Sunday, April 13, 2014

Does Anyone Ever Appreciate the Cost Savings in a Problem that Never Happens?

Preventing problems and enabling continuous improvement requires cultural changes and leadership support

From Wikipedia: "Quality Assurance (QA) is a way of preventing mistakes or defects in manufactured products and avoiding problems when delivering solutions or services to customers". Some say that nobody ever appreciate the cost savings in problems that never happen, is it true? From strategic perspective, where does the quality fit in, how to maximize its value and sustain business prosperity?

For Quality Assurance to be applied effectively, Quality has to be built into the design process of products, systems and services. Waiting for a defect to happen, finding it and reacting to it is called Quality Inspection, not Assurance. To build Quality into the design, it starts with building it in to the business processes. The more the processes are viewed holistically and integrated, the greater the quality of the product, system, or service will be. Quality products, systems, and services are the cornerstone to providing value to the customers and satisfaction for all stakeholders. Value and satisfaction leads to happy customers and stakeholders and is the cornerstone of sustaining the existence and prosperity of the enterprise.

Preventing problems and enabling continuous improvement requires cultural changes and leadership support, and processes for identifying, assessing, preventing, and resolving problems as well as reporting the successes. The proper development life cycle is there so that you can follow good development procedures, principles and guidelines. This alone will eliminate a vast majority of flaws merely by not rushing a project, not making last second design decisions or changing the specification without engineering input. The problem of quality management is not lack of methodology but the lack of commitment to use one. As a leader you should encourage initiative, you should expect mistakes and still encourage people to make mistakes, yet you need to be able to solve the problems or to guide the team on finding the solution and this has to happen fast.

More quality isn't always better from a shareholder perspective. That’s a more insidious issue. Quality has value. Happy customers, good reputation, low return costs. But implementing it always has costs as well. There's an optimum balance between the two (quality and cost) that maximizes shareholder value, and it does not result from infinite spending to obtain perfect quality. The right point is where you maximize the value of (value of quality) minus (cost of quality).

Preventing problems requires people/systems to analyze and predict the possibility of a problem. Risks are simply potential problems. Solving problems requires people who have excellent analysis and problem solving skills. So why is it so difficult to prevent/resolve problems? In order to prevent/solve a problem, you have to get agreement that a problem/risk exists. Unfortunately, there is a "shoot the messenger" reaction in most organizations. The person who identifies problems/risks is viewed as disruptive. These individuals eventually learn to keep their observations to themselves. Thus, open culture plays significant role in quality management.

Measurement matters. Balancing the needs of the multitude of 'customers' for each C-level executives must be a daunting effort at best. The companies that drive those objectives down through the business and require iterative alignment of tactical projects/programs to business objectives are those that are most effective and productive. So where does Quality fit in? It’s measurements; at the end of the day, people do what they are measured against.

So the main reason for lack of appreciation of cost savings in problem that never happens is stiff organizational cultures in conjunction to lack of process-improvement-concept understanding as well as leadership support and effective measurement system. Organizations have to turn the attitude around as from good things come good things, high quality indeed can delight customer and bring satisfaction for all shareholders for long term.


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