Brighton School of Business and Management Student Newsletter October 2010
This summer eleven of our Accountancy students successfully completed all the papers in their professional qualifications, and are now fully qualified accountants. These UK accountancy qualifications are universally acknowledged as amongst the most difficult in the world, taking a minimum of two years and 14 (very difficult!) examinations to complete.
An achievement to be proud of – Congratulations!
October Theme Managing Quality
The management of quality, and the continuous improvement of processes, products, and services, is now an essential activity, and one on which the success of the organisation depends, no matter what size, type, or business sector. It is an area of knowledge and understanding that all professionals must have, and which they must maintain and develop throughout their working lives.
There are many thousands of articles on quality management and continuous improvement, but here are a few that our Management tutor team felt would be of interest ~ see also the websites listed on the left.
Personal & Career Development -Tip of the Month
The philosophy of “continuous improvement” is based on “Kaizen” – the Japanese approach of regularly and consistently making small changes which eliminate errors, prevent mistakes, and result in an improvement.
This can be applied to our personal professional development activity, which should not simply be made up of high profile activities such as qualification courses – though those are necessary.
The Kaizen approach asks us to look at everything we do – how we study, how we apply that learning, how we try to pass that learning on to others, and to constantly look for new knowledge, consider new ways of doing things, gather new information, and to apply these to our working activities, so that almost every day we make a small, incremental, but important, improvement.
Continuous Improvement -Essential Principles
The basic elements for the Continuous Improvement philosophy are the Continuous Improvement principles, defined as natural laws for organizational success.
These principles are now established as an effective guide for the organizational and individual actions which underpin successful continuous improvement.
The principle of Leadership addresses how all employees, and specifically, managers create and sustain a clear and visible environment which is principle-centered, mission-driven, and values-aligned to guide all activities toward excellence.
The principle of Customer Satisfaction emphasizes awareness and identification of customers (internal/external and direct/indirect); responsiveness to customer needs; and ability to meet and exceed customer requirements and expectations.
This principle addresses the effectiveness of efforts to develop and realize the full potential of employees as well as suppliers, customers, stakeholders, and partners. This principle also requires the commitment of the leadership to maintain an environment conducive to full employee participation in decision making, problem solving, process improvement, and personal and organizational growth.
The principle of Performance Management embraces the management philosophy of open, honest communication; specific and timely feedback on employee performance; and positive reinforcement, recognition, and celebration of results to sustain high levels of employee accomplishment.
This principle requires the clear understanding and standardization of processes in order to enable the focus to be on the prevention of potential problems rather the correction of mistakes.
Management by Data
Management by Data directs the collection of specific, accurate, and appropriate data for use in decision making.
The principle of Continual Improvement demands a commitment to the practical and direct application of all of the principles in both day to day business processes and in concentrated process improvement activity or problem solving projects.
Kaizen in Action
“Kaizen really is a personal TQM,” says Jack Covy, an adjunct faculty member of the University of Phoenix in Fountain Valley, California. “It is much more of a foundation for how you operate in the world.”
One Kaizen characteristic is a fixation on finding and rooting out mistakes. Kaizen practitioners revel in discovering errors, including their own. Each problem is seen as an opportunity for an improvement.
Kaizen focuses on improving processes instead of results. A Kaizen practitioner may, for example, aim to improve the company’s decision-making tools without necessarily trying to make a better decision on a matter at hand that day.
Similarly, Kaizen aims to improve systems, not people. In a Kaizen company, making a mistake is not an occasion to blame the person who erred. Instead, it is considered a chance to find out what is wrong with a process.
Kaizen practitioners devote considerable time and expense to measuring such things as error rates and customer satisfaction. They are also likely to hold plenty of meetings to discuss opportunities for improvement.
At Paine & Associates, the first change to the creativity process was to invite more people to brainstorming sessions. Next, the company expanded its roster to include people from seemingly unrelated departments, such as accounting. Later, outside sources, such as clients and suppliers, were invited.
Paine also began holding meetings off-site to spur different approaches. He introduced tools such as idea-generating flash cards and brought clients’ products into meetings–for instance, when ideas were needed for a food pro- duct, the whole office ate that item for lunch.
It’s important to note that while each of these innovations helped the problem, none alone solved it. Instead of trying one thing and discarding it when it proved not to be the perfect solution, the company kept using everything that showed it had some worth.
“These are incremental improvements,” Paine stresses. “We didn’t replace one [technique] with another.”
