Is there really a choice between profit and quality?

“Look after the customers and the business will take care of itself” is a famous quote from Ray Kroc. If anyone knows a way to look after customers without providing a quality product or service in a quality manner, I would be curious to hear about it.

I think that the origins of the conflict between costs and quality lie in the need to demonstrate to auditors or inspectors that due process is being followed for a safe product or service. Certainly, we have all come across blind and rigid adherence to doing things in a prescribed way and keeping prescribed records that do not have any obvious benefit to the customer - at least not to the casual observer, nor to the operator on the line or the staff member entering a record which demands laborious detail.

Challenging the value or benefit of a time-consuming activity is not being anti-quality; on the contrary, it is something necessary for effectiveness and efficiency and, therefore, good quality. It is everyone's job to come up with the most effective and efficient way to satisfy the customer, noting that regulatory authorities and standards bodies are also our customers.

You can try to cut costs by compromising on quality but sooner or later your customers will notice, at which point the business will have to play catch-up.

Tempted to cut quality to cut costs? Think again.

The name W. Edwards Deming looms huge in the history of quality management and the use of statistical sampling methods to control costs through controlling quality. He also made a huge contribution to the efficiency and quality improvement phenomenon in post-war Japan. Reading a Wikipedia article on Deming I was intrigued to find that Japanese disciples of Deming summarized his philosophy into a formula with an 'a' versus 'b' comparison:

(a) When people and organizations focus primarily on quality, defined by the following ratio,

quality tends to increase and costs fall over time.

(b) However, when people and organizations focus primarily on costs, costs tend to rise and quality declines over time.

From <http://en.wikipedia.org/wiki/W._Edwards_Deming>

In Deming's 1950 Lecture to Japanese Management he stressed to senior managers and owners how crucial it was for them to provide the leadership necessary for quality to reduce costs: "No matter how excellent your technicians, you who are leaders, must strive for advances in the improvement of product quality and uniformity if your technicians are to be able to make improvements. The first step, therefore, belongs with management. First, your company technicians and your factories must know that you have a fervor for advancing product quality and uniformity and a sense of responsibility for product quality."

Steps for Managers

Even if your organization (service or manufacturing) is not certified to an ISO standard, the ISO 9001 international standard provides helpful pointers for any organization's leadership to take control of quality in their organization. I like to use the catch phrase, "Measure, Monitor, Manage".

Measure frequently and monitor by regularly reviewing the following:

Audits, inspections or site visits: what was good and what can or should be improved?

Clients, customers, patients, residents: Are we soliciting feedback with surveys or other means? Are we getting complaints? Where are our "customers" on the unhappy-satisfied-delighted spectrum?

Product or Service: How satisfactorily are we meeting our own internal standards? Do we even have standards? Are they adequate?

Corrections, Corrective and Preventive Actions: Are these effective? Is there a backlog?

Action items: Have we followed through on decisions made in previous management reviews of quality?

Changes: Are there any recent changes, or impending changes, that could impact the good functioning of our organization?

Recommendations: Are there any good ideas or recommendations for improvement from any quarter, whether from within or from outside the organization? Are we actively encouraging creative input for improvement or are we fighting to maintain the status quo and suppressing 'heretical' ideas? (Consider this blog a source of recommendation for improvement.)

After diligent review of the above, manage by making decisions and assigning action items that will result in improved effectiveness and efficiency of organization processes and practices, happier clients/patients/residents or improved product with happier (and returning) customers. Consider whether you have the resources, human or material, to achieve this and what you can do if you don't.

By focusing on effective and efficient processes to ensure a quality outcome to delight customers, clients, patients or residents, costs should fall over time. Don't take my word for it. Sixty-four years ago Deming preached that message to Japanese businessmen. Organizations like Toyota still vouch for the validity of his message today.