The Impact of Quality on Social Responsibility

The guidance standard ISO-26000:2010 Social Responsibility was published in November 2010. In applying ISO 26000:2010, organizations are advised to take into consideration societal, environmental, legal, cultural, political and organizational diversity, as well as differences in economic conditions, while being consistent with international norms of behavior. As Social Responsibility becomes increasingly important in corporate boardrooms, many organizations will turn to the Quality professional for assistance linking sustainability efforts to the strategic quality planning process to deliver business results. It is said what gets measured gets improved. In his latest blog post, ASQ Executive Director Paul Borawski asks, "how do we measure return on investment in SR to assess business value?".

On a macro scale, rather than measure a country's economic output as Gross Domestic Product (GDP) or as GDP per capita, a SR look at the relative output might prorate GDP by each country's area (sq miles). Such a measurement recognizes a culture of sustainability where resources are used more efficiently. For example:

Country          GDP               Area         GDP/sq mile
USA        $14.6 Trillion    3,717,792      $ 3.9M/sq mile
Japan      $  4.3 Trillion       145,883     $29M/sq mile

On a micro-economic scale, a SR measure of Return on Investment for organizations might be a mathematical equation describing Loss to Society, incorporating terms for materials efficiency, energy use, greenhouse gas and VOC emissions, water conservation, biodiversity, etc.throughout a product's life cycle.

As one example, my employer, 3M, has had a "Pollution Prevention Pays" program since 1975. Engineering, manufacturing, laboratory, quality and EHS personnel have participated in over 8,100 PPP projects that have prevented over 2.96 Billion lbs of pollution in their first year, generating over $1.37 Billion in savings. Nearly every 3M manufacturing facility, globally, is ISO-14001 registered. 3M leadership constantly reinforces its values, principles, code of ethics and business conduct in all of our operations worldwide.

Implementation of SR is best managed using traditional quality improvement and project management tools and techniques. Development of new SR metrics for the balanced scorecard will help organizations focus on the long-term objectives.

Flawless Execution - It's All About Leadership

In his latest "A View from the Q" blog, Paul Borawksi (ASQ Exec Dir) reflects on the goal-setting process and challenges leaders everywhere to not simply act, but to execute.

Why do so many well-formulated strategic plans fail to deliver on their promises? It's all about execution - or the lack thereof. Counter to a quote attributed to Edgar Whitney, "A good design poorly executed is much to be preferred over a poor design well executed", it is my experience that a great plan poorly executed is no better than no plan at all. Mark Fields (Ford) once said, "Culture eats strategy for breakfast." So true. Flawless execution requires diligence, accountability and a change acceptance strategy to assure organizational alignment. Human capital is our most important asset. Constant, consistent leadership communications, thorough policy deployment, an effective change agent, and a set of meaningful measures are required before any organizational change can be effectively implemented and internalized.

Having a clearly defined mission, compelling vision, shared purpose and an articulated code of conduct are a great start, but adopting an improvement framework such as the Baldrige Criteria brings a much-needed systems approach to achieve organizational performance excellence. Paul Grizzell (Core Values Partners, Inc.) - Baldrige consultant, Senior Alumni Baldrige Examiner, and previous Board member and judge with the MN Council for Quality - created this simple graphic demonstrating the improved organizational alignment achieved via the Baldrige model:








Finally, to drive effective execution we must stop the practice of 2-point comparisons and begin applying statistical thinking in the corner office and board rooms across America. Sustainable flawless execution requires real change with demonstrable new levels of performance with minimal variation. We must train ourselves to look for deeper root causes and not be satisfied with the quick fix, or be tempted to react to every undesirable data point as though it were due to a special cause. All processes have variation; effective leadership appreciates the differences between special cause, common cause; can distinguish trends and patterns; and, understands that management of variation requires systems thinking along with proper use of tools, methods and approaches. Flawless execution depends on it.

Business Conduct and Statistical Thinking in Commercialization

I had an interesting question posed to me the other day: Have I ever observed or perceived an instance of suspect integrity or questionable business conduct? And if so, what did I do about it? I thought this would make for an interesting discussion with respect to practicing more (better) statistical thinking and statistical engineering in one's new product introduction system and commercialization (NPI), and product management of change (MOC) processes . I offer two different hypothetical situations...