Limits And Risks
Kaizen practitioners usually start by looking for improvements that will pro- vide quick paybacks. Rapid results boost morale and keep employees and managers enthusiastic about continuing with the improvements, says Robert Margenthaler, a management professor at Baltimore’s Loyola College in Maryland. Nevertheless, Kaizen remains a tool for businesspeople with long-term goals. That means it isn’t for everyone.
Companies in dire straits can’t wait for long-range improvement, says Oppenheim. Nor will Kaizen help companies that need to move fast, he adds. Because Kaizen aims to improve processes as opposed to results, it’s of marginal utility for companies facing important short-term decisions.
“Kaizen isn’t going to help you that much when you have to decide what your next key new product is going to be, what products to drop or what technologies to invest in, where you need to expand or where you need to consolidate or close an operation,” says Covy.
A continuous improvement philosophy also carries risks. When decisive action is called for, such as closing an operation or making a major push to expand another, Kaizen practitioners may do too little.
Their bias toward small, gradual improvements may keep them from even seeing a big opportunity.
Focusing on continuous improvement is also likely to alienate some employees because, with its constant search for error and problems, it may seem too negative. Other employees may fear they will improve themselves out of a job, says Margenthaler.
Finally, the number and value of improvements generated by the Kaizen process sooner or later begins to level out. Eventually, the returns may not justify the continued investment. At that point, says Margenthaler, a more drastic change agent such as re-engineering is often called for.
Long Term Benefits of Kaizen
Despite its limitations and drawbacks, Kaizen’s fans say it gets too little attention, especially in the United States, for the way it helps focus attention away from short-term results.
“The American approach is to go for a big quantum leap that will get us from A to Z,” says Paine. “Our approach is to go from A to B to C. That takes the pressure off everyone.”
There’s one area where Kaizen keeps the pressure up, however. That is in com- ing up with ever more ways to improve. Paine next hopes to boost creativity by setting up a computer database of ideas. Then he plans to link his Los Angeles and Costa Mesa offices with a high-speed voice, data and videoconferencing network to help employees share ideas.
Having already been ranked one of the nation’s most creative PR agencies, there is some question about where Paine & Associates can go from here. But resting on laurels is not part of the Kaizen way.
“When you talk about continuous improvement,” says Paine, “there never is an end.”
* summarised from a www.asq.org advice article
Quality from the Customer’s Perspective
What do we mean by quality for the customer? We need to answer this question from three perspectives:
The customer perspective. Quality for the customer means that, in selecting and buying the product or service, the customer has a hassle-free experience, and in using the product or service it meets or exceeds expectations for as long as they want it to. If we are providing quality for customers, then, at any moment during or after the process, they would buy more from us or recommend us to others.
Customer quality from the business perspective. Key issues include:
Identifying the target market and the needs of that market, establishing effective communication with customers or customer representatives to develop a good requirements specification, providing high-quality sales and customer service so that the customer likes the company and the interaction, as well as the product or service, and doing all of this affordably.
Customer quality from the technical perspective. Technical groups can only deliver quality to the customer if the requirements specification is a true, complete, clear representation of the wants, needs, and expectations of the requirements of all targeted customers and all stakeholders.
In working with the customer to define quality, we need to work very differently when looking at consumers or business customers.
Consumers – B2C
Let’s first look at defining quality for consumers, and then at delivering quality to them.
In defining quality for consumers, we need to address these issues:
Identifying customer groups. We identify our market by segmenting it into customer groups. Usually, we define them by age, gender, and where they live. But we can use other key factors as needed.
Describing each customer group. We describe each customer group by identifying: the purchaser who decides to buy and pays for the item; the user who actually uses it; and any other stakeholders who may be involved in the purchase decision or who need to be satisfied with the product or service. We then identify the customer’s key need or problem to be solved and other elements of their interest in the product or service.
Defining the customer requirements specification. At this point, we are ready to work out the details of what the customer really wants, and to describe it in such a way that our technical team can create the product or service and our marketing group can figure out how to promote and advertise it. We do this by working with representative customers or sometimes, by working with customer representatives. For example, a savvy marketing department might be able to define a product modification or an initial prototype of a new product, so that we save money by not working directly with the customer. The risk of using customer representatives is that, if they are wrong, we make a product that we think the customer wants, but which is not really valuable to the customer.
Defining consumer needs involves working with the mystery of personal satisfaction. Fads, styles, and the ability to influence choice—called creating a market—through advertising and establishing brand loyalty are all part of the process. Much of this operates outside of, or even against, logic. For example, an item might not be selling well until we raise the price. How can we increase sales by increasing the price? Well, if the previous price was so low that people thought the product was cheap, they wouldn’t buy it. Raising the price can reclassify the product in the customer’s mind as high end, exotic, or deluxe, and actually increase sales.
