A Matter of Survival

The past few months have witnessed a considerable change in the Indian economic environment.  The Indian rupee has been devalued, the licence permit raj curtailed and trade barriers relaxed.  Although one may argue that such change was long overdue, the fact remains that we now have it.  India can now at least aim to be a world-class player in select niche markets.

Our survival as a nation depends on increasing exports and, over the medium term, managing a trade surplus.  The country needs to concentrate on areas where it has a comparative advantage, such as textiles, food processing, engineering and service industries.  The production function and the marketing function which hitherto have been working as adversaries will now have to work in tandem.  Indian products must move from failures per hundred to failures per billion.

Unprecedented competition
It is quite clear that Indian industry will also witness competition at our very doorstep on an unprecedented scale.  All industries will be impacted.  For many survival will be at stake.  As an emergency measure, we must improve the quality of our existing processes, both manufacturing and non-manufacturing, thereby reducing costs and competing in terms of price without sacrificing profit.  As a yardstick, the opportunity to reduce costs through this strategy, in the private-sector units alone, runs into hundreds of crores of rupees.  This cost is equally endemic in the public sector and government departments.

However, the above recommendations can only provide the badly-needed oxygen to survive, for about two years.  The long-term winners will be a few customer-driven companies.  These will be companies that develop quality strategies focusing on the changing needs of customers, market by market, globally.  The responsibility for success cannot be delegated by the chief executive officers.  The first step is a breakthrough in attitude.  In the present environment, this should not be difficult, particularly in the case of young CEOs.  There is nothing new in this customer-driven concept.  Mahatma Gandhi professed it too.

Outstanding customer-driven companies, like Xerox, Motorola and IBM, have consciously developed and implemented customer “obsession” strategies in their niche markets globally.  The fact that all these are US companies should come as no surprise.  The credit belongs to their ministry of commerce which served as a catalyst in assisting them achieve world-class standards and the Malcolm Baldrige Award.

In the early eighties, when Japanese economic aggression in the US reached a climax, resulting in a recession and considerable unemployment, the ministry of commerce invited select specialists to develop a combat strategy.  The outcome was a list of criteria to significantly surpass the Japanese quality capabilities, across industries.  These criteria were subsequently the basis for the Malcolm Baldrige Award.  The award is competitive and can be won by two US companies a year in each of the following three categories: manufacturing, service and small business.  Further, the criteria are toughened every year.

The criteria are unique, in that two of the seven evaluation categories carry almost half the weightage.  These two are customer satisfaction and upper management leadership.  The emphasis is clearly on “fitness for use” as perceived by customers.  Quality assurance systems (on the lines of ISO 9000) is one of the categories accounting for about a fifth of the total weightage.  The focus for such systems is “conformance to specifications”.

Outdoing the Japanese
In the US, companies are applying for the Malcolm Baldrige Award in the thousands.  The motivation is to understand how to satisfy changing customer needs better than the Japanese.  At the same time, companies are applying for ISO 9000 certification in the US and Japan, not as a quality strategy, but as a marketing tool.

Several US companies, whether winners or otherwise, are using the Malcolm Baldrige criteria across their global operations to achieve world class quality.  The revolution is also entering India, through an unnoticed channel.  It is to the credit of Tata Steel and Telco that they have recognized the significance of the Malcolm Baldrige criteria.  In early October they conducted self-assessments to map out the route to total quality.

Government and industry must work together as a team to achieve world class results.  Our survival is dependent on rallying around one flag symbolizing India Inc.