Total Quality Management & Business Excellence

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Auditing of explorative processes

Jan Lenning

To cite this article: Jan Lenning (2018): Auditing of explorative processes, Total Quality
Management & Business Excellence, DOI: 10.1080/14783363.2018.1487605

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Total Quality Management, 2018
https://doi.org/10.1080/14783363.2018.1487605

Auditing of explorative processes

Jan Lenning*

Division of Service Management and Logistics, Department of Technology Management and

Economics, Chalmers University of Technology, Göteborg, Sweden

Process management is a central part of quality management concepts like Total Quality
Management, methods like Six Sigma and Lean but also of management systems
standards such as ISO 9001, where it is represented by different requirements on
process design, process control and process improvement. Research has been
conducted on process management and the understanding of exploitation and
exploration, but also the sometimes negative effects from process management
practices on exploration in organisations when operating in competitive environments.
The purpose of this paper is to study if internal auditors adapt to explorative processes
when auditing ISO 9001 process management requirements. This paper is based on a
qualitative case study in a global company in the consumer electronics industry. The
study points towards that internal auditors apply ISO 9001 MSS requirements for
process control across the studied organisations and processes even though the audited
organisations and processes were considered to be explorative and the environment
competitive. Not adapting requirements for process management, to an explorative
process in a competitive environment, can stunt an organisation’s capability to be
innovative, thereby negatively affecting its competitiveness.
Keywords: ISO; quality management; process management; audit; exploitation;
exploration

1. Introduction
Process management (PM), defined as the three practices of process design, process control,
and process improvement (Hackman & Wageman, 1995; Juran & Godfrey, 1999) – has grown
in importance over recent decades and is now a central part in quality management (QM) con-
cepts like Total Quality Management (TQM) (Hackman & Wageman, 1995), and in methods
like Six Sigma (Raisinghani, Ette, Pierce, Cannon, & Daripaly, 2005) and Lean (Womack &
Jones, 1996). These concepts and methods have been implemented throughout many organ-
isations as a means to increase operational efficiency, but also to improve the quality of
already existing products and services in order to increase customer satisfaction (Andersson,
Eriksson, & Torstensson, 2006; Poksinska, Pettersen, Elg, Eklund & Witell, 2010).
In addition to the above concepts and methods, the ISO 9001 management system stan-
dard (MSS), which is now implemented by more than one million organisations worldwide
(International Organization for Standardization [ISO] survey, 2015a), drives PM practices
through various requirements, which organisations are obliged to fulfil if they have chosen
to have a certified management system (MS). Examples are PM requirements for determin-
ing processes, applying methods for monitoring and measuring processes, and for improv-
ing processes (International Organization for Standardization [ISO] 9001:2008). Moreover,

*Email: [email protected]

© 2018 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group
This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives License
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provided the original work is properly cited, and is not altered, transformed, or built upon in any way.
2 J. Lenning