Once we define customer requirements, it is up to internal work—often technical or engineering—to meet that specification and prepare a product the customer will like. Then we must return to the customer and deliver the product effectively. This is the work of marketing, sales, and customer service with a focus on customer delight. Customer delight includes:
First and foremost, an ability to genuinely see things from the customer ‘s’ perspective. Many companies come up with ideas and gimmicks that seem to favor the customer, but really focus on the company’s bottom line. The customer can always tell.
Appropriate marketing and advertising that promotes the product honestly, features its benefits, and gives customers a good basis for deciding to buy.
A sales process, whether automated or personal that is hassle-free and appropriate.
Customer service, technical or product support, and continuing customer relations that are hassle-free, give customers what they want and need, and build a lasting relationship.
Customer delight, as a corporate goal, means that customers enjoy and appreciate every aspect of the product and every contact with the company. The business value is customer retention, repeat business, referrals, and testimonials. Customer delight boosts both sides of the profit equation. Increased sales increase revenue while repeat business and referrals reduce the cost of each sale.
Business Customers – B2B
Defining the needs of business customers and selling to them is a bit more straightforward than it is when we sell to consumers. Value to a business is that which improves the bottom line. Our first goal is to answer these questions:
How does our product or service improve the customer’s bottom line?
What roles or job titles define the decision makers in the selection of this product or service?
What are the key factors in the decision? If there is direct competition, what would make us better? If there is not, how can we demonstrate to our customers the value of what we do?
From this point, marketing can define the target market and decide how to reach the right people while the process of gathering customer requirements gives us the information we need to develop or improve our product.
The Customer – Quality Mismatch
So far, we’ve talked about how to do quality work in customer relations. In fact, it’s pretty simple and obvious, once you think about it. Now, we need to talk about how it has happened that many companies—including many companies with extensive quality programs—miss the mark, by an inch or a mile, and improve quality without adding any real value for customers or for the company.
A computer chip manufacturer spent $150 million to create a chip that was defect-free and would last 15 years. Unfortunately, they didn’t consider that the customer knew that chips would be outdated in 2—3 years. The customer went with another vendor who had focused on a chip that lasted 2—3 years and cost less.
A local transit authority in Britain is quoted as saying, “It is impossible for them [bus drivers] to keep their timetables if they have to stop for passengers.” Keep the image in mind of empty busses sailing past waiting passengers the next time you are looking to see if your measure of quality really serves the customer.
Such stories seem amazing, but they happen quite often, and for just a few basic reasons related to corporate culture and corporate quality programs. The common root causes of these problems are:
Internal managers and workers have no connection with the customer
Inside a large company, workers receive praise for, and pressure to, deliver results defined by other managers. Sometimes, these goals are part of what is needed to satisfy customers. But all too often they are either internal and meaningless to the bottom line, or incorrectly defined, so that they actually reduce customer satisfaction.
Companies don’t promote an empowered culture with customer focus. Studies show that many workers believe that their own companies don’t care about the customer or don’t provide quality to the customer. When a. worker believes that, the worker probably has solutions to customer quality problems, but is convinced that the company won’t listen.
Companies don’t use enough common sense and process mapping. In addition to workers making the common-sense connection, tools such as process mapping and system modeling can show which processes are really related to customer and company value. Companies could use these and then focus on improving key processes, instead of telling managers and workers to define all processes in a department.
Quality improvement begins by reducing cost, but ultimately offers more by improving value. The initial focus of a quality improvement program is to reduce cost by eliminating unnecessary processes and reducing wasted time and materials spent creating defective products. Many companies achieved those goals, but didn’t know where to go next. And they couldn’t see where to go, usually because the company failed to communicate a vision that linked every employee and every process to both the delighted customer and the improving bottom line.
For the above reasons, quality improvement programs can lose focus or become misdirected and, as a result, disappoint customers and damage the bottom line. Two other ways in which a quality program can actually succeed at delivering better value to customers, but still fail to improve the bottom line, are:
We’re doing a great job, but nobody knows it. Some companies are doing quality work for their customers, but do not have effective marketing. As a result, there are plenty of customers out there who would like what they do, but simply don’t know that they are there. The business can fail due to insufficient marketing even when the company delights the customers it has.