Scenario #1:
In an effort to be "first to market", a new-to-the-world product is fast-tracked through the organization's formal new product commercialization process. Early reviews from customers are favorable. Prototypes have been shown and customer orders taken early in the product development phase. Proper risk assessments have not been completed. Equipment, process and product validation studies have not been completed. Limited product has been made - maybe on the intended production line, but more than likely only on a pilot line. Just one "Qualification" run - a short-term "machine capability" study - has been evaluated... with acceptable results. The organization's operating plan has aggressive Top Line sales growth and Operating Income targets. The NPI Gatekeepers are deciding whether to go ahead with an accelerated "soft" launch in order to meet customer demand and generate revenue.

Sound familiar? What would you do?
Some questions for thought:

• How might the industry you are in, or the markets you serve, play a role in your decision-making?
• How much risk is the organization willing to accept? Have they even quantified the risk?
• What do you know about the customer's needs? (Basic, Stated, Unarticulated)
• How certain are you that tribal knowledge and presumed understanding of VOC have been adequately validated?
• Are the test methods relevant to the customer... do they predict fitness for use?
• Are the TMs adequate (Gage R&R, resolution, stability, etc.)?
• Has acceptable process capability been demonstrated: Short-term? Long-term?
• How were the product specifications established?
• How / where will product be sampled for testing?
• What do we know about the suppliers' process capabilities?
• How rugged is the product design?
  

What other questions should be asked?


Scenario #2:
The manufacturing plant manager is facing factory cost challenges due to the triple threat of high waste, rising raw material prices, and lower than forecasted sales volume. A second source of supply for a key RM is being evaluated for reduced cost and improved availability. The customer contract (perhaps the blanket purchase order) has a boilerplate template stating that it must be notified by the vendor of any planned process or product changes. The producer's product maintenance engineer resolutely believes, based on analytical assessments and bench testing, that this RM substitution will be transparent to the customer. The business has a formalized product management of change process, but it is not consistently deployed nor executed.

Should the customer be notified?

What questions would you have of the RM substitution project?
Some thoughts:

• Is this an approved supplier?
• Is this supplier ISO registered?
• Or, has a site evaluation been performed? Or, has a self-assessment been performed?
• Have you assessed the supplier's process capability?
• Have raw material - process interactions been modeled with this new supplier?
• How many distinct lots of raw material / components have been evaluated?
• What types of product testing have been completed:
•       Standard battery of manufacturing tests only?
•       Plus, product development tests (e.g. Consumer-use tests)?
•       Plus, any stress testing or accelerated life testing?
• When did we last we validate our customers' requirements?
  

Other thoughts?

What does it mean to apply statistical thinking and engineering? I don't think it has a lot to do with tools. We have the tools; and there are consultants who can teach us to use new tools. It comes down to leadership. Leadership and execution that integrates strategic quality plan deployment with effective and efficient systems and processes. So, how are you helping your organization to become more customer focused, apply statistical thinking for better decision making, and drive the right behaviors for sustainable operational excellence, growth, and customer satisfaction?

Raising the Global Awareness of Quality

In his January 2011 'A view from the Q' blog post, Paul Borawski, ASQ Executive Director, asks how we can raise the global awareness that Quality works. In my opinion, the best way to "engage" the C-Suite (i.e. win the hearts and minds of executives) is to move the dialogue from little q to Big Q - from quality control to strategic quality planning; from process improvement to business performance excellence.

How often have we heard the tired phrase, "Quality is a given"? What does that mean? More importantly, what does Top Management think the phrase means? Has Top Management truly embraced quality as a competitive weapon - a value differentiator - and a means to build sustainable organizational results? Or, does Top Management behave as though their organization's quality processes are working fine (e.g. on par with current competition) and therefore shift resources to the next big thing?

A common and all too frequently heard definition of quality is "Conformance to Requirements". I emphatically dislike this definition. It sets the bar at mediocrity and drives goal post mentality (in-spec is "good enough"). Where is the passion and vision for excellence? Then there is the argument that customer requirements are constantly changing; when was the last time we validated our customers' requirements? Are we just meeting requirements or are we delivering exciting quality? Meeting requirements may result in short-term customer satisfaction but does not address those value propositions leading to loyalty. Conformance to requirements evokes images of a statistical tool pharmacy - providing training to the masses and doling out tools and techniques of the month with little connection to what drives sustainable organizational success.