PM is one of the seven quality management principles (International Organization for Stan-
dardization [ISO].org, 2015c) upon which the ISO 9001 MSS is built, and has been
expanded in the latest version of the ISO 9001 MSS to also include additional requirements
in areas such as determining input and output from processes, establishing criteria for
control of processes and applying and evaluating performance indicators (International
Organization for Standardization [ISO] 9001:2015b).
However, becoming and staying competitive over time is not just about the ability to
increase efficiency and reduce variation in various processes; that is, being exploitative.
It is also about searching, being innovative and embracing variation; that is, being explora-
tive (He & Wong, 2004; Gupta, Smith, & Shalley, 2006; O’Reilly & Tushman, 2008). Fur-
thermore, earlier research argues that PM practices that support exploitation and survival in
the short run can even stunt exploration and the ability to be innovative for long-term sur-
vival (Benner & Tushman, 2003). Moreover, it has also been argued that an ISO 9001 cer-
tification may reduce an organisation’s ability to innovate (Terziovski & Guerrero, 2014).
To mitigate this, it has been proposed that organisations need a dual focus, both on practices
like PM that help decrease costs, but also on practices like ambidexterity which enable
innovation and flexibility (O’Reilly & Tushman, 2008; Raisch, Birkinshaw, Probst, &
Tushman, 2009; Matthews, Tan, & Marzec, 2015). Correctly balanced, PM practices can
contribute to both exploitation and exploration at the same time (Bot, 2012; Antony,
Setijono, & Dahlgaard, 2016; vom Brocke, Zelt, & Schmiedel, 2016), so it is important
to apply all three PM practices – design, control and improvement – in a careful manner.
These three practices can even be customised to fit the level of competitive environment
in which the organisations operate in order to enable both efficiency and innovation
(Sanders Jones & Linderman, 2014). In case of a certification to any MSS, the selection
of processes being certified should be done with caution (Terziovski & Guerrero, 2014).
In an organisation holding a certified MS, internal audits are performed in order to
understand whether the organisation’s MS conforms to the MSS requirements such as
PM requirements (ISO 9001:2008; ISO 9001:2015b). However, in order for internal audi-
tors to add value beyond verifying conformance, it is vital to ensure relevant knowledge and
understanding of the organisation’s challenges in the area being audited (Lenning &
Gremyr, 2017). As previous research has shown that PM practices can have a negative
effect on explorative processes, it is of interest whether internal auditors apply MSS require-
ments for PM with a one-size-fits-all approach or with an adaptive approach, thus support-
ing the need for a dual focus on managing both exploitative and explorative processes such
as ambidexterity. However, there is a lack of research on whether or not internal auditors
auditing PM requirements in ISO 9001 adapt to the process being audited. Thus, the
purpose of this paper is to study if internal auditors adapt to explorative processes when
auditing ISO 9001 process management requirements. This purpose will be addressed by
studying internal auditors’ practices for internal auditing and the results from audits in a
large company in the consumer electronics sector. While previous research has focused
on understanding exploitation and exploration (March, 1991; O’Reilly & Tushman,
2004), PM practices as such (Benner & Tushman, 2003), but also the effects of PM practice
on exploitation and exploration (Benner & Tushman, 2003), the results of the present study
contribute in three ways. Firstly, earlier research on the effects of PM practices on explora-
tion is now linked with internal auditing of PM requirements in the ISO MSS 9001. Sec-
ondly, a focus on the internal auditor as being a key person in operationalising PM
requirements has been introduced and thirdly, rather than focusing the effects of PM on
exploitation and exploration this paper focus on adaptation of PM practices to better
support explorative process in competitive environments.
 Total Quality Management 3

2. Theoretical framework
This theoretical framework will be divided into two parts, starting with an account of the
concepts of exploitation and exploration followed by an elaboration on the impact of
process management on exploitation and exploration.

2.1. Ambidexterity, exploitation and exploration

Even if it is complicated, an organisation should not focus solely on either exploitation
or on exploration; it is important to understand how to balance the two (March, 1991;
Sutcliffe, Sitkin, & Browning, 2000; Smith & Tushman, 2005; Palm & Lilja, 2017) –
so-called ambidexterity (Duncan, 1976). In this paper exploitation is referred to as
choice, refinement, efficiency, selection and execution, and exploration is referred to as
search, risk taking, variation, flexibility (March, 1991; O’Reilly & Tushman, 2004). It
has been argued that ambidexterity is increasingly necessary in dynamic environments
where companies’ existing advantages are continuously at risk and new opportunities
must frequently be found (Junni, Sarala, Taras, & Tarba, 2013). Organisations that have
become successful at balancing both exploitation and exploration have managed to both
use and refine their present knowledge at the same time as they create new knowledge
(Turner, Swart, & Maylor, 2013). These organisations have been shown to be more success-
ful in launching breakthrough products and services than more traditional organisations,
meaning either exploitative or explorative (Tushman, 1997; He & Wong, 2004; O’Reilly
& Tushman, 2004; Smith & Tushman, 2005). Different key success factors that can help
create ambidextrous organisations have been put forward by a number of researchers.
Firstly, different organisational setups are proposed in order to manage these sometimes
conflicting requirements of an exploitative versus an explorative process. Duncan (1976)
proposed that organisations need to shift their organisational set up over time in order to
align their organisation to strategic requirements for innovation or efficiency, so called
sequential ambidexterity. A second type of ambidexterity is structural ambidexterity
which is built upon a split of an organisation into units considered to be exploitative or
explorative, where units are then held together by a common vision and a strong senior
team (Tushman & O’Reilly, 1996, 2002). A third type is contextual ambidexterity which
is the ability to enable and encourage individuals to decide how they divide their time
between possibly contradictory demands for alignment to present activities (exploitation)
or adapt to new demands (exploration) (Gibson & Birkinshaw, 2004). Other factors that
have been shown to be important are leadership and their ability to fit strategy, structure,
culture and process (Birkinshaw, Zimmerman, & Raisch, 2016), the ability to combine
cost cutting with entrepreneurship and the formation and communication of a clear and
compelling vision in which both exploitative and explorative teams can identify themselves
(O’Reilly & Tushman, 2004). Moreover, the importance of being ambidextrous has been
identified to differ between industries, where ambidexterity is reported to be important in
manufacturing but even more important in the high technology and service industry
(Junni et al., 2013). Hence, organisations should balance exploitation and exploration
according to their own needs (March, 1991; Gupta et al., 2006).
Exploitation and exploration represent different attributes of an organisation, for
example, different strategic focus, capabilities and cultures (see Table 1). Exploitation is
described in terms of choice, refinement, efficiency, selection, implementation and
execution, and is an enhancement and addition of existing competence and technologies.
Results from exploitative activities are often foreseeable, adjacent, and usually positive
(March, 1991; O’Reilly & Tushman, 2004). Exploration, on the other hand, is described
4 J. Lenning

