrase world-class as “being of the highest caliber in the world” (Webster's, 1995). The American Heritage Dictionary of the English Language (American Heritage, 1992) defines world-class as follows:

world-class adj. 1. Ranking among the foremost in the world; of an international standard of excellence; of the highest order; a world class figure skater. 2. Usage Problem [This label warns of possible difficulties involving grammar, diction, and writing style.]. Great as in importance, concern, or notoriety. USAGE NOTE: The adjective world-class became current as a result of its original use to describe athletes capable of performing at an international level of competition…In recent years it has been extended to mean “of an international standard of excellence” and has been applied to a wide variety of categories. When used of things that naturally admit such comparison, the extended use of the word is generally acceptable to the Usage Panel [a group



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WORLD-CLASS RESEARCH AND DEVELOPMENT: Characteristics for an Army Research, Development, and Engineering Organization 2 General Description of “World-Class” In this chapter the committee describes the concept of world-class in general terms, drawing on examples from industry, academia, and government. The committee also defines the phrase world-class as it applies to research and development (R&D) organizations and identifies the major components of the definition, including a list of attributes likely to be shared by world-class R&D organizations. USE AND MEANING OF THE TERM WORLD-CLASS Webster's Collegiate Dictionary defines the phrase world-class as “being of the highest caliber in the world” (Webster's, 1995). The American Heritage Dictionary of the English Language (American Heritage, 1992) defines world-class as follows: world-class adj. 1. Ranking among the foremost in the world; of an international standard of excellence; of the highest order; a world class figure skater. 2. Usage Problem [This label warns of possible difficulties involving grammar, diction, and writing style.]. Great as in importance, concern, or notoriety. USAGE NOTE: The adjective world-class became current as a result of its original use to describe athletes capable of performing at an international level of competition…In recent years it has been extended to mean “of an international standard of excellence” and has been applied to a wide variety of categories. When used of things that naturally admit such comparison, the extended use of the word is generally acceptable to the Usage Panel [a group

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WORLD-CLASS RESEARCH AND DEVELOPMENT: Characteristics for an Army Research, Development, and Engineering Organization of 173 well-known writers, critics, and scholars]. In the most recent survey 65 percent accepted the description world-class restaurant, and 53 percent accepted world-class sports car. But the expression is not generally accepted as a vague way of emphasizing magnitude or degree. The sentence Johann Sebastian Bach's 300th birthday will rank as a world-class anniversary was acceptable to only 7 percent, and only 4 percent accepted a description of AIDS as a world-class tragedy. These dictionary definitions do not fully satisfy the purpose of this study, which is to define world-class with respect to an Army RDEC. Therefore, to develop the concept of world-class further, the committee (1) consulted with representatives of industry, academia, and government; and (2) reviewed a large amount of written material on the subject. Highlights of these consultations and reviews are described below. A senior industry representative characterized a world-class company as one that is customer focused and dedicated to continuous improvement (Stempel, 1995). He explained that world-class is not to be confused with “best-in-class.” World-class is a balanced approach to excellence,1 whereas best-in-class refers to a superlative performance in a single category or attribute. A representative from academia characterized a world-class organization as one that can make “strategy, process, and structure all work together” (Gobeli, 1995). Another representative from academia highlighted the importance of human resources. He stated that “human resources are the distinctive core competencies” that characterize world-class organizations (Luthans, 1995). A representative from the Sandia National Laboratories with experience in the federal government highlighted the importance of value in R&D performance. He stated that R&D laboratories “need to focus more on R&D outcomes” rather than “outputs” (Gover, 1995a). By this he meant that the true measure of success for R&D is delivering a product or service of value to the customer. 1   A balanced approach is one that focuses on meeting a wide range of customer requirements, thus achieving a high level of overall performance. For example, General Motors Cadillac Division, a 1990 Baldrige Award winner, used this concept in designing the Cadillac Eldorado (Stempel, 1995). Consumer research defined a group of requirements for the car (e.g., concerning economy, acceleration, road handling, and human factors). Although this model did not have the acceleration of a “best-in-class” sports car or the economy of a “best-in-class” compact car, it was a world-class car because it met all the requirements of the target consumer.

