Sustaining Employee Participation: the Challenge of Tipping Point Dynamics

Widespread employee engagement is the cornerstone of success for many successful firms, but many others firms struggle in their efforts to engender it. This paper draws on extensive fieldwork at a manufacturer adopting practices of the Toyota Production System (TPS) to explore transient success in employee engagement and develop theoretical insights concerning the nature of the transition problem that arises as organizations attempt to migrate from current practices to new ones. Our analysis yields several critical insights into the process of fostering front line engagement. First, workers were actively involved in generating ideas, but the work of implementing those ideas strained key support personnel, such as plant engineers and maintenance workers at the field site, who were chronically time impoverished and thus challenged to do work while also learning how to work differently. Second, as they modified their work practices to address the mounting workload, they gained short-term benefits at the expense of delayed consequences. Third, the transition problem is rooted in the interaction of the need for learning by doing and the chronic time pressures on the support personnel. The paper develops a mathematical model and uses simulation analysis to explain the observed transient success and to identify a tipping point beyond which the organization transitions to a regime of lasting change. The simulations characterize the transition problem in organizational change: employee engagement can be self-sustaining if enough energy is invested in building their capability for problem solving. Imitation is a central concept in many strands of organization theory. Imitation occurs when “a firm observes that some other firm is doing things that it would like to be able to do” (Nelson & Winter, 1982, p.123) and attempts to duplicate the target firm’s successful products, processes or strategies. Imitation is said to be a basic mechanism by which innovations spread throughout industries (Nelson et al., 1982; Rogers, 1995). Institutional theory notes that pressures to conform to orthodoxy foster imitation and clearly identify mimetic processes in the path towards isomorphism (DiMaggio & Powell, 1983). Firms employ imitation as a response to uncertainty especially when organizational technologies are poorly understood (March & Olsen, 1976). Models emphasizing the socially embedded nature of organizational behavior find that inter-firm relationships influence the frequency of imitation of strategies, market entry, antitakeover defenses, acquisition strategies, and organizational structures (Davis, 1991; Greve, 1995; Haunschild, 1993; Haveman, 1993; Palmer, Jennings, & Zhou, 1993). Much strategic theory rests on the notion that imitation by other firms reduces overall profitability of an industry and whittles away the ability of successful firms to maintain competitive advantages (Nelson et al., 1982; Porter, 1980). The centrality of imitation in these academic theories notwithstanding, imitation in practice is more challenging and less reliably successful than these theories seem to consider. Imitation is indeed a widely practiced approach to improving organizational performance. The study of best practices has become an almost standard technique in the managerial toolkit. One recent survey identified benchmarking as the most frequently used tool for process improvement (Dolan, 2003). Some authors herald the merits of the search for exemplary practices: “Identifying and adopting what others do best is one method of meeting the growing need to find shortcuts to improvement. ... Survival and growth depend on continuous learning regarding how to improve quality, reduce costs and time, and increase productivity. Any organization that has developed effective practices which contribute to these outcomes can be studied, and, where possible and suitable, their practices can be adopted” (Lake & Ulrich, 1993, p.2). Yet although firms often adopt innovations in work practices based on studying other firms, the results are often disappointing (Klein, Conn, & Sorra, 2001). Empirical studies document low rates of successful implementation of innovations ranging from process improvement technologies such as total quality management (TQM) (Easton & Jarell, 1999; Hackman & Wegeman, 1995) and business process reengineering (Champy, 1995; Hall, Rosenthal, & Wade, 1993), to high-performance work practices in manufacturing (Pfeffer, 1997; Pil & MacDuffie, 1996) and product development (Wheelwright & Clark, 1995) to the use of computerized technologies (Klein et al., 2001), including advanced manufacturing technologies (Zammuto & O'Connor, 1992). Some research has explored reasons for difficulties in imitation. One class of explanations rests on attributes of the target innovation that make it difficult to imitate, such as compatibility with the adopting organization, observability, trialability, and complexity (Rogers, 1995). Explanations following the resource-based view of the firm similarly consider factors that make imitation difficult, such as impediments to factor accumulation, social complexity, causal ambiguity, tacit knowledge, economies of scale and scope, adjustment costs, and first-mover advantages (Barney, 1991; Dierickx & Cool, 1989; Lippman & Rumelt, 1982; Rivkin, 2000). A second class of explanations highlights steps firms take to make imitation less attractive to potential competitors, such as costly commitments and credible threats of retaliation. Offering yet another explanation, Rivkin (2000) proposes that “the sheer complexity of a strategy can raise a barrier to imitation” (p. 825). While each explanation offers some insight, all have as their main focus either the strategy and practice to be imitated or the characteristics of the target and imitating organizations. Such explanations do little to help us understand the fundamentally dynamic nature of intended, inter-organizational imitation. For example, consider an improvement initiative based