Table 1. Synthesis of exploitative and explorative attributes based on March (1991) and O’Reilly
and Tushman (2004).
Exploitative attributes Explorative attributes
Strategic focus Cost, profit Innovation, growth
Critical tasks Operations, efficiency, Adaptability, experimentation, new products/
incremental innovation services, breakthrough innovations
Capabilities Operational, refinement, Search, entrepreneurial
extension
Organisation Formal, mechanistic Adaptive, loose
Controls, Margins, productivity, positive Milestones, growth, often negative and
rewards and predictable return unpredictable return
Culture Efficiency, low risk, quality, Risk taking, speed, flexibility, experimentation
customers
Leadership Authoritative, top down Visionary, involved
role

as search, risk taking, variation, play, flexibility, and innovation and can be characterised as
a form of experimentation. Hence, the result is more unreliable, distant, and sometimes not
so positive (March, 1991; O’Reilly & Tushman, 2004).

2.2. Process management and the impact on exploitation and exploration

Already in Deming’s (1988) improvement framework, organisations were seen as a system
of interlinked processes and the improvement thereof was seen as a prerequisite for improv-
ing efficiency and performance (Dean & Bowen, 1994), which drew attention to PM. There
has also been increasing pressure to implement QM concepts and methods like TQM, Six
Sigma and Lean, and also to be certified according to any of the ISO MSS (Benner &
Tushman, 2003). In these concepts and methods PM is a central practice and the ISO
9001:2015 MSS contains several explicit requirements related to PM. The introduction
to the ISO 9001 MSS states that the standard promotes a process approach. Furthermore
it is detailed that an ‘organisation shall establish, implement, maintain and continually
improve a Quality MS, including the processes needed … ’ (ISO 9001:2015b, p. 2). This
focus on establishment, implementation and improvement aligns to the commonly used
clustering of PM practices; design, control and improvement (Hackman & Wageman,
1995; Juran & Godfrey, 1999).
The impact of PM on exploitative and explorative abilities has been studied and it has
been argued that PM practices drive a culture of local search, i.e. exploitation. This, in turn,
results in a decrease and a crowding-out effect of the more explorative forms of innovation,
which, in a turbulent environment could negatively impact a firm’s chances of survival
(Benner & Tushman, 2002). However, the effects of PM practices also differ depending
on the level of competition in the industry in which the organisation operates. In organis-
ations operating in fierce competition and with a high rate of product change, both exploi-
tative and explorative activities are needed, while organisations operating in low
competition and with less need for product change benefit most from exploitative activities.
Organisations operating under mixed conditions – that is, a changing level of competition
and need for product change – benefit most from exploratory activities (Sanders Jones &
Linderman, 2014). Therefore, Sanders Jones and Linderman (2014) argue that there is a
need to distinguish between the different PM practices (design, control, and improvement)
based upon the competitive environment in which the organisations operate. Process design
 Total Quality Management 5

