| In many business sectors today, the focus on quality as a competitive tool is being replaced by a focus on innovation. Research exploring connections between quality management, innovation, and company performance suggests that quality is 'necessary but insufficient' in today's business environment. In short, the question facing managers, particularly those in small firms, is how to adapt their quality management practices to achieve innovation performance in addition to quality performance.;To answer this question, West Coast U.S. forest products manufacturers were surveyed about quality management practices and performance with respect to both quality and innovation. Quality management practices were assessed following the systems perspective articulated by the Malcolm Baldrige National Quality Award. Data envelopment analysis was used to identify companies efficiently using quality management practices to lead to quality and/or innovation performance. Survey responses from the efficient firms were then analyzed via cluster analysis to identify two categories of firms: those achieving primarily quality outcomes and those achieving both quality and innovation outcomes. Executives from two firms in each category were interviewed to provide detail on the management practices used by the companies. Interview transcripts were examined to identify similarities and differences in practices between the two categories of firms.;Results suggest several specific areas of focus for firms wanting to adapt their quality management practices to achieve both quality and innovation performance. For example, firms focused on innovation proactively seek to identify and meet customers' needs whereas quality-focused firms primarily emphasize reacting to customer complaints. More specifically with respect to 'customer focus', firms focused on innovation emphasize convenience for their customers through practices such as standardizing product lines and providing product specifications on their websites. In contrast, neither quality-focused firm had a website. These firms were at their production capacity (at least prior to the recession) and viewed websites strictly as a means to attract new business rather than as a service to existing customers. Also with regards to customer focus, firms focused on innovation sought to generate new business -- not just for their company, but for their customers as well. Beyond customer focus, firms focused on innovation provide employees with opportunities to help the organization implement changes. With respect to benchmarking, firms focused on innovation actively sought to measure their performance against the 'best practice' in the industry; firms focused primarily on quality performance demonstrated little if any emphasis on benchmarking. Finally, there were apparent overarching and hence cultural differences between the two categories of firms -- firms focused on innovation were more proactive, strategic, and willing to take risk; in addition, these firms discussed innovation as the means to improve product quality, reduce costs, or attract new customers. By contrast, the quality-focused firms were reactive, conservative, and risk-averse; these firms discussed innovation primarily as 'technology' without reference to potential linkages to company performance. |
