Is T.Q.M. (Total Quality Management) D.O.A. (Dead on Arrival)?
by Dr. Duff Watkins
from Safety Australia Magazine
Is safety an integral part of quality in Australian manufacturing? Most people responsible for safety on the work site (Safety Officers, OH&S Managers, and suppliers of safety equipment) would quickly say "yes!" Yet quality has rapidly become a word which everyone uses without fully understanding what it means. The question is: how affordable is quality --and safety?
How much do you know about quality? Test your quality IQ. What do the following US companies have in common?
- Johnson & Johnson
- Wallace Co. (makers of oil equipment)
- Varian Associates Inc. (makers of scientific equipment)
- the Fiero Plant of the Pontiac Division of General Motors
- Florida Power & Light.
All are winners of prestigious quality awards...
... and all damn near went broke anyway!
Florida Power & Light was the first non-Japanese company to capture Japan’s
highest prize for quality but they still lost US$500 Million and removed
their Chairman. Despite being a model for quality, Pontiac’s Fiero Plant was
forced to close.
It happens here too. The State Bank of South Australia was a finalist for the ‘90 Australian Quality Award and yet lost nearly $1000 Million. The award winner for individual projects in ‘80, Girvan Corporation, went into receivership mere weeks after winning its award. Clearly, you can be good and dead!
The two serious lessons to be learned are:
1) a business can be high on quality and low on profits
2) quality is wasted unless its connected to the creation of value.
Quality is too often seen as checking, counting, and monitoring. This perception started when renowned statistician and management consultant Dr. W. Edwards Deming helped revive post-war Japanese industry by introducing methods of quality control through detailed measurement and statistical analysis in the production sides of Japanese companies. This Statistical Quality Control was later extended to include not just production but every function of a company. Thus was born Total Quality Management. TQM, as it’s now known, is really a compendium of techniques, principles, and methods for monitoring the methods by which a product or service is produced. But does TQM count the things that matter? Does it account for the intangibles in a company?
In my view TQM programs entail two premises, one spoken and one unspoken. The first and spoken premise is: by studying and then documenting carefully what you do to produce your product, you will learn about your deficiencies and inefficiencies and therefore be able to correct them. The second and unspoken premise is: documenting deficiencies automatically or necessarily leads you to correct them. The problem is that the second premise does not automatically follow from the first. Just as documenting unsafe work practices does little in and of itself to produce a safer work site, so to does documenting deficiencies automatically produce a road map to quality.
As a management consultant, I know companies which are fully certified and accredited in AS3901-2 but whose TQM programme has done little more than document production inefficiencies. All too often it seems that when the standard is reached and the ü of quality is awarded, companies simply forget that the ultimate purpose of TQM is not to document existing processes but to improve the company’s business. The fact is, simply studying how you got where you are does not necessarily take you to where you want to be.
Nor does studying how you got where you are necessarily take you to where you need to be. At worst, quality improvement programmes are fashionable, flavour-of-the-month fads which create the illusion of progress but don’t address larger more serious issues. For example, if Asia produces a better widget than Australia produces, it doesn’t help to document exactly how Australia produces an inferior widget! The ultimate goal in TQM is to make a better more competitive product, not possess an encyclopaedic knowledge of an inferior one.
The Cognitive Leap
The problem in safety is that TQM is too often linked to the "small picture" and focused on relatively insignificant results. It sometimes fails to make the important cognitive leap of jumping from what you are doing to what you need to be doing. Every company "talks" quality/safety, but not every company "walks" it. Every company is involved with quality/safety, but not every company is committed to it. Every company wants to improve itself, but not every company wants to incur the cost of improvement. And make no mistake about it, quality-- like safety-- costs. Implementing TQM is an "effortful" exercise in which companies not only have to change their procedures but their thinking as well. This is difficult since companies, like people, resist changing their habits. And implementing a TQM program is even harder than getting your work force to wear their protective spectacles when on the job, even though the benefits of the latter are much more obvious than the former!
The idea that TQM (again, like safety) will over time pay for itself, increase sales, increase market share, lower costs, motivate the work force, etc, is possibly -- but not necessarily -- true. Like any other business endeavour, TQM requires a rational justification before being embarked upon. In short, look before you leap.
Moths & Butterflies
All management is not created equally. In the survival-of-the-fittest world of business some companies thrive and some barely survive. Some are "Moths" and some are "Butterflies."
"Moths" are those companies which engage in repeated and inefficient behaviours, like a moth circling around a light. These companies confuse movement with progress. "Butterflies" are those companies which not only know what they're doing but why they're doing it. Every motion within these companies has a clear purpose and goal. Like butterflies, these companies are genuinely transformed and progress purposely from one stage (land bound caterpillar) to another stage (air bound butterfly).