Success in an ever-increasingly competitive world requires enterprise-level strategic quality planning, structured quality management systems, and flawless execution. Top Management must champion investments and deploy visionary strategy that connect quality improvement to sustainable growth, meaningful results and customer satisfaction & loyalty.

Good food service is not a dish best served cold

It happens all too often...

I really dislike restaurants that use a server to bring you your food instead of the waiter/waitress who took your order. More often than not, the server takes your meal on a tour of the entire restaurant before finally finding your table, but not until after several other people have breathed on it and it is no longer at the desired serving temperature. The manager obligingly apologizes, offers a new meal - to be similarly delivered - or maybe even comp the meal, but the manager completely misses the point.

If the restaurant wants my repeat business, I am not interested in a quick fix or do-over. I do not want a 3rd party delivering my meal. I have established no rapport with that individual; whereas, the wait person who took my order knows where I am seated, and more importantly, has a sense of personal ownership to get my order right.

I assume the intent of the server position is to rush the meal to the guest's table. So when that does not happen I do not want to hear excuses or insincere, almost mechanical, apologies. I want to see evidence of customer focus and continuous improvement. Where is the root cause investigation? Why didn't the server take the few seconds to know my table number before leaving the kitchen?

The Baldrige Program is Safe for Now

It has been reported that the National Commission on Fiscal Responsibility and Reform (NCFRR) has suggested the elimination of the Baldrige Performance Excellence Program as a cost-cutting move to reduce the US national debt. An illustrative example from NCFRR states that the Baldrige Award Program - along with support of the Hollings Manufacturing Extension Partnership costs the US taxpayer approximately $120 Million. Compare this figure to the $16 Billion spent on ear marks or the $20 Billion wasted to purchase military hardware that the US military does not even want.

The Malcolm Baldrige National Quality Program was established in 1987 as a means to recognize performance excellence of public and private U.S. organizations, thereby promoting U.S. competitiveness. A network of state, regional, and local Baldrige-based award programs provide potential award applicants and examiners, promotes the use of the Criteria, and disseminates information regarding the Award process. The National Institute of Standards and Technology (NIST), an agency of the U.S. Department of Commerce, manages the Baldrige National Quality Program; and the American Society for Quality (ASQ) assists in administering the Award Program Many enterprises around the globe now follow the Baldrige Criteria.

I am a 29 year Quality veteran, an ISO 9001 Lead Auditor, and a Baldrige Examiner for the State of Minnesota. I consider myself socially liberal but fiscally conservative, generally favoring a smaller central government. Without getting into a deep philosophical discussion of my personal political views, I believe a critical role of the U.S. Government is to protect the Republic, uphold the Constitution and Bill of Rights, support human rights and protect civil liberties. Consider the federal Depts of Transportation and Commerce: just as a modern, efficient transportation system is critical to the flow of goods and services for economic growth and national security, the Baldrige Criteria are critical to assure the long-term viability of organizations, thereby protecting the competitiveness of the country in an increasingly global economy.

How ironic then, that the NCFRR has identified the Baldrige National Quality Program as wasteful, when it is the Baldrige Criteria that offer a long-term solution to waste reduction and performance improvement. Rather than cutting costs by freezing wages, eliminating jobs and reducing services, we need government to focus on eliminating waste and non value-added activities to improve its productivity, cost effectiveness and operational excellence. It's all about leadership, strategic planning, taxpayer and constituent focus, measurement and analysis, employee engagement, process management, and results. Sound familiar?

Quality is not an expense, it is an investment.

Raising the Voice of Quality

In his October 26, 2010 post to ASQ’s new blog “A View from the Q”, Executive Director Paul Borawski announced that ASQ was embarking on ASQ 2015 - an initiative to evolve ASQ’s role in the world to “Raise the Voice of Quality.” Paul notes that in November 2010 ASQ joins the world’s quality organizations in observing World Quality Month, stating, “We join the world in its efforts to bring attention to the impact quality is having in every corner of the globe. Better quality in products and services, better healthcare, better education, better government, better nonprofit organizations, better communities–individually and collectively making the world a better place”.

Paul Borawski asks what it would take to get the world’s attention to focus on quality; to have the world realize the full potential of quality?