We improved, but so did everyone else. Many executive projections fail to ask, “What if the competitors do a quality improvement program just as good as ours?” Say three companies share nearly all of a market about equally. One company evaluates a quality improvement program. The team—or more likely, a consultant—says, “This quality program can reduce costs due to waste by 10% in the first year. Our competitor’s products are similar to ours. We can cut price by 5% and increase both our market share and profit margin at the same time.” He then shows a rosy picture of what it will look like to have 50% of the market and a larger profit margin. What no one asks is, “What do we get if our competitors do an identical quality improvement program?” The answer would be – nothing. If all three companies improve equally, then, a year from now, there will be a price war. Customers will be better off, getting the same quality at lower price, but the businesses will have the same customer market share and the same profit margin.
Historically, Japanese companies got a head start in steadily delivering quality. Japanese productivity and quality climbed steadily starting in the 1950s and, by the end of the 1970s, North American businesses were in big trouble. This led to over a decade of major quality improvements. However, by the early 1990s (for the reasons we’ve discussed above) the first companies were seeing that quality improvement did not always mean more productivity and profit. The issue of quality for the customer really came to the fore in the early 1990s, and terms such as customer delight and the voice of the customer began to shift the American business focus from internal quality improvements to total quality for the business and the customer.
Unfortunately, by the mid-1990s, several other things got in the way. Executives who had been promised higher market share and greater profit margins were disappointed. If we follow the example from the last bullet above, we can see how this happened. What the executives didn’t see is that, in doing a quality program, they had done the right thing for the wrong reasons. They thought they would get ahead, and were disappointed. What they didn’t see is that maintaining quality improvement was simply essential for survival. Companies that did not launch improvement programs never saw the increased efficiency and went out of business.
So the executives survived, but they were dissatisfied. In fact, they were dissatisfied customers of the quality movement, and they were feeling a lot of pressure to fix the bottom line. This led to a flurry of profit by merger and acquisition, and a focus on branding to gain customer loyalty through advertising. Process re-engineering often focused purely on cost, sometimes at the expense of quality, and often at the expense of employee loyalty. Some industries faced heavy costs from the need to prevent disaster due to lack of computer and equipment compatibility after the year 2000—the Y2K bug.
And then came the Internet, a whole new way of business, an apparently ever- expanding bubble of opportunity, and then the burst of that bubble. Many Western organisations have lost their focus on quality, lost in the melee of mergers, acquisitions, and downsizing and, all too often, looking for the quick fix and the quick buck due to a focus on the quarterly profits announced to stockholders. Now, the Internet is doing for soft skills—software development and customer service— what the Japanese success with TQM did in manufacturing in the 1980s. Business is moving overseas.
For the next decade of the 21st Century a new vision for quality improvement is needed.
The Voice of the Customer
The “voice of the customer” is an approach that developed in the 1990s in North America among both the promoters and critics of Total Quality Management. It has since been adopted by the more recent Six Sigma quality movement. “The voice of the customer” is a simple catch-phrase to remind us that we need to be certain we are addressing customer requirements—not purely internal requirements—or our idea of what the customer wants. This issue can be raised in product design, and also in troubleshooting quality problems. It allows us to ask:
Do we really know what the customer wants? Or do we need to find a way to gather or check customer requirements?
Do we know if this issue really matters to the customer? Let’s make sure before we fix what isn’t broken.
Do we really know the customer view and issues on the problem we’re working on? Or, are we doing the customers’ thinking for them, instead of listening to them?
The customer is not the only group that has requirements. We need to define and meet the requirements of all stakeholders, including applicable regulations and standards. However, the Customer is as important as any, and ultimately more important as they are the purchaser and-or user.
For the most part, delighting the customer by meeting all needs, wants, and expectations in our product and providing a high-quality customer service experience is beneficial for the company. But, as always, success requires balance. It is possible to become too customer focused. All of our quality efforts should focus on delighting the customer and we should be able to demonstrate how each quality improvement will benefit the customer, or not reduce customer value while increasing productivity and profitability.
There is one re-engineering model that is sometimes too focused on the customer. The concept is that we can replace management requirements with customer requirements. The slogan says that we eliminate management and give the customers what they want. This works in the limited circumstance where our business customers provide us with complete specifications. However, in all other cases, we have management work to do because the customer can’t define quality by himself. We must assist in the process of quality definition, then ensure its delivery. That is our essential function as quality managers.
At the same time, executives and quality managers also need to pay attention to the needs of their own business. The cost of a quality program has to be affordable and reasonable. Quality programs must not interfere with or take away from routine business operations and other important initiatives. And we can’t let the customer’s eyes grow bigger than their pocketbook when we ask them what they want, or they will define requirements that cannot possibly be delivered at reasonable cost—even though we’ve led them to expect such miracles.
Quality Management in Developing Countries
* we have included this article before, but it is relevant to this edition’s theme, and of value to new readers
For anyone who doubts the importance of taking Quality seriously, here are extracts from recent articles on Quality Management that illustrate how organisations and governments in developing and emerging countries are adopting Quality principles and techniques in order to become leading global providers.