is found to be positive and independent of the competitive intensity, while process control
could have a have a negative effect on innovation performance in intense competitive
environments. Lastly, process improvement in intense competitive environments could
also weaken an organisation, while these processes might soon be outdated anyway.
Instead, these organisations should spend time developing new processes that will help
them to stay competitive (Sanders Jones & Linderman, 2014).
Hence, it is has been proposed that managers should carefully adopt PM practices regard-
less of the increasing pressure for PM practices in initiatives like ISO 9001 and other QM
concepts (Benner & Tushman, 2003; Benner, 2009; Müller, Ulrich, & Nielsen, 2014;
Terziovski & Guerrero, 2014). When more drastic transformations are needed, MSS like
ISO 9001 may even slow down the response to the change (Benner, 2009) and stifle
product innovation (Terziovski & Guerrero, 2014). Moreover, standards like ISO 9001 are
seen to support a culture focused on stability and control, rather than an innovative organis-
ation searching for new products. Therefore, it is also important that PM practices are differ-
entiated based upon the level of competition in the industry (Sanders Jones & Linderman,
2014). Thus, from an initial argument that PM practices should be kept isolated from explora-
tory activities (Benner & Tushman, 2003), it has later been suggested that PM practices
should be customised in order to enhance efficiency and/or innovation and not applied
with a one-size-fits-all approach (Sanders Jones & Linderman, 2014; Zhang, Linderman,
& Schroeder, 2014; Ng, Rungtusanatham, Zhao, & Lee, 2015).

3. Method
The purpose of this paper is to study if internal auditors adapt to explorative processes when
auditing ISO 9001 process management requirements. Because this is a dynamic and
complex phenomenon to study, qualitative methodological approaches are suitable
(Flick, 2014). Moreover, this phenomenon requires an understanding of connections
between the setting and the phenomenon, a type of research suited to the case study meth-
odology (Meredith, 1998; Dubois & Gadde, 2002; Voss, Tsikriktsis, & Frölich, 2002). The
research approach used in this paper is the so-called systematic combining (Dubois &
Gadde, 2002). This abductive approach involves movement between theory and empirical
data, and conclusions are drawn when enough data has been collected from the case.

3.1. Case selection

The company studied in this paper, referred to here as Electronics, is a large company in the
consumer electronics sector. Electronics operates in a fiercely competitive environment where
product life cycles have become shorter and shorter and the need for quick adaption to new
and changing requirements has increased over the years. Since 2014, new explorative func-
tions have been added to the organisation and the setup is considered to represent structural
ambidexterity. The company is certified for ISO 9001, ISO 14001, and other industry-specific
standards. However, this study focuses on the ISO 9001 certificate, which covers areas from
research and innovation, product planning and development, marketing, sales, sourcing and
supply chain management to after-market. As a part of holding the ISO 9001 certificate, there
is a yearly audit programme including internal (first-party) and external (third-party) audits.
This programme should take into consideration the importance of different processes,
changes currently affecting the organisation, and the results of previous audits, both internal
and external (ISO 9001:2015b). The individual audit performed within Electronics follows a
standardised process based upon ISO 19011:2011 (International Organization for
6 J. Lenning

Figure 1. Six-step audit process and indication of the focus of the data collection.

Standardization [ISO] 19011:2011) (see Figure 1). The focus of data collection is indicated in
Figure 1 and further elaborated upon in Section 3.2.

3.2. Data collection

This study has used multiple data sources, such as organisational documentation of differ-
ent types, interviews with auditors and auditors’ list of questions. In order to strengthen the
reliability of the findings triangulation of these sources was used (Eisenhardt, 1989). Col-
lection of data was divided into three steps: (1) study of auditors’ list of questions prepared
for two audits, (2) key informant interviews, and (3) studies of audit reports from internal
audits performed between 1 January 2009 up until and including 31 December 2016.

3.2.1. Data collection from auditors lists of questions

In the first step, two lists of questions from two audits, predefined by the auditors, were
studied. The purpose of studying these questions was to find out how the auditors considered
the different PM-related requirements and, given that they were going to audit processes con-
sidered to be explorative, whether they adapted to that circumstance. The list of questions was
prepared by the auditors in step 2 of the audit process (see Figure 1) and represents the differ-
ent MSS requirements that were planned to be covered in the audits. These questions were
asked during the audit interviews in order to find evidence for whether the auditee or organ-
isation conform to the requirements in the MSS. The list of questions used in this study came
from two of the chosen audits (D and E; see Table 2). Due to lack of accessibility of data from
the other audits, only these two lists of questions were studied. As evidences, questions
specifically related to the PM practice ‘process control’ was looked for, but also the
balance between questions focusing on process design, control and improvement.

