CENTER FOR QUALITY OF MANAGEMENT JOURNAL
Creating the New Center for
Thomas H. Lee is President of the
CQM and has been trying to integrate
TQM methods and Ackoff’s strategic
planning process since 1989.
•••
Tody Woll is Executive Director of the
CQM and led the CQM team through
the idealized design process de-
scribed in the article.
1
Thomas H. Lee and David Walden,
“What Is the Center for Quality
Management,” CQM Journal, Vol. 1,
No. 1, 1992.
Volume 4, Number 2
Quality of Management
^
by Thomas H. Lee and Toby Woll
“Whatever we want something to be right now
includes what we expect of it in the future.”
– Russell L. Ackoff
What compels an organization to revisit its strategic intent? Manage-
ment often will question an organization’s direction when faced with
poor business results. In 1994, however, the Center for Quality Man-
agement reexamined its direction at a time when the organization was
very successful and not in distress. This planning effort afforded CQM
a unique opportunity: to reassess our strategic direction and at the same
time to run an important experiment in combining Total Quality Man-
agement techniques with a sophisticated planning methodology. This
article will describe the background, the process, and the outcome of
this effort.
The Background
The Center for Quality Management was founded in December 1989 as
a membership organization whose purpose was to make its member
companies more competitive by training their executives in Total Qual-
ity Management.1 By the end of 1993, CQM had developed substan-
tially. Indeed, one could argue that CQM was a success by all conven-
tional means.
CQM at the end of 1993
As a snapshot of some of the key metrics at the end of 1993:
• CQM’s membership had increased from 7 to 43 member companies.
This growth met the planned pace and targets set by the Board of
Directors and was achieved with full adherence to the requirement that
the senior executives of each new member company take the 6-Day Course.
• Senior managers from CQM member companies had volunteered and
successfully taught 626 other managers through the 6-Day Course.
• CQM had developed new products and services to meet member needs
as they arose.
• All CQM members were participating in either networking
activities or research efforts, or both.
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2
• At the urging of key members in California, a West Coast chapter was It is interesting to note that in 1993, 70
being planned, for formal launch in January 1994. of Japan’s foremost TQC experts
• CQM, as a nonprofit corporation, had achieved a responsible fund gathered in Tokyo to discuss the
surplus to insure its long-term viability. weaknesses in TQC. Shoji Shiba was
among them. At that time, they
concluded that TQC did not offer
Initial Strategy of CQM
methodology for strategic planning.
Clearly, Hoshin management offered a
For the first four years of CQM’s existence, members focused on learn-
powerful deployment methodology
ing about and implementing Total Quality Management as a manage-
for aligning organizational efforts
ment system. During the initial planning of CQM in 1989, however, the
around key breakthrough goals.
founding members had considered a more comprehensive plan. As part
However, the question still remained,
of this plan, an early objective had been to incorporate a strategic plan-
where do the Hoshin goals come from?
ning process into TQM.2 The planning process called Idealized Design,
Is it enough to count on the wisdom of
developed by Russell L. Ackoff and his colleagues, was introduced along
the CEO?
with TQM to some of the founding member companies. 3 But these com-
panies still lacked a full understanding of either TQM or Idealized De- 3
Russell Ackoff has created a very
sign methodology and could not verify that the two approaches were
comprehensive approach to strategic
complimentary. People questioned the wisdom of introducing what they
planning and implementation called
perceived as two different methodologies at the same time. In the face
Interactive Planning. Idealized Design
of this confusion, Ray Stata, Thomas Lee, and Shoji Shiba jointly de-
is the part of the methodology used to
cided to focus only on TQM as CQM got underway.
generate the plan for the organization.
As a whole, Interactive Planning is a
Preliminary Work on Idealized Design Planning Methodology systemic approach that focuses on
management of the interaction
Tom Lee, however, continued to explore the possibility of combining between the parts of the organization
strategic planning with the operational power of TQM. Once compa- to achieve the strategic objectives of the
nies in the CQM family were familiar with TQM, the expectation was whole.
that they would need the integrated package and would value the
complementary nature of the two methodologies. During 1991, the ex-
ecutive committee of Bolt Beranek and Newman (BBN) studied Ackoff’s
approach; and David Walden, then Senior Vice President, wrote a white
paper on the relationship of TQM and Idealized Design methodologies.
In 1992, a two-day meeting took place at Russell Ackoff’s Institute of
Interactive Management (INTERACT) in Philadelphia. Attending from
CQM were Ray Stata (CEO, Analog Devices); Steve Levy (CEO and Presi-
dent, BBN); Tom Lee (President, CQM); Dave Walden (Chief Quality
Officer, BBN); Professor Shoji Shiba (CQM and MIT); Mike Bradley (To-
tal Quality Manager, Teradyne); and Gary Burchill (MIT). Russell Ackoff,
Jamshid Gharajedaghi, and two associates from INTERACT also at-
tended. At the end of two days, it was agreed that CQM and INTER-
ACT would launch a joint effort to develop a strategic alliance between
our two organizations. Tom Lee wrote a paper celebrating that agree-
4
ment in the CQM Journal.4 Thomas H. Lee, “Systemic Approach
Between 1991 and 1994, six experiments in Idealized Design were to Management: TQM and Planning,”
conducted at the following organizations in the following order: CQM Journal, Vol. 3, No. 4, 1994.
See also Thomas H. Lee, “How the
• Carrier Corporation Technology of TQM Breeds Joy in
• Software Division of Bolt Beranek and Newman Inc. Work,” CQM Journal, Vol. 2, No. 1,
• Analog Devices, Inc. 1993.
• COM/Energy
• CQM

