Cost of Quality

What is the cost of quality? Six Sigma asks this question from a different angle. What is the cost of poor quality? If you're in information technology and just need an acronym, that's COPQ!

So let's answer that question. What is the COPQ (Cost of Poor Quality)? A major manufacturer which, for the past three years has been outperforming the market, just reported earnings at less than half what market analysts had been expecting. Needless to say, the days of "outperform" are over...for now at least. OK, so that's the cost. Now, what about the quality side of the equation?

Well, this company is citing "higher warranty liabilities" on its products. Why do we have higher warranty liabilities? The company goes on to describe higher repair costs have impacted warranty costs. OK, so why higher repair costs? Well, we could go on and on, asking "why" five times to get to the root, but I think you get the point.

Now, let's consider a solution that approaches this from the top-down.
1. First we want to understand the market we wish to serve. Obviously this company has done just that. Then, let's target that market with a product that will meet the needs of this market we've identified, and let's come up with product characteristics and requirements that will allow us to compete profitably while differentiating ourselves from our competition.
2. Now let's translate those requirements into technical specifications so we can design a product that meets the market segment we want to serve. We want to design this product with:
a. Clarity around how we will manufacture this product economically while still meeting the specifications we developed and...
b. An understanding of how we will produce the product so we can meet the quality specifications while controlling costs.
c. Quality designed-in so we can economically support this product in the market place once it is in production and distributed.
3. With clear strategy (Step 1) and and eye to quality requirements (Step 2), we can now transition the product into production. If steps one and two were done properly, transition into production should be relatively straightforward as long as we thought about the risks that may arise as during transition.
4. Finally, we have a well-designed product, with clear specifications of designed-in quality, and the foresight that included risks of production. If stages one, two, and three were done properly, we can now rest assured stage four, operation, will have few surprises for us. We can be certain that the product will operate as expected because we designed this product with the end-in-mind within cost and quality requirements to meet the demands of the market we elected to serve at a reasonable profit level.

Hmmm, what a concept. Not a new idea...this has been with us for over 75 years.

Consider this: Accountability and Entitlement

Given this statement on ethics... "Character — the willingness to accept responsibility for one’s own life — is the source from which self-respect springs," (Joan Didion, writer)...is it possible to conclude that, if an individual works in an environment or culture that robs them of accountability or responsibility for their life, does that also rob them of self-respect or perhaps the ability to develop self-esteem or self-respect?

Or, as a friend responded to the same question, is it the result of an environment that does not demand accountability or responsibility for ACTIONS, thus robbing them of self-respect and inhibiting the growth of self-esteem or self-respect.

Any way one looks at it, one must wonder if such permissiveness in our society has permeated business. Managers are afraid (?) to discipline. Are we really afraid to hold one another accountable for what is expected of them in their jobs? Is our culture communicating the idea that the road to prosperity is padded with shock-absorbers so, if you fall, you won't get hurt? That is NOT the way to build a business and if one does adopt this approach, it's not sustainable. It will fall apart at the first rough stretch of road. At the first sign of difficulty, the whiners emerge from the woodwork and begin the finger pointing. "It's not me; it must be YOU!

Any way one looks at it, one must wonder if permissiveness has permeated our business. Managers are afraid (?) to discipline. Are we really afraid to hold one another accountable for what is expected of us? Is our culture communicating the idea that the road to prosperity is padded with shock-absorbers so, if you fall, you won't get hurt? That is NOT the way to build a business and if one does adopt this approach, it's not sustainable. It will fall apart at the first rough stretch of road. At the first sign of difficulty, the whiners emerge from the woodwork and begin the finger pointing. "It's not me; it must be YOU!

Take a look at a recent New York Times article, "Student Expectations Seen as Causing Grade Disputes"

One HAS to wonder if this attitude is developed in the young, as a result of permissiveness, and is now impacting the very businesses that have provided the foundation of America's strength.

What does all this have to do with Service Management? Everything!