3.2.2. Data collection from informant interviews

In the second step of the data collection, five semi-structured interviews were conducted with
lead auditors and auditors. The purpose of these interviews was to collect a more in-depth
understanding of whether these auditors adapted to the explorative process they audited.
All interviews were conducted on site by the author and lasted anywhere from 47 to 77
minutes and were recorded and partly transcribed. All interviews covered the six steps in
the audit process (see Figure 1). Hard copies of audit reports from internal audits, where
the auditor were part of the audit team, were used together with a copy of the six-step
audit process, described in Figure 1. The interviews focused on reflections on the audits
and what adaptations, if any, the audit team had made to the explorative process.
 Total Quality Management 7

Table 2. Explorative processes included in the case study and examples of corresponding
explorative attributes.
Units involved in the
Audit Process(es) and main purpose of process characterised Examples of explorative
report the process as explorative attributes according to Table 1
A Product design process Design centre Visionary, Loose New
Designing products with products Risk taking
attractive graphics, industrial
design and colours
B Portfolio planning process Product planning New products Risk taking
Product planning process Growth
Design of the long-term
portfolio and product plan
C Provide Technology Strategy Technology research Experimentation
Explore & Scout Unpredictable return
Technologies New Breakthrough innovation
technology introduction Risk taking
Researching technology and
new technology introduction
D Incubation process Exploring Business incubation Experimentation New
new technologies 2–5 years products/services
out, drive new products and Unpredictable return
business propositions Entrepreneurial Risk taking
E Service and content business Business New products/services
development process New development Adaptive, Growth Risk
business creation and support taking
F Software development process Software Experimentation New
Ensuring delivery of the development products/services Speed/
correct product with correct flexibility
quality. Accelerate innovation
of new differentiating areas

3.2.3. Data collection from audit reports

In the third step, using purposive sampling (Flick, 2014), a selection of relevant audit
reports from audited processes were chosen by the author using the attributes of exploitation
and exploration described by March (1991) and O’Reilly and Tushman (2004) (see Table 1).
The focus was on selecting audits of typically explorative processes; Table 2 summarises
the selected processes, their main purpose, corresponding organisations, and typical
explorative attributes.

3.3. Data analysis

Data analysis was performed using the so-called Pattern Matching method (Mills, Durepos,
& Wiebe, 2009). In order to analyse the collected data from audit reports and explore
whether auditors adapted their way of auditing requirements for process management prac-
tices to the processes characterised as explorative, a pattern matching tools was created (see
Section 3.3.1; the usage of the tool is described in Section 3.3.2). Moreover, the author has
several years of knowledge, insights, and experience in internal auditing as a trained and
certified lead auditor for both ISO 9001 and 14001 MSS, which helped in the data analysis
in areas such as interpretation of audit findings and classification of findings using the
pattern matching tool.
8 J. Lenning

3.3.1. Pattern matching tool

The PM requirements in the ISO 9001:2008 MSS were mapped towards the key practices of
PM (design, control, and improve), described in the theoretical framework. The mapping
was then validated by two trained lead auditors, after which some corrections were
made. This tool, named the data analysis tool, was utilised to categorise audit findings
from the selected audits towards the three PM practices (see Table 3).

3.3.2. Pattern matching

For the case of Electronics, operating in a fiercely competitive environment, it is concluded
from the theoretical framework that the different PM practices have different effects on
explorative processes (Benner & Tushman, 2002; Sanders Jones & Linderman, 2014).
Therefore, the data analysis tool was used in the following way as an example. If auditors
classified a finding, in an audit of any of the explorative processes described in Table 2, as
being a non-conformity towards the ISO 9001:2008 MSS requirement 4.1e, stating that
‘The organisation shall monitor, measure where applicable and analyse these processes’
(ISO 9001:2008, p. 2) (see Table 3), it could be argued that the adaption from the audit
team is low or non-existent. This is due to the fact that the ISO 9001:2008 4.1e was
mapped as a PM practice that drives process control (see Table 3). Requiring process
control in an explorative process, in an environment of fierce competition, is considered
to have a negative effect on exploration; that is, on innovation, growth, experimentation,
search and entrepreneurship (see Table 1). Supporting and enhancing exploration is
deemed important in order for an organisation to stay competitive in times of fierce com-
petition (Sanders Jones & Linderman, 2014; Zhang et al., 2014).

4. Empirical findings
The report of the empirical findings starts with an account of how internal auditors opera-
tionalised PM and other process-related requirements in the MSS into the list of questions
that they were planning to probe in the interviews. This is followed by a description of what
adaptions the internal auditors made during the audit process, which was presented in the
interviews, and finally the result of what type of PM practices were used in the six different
audits (see Table 2).