A Logistic Support Operation of the U.S. Navy

The projects had different degrees of success, but they were invaluable
to our learning process. At the beginning of the six experiments, CQM
merely observed how Jamshid Gharajedaghi conducted the design pro-

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cess. Gradually, TQM tools for processing language data — such as the
LP method, MPM method, the tree diagram, and matrices — were in-
troduced into the process. By the fifth experiment, the Idealized Design
of CQM was done without facilitation by INTERACT. The sixth experi-
ment was also done in a similar way. At the end of the sixth experiment,
we were confident that a combined planning and operational system
could be offered to the CQM family. To introduce this concept, CQM
held a one-day Idealized Design Overview Seminar for the West Coast
Chapter members on February 23, 1995.
This paper describes the results of the fifth Idealized Design experi-
ment, in which we created a strategic plan for the Center for Quality
Management. The process led to a clarification of CQM’s strategic in-
tent and necessary improvements in CQM’s operation. We’ll begin with
a brief overview of the Idealized Design Planning process.

A Brief Description of the Idealized Design

Planning Process
There are three major elements in the Idealized Design Planning pro-
cess: (1) the Mess Formulation, (2) the Idealized Design and (3) the Means
Planning. According to the Ackoff methodology, two different teams
undertake the work. The members of the Mess Team are usually out-
standing managers, likely to be the leaders of the company in the fu-
ture, who have excellent operational knowledge. The Design Team con-
sists of the senior management and may include members of the
company’s board of directors. Usually the Mess Team managers start
their Mess Formulation process first but do not present their findings to
the Design Team until the Idealized Design is complete. The Mess then
acts as a reality check for the design. The design must completely dis-
solve the Mess before the Design Team can consider its job complete.
Finally, in Means Planning, the Design Team studies the obstacles to
achieving the design and plans how, by successive approximations of
the Idealized Design, the organization can move forward.
Detailed descriptions of the Idealized Designed Process and how Total
Quality Management tools can be helpful in this process will appear in
a companion paper in a special issue of the CQM Journal dedicated to
Idealized Design and its integration with TQM. For just a brief preview
of how the TQM and Idealized Design methodologies fit together, refer
to the Afterword of this article.

Mess Formulation

Figure 1 (next page) shows the steps of the Mess Formulation. There are
three major steps for gathering and analyzing information:
System Analysis
In this step, the Mess Team takes a comprehensive look at the current
internal and external situations. The inquiry is holistic; the team exam-
ines the functions, processes, and structures of the organization as well
as the environment, including the company’s stakeholders, competition,
and industry characteristics.
Obstruction Analysis
The purpose of this inquiry is to find the obstructions both internal and
external that prevent the organization from accomplishing its objectives.

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Figure 1 is a Diagram of the Mess Formulation Process

System Dynamics

This analysis is different from the conventional model building in sys-

tems dynamics. In Mess Formulation this step requires that the team
analyze the major trends and directions to suggest what may happen if
the organization make no changes to respond to the changing environ-
ment.
After these three information-gathering steps, the next step in the
Mess Formulation is to Map the Mess. Mapping is a synthesizing pro-
cess designed to reduce the complexity of the Mess to an expression of
the critical interdependent problems. The Mess Team carefully studies
the interdependence of the problems and endeavors to understand the
“second-order machine” — the underlying cause for the organization’s
Mess and that which restricts the organization’s ability to change and to
respond to new environments.
Mess Formulation is very difficult, because its weakness orientation
is much harder than the weakness orientation in reactive problem solv-
ing in TQM. In Mess Formulation you are confronting system failures,
management issues, and interdependent problems that, by their nature,
5
cannot be solved individually. Mess Formulation requires what Chris Chris Argyris, Facilitating
Argyris calls double-loop learning.5 We found, however, that the most Organizational Learning (Englewood
important thing to understand is that the Mess is invariably the result of Cliffs, NJ: Prentice Hall, 1990) 91-94.