TQM can’t change a small-minded "Moth" into a big-thinking "Butterfly" but
TQM can help a company "take off" by expediting its evolution from one stage
TQM won’t change a "Moth" into a "Butterfly" but it may shift a slow-moving "Caterpillar" company to the next stage of its development. Remember though, that progress has its price and that the road to the "Land of Excellence" is bumpy.
From the Rough to the Smooth: Transiting to Competitiveness
Any quality or safety enhancing programme can fail or succeed and TQM can be a particular rocky road to travel. TQM often stalls for the following 4 reasons:
How to Fail with TQM:
- 1. Inadequate technical knowledge of what constitutes quality and how to improve it.
- 2. Short-term focus on customer and employer needs of today while overlooking the long-term needs of shareholders and the task of preserving the company’s survival. In short, if the company is not profitable and providing employment to people, it is not a quality operation.
- 3. Omission of the strategic functions (eg, marketing, planning, R&D, risk management, capital budgeting, product design, etc.) from the TQM program ensures failure because, just as it doesn’t matter how fast your train goes if its on the wrong track, it doesn’t matter how efficiently you produce if what you produce is non-competitive or undesirable. The most efficiently produced, highest quality dog food is worthless if dogs don’t like it!
- 4. Implementing TQM in isolation from other factors prevents a company from
attaining long-term competitiveness. Just as in sport athletes are told to
sustain their competitive efforts until the final siren ends the game, so
too is TQM meant to last throughout the business "game."
Success isn’t smooth. Obtaining quality in your safety program often requires a change in management style. Here are the 5 stages you can expect to experience when implementing TQM. The key is to manage differently and inculcate "quality thinking" within your company.
How to Succeed with TQM:
- 1. Forget firefighting. Look at the "big picture." Think strategically and in terms of longitudinal relationships with customers and suppliers.
- 2. Sow seeds. Introduce "quality ideas" into your organisation and encourage others to do the same. Recruit key employees to champion the cause of quality within the organisation. Remember, implementing quality is a campaign, not a one night stand.
- 3. Cultivate a culture in which everyone seeks to do things better.
- 4. Install quality management systems such that quality is owned by all. At this stage TQM is perceived as a good idea with benefits for all.
- 5. Coherent creativity is the goal. That is, when everyone is engaged in a coordinated effort to improve activities and when quality is seen as a way of life.
The Map Isn’t the Territory
TQM can be a useful map when travelling to the "Land of Excellence" but the map is not the territory. TQM may guide a company from being average to above-average, from unsafe to more safe, but it constitutes a a method rather than a purpose, a means rather than an end.
TQM: "what it is and what it ain’t"
TQM is not a panacea, quick-fix solution or business miracle. TQM is a method for collecting data which, in turn, may become useful information. The chart below summarises the best and worst aspects of TQM:
At worst, TQM...
At best, TQM...
gathers only data
discovers new ideas
measures only performance
measures the creation of value
concerned with methods (eg, cost-cutting, defect reduction, quicker cycle times, etc)
concerned with customer
views quality as its own reward
views quality as a means to a higher end
self-analysis for commercial reasons
The Parable of the Two Wrist Watches
One problem with TQM is that is sometimes lacks common sense. For example,
say you were offered a choice between two watches:
one which is stopped
one which loses a second every 24 hours
which would you choose?
When offered this choice a highly sophisticated computer chose the stopped watch. It reasoned that the stopped watch was correct at least twice a day whereas the watch which lost a second-a-day was only correct every 1,394 years!
Common sense tells us, of course, that losing a second-a-day would go unnoticed and is therefore a very tolerable margin of error. Moreover, the slow watch would still be extremely useful. A stopped watch, however, is good for nothing except decoration.
So it is with TQM. When TQM is divorced from the business result it becomes
a cosmetic feature, a decoration. The same is true of safety.
Common sense also tells us that "quality" means different things to different people. Quality varies just as companies do. K-Mart is not David Jones; BMW is not Volkswagen. Yet they successfully coexist in the market because each provides quality in the form of consistent product. Shoppers expect, for example, to find a particular type of merchandise in K-Mart and they know it won’t be of the same quality of merchandise as found in David Jones. No one confuses a BMW with a Volkswagen, yet both cars have a particular and specific quality which suits their respective markets.
Love in the Morning
TQM in isolation is like silicon breast implants in starlets: it may help you look good for a while and attract attention but will anybody love you in the morning?! Likewise TQM may help you look good in the market; gain you ISO 9000 accreditation, and make you advertisements look "snazzier", but will your customers still love you in the morning?
What’s true of TQM is true of safety. When taken in isolation, TQM or safety may miss the point, which is: to build a better business. A "better business" means quite simply: more profit, greater return to shareholder, more customers and more satisfied customers, greater market share, better products, greater value being produced, etc. Nothing less will do.