4.1. Operationalisation of MSS requirements into list of questions

Two lists of questions, from Audits D and E in Table 2, have been reviewed in this study;
below is a summary of some details from these two list of questions. In Audit D, which
focused on the incubation process, several questions were asked about, for example, why
Business Incubation is set up as an organisation, what it is expected to deliver, and to
whom. Furthermore, in a section about team strategy and innovation strategy, questions
were asked regarding how those strategies connect to the overall company strategy and
the process for developing the team strategy. In another section about measurements, ques-
tions were asked regarding process measurements (such as the efficiency and effectiveness
of the innovation process and whether innovation was generally successful within Elec-
tronics) and where to find records of measures and successfulness (that is, whether the
organisation as such has been successful or not). There were also several questions about
the innovation process itself, such as decision forums, risk management, authority and
 Total Quality Management 9

Table 3. Data analysis tool: ISO 9001:2008 process management requirements and corresponding
PM practice.
A. ISO 9001:2008 C. PM
requirement B. Requirement related to PM – description practice
4.1a ‘Determine the processes needed for the quality Design
management system’
4.1b ‘Determine the sequence and interaction of these processes’ Design
4.1c ‘Determine criteria and methods needed to ensure that both Control
the operation and control of these processes are effective’
4.1d ‘Ensure the availability of resources and information Design
necessary to support the operation and monitoring of
these processes’
4.1e ‘Monitor, measure where applicable, and analyse these Control
processes’
4.1f ‘Implement actions necessary to achieve planned results and Improvement
continual improvement of these processes’
5.5.2 ‘Ensuring that processes needed for the quality management Design
system are established, implemented and maintained’
5.6.2c ‘The input to management review shall include information Control
on … process performance’
5.6.3 ‘The output from the management review shall include any Improvement
decisions and actions related to … improvement of …
and its processes’
7.5.2 ‘The organisation shall validate any processes for Control
production and service provision where the resulting
output cannot be verified by subsequent monitoring or
measurement’
8.2.2 ‘An audit program shall be planned, taking into Control
consideration the status and importance of the processes
and areas to be audited’
8.2.3 ‘The organisation shall apply suitable methods for Control
monitoring and, where applicable, measurement of the
quality management system processes. These methods
shall demonstrate the ability of the processes to achieve
planned results. When planned results are not achieved,
correction and corrective action shall be taken, as
appropriate’
8.4 ‘The organisation shall determine, collect and analyse Control
appropriate data to demonstrate the suitability and
effectiveness of the quality management system and to
evaluate where continual improvement of the
effectiveness of the quality management system can be
made … The analysis of data shall provide information
relating to the characteristics and trends of processes’

responsibilities and the consequences of different activities occurring or not occurring in the
process.
In Audit E, which focused on the Service and Content Business Development process,
there were also several different sections, such as responsibilities, scope and resources, gov-
ernance, processes, business cases, development and optimisation, and strategy and plan-
ning. Questions asked in the area of responsibilities covered Business Developments
responsibility and roles in regard to other interfacing organisations, how their responsibility
differed from others, and why it was its own organisation rather than part of another
10 J. Lenning

organisation with similar objectives. Quite a few questions were asked related to govern-
ance; for example, regarding what key performance indicators were used, what decision
forums the interviewees were part of, what criteria were used in decisions, and how
decisions were prioritised, documented, and communicated. There were also questions
about internal financial control. Regarding the process area, questions were asked about
how continuous improvements are assured, how alignment to other processes was
ensured, and what key decision points were set in the process and who the decision
maker was. Finally, a few questions in the area of strategy were asked regarding how
their roadmap and application portfolio looked, but also about their revenue plan.