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past successes. A system grows and solidifies in a way that initially
works extremely well. Success encourages people in the organization
to maintain the status quo. Then, when the environment changes, this
solidification becomes a threat to the organization’s existence.

Idealized Design

Figure 2 diagrams the elements of the Idealized Design process. First,

the Design Team must establish the context in which the new design
Figure 2 is a Diagram of the Idealized Design Process

must exist. They must examine:

• The stakeholders and their expectations, and
• The current business environment with its drivers for change, risks,
and opportunities.
The basic rules for creating the Idealized Design are that the existing
organization has disappeared overnight; the new design must be viable
given today’s stakeholders and business environment; and the technol-
ogy required must exist; the new organization must be capable of “learn-

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ing” as it goes forward. The steps in the design process are to design:
• The purpose of the organization — i.e., its mission and vision — and its
criteria of success;
• The appropriate product and market mix to achieve the mission;
• The organizational architecture capable of delivering the products to the
markets; and
• The critical processes to ensure the viability of the organization.
The process of design must be iterative, because one cannot answer any
one of the questions without having some knowledge about the answers
to the other questions.

While the Mess Formulation is difficult because its weakness orienta-

tion is hard to accept, the Idealized Design process is also difficult be-
cause of another cultural issue. The story Russell Ackoff loves to tell is
how Pogo went into the forest to search for the enemy. When he came
out, his friend asked him whether he had found the enemy. His answer
was, “Yes.” When asked, “Who are they?” Pogo replied, “They is us!”
Our difficulty with Idealized Design is to overcome self-imposed con-
straints. Indeed, there are real constraints that we cannot do very much
about. But there are also self-imposed constraints that we only think are
real. The Idealized Design process is designed to help us understand
which is which. In reality, freeing ourselves from self-imposed con-
straints in order to design an ideal turns out to be the second-most diffi-
cult challenge in the process.
I (Lee) want to tell a personal story at this juncture. In 1974, I became
the chief planner for General Electric’s energy business. Nuclear energy
was one of my major responsibilities, and GE was in the process of los-
ing $1 billion on its nuclear program. My approach to the problem was
heavily influenced by two people. The first was my boss, who told me
that I was allowed to think the unthinkable. The second was an advisor
who said to me, “Tom, the United States has just mad a major policy
change. Previously, U.S. national policy was to promote the peaceful
application of atomic energy. Now, the government has pulled back
from that effort. Why don’t you say that the GE nuclear program was
GE’s attempt to be a good corporate citizen in supporting the national
policy — but that now, since this is no longer the national policy, GE
wants out?” I went to my boss and said, “I want an analysis done on
our legal liabilities if we decide to announce that we are getting out of
the nuclear power business.” He supported the idea. As it turned out,
GE did not make the announcement, because the potential legal risk
was too great; and eventually we did come up with a strategy that, be-
lieve it or not, made the nuclear business one of the most profitable op-
erations for several years. By undertaking the study, however, we caused
an interesting cultural shift. By asking the people in the operation to
think the unthinkable, we helped create a climate for thinking without
constraints. This culture continued to flourish in the organization, long
after the triggering study. As we introduce Idealized Design in to the
CQM family, we must somehow foster this cultural change in our mem-
ber organizations.

Idealized Design Planning at CQM

We selected CQM as the subject for the fifth experiment in Idealized
Design Planning for three reasons. (1) The business environment had
changed significantly in the four years since CQM’s inception, and our

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strategic direction needed to be reexamined. (2) We wanted to test
whether CQM could successfully undertake the planning process with-
out the expert guidance of an INTERACT facilitator. And (3) we wanted
to develop a case that could be used as an example of a planning pro-
cess in future training sessions. Unlike the results of reactive problem
solving in TQM, which are not difficult for members to share with one
another, the actual outcome of an Idealized Design Planning process
would contain information too sensitive for a member company to share
with others as a detailed case.
During the CQM experiment, the same people acted as both the Mess
Team and the Design Team. The team members were: from CQM, Silja-
Riitta Dandridge (Executive Assistant and Registrar), Phil Gulley (Di-
rector of Educational Programs), Thomas Lee (President), Donna McGurk
(Manager of Information Systems), Shoji Shiba (Advisor and Board of
Directors), Ted Walls (Manager of Research and Publications), and Toby
Woll (Executive Director); and from Bose Corporation, Warren Harkness
(Directory, Total Quality) and Ilene Ringler (Manager, Corporate Edu-
cation and Training).
Over seven months the team met 14 times for a total of 47 hours. In
addition, team members worked individually and in small groups to
assemble data and to document the steps.
In the interests of conveying the outcome of CQM’s planning pro-
cess as a direct result of following the Idealized Design Planning meth-
odology, we will present the conclusions reached by the team in the same
order as the planning process.

