The Quality Sieve

Quality is no longer an optional concern for corporate India.  Going by historical international comparisons, it is evident that Indian businesses that do not produce high-quality products and services will not survive the 1990s.  Quality must form an integral part of a company’s business strategy.

While it may seem implausible, it was only five years ago that we in India subscribed to certain ‘truths’ about quality, such as that better quality costs more, that quality requires extra time to produce, and that quality programmes best fit manufacturing.  Competition, if any, was selective.  Today, we know that raising quality does not raise costs - it lowers them; that quality does not take time - it saves it; and that service organizations need quality most urgently.  Competition is a reality; economic reforms have pushed India into the mainstream of global commerce.  The recurring question in our society is “How do we become more competitive?”  A good surrogate question is “What are we doing about quality?”

Firms, not nations, compete in international markets.  Each firm must choose its position within its industry.  At the heart of positioning is competitive advantage.  In the long run, firms succeed relative to their competitors if they possess substantial competitive advantages - if they can offer lower cost and better product/service differentiation.

Korean steel and semiconductor producers have attracted world markets by producing quality products at very low cost, employing low-wage but highly productive labour forces and modern technology.  They have focused on productivity - on the continuous improvement of the quality of manufacturing, service and business processes.

Differentiation allows a firm to command a premium price.  At the heart is customer delight, stemming from the institutionalization of a structured quality planning process - a process managed by quality professionals, not amateurs.  German machine tool producers, for example, compete with differentiation strategies based on superior product performance, reliability and responsive service.

Competitive advantage of either type translates into productivity higher than that of competitors.  The low-cost firm produces a given output using fewer inputs than competitors require.  The differentiated firm earns higher per unit revenues than its competitors.  Any successful competitive strategy must pay close attention to both types of advantage while maintaining a clear commitment to superiority based on one.