4.2. Audit team adaptions during conducting audits

Five key informant interviews were conducted with lead auditors and auditors. Overall, the
informants presented the different audits following the six steps in the audit process; see
Figure 1. As described in Section 3.2.2, audit reports from audits were reviewed and dis-
cussed in the interviews and several different adaptions were described by the informants.
Generally, the adaptations made were merely characterised as being administrative and
regarding practical matters, e.g. adjustments in time when the audit should be executed,
who to involve in the audit, adjustments in classification of findings and discussions
about what corrective actions to perform. However, in the discussion about Audit D, one
of the informants described that that there had been a discussion within the audit team
whether the ISO 9001 MSS was possible to apply or not and ‘if it was at all possible to
audit them [Business Incubation] while it was an innovation process and how should one
audit such a process’. Furthermore, also regarding Audit D, one informant also believed
that the other auditor did not think that they should audit the parts of the process that
they [Business Incubation] had not utilised. One informant also stated that the audit team
skipped auditing the part about innovation and organisational culture. This was due to
them not feeling that they had the tools to audit these parts. Finally, when stressing the ques-
tion about if there were any specific adaptions in the area of PM requirements one informant
answered ‘not really’.
In Audit E, on the question if the audit team adapted to the characteristics of the process
one informant answered that
we did not understand the importance and what it [the process] was until during the audit […]
we got a picture during the pre-meetings and that was in the back of our heads […] however we
did not understand the focus […] we could have spent more time [meaning initial steps] but we
did not.
Moreover, on the question about what could have been done differently in step 3
(conduct the audit), the informant stated that ‘it is easier to find evidence and to get a
description in a more structured organisation, they have more to show […] the other
one [Business Development] is not that concrete’. Finally, as one of the informants
expressed, ‘we have a process [audit process], we follow that, but to be able to come
through, we have to adapt to time, how much we interfere or not depending on the
maturity of the audited organisation and their understanding […] we have our process
but we need to adapt our behaviour’.

4.3. PM practices identified in audit reports

For each of the six processes in Table 2, audit reports were extracted from the audit system.
Each of the audit findings was analysed using the data analysis tool (see Table 3). While
 Total Quality Management 11

similar findings were found in different audits, a summary of these are reported in column A
of Table 4.
In total, 23 findings related to PM were identified and analysed. Of these, one directly
relates to the PM practice improvement (4%), 14 relate to PM practice design (61%) and 8
relate to PM practice control (35%).

5. Discussion
The empirical findings show that audit questions covering company mission, strategy,
team strategy, innovation strategy, and governance were prepared to be asked. While
Electronics’ is split into units that can be characterised as either exploitative or explora-
tive, so called structural ambidexterity (Tushman & O’Reilly, 1996, 2002) audit questions
about mission, strategies, and governance can be supportive for structural ambidexterity
as they form a common foundation (Birkinshaw et al., 2016). However, it was also found
that several audit questions were prepared about predictability and risk management.
These questions represent typical exploitative attributes (March, 1991; O’Reilly &
Tushman, 2004); exploitation is argued to drive incremental innovation and can have a
crowding-out effect of the more explorative forms of innovation, and can also build
resistance to change and stunt an organisations ability to adapt (Benner & Tushman,
2002; Terziovski & Guerrero, 2014). Furthermore, it was also found that several audit
questions were prepared about process efficiency and effectiveness measurements, as
were questions about the possible consequences if different activities do or do not take
place in the process. These questions represent the PM practice ‘process control’. Enfor-
cing practices like process control, in an explorative process operating in a competitive
environment, is believed to have a negative effect on explorative attributes as innovation,
instead the focus should be on the PM practice ‘process design’ (Sanders Jones & Linder-
man, 2014). Preparing questions, probing for conformance to typical exploitative attri-
butes in an explorative process, indicates that internal auditors do not adapt PM
requirements when planning audits of processes that are considered to be explorative.
Furthermore, no specific measures were taken to adapt to the explorative process in
focus. This suggests that internal auditors are utilising a one-size-fits-all approach
when auditing PM practices. This is argued not to be beneficial and, instead PM practices
should be customised in order to enhance efficiency and/or innovation (Sanders Jones &
Linderman, 2014; Zhang et al., 2014; Ng et al., 2015).
The findings in Electronics’ audit reports show that internal auditors looked for evi-
dence of conformance with MSS requirements driving the PM practice ‘process design’;
for example, over-all process descriptions, identification of process interfaces, receivers
of process deliverables, and process awareness. Such practices are believed to have a posi-
tive effect on organisations operating in an environment of fierce competition and with a
high rate of product change (Sanders Jones & Linderman, 2014). However, several audit
findings show evidence that auditors also looked for conformance to MSS requirements
driving the PM practice ‘process control’, which has been argued to support exploitation
and hinder exploration (Benner & Tushman, 2003). Looking for conformance to the PM
practice ‘process control’ in explorative processes points towards that internal auditors
do not adapt PM requirements when auditing processes that are considered to be explora-
tive. Instead, exploitative attributes like efficiency and refinement should be separated from
exploratory activities (Benner & Tushman, 2003) in order to be or become successful
(Turner et al., 2013). Moreover, all organisations audited operate in a fiercely competitive
environment and it has been argued that PM practices should focus on process design rather
12 J. Lenning

Table 4. Description of audit findings including PM practice classification.

