The Quality Pyramid

The Quality Pyramid
Let me first say that I am very fortunate to have a team that is committed and dedicated to the mission of achieving world-class quality. And their dedication and commitment have been critical inputs to our success. Whilst our organization has always placed quality high on the agenda, we nevertheless felt the need to put in place an institutionalized structure to accelerate the drive for world-call quality right across the organization. In line with this, we set up a World Class Manufacturing Cell six years ago. This cell has championed the drive for world-class quality and has partnered the different businesses of our Group in their journey towards this end. I want to particularly mention 3 of or units - Thai Carbon, Thai Acrylic and Hi-Tech Carbon India, all of whom have received the Deming Award. Several other units in our Group have been TPM certified.

Product Quality
Let’s begin at the first level - product quality. Product quality is the lowest rung in the quality hierarchy and, more and more, a given and just the threshold.

I would say that the advances in the area of product quality have been nothing short of phenomenal. Over the years, the tolerances, and the room for error, have been driven down to almost infinitesimal levels, skirting zero, and the idea of quality has evolved far beyond just zero-defects - to the much higher plane of Six Sigma. At Six Sigma, for instance, the failure rate approaches 3.4 per million, a level at which quality becomes near perfect. Six Sigma suggests an accuracy, defect-free level or success level of 99.99966 percent.

In the Indian context, as we integrate into the global economy, and as the world becomes our market, the need to be world-class in product quality can never be underscored. For instance, at Hindalco, we actually sell on the LME, the global metals exchange. Our product cannot be traded on the LME unless it meets world-class standards - and in the case of aluminium, a 99.99 percent purity is required if we desire a premium on the LME. As our export component keeps rising, product quality will have to be stretched all the time.

Total Customer Experience Quality
So if everyone is offering excellent quality, how does a business differentiate itself? It’s here that we build in the service element, bundling the product with the service. Looked at this way, the concept of quality becomes all encompassing. It’s no longer just a question of manufacturing defects or poor product design. The concept of quality extends far beyond this - to the marketing effort, after-sales service, life-cycle costs, and the total user experience, right along the customer’s value addition chain. This is the second level of the quality hierarchy - the total customer experience.

Effectively, the quality boundary now extends right up to the point where the product - as well the service bundled along with the product - touches the customer, and as long as it continues to do so.

This reality shapes the response of companies. To give a simple example, take the case of reducing waiting time, which can be very unpleasant for any customer. At Disney, while the amusement rides are first-rate, getting on to the ride involves a lot of waiting. So Disney has added fun to the wait, by sending out live Disney characters to keep the crowd entertained. The expanded ambit of service has also led companies to work closely with their vendors and customers - right from the time a product is conceived - so that everyone contributes to delivering something that is just right for the customer.

Our Group is primarily a producer of commodities. Hence, for us, the quality of the total customer experience and our ability to provide solutions becomes even more critical - for building in the differentiation and the value added, and giving us the competitive edge.

For us, the total customer experience has two dimensions – first - providing customized quality, and second - going beyond the customer to the customer’s customer.

Take customized quality - this is becoming increasingly important, even in the case of continuous process industries, where the product is mass-produced. In Carbon Black, for instance, we are increasingly required to develop customized grades for particular types of tyres - for customers such as Michelin and Bridgestone. Hence, even in the case of supposedly purely commodity products, the proportion of customized products is on the rise.

The second dimension of our response involves going to the customer’s customer. Take the example of fibre. Earlier we were working only with spinners, who are our direct customers. Different spinners would have different configurations of machinery, based on their customers down the line, and on their product mix. So, taking it forward, we increasingly work with the fabric manufacturers and, very often, even the garment manufacturers - to understand trends in the garment industry, and the fabrics and blends they need. To fully comprehend downstream customer needs, we look along the entire chain.

So, it all boils down to keeping the customer delighted - the focus of quality is not driven by merely by zero-defects, but by the need to keep the number of customer defections to zero. While product quality will keep on improving - perhaps to levels that we once thought would be impossible to achieve - the competition is going to shift more and more to service - to the total customer experience.

Quality of Work Life
Going beyond the product and the customer experience, we come to the third level of the quality hierarchy, which a CEO must focus on - the quality of the work life, and the richness of the work experience.

Our Group has carried out 3 Organizational Health Surveys, with the last one covering about 9,000 managers. These surveys - which are a well accepted mode, globally, of tracking employee satisfaction and quality of work life - are conducted by outside consultants. The surveys have shown a significant improvement on critical dimensions, among them clarity about the Group’s vision and the future direction of the business unit, speed to market with new products and services, having the necessary authority to do one’s job well, recognition for high achievers and timely reward for employees. When we look at this data and link it with a business unit’s performance on product quality and the total customer experience, we see a very clear and positive correlation.

Given this clear linkage, I believe that a major objective - and a major lever - for the CEO lies in enhancing and enriching the quality of the work experience and the work life.

We, as a Group, do this by taking high- potential people through a well-chalked out, multifunctional job experience - involving different situations and different businesses and, perhaps, different countries also. This process creates managers who are holistic, who can think out of their narrow specialties, and who can take an enterprise-wide view. Along with the broad exposure, we work to continuously step up empowerment levels. This gives them the responsibility, as well as the accountability that comes with it. The enriched work experience gets the people to liberally invest their emotional equity in the organization, making possible a quantum rise in performance.

Quality of Corporate Governance
At the apex of the quality pyramid is the quality of corporate governance. Organizations cannot prosper for long - or even continue to exist - if their governance standards, fall short. Business has a much broader constituency to address - not just customers, or just what’s good for them over the short-term. I believe that the other constituencies - shareholders, lenders, and the larger society - all of these have the right to expect high quality governance from a business. Here the quality parameters include accountability, transparency and the quality of disclosure. Looking beyond the business, there are other quality parameters related to safety, environment, and doing well by society.

The notion of quality is multi-dimensional- and each dimension interacts with the other. That is how I see it. From a CEO’s perspective, quality, as a concept, has many more dimensions than it did in the past.

Where quality is concerned, I believe that our Group has made significant progress on each of the four levels of the quality hierarchy. To constantly keep one pace ahead of our customer’s expectations, given that these are continuously on the rise, provides an ongoing stretch. Managing customer expectations is the greatest challenge and to do so effectively, I believe quality has to be ingrained into the very genetic coding of the organization. It can never be regarded as the domain of a select few. For each and every employee, quality must be a never-ending obsession. The goal post is always shifting and there is no finishing line.

(Excerpted from Mr. Kumar Mangalam Birla’s acceptance address on receiving the much coveted Qimpro Platinum Standard Award for the year 2002)