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WORLD-CLASS RESEARCH AND DEVELOPMENT: Characteristics for an Army Research, Development, and Engineering Organization When referring to companies and research laboratories, many of the experts and sources available to the committee emphasized the link between an organization being customer focused and being world-class. In his recent book, World-Class Customer Satisfaction, Jonathan Barsky writes: “World-class companies understand what satisfies their clientele the most and utilize this information in customer programs and employee training to promote customer loyalty” (Barsky, 1995, p.6). For understanding the phrase world-class, the committee also found it helpful to review descriptions of several leading organizations and their paths to success. The following four examples were selected to illustrate a range of approaches to excellence. In 1981, Motorola Incorporated dedicated itself to a tenfold improvement in quality within five years (Main, 1994). After discovering that its competitors were capable of matching this level of quality, the goal was extended to a hundredfold improvement in 10 years. Motorola is a 1988 recipient of the Malcolm Baldrige National Quality Award. Today, Motorola is widely recognized as a leader in product quality and the use of benchmarking programs that analyze all aspects of a product (manufacturability, reliability, cost, and performance) to encourage continuous improvement. Also, Motorola is identified with what is perhaps the United States' most famous quality goal, the “six-sigma quality” standard. Six sigma, a statistical measure of deviation from a desired result, translates into a manufacturing target of no more than 3.4 defects per million products, customer services included. The company's goal is simple—“zero defects in everything we do” (World Wide Web, 1996a). Milliken & Company committed itself in 1981 to value creation through continuous improvement (Main, 1994). The company set goals for reducing defects, improving on-time delivery, shortening development times, and improving other internal processes. Today, Milliken & Company, a 1989 Malcolm Baldrige National Quality Award winner, is recognized as a world leader in the textile industry, both in product quality and technology. The Massachusetts Institute of Technology Commission on Industrial Productivity recognized Milliken & Company as “a front runner in research on performance fabrics” (MIT, 1989). FedEx Corporation, a 1990 Malcolm Baldrige National Quality Award winner, was founded in 1973 with a management philosophy that emphasized people, service, and profit (World Wide Web, 1996b). The FedEx quality-improvement process focuses on 12 service quality indicators linked to customer expectations. FedEx has invested heavily

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WORLD-CLASS RESEARCH AND DEVELOPMENT: Characteristics for an Army Research, Development, and Engineering Organization in advanced technology to handle the demands of its expanding business and to ensure customer satisfaction. The on-time delivery of more than 1.5 million packages each day is managed by scanning bar codes every time shipments change hands between pick-up and delivery. These data are incorporated into a daily service-quality-indicator report, which is transmitted to workers at all FedEx sites. In 1992, Intel Corporation became the world's largest manufacturer of semiconductors, the first time in a decade that an American company held that position. Intel took the lead by adopting and focusing on six guiding principles: (1) results orientation, (2) risk-taking, (3) discipline, (4) customer orientation, (5) product quality, and (6) recognition of employees as a fundamental strength (Main, 1994). Intel's effective management of R&D and manufacturing processes has allowed it to deliver new products to the marketplace consistently faster than its competitors. OBSERVATIONS The phrase world-class is widely used to describe products and services. However, world-class can reasonably mean different things to different people. To athletes, it means being competitive with the best athletes in the world. To General Motors, it means a balanced approach to excellence. To others, it means having and implementing a winning strategy, being able to anticipate customer needs, and meet those needs faster and with higher quality products than competitors can. The committee believes that world-class organizations generally have a balanced approach in that they perform very well in the areas of operation they choose to focus on, and exceptionally well in some of these areas. In addition, most world-class organizations do not try to cover all areas of operation. Finally, the committee believes that world-class organizations generally use the concept of world-class as a method of internal focusing to achieve excellence rather than as an external mechanism to advertise organizational virtues. Excellence is advertising enough. In the R&D field, it is important that strategy be compatible with the business objective (Deschamps and Nayak, 1995). In markets driven by product and process improvement, R&D strategies based on breakthrough research will probably not be successful. However, breakthrough research may be vital to technology-driven businesses.