B. Found in audit
A. Audit finding (see Table 2)
C. PM
No. Description and ISO requirement reference A B C D E F practice
1 Process development and implementation guidelines X Design
are missing; implementation follow-up is not done
(§5.5.2)
2 No description of the development programme X Design
process; this process was not clear for some of the
interviewees (§4.1a)
3 Unclear process relating to development planning and X Control
how and what the company commit to customers
(§4.1c)
4 Authorities and responsibilities for process owner/ X X X Design
manager and other process roles are unclear/not
known/not agreed (§5.5.2)
5 Description for the project lead does not fully capture X Design
responsibilities, competences and authorities,
resulting in very different ways of working (§5.5.2)
6 Process measurements (effectiveness and efficiency) X Control
are not in place in order to drive process continuous
improvements (§4.1c)
7 Processes defined but process efficiency is not X Control
evaluated (4.1e)
8 There is a process measurement stated in the functional X X Control
description (planning stability) – but it is not actively
used or documented (§4.1e)
9 Deliverables and actions were not described within the X Design
development planning process or any other process
(§4.1a)
10 By whom, when and how process deliverables should X Control
be reviewed is not documented (§4.1c)
11 Tollgate documentation which is part of the process X Design
description is not in practice and members were not
aware of it. Some expressed that the documentation
is not useful as it looks right now (§4.1d)
12 Process contributors were not familiar with the whole X Design
process, including roles and authorities (§5.5.2)
13 Definition of receiver/customer of the deliverables X Design
missing (§4.1d)
14 Plan for process alignment to SW transition including X Control
resources allocation is not yet defined (§4.1c)
15 Business Incubation are not working systematically to X Control
capture feedback and reuse learning (§4.1c)
16 Insufficient resources/discipline available to work with X X Design
process management (§4.1d)
17 No roll-out plan for processes improvements (§5.6.3) X Improve
18 There is no content on the planning process pages in X Design
intranet pages (§4.1d)
19 Much of the information is not documented and X Design
dependent on individuals (§4.1d)
Note: X = Found in audit.
 Total Quality Management 13

than on process control, while this activity will conserve processes and does not support
implementation of new processes (Sanders Jones & Linderman, 2014).
The empirical findings also points towards a possible challenge being an internal auditor,
in an ambidextrous organisation. It has been argued that it is important to balance the focus on
exploitation and exploration (March, 1991; Sutcliffe et al., 2000; Smith & Tushman, 2005),
i.e. ambidexterity (Duncan, 1976), in order to be successful at launching breakthrough
products and services (Tushman, 1997; He & Wong, 2004; O’Reilly & Tushman, 2004;
Smith & Tushman, 2005). It has further been argued that it is necessary to differentiate
PM practises based upon the competition in the industry (Sanders Jones & Linderman,
2014). However, the results indicates that internal auditors may have a difficulty moving
between exploitative and explorative processes; adapting PM requirements in the ISO
9001 MSS, at the same time as looking for conformance to the same.
The present study is limited to one company and the European part of its organisation.
Future research could include multiple case studies in organisations in different competitive
environments. To increase the validity of the study, future research of this case, could be
based on similar interviews in other geographical parts of the organisation.

6. Conclusion
Correctly adapted PM supports both exploitation and exploration. By managing this,
internal auditors can add value beyond verifying conformance to the MSS when auditing
organisations or processes characterised as explorative. However, this study points
towards that internal auditors apply ISO 9001 MSS requirements for process control, i.e.
assuming exploitative processes, even though the audited organisations and processes
were considered to be explorative and the environment fiercely competitive. This assump-
tion can possibly origin in an absent understanding of exploitation and exploration, the
differences between the two and the effects of PM. Moreover, this study indicates that it
might be challenging for internal auditors to move between exploitative and explorative
processes in an ambidextrous organization, especially when looking for conformance to
the PM requirements in the ISO 9001 MSS. This somewhat obdurate behavior can have
its genesis in an uncertainty about how broadly the ISO 9001 MSS requirements can be
interpreted. In an increasingly competitive environment, and given that PM is a core
requirement in the ISO 9001 MSS, it is vital that internal auditors are aware of the positive
and negative effects of PM on exploitation and exploration to better support explorative
processes. In order to increase the awareness, and support internal auditors in managing
ambidextrous organisations, internal audit department managers should initiate discussions
regarding what to think of when auditing different organizational settings and explorative
process, but also consider the possibility for using diverse competencies in audit teams.

Disclosure statement
No potential conflict of interest was reported by the author.

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