The Mess Confronting CQM

As the team analyzed CQM’s products and services and our successes
in delivering them to our members, we had a clear picture of some of
our weaknesses. To give a taste of the obstacles that we expressed:
• As the member population had evolved over four years, the maturity and
status of TQM implementations began to duffer greatly among member
companies. Some of the later members were extremely well along in
their quality journey, while others were just beginning. But we had a
homogenized set of offerings for this diverse set of members.
• Some member companies needed additional help in TQM implementa-
tion. What the senior managers learned in the 6-Day Course was not
enough to enable them to guide a company-wide program without
midcourse support.
• As the number of members grew, we did not continue to have clear and
intimate knowledge of the state of implementation in each of the member
companies.
• While the 6-Day Course was well received by senior executives, the
penetration of understanding and skill among midlevel management was
inadequate.
• There were signs that the demand for the 6-Day Course, the core course
offered by CQM, was dwindling among the older member companies
and that CQM’s revenue would drop dramatically with limited member-
ship growth. At the same time, the falling demand for the 6-Day Course
did not replect a lack of need for help in TQM implementation.
• The book A New American TQM had been published, and the CAES-MIT
tape series by Shoji Shiba had been released. Many requests for help were
coming from nonmember companies. But by our own charter we could
not serve these requests.

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Figure 3 is a Map of 5 Key Problems that Confront the CQM.

Figure 3 shows the map of the Mess after the group had gone through
the Mess Formulation process. How this was done will be described in
the companion paper mentioned earlier.
For this paper, let us illustrate the interdependence of these prob-
lems by tracing one path through interrelationships among the compo-
nent problems of the Mass. (Refer to figure 3 as needed.)
• One of the problems identified was that we lack resources for essential, dis-
cretionary, and advanced work (Problem V). This problem is related to…
• Our self-imposed constraint of working only with members eliminates
the possibility of getting revenue from other sources (Problem IV)…
• Our members are reluctant to invest in necessary advanced work until
the results of their TQM implementation have been decisively proven
(Problem II)…
• The lack of resources prevents us from recruiting key expertise and re
sources to help the member companies improve their TQM implementa-
tion (Problem III)…
• And, lacking adequate communication with our members, we are not
able to document successfully the achievable successes from TQM
programs (Problem I)…
• At the same time, increasing available resources by increasing the number
of members through aggressive recruitment further damages our
communication with member companies (back to Problem V)…

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The problem goes around in circles — our important points are:
• Problems in the Mess are interdependent. Taking action to solve any one
alone can adversely affect the others.
• The Mess is a result of our past success. CQM’s design was based on our
being a member-driven, member-run organization with only seven
member companies, all of whom were at about the same level of
maturity in TQM implementation. The original CEOs were intimately
involved in every facet of CQM’s activities. But, the growth of CQM,
which was a natural outcome of its members’ success, resulted in an
erosion of the capability of the system to stay on track.

CQM’s Changing Environment

To begin the Idealized Design Planning process, the CQM team studied
the current business environment, the nature of the competition, and
the drivers for change.
Competition with Japan surfaced as a critical issue in the 1980s, when
the United States found that the automotive, electronic devices, and con-
sumer electronic sectors were losing significant market share to Japan.
There was a general rush to learn how the Japanese managed their en-
terprises. The U.S. givernment introduced a national award, the Malcolm
Baldrige Award, to stimulate improvement in American management.
Some early winners, like Xerox and Motorola, testified to the power of
Total Quality Management. All of a sudden, in typical American fash-
ion, TQM became a household word. When CQM was founded in 1989,
the rush was about at its peak. CQM had to turn down applications for
membership because of our limited capacity to serve a large number of
companies.
Within three to four years, however, the environment changed con-
siderably. The results of TQM’s implementation were, at best, confus-
ing. There were some significant success stories, but there were also
disappointments. At the same time, Japan experienced the worst eco-
nomic recession in the postwar era. Questions were raised about how
powerful TQM really was and why it had failed to fulfill people’s high
hopes. Some noted academics proposed that TQM offered only incre-
mental improvement and that breakthrough improvement was what the
U.S. economy needed. The United States was culturally more comfort-
able with breakthrough types of activities.6 Reengineering was proposed 6
Thomas H. Lee, “TQM Myths,”
as the solution to our industrial ills. But, less than two years since the unpublished (1995). See also David
introduction of reengineering, doubts are surfacing about its viability as Walden, “Breakthrough and
the silver bullet for American industry. Continuous Improvement in Research
There are many possible explanations for these conflicting results and and Development — An Essay,” CQM
directions: Journal, Vol. 2, No. 2, 1993.
• Our love for a “plug-in” concept of management. With typical optimism,
many Americans would like to believe that it is possible to plug in what
consultants have to offer like an appliance. As a result, management
often fails to invest in the necessary study and practice to develop skill
and to effect real change.
• The increasing variety of solutions. As corporate America asks for more
guidance about how to improve its management systems, the number of
experts offering solutions increases to satisfy the demand.
• Our strong appetite for the menu of the month. Given an ever-increasing
variety of approaches, management tends to shift from approach to
approach as the popularity of one guru eclipses the luster of the prior one.
• The failure of many CEOs to understand TQM and the role they must