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WORLD-CLASS RESEARCH AND DEVELOPMENT: Characteristics for an Army Research, Development, and Engineering Organization Also, it is especially important to distinguish between breakthrough research and commercialization. For example, many U.S. R&D organizations have conducted breakthrough research, but they have not done as well as others in terms of commercializing the results (Gover, 1995b). To grasp this point, one need only look at the U.S. experience with television sets and videocassette recorders vis-à-vis the Japanese. Based on a review of information from many sources, the committee developed the following definition of the phrase world-class as it applies to R&D organizations: A world-class R&D organization is one that is recognized by peers and competitors as among the best in the field on an international scale, at least in several key attributes.23 World-class R&D organizations maintain their performance by creating and sustaining certain critical competitive advantages. The committee identified the following competitive advantages:4 Strategic focus concentrates energy on unique competencies that can be used by the organization for an extended period of time (perhaps in multiple applications), thus providing a source of information and knowledge for generating productive output for the indefinite future. Technological leadership supports the strategic focus and ensures that the organization is able to generate new, state-of-the-art products and services with a continuous influx of new ideas. Identification of output is the ability to identify and define what will be needed over the next decade to accomplish certain outcomes and thus provide direction for all R&D activities. 2   This definition has some similarities to another definition, which indicated that the phrase world-class refers to an organization described as “the best in its class or better than its competitors around the world, at least in several strategically important areas” (Luthans et al., 1994). 3   The committee also notes that this definition should not be interpreted as a condition that can generally be satisfied by a simple voting process without analysis. If that were the case, there would be no need for components, characteristics, and metrics to define world-class. On the other hand, voting by peers and competitors who are well informed about a particular R&D organization and who know what it takes to be world-class could lead to the same results as an analysis (e.g., the peers and competitors may implicitly rely on similar metrics). 4   Readers interested in learning more about competitive advantages can refer to Porter, 1985.

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WORLD-CLASS RESEARCH AND DEVELOPMENT: Characteristics for an Army Research, Development, and Engineering Organization Staying the course means persistence, staying with the agreed agenda, maintaining the strategic focus, and not being distracted from the central mission of the R&D organization. A highly stable work force ensures that the same personnel will be working together for an extended period of time and can learn from and draw on each other's talents. Continuous improvement is an imperative for becoming a leader and maintaining leadership indefinitely by (1) continuously improving current activities, and (2) expanding the scope of activities to include new areas of inquiry that result in radically new products or services. The committee concluded that world-class R&D organizations are likely to excel in five key attributes: (1) customer focus, (2) resources and capabilities, (3) strategic vision, (4) value creation, and (5) quality focus. These attributes are the pillars that support a world-class R&D organization. The competitive advantages result from excellence in these pillars (the five pillars are discussed in Chapter 3). The committee strongly believes that the pillars must rest on a foundation of demonstrated, strong, and steadfast commitment. This commitment is characterized by openness at all levels to exchanging information, facilitating interaction, and bringing all individuals in the organization into the process of analyzing goals, defining methods, and implementing procedures. This commitment usually mandates a shift in the operating paradigm of the organization and must be communicated throughout the organization, sending the message that the entire organization, individually and collectively, from the highest management to the lowest staff levels, recognizes the benefits of striving to be world-class. It dictates an allocation of time and resources—principally, people and dollars—to the systematic implementation of details required of a world-class organization. Without this commitment, only lip service can be paid to the concept and goal of world-class performance. Lip service is obvious in an organization that claims to be world-class but makes no deliberate, focused efforts to achieve it. Figure 2-1 shows the relationship between the major components of a world-class R&D organization. These components, starting at the base, are a demonstrated commitment, the five pillars, and the competitive advantages. The committee believes that the base—a demonstrated commitment—is the most important component. Without a demonstrated commitment, reaching or maintaining world-class performance will be doomed.