China Leads in Adopting ‘Quality Management’ Measures for Business
“Chinese organizations are embracing management systems faster than the rest of the world in a bid to boost reputation and customer satisfaction.
The research conducted for the UK Lloyd’s Register Quality Assurance (LRQA) said the surge of investment in management systems is driven by a desire to overcome perceptions in the developed world that quality and social and environmental standards are lower in emerging markets such as China.
The desire for improved reputation, customer satisfaction and improved quality of products and services is the driving force behind the change in management systems, the report said.
China’s response has been to recognize the upside of having robust, assessed systems and the positive impact it has on reputation and customer satisfaction. Systems dedicated to managing quality control have now spread to many other areas of business operations, and have become key tools for managing organizational performance and behaviour”.
See www.chinagate.com for the full article
How India Inc is Managing Quality
“Today India boasts over 20 companies that have won the Deming Award from the Japanese Union of Scientists and Engineers, over 100 companies that have been awarded TPM (total productivity management) certificates from the Japan Institute of Plant Maintenance, and 50,000 ISO-certified companies.
A leading example is in the auto components industry, where, amongst China, India and Thailand, India is No.1 on the quality of products supplied, and multinational companies have begun to see the benefits of sourcing from India.
General Motors and Caterpillar source radiator caps from Sundram Fasteners – the company has won GM’s best-supplier award for three years. GM sources light equipment from Lumax. Mitsubishi of Japan sources front-axle beams from Bharat Forge. Federal Mogul of the US sources components through a tie-up with the Anand group.
This is a reflection of the increasing quality consciousness of India Inc, generated by the Total Quality Movement launched in the 90’s that gained momentum resulting in TQM and TPM now being extremely popular models among Indian companies”.
See www.rediff.com for the full article
Featured BSBM Courses
If Quality Management is a major, significant, part of your role, or you believe it will be in the near future, we have two internationally recognised Quality Management qualifications that may be of interest to you.
These are the:
Certificate in Quality Management – a Level 3 foundation course
Diploma in Quality Management – a Level 5 professional specialist course
Both are accredited by the Chartered Quality Institute – the CQI – which is itself internationally respected as one of the leading Quality educational and professional bodies.
If it is only specific aspects of quality management that you need knowledge of, the different subjects within these courses are also offered as CQI Accredited individual modules.
For details of our these, please visit:
Study Resources of the Month
As this issue is focused on Working Abroad here are some recommendations related to that topic:
Spencer K H – The Internal Auditing Handbook (Wiley Finance, 2010) ISBN: 0470518715
Smylie M A – Continuous School lmprovement: A Process of Continuous Improvement (Corwin Press, 2010) ISBN: 1412936896
Grigorourdis E, Siskos Y – Customer Satisfaction Evaluation: Methods for Measuring and Implementing Service Quality (Springer, 2009) ISBN: 1441916393
Summers D – Quality Management: Creating and Sustaining Organisational Effectiveness (Pearson, 2008) ISBN: 0136087426
Hoyle D — Quality Management Essentials (Butterworth Heinemann, 2006) ISBN: 0750667869
Dale, Van der Wiele, Van Iwaarden – Managing Quality (Wiley Blackwell, 2007) ISBN: 1405142790
Please see the links, above in the left hand column, for websites that contain valuable information, articles, reports, case studies, and reflections on Leadership.
Student Recommended Resources
“…. www.roninweb.com/pmo/10steps.htm describes the 10 steps for managing projects effectively…”
“…some Marketing sites are really hard to use …. www.knowthis.com is good though ….” our thanks to Joanna
Quotes from the Gurus
“A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it.
He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.”
“Change is vital, improvement the logical form of change.” James Cash Penney
” Excellent firms don’t believe in excellence – only in constant improvement and constant change.” Tom Peters
“When you go into an organisation and see that the employees are not serious about quality, the real problem is that the management is not serious about quality.” Philip Crosby
“Be careful not to be too proud in life, because there is always room for improvement” Sylvia Kristel (ok, not a guru, but it’s a great quote!)
Useful Study Links
the Chartered Quality Institute – the UK’s prestigious Quality institute
the American Society for Quality
BSI is the national standards body for the UK
the European Organisation for Quality
the European Foundation for Quality Management models and standards
UK Quality Scheme for Sport and Leisure organisations
www.benchmarkingnetwork.com benchmarking training and research
benchmarking exchange, advice and information
UK Department of Trade and Industry
management advice, including quality management
the international standards organisation
a UK quality network