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play in its implementation. In many failed attempts, the need for the
active involvement of top management was sadly underestimated.
• The lack of academic research to support and improve our knowledge
about TQM as a management system. Having com “from the field,”
TQM has been mainly overlooked as a legitimate area for research and
development in our academic institutions.
We felt that the changing environment had to be addressed if CQM
was to fulfill its objective of making its member companies more com-
petitive. The known weakness of TQM had to be addressed. As knowl-
edge about markets improved, products had to change also. Small com-
panies had to have appropriate strategies; service companies needed
their own approach. And, where possible, strategic alliances would re-
duce rather than exacerbate the confusion of multiple suppliers.

CQM’s Stakeholders

Who are CQM’s stakeholders, and what are their expectations? The
team identified and analyzed seven stakeholder groups. Our conclu-
sions are best summarized in figures 4 and 5.

Figure 4: Stakeholder Analysis I.

The companies with mature TQM programs and the “gurus” (thought
leaders) are critical to CQM’s success. The both have:
• High influence (voice in CQM’s directions) and high leverage (ability to
contribute), and
• Great importance to CQM’s success, and significant degrees of
independence.

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Figure 5: Stakeholder Analysis II.

There is a key synergy between the thought leaders, who wnt to see
their ideas produce verifiable results, and the lead companies, who need
guidance as they put advanced theory into practice. The CQM directors
need to play a key role in promoting CQM and ensuring its longevity.
Finally, companies new to TQM are the new market for the knowledge
and offerings whose proven worth is based on the experience of the
innovative companies.

CQM’s Mission and Vision

Clarifying CQM’s mission and vision was the step that gave the Design
Team the most difficulty. Yet this is perhaps the most important step in
strategic planning. We were most impressed by the story of the break-
through experienced at Anheuser-Busch when they defined their mis-
sion as helping people enjoy leisure time. It was thanks to this redefini-
tion of the Anheuser-Busch mission that an amusement park became as
natural a part of their operation as the brewery.
Faced with the difficulty of the task, the CQM team agreed to use an
image LP with the theme, “What are our images of our trip to the ideal
CQM of the future?” The high-level titles that came out of the image LP
were:
• “With CQM there are Platos and Socrates all around to guide me.”
• “When E. F. Hutton (CQM) speaks, everyone listens.”
• “Olympic veteran competitors gather to inspire and help others.”
• “I can access CQM as easily as I can reach the person at the next desk.”
• “The ‘CQM Learning Exchange’ is like being in an agitated melting pot.”

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The image LP made it relatively easy to come up with a new under-
standing of what CQM’s mission must be. Figure 6 diagrams the ele-
ments of the new mission for CQM.

Figure 6: The Complete Transformation Process

Let us explain this diagram by relating it to CQM’s original mission:

The mission of the Center for Quality Management is to promote the
use of quality management by creating a network of like-minded
organizations who will share their knowledge and experience. The
long-term objective is to help society better understand how to improve
the performance of human systems.
Given the original mission, CQM has been quite successful. We
trained 1019 senior executives in four years (by the end of 1994). Many
of them are leading the TQM implementation in their own companies.
A significant number have demonstrated their dedication by personally
teaching in the 6-Day Course. And we have organized many network-
ing activities to facilitate mutual learning. These activities appear in the
first two quadrants in the diagram, showing the process of “diffusion”
of new knowledge.
However, our new perspective on organizational transformation in-
dicated that the old mission is no longer enough. Our purpose ulti-
mately is to support our member companies as they transform them-
selves into world-class competitive organizations in the global environ-
ment. To do this, the Design Team decided, CQM must extend its mis-
sion to address the last two quadrants in figure 6. We must be prepared
to help the companies complete their transformation process (quadrant
3); and, when they have mastered the implementation of TQM as we
know it today, we must help companies move on to the next level of
competence in their ever-evolving management system, always build-
ing on and consistent with their prior achievements. This is the chal-

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lenge in the fourth quadrant of the diagram. To summarize, the new
CQM mission has three critical strategic elements. First, CQM facilitate
the total transformation cycle. In doing this, CQM must offer additional
products and services that help organizations overcome predictable
hurdles. Then, based on its members’ experience, CQM can help com-
panies identify areas of weakness and integrate the best management
practices to build on their current practices. Finally, having the capabil-
ity to diffuse proven knowledge more successfully, CQM can support a
larger audience and facilitate continuous learning to be capitalized upon
by society as a whole.

