This Article originally appeared in
Continuous Journey Magazine
Published by the American Productivity and Quality Center
January, 1995

Quality Travels At The Speed Of Change

By Howard C. Skolak, CMC

BENCHMARKING AND REENGINEERING are not total quality management (TQM). But they are two tools that can help develop a total quality culture.

There is confusion around the relationship of TQM and tools, such as problem solving tools, self-directed work teams, empowerment, ISO 9000, and Statistical Process Control (SPC). Are the tools used in place of, or to accomplish, TQM? Is total quality a way of running the business or is it a tool to improve the business? There is a tendency for firms to place a short-term emphasis on projects such as employee involvement, teams, results, and rewards, and believe that they have implemented total quality.

Tools and techniques, however, rank dead last in terms of relative importance to a total quality effort. "TQM is at least 80 percent concept and probably only 20 percent tools and techniques," said Bill Ginnodo, executive director of QPMA, in Industry Week. "It's far more important to deal with leadership, training, and empowerment - the conceptual issues that will get people in sync with the effort."

Benchmarking is a tool that can be used to identify the processes that need to be reengineered. Through the Benchmarking process, a firm will study how other firms, including competitors, handle everything from product development to marketing.

Dr. Michael Hammer, co-author of Re-engineering the Corporation, defines reengineering as the radical design of a business process for dramatic improvement. He further states that it is not for the faint of heart. It requires companies to shatter their assumptions about how they do business and implement wholesale change in their business processes.

In contrast, the TQM philosophy is to proceed on an effort that will continually change the way the business is run. This change will be in response to the needs of all the business elements, including the customers, suppliers, employees, and stockholders. During this never ending journey, adequate tools and techniques will be used to insure progress and direction are maintained.

Improvement through change is the end result of both total quality and reengineering. One significant difference between the two is the speed at which this change is expected to occur. Most of us will more readily accept change if we understand why it is required and if it can occur at a reasonable pace. Like the infant with a wet diaper, people must feel the need for a change.

Unfortunately, this need for change usually results from a major downturn in business or request from a major customer. There are, of course, some successful firms who feel they must change to remain competitive. A total quality focus would be an appropriate response under all of the above conditions.

Taco Bell used re-engineering to dramatically alter the concept of its business and significantly increase the volume of its sales. It went from a modestly successful fast-food restaurant, concerned with preparing food, to a food provider focused on serving customers. Its typical restaurant went from 70 percent kitchen and 30 percent dining area to 30 percent kitchen and 70 percent dining area. Its sales volume increased by a factor of six.

In addition to the need, employees must develop confidence that the changes will not seriously threaten job security. Individuals must be able to make mistakes without fear of major consequences and realize that not changing could be more of a threat than changing. Employees must move into this unknown atmosphere of change. This is very difficult because most people have a fear of the unknown. An organization can reduce this fear of the unknown by developing a clear vision of who it is, where it is going, and how it plans to get there.

A tendency also exists to underestimate the degree of commitment and the time required to travel toward the total quality culture. Firms frequently meet a "wall" along the continuous journey. This wall results when the investment of time, energy, and dollars is questioned. Comparing this "up front" investment to a major machine tool is difficult because the initial results are not as easy to predict or measure.

The following points from a Conference Board study by Kathryn Troy and Lawrence Schein, released February 1994, illustrate the commitment that total quality requires:

• Companies implementing total quality need at least four years to persuade their employees to buy into the philosophy and eight to 10 years to fully establish total quality principles.
• That kind of patience is not the norm in the boardrooms of corporate America, according to the study, which is based on more than five years of research on hundreds of U.S. companies.
• "Look at Motorola," she said. "It was seven or eight years into its quality effort before it won the Malcolm Baldrige Award in 1987."

It is also critical to thoroughly understand the desired results of current business processes before considering to make a change. Current business process can be documented by an old technique called flow process diagraming. This exercise is performed by the operating team to produce a better understanding of the business process, identify improvement opportunities, encourage teamwork, employee involvement, and teach the use of other tools and techniques.

