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Speak the Language of Top Management – Money!

Demand > Supply
Most organisations work in vertical silos. These silos have names: Purchasing, Operations, Finance, Marketing, and so on. Individual visiting cards cement the silo one belongs to. The silo also defines one’s career path in an organisation. This approach to management can work if demand for our offerings is greater than supply. Quality is not an issue.

Demand < Supply
In a competitive environment, where supply is greater than demand, we learn that the customer defines quality. Further, that the customer is outside the organisation. Our customer receives an output/offering from work that flows horizontally, across silos. We call this horizontal crossfunctional work, a process.

Basically, a customer votes for our offering with his/her money if customer perception exceeds customer expectation. While perceptions are usually stable, expectations are a moving target. These expectations are influenced by competitive offerings. Quality is the driver.

Leadership for quality
In order to become more competitive, leaders need to become more knowledgeable about quality management. They need to make quality an integral part of their business strategy. This business strategy should identify the chronic problems buried in processes. Thereafter, the vital few problems that create 80 per cent of the cost of poor quality (copq), need to be solved by leaders and managers, using structured quality improvement methodologies. Our processes must become faster, better, cheaper than our defined competition. This can result in customer satisfaction, and perhaps even customer loyalty. But this is not as easy as it sounds. Leaders
have other priorities for their respective organisations. Their vision is usually driven by the top line, market share, recognition, and so on.

Ignite bottom line thinking
However, there is a solution. Ignite the thinking of leaders with the following: the copq in any organisation is one-third of total costs; compare profit/ sales ratio with copq/sales ratio; the RoI for vital few problems is 1,000 per cent. In my experience, leaders who succeed in improving the bottom line through a quality strategy, generally have five attributes: trainer; coach; counsellor; facilitator; recogniser.

The mystery of commitment (Reproduced as is from Quality Fables Book 1)
In an English breakfast of bacon and eggs, which is  more committed? The pig? Or the hen?

Organisations desire commitment at all levels. But how do you get commitment for quality from the top management? It isn’t that they are not committed. What I mean is committed-committed.

The chairman of a large steel plant, in the 1980s, resisted any formal quality intervention on the grounds that even the 3 per cent seconds (read: rejects) of steel from his plant had a pent-up demand. Is seconds an opportunity or a threat? By translating the 3 per cent seconds into the language of top management, the opportunity converted to a threat. The language was that of money.

The alarm for 3 per cent seconds was 30 per cent of total cost! This is referred to as the copq.

The chairman compared that figure with his profit. He instantaneously became committed to drastically reducing the seconds. He  assembled other members of the top management and declared war on waste! The commander-in-chief was none other than his legendary managing director. All the rank and file from all functions stood committed to the declared war.

Why had he not seen it this way before?
Ten years later the same steel plant became the lowest cost, steel producer in the world. A further decade on it acquired an ailing steel company in the UK. The UK company is a turnaround story today, importing the best practices from the Indian parent. Finally, the answer to the original question on commitment is – the pig! He sacrifices his life.

Lessons learned
When you want to sell an idea to top management, speak the language of management – money: lock the monetary opportunity into the strategic plan; set global goals with local capabilities; get the commitment first. A change in behaviour will follow. Inefficiencies in processes are hatcheries for waste: waste translated into copq can trigger an alarm.

Random thoughts on 10 March 2019

• Will the new government appoint a minister for quality? Can all mps be trained on copq?
• Can the copq saved in running governmental institutions be strategically channelised to improve agriculture, education and healthcare?
• By halving our copq, will we become the wealthiest nation on earth? The answer is yes.