CQM Product/Market Mix

The Design Team evaluated the possible markets for which the new CQM
strategic intent would be appropriate. We used several criteria to judge
the attractiveness of different market sectors to CQM. We analyzed the
characteristics of different categories of potential customers. We evalu-
ated the contribution that each potential CQM product could make in
its target markets. And finally, we correlated CQM’s ability to offer dif-
ferent competitive products with the markets’ need for the products.

New Products

CQM will continue to provide the TQM courses and networking that
have been the foundation for its success. In addition, the team has iden-
tified new products CQM needs to offer to support companies that are
in the third quadrant of the transformation cycle (refer to figure 6).
First, to provide a leg up for organizations to get over the known
hurdles, CQM can offer diagnostic and advising services as well as course
that target known deficiencies.
First, to provide a leg up for organization to get over the known
hurdles, CQM can offer diagnostic and advising services as well as
courses that target known deficiencies.
For example, in 1994, CQM started a pilot experiment to diagnose
TQM implementation in a volunteer member company. A team of ex-
perts was assembled, including Shoji Shiba, A Deming examiner; and
John Petrolini of Teradyne and Bob Stasey of Analog Devices, both
Baldrige examiners. We had decided that CQM’s diagnosis service would
differ from the well-known Baldrige and Deming Award assessments
in two aspects:
• The purpose would be not to evaluate the perfection of the quality
system but rather to diagnose the degree to which it was able to
contribute to the desired business results.
• The team would be prescriptive and would offer recommendations about
how the organization could proceed to improve.
The first experiment was quite successful, and we are now prepared
to move forward in offering this service.
Second, to amplify our existing Concept Engineering advising ser-
vice, CQM will offer facilitation in other challenging methodologies. For
example, Idealized Design Planning is an area in which members may
want to take advantage of expert facilitation. What is common between
Concept Engineering and Idealized Design is that the content of the
material under discussion is often too sensitive for the direct mutual
learning environment. So, to create in-house capability, it is important
to let the learning take place in the context of the organization’s own
problem-solving activity.

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Finally, CQM will offer courses that target problem areas identified
by many member companies in TQM journeys. As examples, a TQM
overview for middle managers, training in facilitation skills, and instruc-
tion in how to apply TQM methods to solving the daily problems of man-
agement are courses that will help CQM members move forward.
Moving on now to the fourth quadrant, the effort to combine the
Idealized Design process with TQM is symbolic of the new products
and services that are called for as members are ready to push ahead.
There are two aspects to this challenge, First, CQM must practice what
it preaches. We must continually ask questions like:
• What are the weaknesses in the TQM we teach today?
To answer this question, we have to come up with the following list:
• Strategic planning is not part of TQM.
• Organization design concepts are weak.
• Time is not discussed as an independent factor.
• Although TQM itself is a successful way to implement the social model
for management, there is a lot of “soft stuff” that still needs strengthening:
Conversion Management
Conflict Resolution
Leadership
Design of Measurement System
Appraisal Systems
Mentoring or Coaching
To address these deficiencies, however, we must also address weak-
nesses in management science and practice community. We refer to the
weaknesses of the “gurus”:
• The gurus talk eloquently about what is wrong, but often offer
considerably less on what to do.
• Although the gurus talk about systems, the solutions they offer invariably
focus on only one or at most a few elements of the whole.
• Gurus do not talk with each other. Therefore, they do not integrate their
teaching with the teachings of others to provide a practical and
comprehensive operating system for practicing managers.
In other words, managers are left with the challenge of choosing
among gurus and the gurus’ approaches that are very difficult to inte-
grate. This leads us to the menu-of-the-month phenomenon.
What product, then, can CQM offer to satisfy the fourth quadrant?
After providing an arena for the weaknesses or the missing parts to be
identified, CQM and “gurus” must undertake to identify and integrate
the best new knowledge into a self-consistent system for management.
Our first step is to merge TQM and Idealized Design methodology. With
the same purpose in mind, study groups have addressed other subjects
like conversation management, system dynamics, leadership, conflict
resolution, and so on. Building new knowledge onto and integrating it
with existing capabilities is the basic strategy for the fourth quadrant in
figure 6.