As a manager, tasked with the responsibility of making a change in the processes that make your operation work, you must be aware of this phenomenon. You have to identify all the possible elements - all the variables - that may undermine your efforts and deal with them through communications and training in which you clearly state your objectives, and, more importantly, why you are taking the organization down this new path. Ignoring the fact that we have such attitudes of entitlement will not make them go away.

If you think your organization is immune to such attitudes I encourage you to think again. Re-read the New York Times article I referenced above. Take some time to do a cultural analysis of your organization. If you find accountability is not highly regarded, is not encouraged and reinforced, you may find a lack of self-respect among some of your employees which will make the task of driving improvement ever more difficult. But at least you are aware of the the issue and can plan for such a liability as part of your implementation efforts.

Improvement is Everyone's Responsibility

I'm unhappy with what I'm seeing in this industry-the space in which I work- the industry that I CHOSE to serve - because I think it's a reflection of the sense of entitlement we are seeing in our nation. It has me concerned. My job is NOT to do FOR a client, but to show them the way so they may DO FOR THEMSELVES. Yet increasingly we are seeing a detachment from the law of physics: a failure to acknowledge that our actions today impact the results tomorrow. There seems to be a pervasive sense that one doesn't have to do anything, that one does not have to take responsibility for anything, yet by some magic, their processes and services should improve.

For some reason, many in this industry are of the opinion that it doesn't matter what they do; that someone will "bail them out" or there will always be time to "do it again". Well, there isn't. If an organization is looking to improve, it is the responsibility of EVERYONE in that company, not just the consultant, and not just the CIO, and not just the project manager. Quality is EVERYONE's business. Anything less is a waste of time, and effort. Quite frankly, anything less than universal acceptance of responsibility for our actions is useless.

Improvement is about changing the way we do things. The tentacles of change MUST reach across the organization, deep into the psyche of those essential assets, the PEOPLE, that add value in producing a product. It is in this state of entitlement that creativity, productivity, and success are stifled. There is no motivation to make the incremental improvements that, when aggregated under a focused effort, will lead to the improvement that is essential to success.

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Well, We've Got To Do Something!

Our economic stimulus package is being justified by those promoting it as a measure we had to put in place because we couldn't stand idly by. Yes, something HAD to be done, but is it the right thing?

Many of today's organizations jump on the "program of the day", the favorite campaign of a new administration in organizational governance, with the same intent: "Well, it's as good as anything else. We've got to do SOMETHING".

OK, even if it's not the right thing?

There may have been a time when we could try something, stop, regroup, and then try something else. This is NOT that time. And why would we? Why do we have to learn the hard way? Today, we have countless examples of what doesn't work. But better, we have numerous case studies of what DOES! We have a framework within which we may drive improvement. We have time-tested guidance that goes beyond the "what" and directly addresses the "how".

The danger in doing "something" without thinking through the "why", "what", and "how" is the damage such reactionary, short-term actions may do to:

• Any current initiative
• The prospect of any future improvement effort
• The loss of credibility we will suffer in the process

Ask yourself, looking at the current state of the economy and the "stimulus package" do any of our representatives in Washington have any shred of credibility?

Service Management Won't Work for Us?

Many organizations do not believe common and centralized approach to processes will work for them. I find this particularly interesting. The underlying principles of ITIL and the concept of Service Management have been with us for a very long time. Prior to that, the elements expressed by the "good practices" framework were espoused in the principles of quality. The concepts are not new and, in fact, were used to manage mainframes years before the concept of distributed computing was ever developed.

Often resistance takes many forms but arises out of fear: fear of change; fear of accountability; fear of management. Regardless of the root of the resistance, it propagates unhealthy behaviors. Such behavior has the tendency to:

• Reinforce the perception that a given company is unique;
• Make individuals think their problems are unique to their business;
• Undermine the introduction of new ideas;
• Challenge the rationale of change;
• Promote activity that is incompatible with efficiency and effectiveness;
  
• Promote the sense that the road to success is an expressway.
  

Organizations that cannot come to terms with these issues will indeed struggle to be successful...but not just at implementing Service Management...they will struggle being successful in any endeavor.

Rather than focusing on all the reasons this "stuff" won't work for them, they should redirect their attention to understanding what might work and how IT Service Management can be used.