I can’t describe it but I’ll know it when I see/feel it...
The first challenge is to have a common language around Quality. Joseph M. Juran’s Quality Control Handbook is the standard reference work on quality control and established Juran as an authority on quality. In his book Juran defines quality as fitness for use described by:
• features that meet customer needs, and
• freedom from deficiencies (errors, waste, defects, etc.).
Juran is widely credited for adding the human dimension to quality management. He pushed for the education and training of managers. He also developed the "Juran's trilogy," an approach composed of three managerial processes: quality planning, quality control and quality improvement

W. Edward Deming's conceptualization of quality suggests that quality must meet both explicit and latent needs. Deming believed that quality should be the underlying philosophy of a business rather than simply a component of its strategic plan.

Philip Crosby , in his 1979 book titled Quality is Free, defined quality in terms of Conformance to Requirements. My difficulty with this limited definition is in the following key areas:
1. It reinforces a goal-post mentality and behavior where everything inside the specification limits is treated as equally good
2. It assumes that specifications were soundly established in the first place, and continuously validated over time to keep pace with changing customer needs
3. It assumes the test methods for which the specifications were originally developed are relevant to customer use. Furthermore, are the test methods robust to uncontrollable noise and other effects? Are they stable and capable?
4. It assumes the sample being tested is representative of the lot. Has the product presented for inspection been sampled properly?

David A. Garvin ("Competing on the Eight Dimensions of Quality", Harvard Business Review, November-December 1987) proposes eight critical dimensions or categories of [product] quality that serve as a framework for strategic analysis: Performance, features, reliability, conformance, durability, serviceability, aesthetics, and perceived quality.

Genichi Taguchi defines the lack of quality as a loss to society. The societal-loss perspective suggests that “quality is the loss a product causes to society after being shipped, other than losses causes by its intrinsic functions". Losses to society result from either off-target performance, variability in performance or harmful side effects. Losses due to harmful side effects are referred to by economists as "negative externalities" or external diseconomies of production or consumption. Diseconomies of production occur when a producer's actions result in an uncompensated loss to others. This societal loss perspective of quality is the foundation of today’s “Green” and “Sustainability” initiatives.


Have a strong customer focus to improve key value streams
Regardless of how the producer/provider might define quality, the customer is the ultimate judge of quality. A “quality” product, service or transaction must deliver value to the customer – as perceived by the customer. It has been my experience that the single most impactful driver of quality is a strong customer focus (followed closely by process and system improvement, and total involvement). Customer focus is the greatest enabler of employee engagement – and employee engagement is critical to the long-term success of an enterprise. The notion of “Loss to Society” is a powerful driver to the continuous improvement of systems, processes, products and services because each of us wants to leave a positive legacy for our children and grandchildren.

Paul Borawski has said that “vision represents the end state, strategy represents the starting point...” (Quality Progress, June 2007). I further suggest that the organization’s values and principles establish the boundaries of acceptable norms and behaviors among its people as they deploy and execute the strategic, operational and tactical plans towards accomplishing its mission.

Customer focus must be internalized and structured as a key organizational and personal value. Per the Baldrige Criteria for Performance Excellence, Leaders must
• identify and innovate product offerings to meet the requirements and exceed the expectations of customer groups and market segments, and
• create an organizational culture that ensures a consistently positive customer experience and contributes to customer engagement and workforce performance.

“Quality at the Source”- the practice of shifting responsibility and ownership for quality to the production operator – recognizes that quality cannot be inspected into the product; rather, quality is designed and built into the product at each step of the value stream. Quality by Design and Quality at the Source are good first starts but customer focus requires more. All of the various customer touchpoints in an organization – marketing, field sales, customer service, technical service, quality engineering, complaint analysis, etc., must be aligned and coordinated into a cohesive organizational strategy.

Leaders must talk the talk to clearly and consistently communicate their expectations, and walk the walk to personally model the desired behaviors. Every individual must take personal accountability to “own” a customer issue when it presents itself, and personally see the issue to its successful resolution. Voice of Customer (VOC) should not only be an integral component to new product development, but customer feedback and VOC validation must be integrated into the Management of Change process. Customer requirements are constantly changing. That what was once an exciting feature eventually becomes an expected or even basic need (see Kano Model).


Apply statistical thinking everywhere...
Quality performance beyond conformance to requirements is often seen as a cost rather than an investment. A focus on the customer (and an eye on the competition) will help assure the organization will not be satisfied with the status quo, but will promote organizational learning and continuous improvement. The ASQ Statistics Division has been promoting statistical thinking for 30 years as a philosophy of learning and action to understand and manage variation for performance excellence. Statistical thinking can be applied to improve strategic, managerial and operational processes everywhere.