New Markets

From our analysis, we concluded that CQM is best able to provide value
to four major markets: the manufacturing and services companies and
health-care and education institutions.
But the team also decided that it was important to commit to making
significant improvements in the area of member relations. It was clear
from past experience that the greatest benefit to the members and to the

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learning system as a whole comes when CQM knows members well,
understands their plans, and engages in an ongoing dialogue about what
members can contribute and, more significantly, what they need in or-
der to progress. So, as part of the new design, the team has planned a signifi-
cant commitment to enhancing the member relations activities of CQM.
We further decided that there were compelling reasons to remove
some of our self-imposed constraints on our membership structure. In
order to be responsive to the needs of different organizations, we will
now have three classes of membership:
• Full membership will continue to offer the full benefits of membership as
they exist today.
• We will now offer Associate membership to organizations that want only
to take advantage of the TQM courses that are currently offered by CQM
and do not want to participate in networking activities or new areas of
learning. Typical Associates will be organizations that are geographically
distant from CQM’s centers; that are interested only in learning about a
limited area of CQM’s offerings (e.g., Concept Engineering); or that do
not yet have top management involvement and therefor are not eligible
for full membership.
• Nonprofit groups and universities will be able to be CQM Affiliates. This
relationship will enable these institutions to offer CQM courses to their
constituencies and to begin to build learning networks. Consortia in
Norway, India, and Indonesia have already said that they would like
to form this type of affiliation.
Creating this broader range of options for participation in CQM of-
fers us the opportunity to diffuse responsibly the exceptional knowl-
edge generated by the CQM family during the first five years. How-
ever, the design requires that we serve these markets without increasing
the burden on the full members, who will continue to constitute the
learning laboratory.

CQM’s Organizational Architecture

We reexamined CQM’s organizational structure. What structure would

allow us to accomplish our mission and to deliver the full range of prod-
ucts and services to the selected markets? We found a revolutionary
way of thinking about CQM’s organizational design in the multidimen-
sional structure proposed by Ackoff et al.
Ackoff suggests that every organization has three dimensions: a tech-
nology or input dimension, a product/service or output dimension, and
a market dimension.

Figure 7: The Three Dimensions of

Organizations.

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As shown in figure 7, one of these dimensions tends to be the domi-
nant dimension. For example, Martin Marietta serves the defense mar-
ket. Therefore, its products and technology are selected and developed
to serve the needs of that market. When one dimension is dominant,
the other dimensions tend to be sub-optimized. In addition, whenever
the organization wants to focus on one of the non-dominant dimensions,
the company must reorganize. This results in tremendous dislocation
and disruption. Ackoff suggests that we look at the interaction between
the elements of the organization, rather than the hierarchical relation-
ship. If each part of the organization is in fact part of an internal mar-
keting system, each part “buying from and selling to” the other parts,
no dimension will dominate at the expense of the others, and each part
will develop in a competitive fashion.
Following Ackoff’s model, the Design Team redesigned CQM’s or-
ganization using a three-dimensional diagram that allowed us to focus
on the interrelationships between the elements of the organization. Fig-
ure 8 shows the organization we plan to implement in 1995.
Figure 8: CQM’s New Architecture.

We carefully explained the expectations and responsibilities of each

element of the architecture relative to the other parts. For instance, on
the input axis, functions (such as event logistics and information ser-
vices) that are common to more than one of the CQM’s products or ser-
vices are included in a core, shared service. With this design, we can

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easily apply the expertise gained while running one type of event to
running all CQM events. Moreover, as CQM grows, the shared service
unit can develop outsourcing capability to allow for expansion. The
output or product axis relies on the people responsible for producing
CQM products and services to create an attractive package for mem-
bers. Finally, along the customer relations axis, the member relations
function is responsible for acting as the members’ advocate into the sys-
tem and for identifying new topics and opportunities to meet the vari-
ety of members’ learning needs.
There are three levels of managing bodies in the new design, two of
which are shown in the diagram. First, the Board of Directors will con-
tinue to create the decision rules for the CQM. Similar to a coach on a
football team, the board will call the plays. Next, the Opportunity Dis-
covery Board is a new group responsible for looking forward and iden-
tifying directions and future sources of knowledge. Referring back to
figure 6, the Opportunity Discovery Board will be very important to the
work in the fourth quadrant of transformation. Finally, a CQM staff
team will manage the synergy between the parts of the organization.

Critical Processes

The Design Team’s final step was to design three critical processes.
Throughput processes are the first category. These are the processes
that promote operational efficiency and effectiveness. As CQM is an
organization dedicated to the teaching and practice of TQM, it was a
natural choice to implement quality management practices as our method
for building operational strength. Next, the Design Team had to ad-
dress the processes for maintaining the synergy between the functions.
CQM’s new annual planning process goes a long way to providing this
need. Finally, the new Opportunity Discovery Board and the new mem-
ber relations function are going to be developing the latent processes
that ensure constant review and anticipation of the needs of the chang-
ing markets.

