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WALK AWAY!

If you are a quality professional you have been asked the question 1000 times, and if you are a business man you need to be asking the question of your quality professionals. What is QUALITY?

Listen to the answers you get. They will tell you if the quality professional you are speaking with is educated in quality. A friend of mine latched onto a definition that feels good, but is not complete. The definition was "quality is when your customers return but your product doesn't". It's quick and easy to say, and it conveys a nice visual in the message. In essence he was saying quality is your reputation of value to your customers. It is how they see your company's product/service relative to to the total cost of ownership for that product or service. If they like the value vs. purchase price they will return. If they don't they won't.

The reason this definition is not good enough is because it doesn't address company profit. If you make a product that your customers love but the company makes zero profit on, then the customer would say it is a valuable product but the company would not agree. This sounds like a no-brainer, but if your product or service produces so little value to your customer that your company can't make a profit then it's a looser. Here is the key. Get your definitions correct so you can both be on the same page. Value goes to the customer and Profit goes to the company.

Juran (a quality guru) gave two definitions;

  1. A feature rich product or service that adds more value than competitors (this definition of quality costs more because you have to add more value for the customer in order to sell it). This definition references how the customer values your product relative to your competition.

  2. A defect free product or service (this one costs less to produce because there are no defects and rework loops). This definition references your cost to produce, so it is impacting profit. The customer will only see this if the life of the product is extended or the cost reductions are passed through price to the customer.

If you are a business man the happy customer is not enough. A businessman must have profit as well. In fact to be clear he must have maximized profit from the mix of products offered.If you are a quality professional you have to start with the right definition, and it must include the notion of maximizing profit. Not profit at any cost, but maximizing profit under the values of the society and company you serve.

A good quality professional will listen intently to the business manager and try to understand exactly where the concern lies. Often the manager will intuitively or anecdotally know the business is not yielding its entitlement. By listening, the astute quality professional will hear, in the story put forward by the manager, where the profit is undiscovered, disappearing or how it will soon disappear. If you can't hear these business positions in a discussion, you must sharpen your business acumen until they ring clear as a bell. Remember the business exists because it turns a profit. You are there to help it increase that profit not take from it. You must learn to propose quality projects in terms of growth not expense.

So when you propose something it must be in measurable business terms like ROI, Rate of Return, NPV, or Real Rate of Return, so it can be compared to other business investment proposals. Know the company hurdle rate so you know if your project will be considered. Before you propose anything, you need to listen with focus and understand the concerns of the business manager. You must frame your proposals in business terms. Specifically the terms you heard in the business manager's story.

Your variables are:

  • price

  • cost

  • volume

So your projects:

  • add value to the customer

  • reduce production costs

  • change capacity or volume mix through gained efficiency

Your selling story options are:

  • growth in market share which results in growth in net profit

  • growth in profit from reduced production costs

  • growth in value to the customer which results in a price increase and thus profit growth

  • growth in net profit from a modification of product mix.

Let's take a quick example. You want to implement a more effective quality system, but you run into difficulty with upper management. If you work for an organization that would rather keep profit in the company coffers instead of spending it on implementing effective quality systems, you have just heard one of two things. The business manager at the moment prefers company profitability over growth, or you have just heard the business manager does not equate an effective quality system with growth. Purposefully ask what projects are competing for the same investment money. If the answer is none then you will know the reason is profitability over growth. This statement alone can tell you volumes. If, on the other hand, the answer is several other projects are competing for limited dollars, you understand the quality systems are not considered growth.

For many quality managers this is the case because quality systems like ISO 9000 standards are not well correlated with product features or company savings, yet there is a definite cost in setting them up and maintaining them. You know standards are fundamental to creating the consistency needed from which to launch other quality initiatives, and the system in which those standards reside are excellent for embedding other quality disciplines. This would be a strategic investment that will result in growth. The manager, however, may not know this and instead might be relying on his personal experiences. He will implement the QMS if he understands implementing those standards come with growth in market share. Many customers will not do business with a company if they don't have a minimum certification in a QMS like ISO. Sooo... a business managers will implement a QMS because it gives them access to customers they wouldn't see without the certification. This project is most likely about volume because it adds perceived value to the customer and results in growth of total market share.

Use this understanding to listen intently to the concerns of why quality systems are a negative to the business. Write them down in a list as you hear them. Ask where the concerns come from, why it surfaces now and keep digging until you get the story. The story will come in the form of an experience, conflict or waste he witnessed. It is my experience that once you get the story you are past the shield of defense and you must recognize this moment with empathy and understanding. If you dismiss or attack a concern, fear, or even a prejudice exhibited by the business manager, you will be met with full opposition. Acknowledge the concern and say thank you for the perspective. You now have a lot to think about. Walk away.

Remember your coworkers and managers can have 5 basic reactions to your existence. They can actively oppose you, passively oppose you, be neutral to you, passively help you or actively help you. Only the last two reactions are acceptable options if you are to succeed in your mission and be an effective quality professional.

Go think about it and find the money that doesn't exist or is disappearing without your project. As a quality professional you know things about quality products, and you have insights the business manager does not. For instance think about the Cost of Quality and address some of the Costs Of Poor Quality. If your company does not have an agreed upon COPQ definition, then maybe that should be one of your first projects.

Recognize you must have agreement and buy in, and you must work to get it. Improve your quality. Be that catalyst of change. Go exercise your professionalism and prepare your lesson in the language of the business manager.

Happy Hunting.

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