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WORLD-CLASS RESEARCH AND DEVELOPMENT: Characteristics for an Army Research, Development, and Engineering Organization FIGURE 2-1 Relationship of the components of world-class R&D organizations. Note: Figure 2-1 is intended to describe the relationship of the components that the committee judged to be mandatory considerations for a world-class R&D organization; the figure is not meant to convey organizational structure. The central components were considered by the committee to be absolute, rigid supports for world-class performance and, therefore, were deliberately portrayed as pillars. Portrayal of these components as pillars clearly does not preclude their implementation through a flexible, open, productive, and supportive organizational structure. In fact, the metrics proposed in Chapter 4 for assessing the strength of each pillar reflect the committee's understanding and validation of an organizational structure that achieves the world-class objective. REFERENCES American Heritage. 1992. American Heritage Dictionary of the English Language.Third Edition. Boston and New York: Houghton Mifflin. Barsky, Jonathan. 1995. World Class Customer Satisfaction. Burr Ridge, Ill. and New York: Irwin Professional Publishing.

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WORLD-CLASS RESEARCH AND DEVELOPMENT: Characteristics for an Army Research, Development, and Engineering Organization Deschamps, Jean-Philippe and P. Ranganth Nayak. 1995. Product Juggernauts: HowCompanies Mobilize to Generate a Stream of Market Winners. Boston, Mass.: Harvard Business School Press. Gobeli, David. 1995. World Class R&D at Natick RDEC. Presentation to the World-Class Panel of the National Research Council Standing Committee on the Program and Technical Review of the U.S. Army Natick Research, Development and Engineering Center. Washington, D.C. December. Gover, James. 1995a. World-Class R&D Performance: A synthesis of relevant research, opinions, and ideas . Presentation to the World-Class Panel of the National Research Council Standing Committee on the Program and Technical Review of the U.S. Army Natick Research, Development and Engineering Center. Washington, D.C. December. Gover, James. 1995b. Corporate Management of R&D—Lessons for the U. S. Government. Research-Technology Management. 38 (2): 27–36. Luthans, Fred. 1995. Summary Outline of World-Class Management. Presentation to the World-Class Panel of the National Research Council Standing Committee on the Program and Technical Review of the U.S. Army Natick Research, Development and Engineering Center. Washington, D.C. December. Luthans, Fred, Richard Hodgetts, and Sang Lee. 1994. New Paradigm Organizations: From Total Quality to Learning to World-Class . Organizational Dynamics. 22 (3): 5–19. Main, Jeremy. 1994. Quality Wars: The Triumphs and Defeats of American Business. New York: Free Press. MIT. 1989. The MIT Commission on industrial Productivity.Working Papers. Volume 2. Cambridge, Mass.: MIT Press. Porter, Michael. 1985. Competitive Advantage. New York: Free Press. Stempel, Robert. 1995. Highlights of Total Quality Management: Philosophies and Applications . Presentation to the World-Class Panel of the National Research Council Standing Committee on the Program and Technical Review of the U.S. Army Natick Research, Development and Engineering Center. Washington, D.C. December. Webster's. 1995. Merriam Webster's Collegiate Dictionary. Tenth Edition. Springfield, Mass.: Merriam Webster, Inc. World Wide Web. 1996a. http://www.nist.gov/quality_program/doc/Win/ Motorola_Inc.html World Wide Web. 1996b. http://www.nist.gov/quality_program/doc/Win/ Federal_Express_Corporation.html .