Means Planning

A strategic plan that is enthusiastically embraced by all the stakehold-

ers in the organization has the greatest possibility for successful imple-
mentation. We will defer a detailed explanation of the Means Planning
process to the upcoming companion article describing the Idealized
Design Planning process. For the purposed of this article, we would
like to reflect on how, as part of the plan for implementation, we are
working to ensure successful stakeholder buy-in and implementation.
As a key stakeholder (see figures 4 and 5), CQM’s Board of Directors
needed to be enthusiastic about the new design. To secure their partici-
pation and endorsement, the Design Team carried out the final iteration
of the design process at a special board meeting on December 12, 1994.
The directors took a very active role in shaping the final articulation of the
design for the new CQM and have participated in the initiatives that have
been undertaken since then as we have been putting the plan into action.
Next, existing CQM members are at the heart of the successful devel-
opment of practice. To expose all the members to the CQM’s new vi-
sion, both authors have undertaken to meet with the CEOs of each of
the member companies. So far, we have talked with over half of the
members, and we will continue until we have made presentations and
led discussions at many CQM events to acquaint the CQM family with

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the new directions. We are pleased with the very positive reaction we
have received. As one CEO said, “You are wrong in saying that the
integration of the best management practices is not done in the United
States. It is not done anywhere in the world!”
And what of the gurus, the other stakeholders identified as critical to
CQM’s success? Professor Shoji Shiba has expressed his complete com-
mitment to the concept of developing integrated, advancing methodol-
ogy. His interest in the integration of strategic planning with TQM is
expressed in his request that CQM consider presenting its work with
Russell Ackoff in Japan in 1995. In addition, CQM has a strategic alli-
ance with INTERACT to work together to create the new CQM Design
Center, through which CQM members will be able to learn about and
master the Idealized Planning methodology and to build on each oth-
ers’ capability. Other thought leaders have offered to work with CQM
to integrate their ideas and methodologies in order to build on the sub-
stantial base that CQM members have developed.
Finally, let us return to the Idealized Design process itself and the
CQM team that created the new design. As was discussed earlier, the
Mess Formulation and Design phases present different challenges and
difficulties. That said, however, the team responsible for developing
the design has experienced an extraordinary transformation. And in
the final analysis, this change may be the most significant contribution
of the planning process.
Having worked through all aspects of the design process, the team is
deeply committed to the new vision of the CQM. Work styles and inter-
actions have already changed to conform to the new directions. The
CQM staff is creating the Shared Services unit by reiterating the Ideal-
ized Design process at an operational unit level. New people are join-
ing the effort with a clear understanding of how they will contribute to
the ultimate accomplishment of our ambitious goals. But above all, there
is excitement and commitment to the new direction that is a direct result
of the intensity of the work that went into the planning process. The
staff feels that the new direction is their own, and they are deeply in-
vested in its successful achievement. What better ingredient can there
be to the successful implementation of a challenging strategic plan?

Afterword
There is a natural integration of Ackoff’s Idealized Design Planning
methodology with Hoshin Management. Figure 9 (next page) shows
7
how Idealized Design informs the Hoshin system.7 Shoji Shiba, David Walden, and Alan
In effect, once the Idealized Design has been developed, the Design Graham, A New American TQM: Four
Team considers the significant achievements that the organization must Practical Revolutions in Management
accomplish to realize the design as part of the Means Planning. These (Cambridge MA: Productivity Press,
achivements become the annual Hoshins, the breakthrough goals, on 1993) figure 1-6, p. 423.
which the entire organization must focus.

Bibliography

If you are interested in reading about the Idealized Design Planning

process, the following bibliography will be helpful. In addition, a set of
articles by Russell Ackoff and Jamshid Gharajedaghi are available in the
CQM library to CQM Members.

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 CENTER FOR QUALITY OF MANAGEMENT JOURNAL
Figure 9: Combining Idealized Design Planning with Hoshin Management.

Books

Russell L. Ackoff, Creating the Corporate Future (New York: John Wiley &
Sons, 1981).

Articles

Russell L. Ackoff, “Idealized Design: Creative Corporate Visioning,”

1993.

Russell L. Ackoff, “Systems Thinking & Thinking Systems,” 1993.

Videotapes

Russell L. Ackoff, “Interactive Management Presentation to Analog Ex-

ecutive Team,” (V-731 CQM Video Library 3-tape set; V-731.1 excerpts)
1990.

Jamshid Gharajedaghi, “1-Day Idealized Design Seminar at CQM,” (V-

1402 CQM Video Library 3-tape set) 1995.

Case Studies

The Center for Quality of Management, “Case Study: Interactive Plan-

ning Process,” February-September 1994.

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 CENTER FOR QUALITY OF MANAGEMENT JOURNAL

The Center for Quality of Management Journal is a forum for dissemi-

nating the experience of organizations learning to implement modern
management practices. It seeks to capture experiences and ideas that may
be useful to others working to create customer-driven, continuously im-
proving organizations.
The CQM Journal is refereed. However, it is not an academic publica-
tion. Experiences and ideas will be published if they seem likely to be
JOURNAL useful to others seeking to improve their organizations.

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