ROQ > TQM
One way to ensure that 1) your customers stay in love with you and 2) that you stay is business is ROQ (Return On Quality). ROQ means ensuring that any quality enhancing procedure you put into place provides a worthwhile return that justifies the cost of implementation. This idea clearly pertains to safety since a work site must be simultaneously safe and profitable.
ROQ ensures that the steps taken to improve quality simply pay for themselves. For example, at AT&T in the US any proponent of any new quality initiative must first demonstrate it will yield at least a 30% drop in defects and a 10% return on investment.
ROQ measures not only the tangibles within a company, but the intangibles as well. After all, customers are an economic asset which are not listed on a company’s balance sheet. Yet their wishes should be taken into consideration.
ROQ basically ensures that the quality you offer equals the quality the customer wants. For example, the package delivery company UPS realised that their customers were not as obsessed with on-time delivery as they had thought and learned that what the customers really wanted was advice from the UPS drivers. So they allowed their drivers to slow down and take more time dealing with customers. It cost UPS $4.2M in driver’s time but earned the company tens of millions in revenue.
How Much is Enough?
How good should a product be? What is a sufficient return on quality? How safe can a site be? These vexing questions have no clear answers, which is why ROQ remains an inexact measure.
The bottom line of quality or safety, however, is the bottom line of business. If TQM enhances a company’s bottom line--- and it may not--- then it’s worthwhile. The key to TQM is the creation of value.
Value is intangible. You can’t count, number or monitor it, but you sure know when it’s absent. Most of the ingredients of value, however, are tangible. We can compute how any employee's contribution affects a company’s "deliverables." The key is to study the relationship between a company’s financial results (at which most companies are very good) and its non-financial results.
The chief task of a value centered TQM program is to measure today the ability to produce wealth in the future. Some companies have little idea as to how they actually create value. This is ironic but not surprising. After all, it’s like asking David Campese how to score tries in rugby matches or asking Kieran Perkins how to shave seconds off world record swim times. They might reply: "Just do it!"
Of course, not everyone is capable of "just doing it." Research indicates that the best advice a young, aspiring athlete might receive is to "choose your parents wisely!" because in sport-- as in business-- some factors critical to success are outside one’s control. In sport, in business and in life we largely inherit that with which we must work. Just as it may not be practical or worthwhile for every child to aspire to become a world class athlete, so too it may not be practical for every Australian company to aspire to world class status. TQM certification can be as difficult to obtain as an Olympic medal --- and just as useful and temporary.
In conclusion, it is the creation of value that matters most. A company, any company, creates value by transforming input into output such that the worth of the output is greater than the input. Therefore providing a ROQ is the best way to prevent TQM from being DOA.
A Quality Parable
Once upon a time the Australians and the Japanese competed on a boat race on the Yarra River. Both teams practiced long and hard but on race day the Japanese won by a hundred meters.
The disappointed Australian management vowed that it wouldn’t happen again and set out to correct the situation. Their investigation revealed the problem: the Japanese had 8 people rowing and 1 person steering while the Australians had 1 person rowing and 8 people steering.
Management immediately hired a TQM consultant to study the Australian team structure. After many months and many thousands of dollars, management concluded that they had too many people steering and not enough rowing.
In order to compete more effectively with the Japanese, management introduced TQM, restructured the team so that it now had 4 steering managers, 3 senior steering managers, 1 executive steering manager, and a rower. A performance appraisal system was installed to give the rower an incentive to do better and become a key performer. All managers attended a 6 week course in the Whitsundays to learn more about TQM
At the next year’s race the Japanese won by 200 meters.
Australian management then sacked the rower, sold the oars, cancelled all capital investment, halted development on a new hi-tech boat, and distributed the money saved to senior managers.
How to Transform Your Company
1. Create constancy of purpose toward improvement with the aim of staying in
2. Adopt a new philosophy. Wake up! The old ways won’t work for us any more. Think differently than before.
3. Cease dependence on inspection to achieve quality. Build in quality.
4. Minimise total cost and don’t award business on the basis of price alone. Develop long-term relationships with your suppliers based on trust and loyalty.
5. In production and service, improve constantly and forever. It’ll lower your costs.
6. Train on the job.
7. Institute leadership.
8. Drive out fear. It hampers effectiveness and increases your costs.
9. Break down barriers between departments. Tap the natural synergy that already exists among your sales, production, design, and research departments.
10. Eliminate slogans, exhortations and targets for the work force. Instead ask for zero defects and new levels of productivity.
11. Eliminate production quotas on the factory floor. Eliminate management by numbers. Substitute leadership.
12. Eliminate anything that separates the hourly wage earner from taking pride in his/her workmanship (including annual reviews, merit ratings, etc.). Refocus all managers away from sheer numbers and onto quality.
13. Educate vigorously and institute self-improvement programmes.
14. Put everybody to work to transform the company. After all, it’s everybody’s business.