on imitating another firm’s proven success such as in the adoption of TQM. The tendency for such imitation efforts to run out of momentum is widely recognized (Beer, Eisenstat, & Spector, 1990; Pettigrew, 1998; Pettigrew, Woodman, & Cameron, 2001; Repenning & Sterman, 2002), yet there is little research aimed at understanding the transient pattern of success so frequently observed. Theories that explain both why such an initiative first generates desirable results and then subsequently loses momentum remain largely unexplored. The purpose of this paper is to explore transient success in imitation and thereby extend thinking beyond the traditional static view in which imitation is primarily seen as analogous to acquisition, importation, or transfer to one in which imitating is more akin to rediscovering, learning, or transitioning. In particular, we explore intended, interorganizational imitation in the context of implementing widely accepted practices in process improvement. The setting is a United States recreational vehicle manufacturer implementing practices identified with the Toyota Production System (TPS) and lean manufacturing (Monden, 1981; Womack, Jones, & Roos, 1990). TPS is a particularly compelling domain for this study because it is widely regarded as a superior production system, yet it has rarely if ever been successfully imitated. As Rivkin points out: “Particularly striking is the ability of some firms to resist imitation despite extensive public scrutiny of their strategies. Firms such as Dell Computer, Southwest Airlines, and Toyota enjoy higher rates of return and faster growth than rivals even though journal articles, case studies, analyst reports, and books by founding executives reveal the ingredients of their successful recipes” (Rivkin, 2000, p. 824). Moreover, TPS is a participative process improvement technology and thus similar in many regards to other widely studied managerial approaches such as total quality management (e.g., Easton et al., 1999; Hackman et al., 1995; Zbaracki, 1998). The focus of the research is implementation, “the process of gaining targeted employees’ appropriate and committed use of an innovation,” (Klein & Sorra, 1996, p. 1055) which follows the innovation adoption decision. The research presented here follows the logic of grounded theory building, which begins with field-based case data and induces insights through analysis and theory building (Glaser & Strauss, 1967). The analysis is informed by causal loop diagramming and formal modeling in the system dynamics tradition, an approach that is achieving increasing prominence in organization studies (e.g., Perlow, Okhuysen, & Repenning, 2002; Repenning, 2002; Repenning et al., 2002; Sastry, 1997). We chose the combination of grounded theory building and system dynamics because of our interest in looking for connections between situated behavior and macro level outcomes (Weick, 1993). Grounded theory brings the work of improvement activity into the foreground (Barley & Kunda, 2001), and system dynamics is an ideal complement because the phenomenon we are exploring unfolds over time. The major results from the study were theoretical insights concerning the nature of the transition problem that arises as organizations attempt to migrate from current practices to new ones. The first insight concerns the importance of conceptualizing the development of new individual skills and organizational capabilities as a dynamic process of learning rather than as a static event such as an acquisition of knowledge or an endowment of skill. The need for sustained practice over time to learn by doing new skills renders inadequate a view that required skills can be gained through a mechanism that confers instant benefits. Second, from a close examination of how the work of improvement activity gets done I found that support personnel, such as plant engineers and maintenance workers at the field site, were chronically time impoverished and thus challenged to do work while also learning how to work differently. Mounting workloads placed significant pressures on these individuals that dissuaded them from attempting new ways of working. Third, by analyzing the implications of these first two points in combination, I learned that the transition problem is rooted in the interaction of the need for learning by doing and the chronic time pressures on the support personnel. By finding ways to meet the immediate need to accomplish the instrumental tasks of implementation, they undermined the longer-term learning processes that were needed to accomplish the transition to a sustained preference for new ways of working. As pressures from mounting workloads favored current practices rather than new ones, the consequence over time was that the organization locked in to the old way of working. A primary contribution of the paper is to take some steps toward characterizing the transition problem as an endogenously generated, dynamic pattern of behavior over time that arises from the need for learning by doing in the context of ongoing organizational activity. The paper develops a model that illuminates reasons for temporary success followed by loss of momentum, and model analysis shows that small changes can mean the difference between fleeting improvement and sustained success. This perspective contrasts with many in organizational and strategic thinking in which imitation is assumed to be static or nearly so. This dynamic perspective implies that much of the current practice of benchmarking is misdirected at the static, observable artifacts and well-honed (perhaps codified) practices of imitation targets rather than at the critical learning processes central to successfully navigating an organizational transition. Similarly, the transition problem suggests a path toward bringing the implicit assumption throughout much of organization theory that imitation, although costly, is simple, automatic, straightforward, and static into better alignment with the experience of practitioners that imitation is difficult, uncertain, complicated, and dynamic.