BUILDING A FIRM FOUNDATION

The TQM culture must be supported by three strong and level pillars anchored in a firm foundation.

The foundation of today's total quality culture is the same as that required for any successful business. The firm must provide a product or service that customers will purchase at a price that will permit the firm to make a profit and remain in business. This foundation must support the three pillars as follows:

PILLAR #1

This pillar focuses on improving customer perception of the product and service, not on beating the competition or gaining market share. (If the three U.S. automobile manufacturers would have focused on responding to their customers and expanding the market, rather than trying to gain market share, they may not have all lost market share to the Japanese)

PILLAR #2

This pillar emphasizes educating, training, and leading employees to greater involvement in the business process.

PILLAR #3

This pillar assists employees with tools and techniques to systematically address major issues. These tools and techniques include teams, flowcharting, benchmarking, re-engineering, brainstorming, Pareto analysis, cause and affect diagrams, ISO 9000, Malcolm Baldrige National Quality Award, and Statistical Process Control (SPC).

LOOKING IN DETAIL

The first pillar, the customer's perception of the product or service, can be influenced more by the treatment the customer receives from employees than by the functional value of the actual product or service. This is supported by a survey conducted by the Forum Corporation on companies in the manufacturing and service industries. Survey results indicate that two-thirds of the people surveyed switched to a new product or service because of the way they were treated (or ignored), rather than by the value of the product or service.

Richard Melman, founder of the successful Chicago restaurant company, Lettuce Entertain You Enterprises, believes his servers are one of the key assets to the business because they are the "restaurant" in the customer's eyes. The perception of a good restaurant is not based only on the taste and temperature of the food served. The server can significantly adjust the customer's perception of his restaurant experience.

To comply with the second pillar, executives and managers should be spending the major part of their time leading the workforce along a path that will insure the current vision is understood and being pursued. Managers, therefore, will not have the time, or the knowledge, to make the "shop floor" decisions. Those are left to the people who are closest to the action and understand how the actions support the company vision.

To increase employee involvement, there must an atmosphere that encourages employees to take on responsibility without the fear of failure. Employees must also have the necessary knowledge, training, and skill that will give them the confidence to make decisions based on the team's analysis of the problem. Executives and managers should help their employees by developing the vision and atmosphere that will lead to the desired culture change.

Many companies attempting to embrace the total quality concept are expecting to use the tools described in the third pillar, without the proper education, training, and atmosphere. This is like the Russian farmer who was beating his first tractor with a whip because it had stalled.

Another major stumbling block is placing too much emphasis on a particular tool. If our major emphasis is on benchmarking, people may find themselves playing catch-up. The goal should be to get outside of the "Paradigm" by doing a better job of responding to customer's (and desired non-customer's) perception of product and service. This is enforced by the following quote from Peter Drucker in the Wall Street Journal: "In fact, the most probable assumption is that no currently working business will be valid 10 years hence - at least not without major modifications."

The same might also be said for re-engineering, which improves a business process. Organizations must be careful not to spend too much time and effort improving the business process for something with a decreasing demand (hula hoops, carburetors, etc.).

The basic concern must be that the atmosphere exists to support and encourage the cultural change process. The foundation must support the pillars that are, in turn, strong enough and level enough to adequately support the culture.

The Ford Motor Company provides an example of a successful application of total quality improvement. From 1978 to 1980, Ford's U.S. market share dropped from 23.5 to 17.2 percent. Then Chairman Donald Peterson was quoted as saying, "If we aren't customer-driven, our cars won't be either." With the help of Dr. Deming, they began implementing a new strategy that is now history.

A firm will not successfully achieve the benefits of total quality without first recognizing a need and then establishing the foundation for the continuous change. This is a slow and deliberate process that requires a commitment and persistence. There is no short cut in the continuous journey toward the total quality culture.