What’s Missing?

Basic Business Cents

Some organizations can’t seem to hold on to good people. Others have waiting lists of applicants. What’s the difference?

Money is the first thing that comes to mind. After all, it is the most common reason people give for leaving in exit interviews. However, it is probably not the main reason. It is a convenient excuse because people do not want to burn bridges, hurt others feelings, or they have difficulty expressing their feelings of unhappiness. They probably would not have looked for another position if they were content with their present organization. Survey after survey shows money to be in the top ten reasons for job motivation, but it is usually in the bottom five. So, if money is not in the top five reasons for leaving a present position, what is?

Some organizations foster a spirit of brotherhood that creates a good feeling of belonging and pride. People in these organizations look forward to going to work each morning. They enjoy bonding with fellow employees and feel a part of a whole. IBM in its early years was this type of organization. They even had their own songbook about the company and employees would enthusiastically sing from it at social occasions. NASA in the early years was also a good example of brotherhood in work. Employees took great pride in their role in placing a man on the moon. The United States Marine Corps has an indescribable spirit of brotherhood with their motivational drivers like no brother left behind, always faithful, and accomplishing the most difficult tasks. They also developed a strong sense of accomplishment by making through their boot camp.

The feeling of accomplishment may be the strongest reason for employees to stay with their present organization. Everyone wants to feel like they are doing something worthwhile; that their job is important. Necessary to achieve this feeling is to comprehend the aim of the organization and why that is important. Proper leadership is key to creating this environment. They must create the picture of where the company wants to be in a finite period, usually a five-year goal. This aim must be communicated throughout the organization so that all employees are in agreement with the aim.  Communication has two components, sending and receiving. This means that leadership must define the goal or aim of the organization, why it is important, what it means to employees and the community at large, and why they are important in achieving the aim. Then leadership must listen carefully to employee feedback and be willing to accept ideas from the workforce. In this way, they have ownership. A good aim or vision must satisfy three criteria:

·      It must be memorable. It is of no value if each employee cannot recite it from memory. It must be clear and concise.

·      It must be inspirational. It needs to be so desirable and important that employees want to be a part of making it happen.

·      It must be compelling. It is so powerful and irresistible that it moves employee to action.

A spirit of brotherhood accomplishing something deemed worthwhile by employees will create loyalty and fulfillment in their present organization. That overcomes temptations to move to another organization. Money cannot entice them to give that up.

Building Teamwork

Basic Business Cents

Building teamwork is an unnatural act. We are raised in a competitive society and it starts early. We experience sibling rivalry over which child is loved the most by parents, who gets the biggest dessert, who gets treated the most leniently, who is the most attractive, and who is the tallest or slimmest.

We then start school and are graded and ranked. A primary school teacher told me she tried cooperative learning for a term on a trial basis. They were allowed to experiment for a term but at the end had to return to the regular format. She said the biggest problem she encountered was to get her students to go outside and play during recess as they were so absorbed into the team learning that they did not want to interrupt it for recess. On to secondary school and the students are pressured to get better grades than others because parents believe they have to be in the top ten percent of their class to get into the college of their choice. If a child gets a poor grade in one subject, they may think they are no good, for example, in math and will quit studying or avoid math. Sports are also all about competition.

Adulthood brings more competition. We compete for the best job offer. Once in the work force; we are ranked with our fellow workers, which impacts promotions. Our legal system is competitive; we face bigotry, ego building, financial transactions, and even winning the love of our life. These are all win-lose situations but they are not all bad.

However, in many cases we are better off with a win-win situation. Teamwork is needed throughout all of our organizations. How do we do this? It is not easy; a quick literature search this morning revealed very little.

The first step to achieve win-win is to build mutual trust and respect, up down, and across the unit in which we find ourselves at the moment, whether it is our family, school, workplace, or community. Multiple brains working together are more powerful than one. Teamwork requires one to compensate with his/her strength to compensate for others weaknesses. Everyone benefits from responding to others questions.

From the book, Out of the Crisis, by W. Edwards Deming, “Everyone on a team has to have an opportunity to contribute ideas and plans. They need to understand their ideas and plans may be discarded by a consensus of the team. They may be more appropriate later. A good team has a social memory.”

A team must be united to accomplish the aim of the organization. To do that, they need to understand that aim and what is expected of them. It is key that every member of the team buys into the aim or goal before work is started. A statement must be specific and understood by all. A team has customers who must be satisfied and more.

In summary, to build teamwork in our settings, we need to:

·      Display mutual trust and respect for others

·      Understand the aim and desired result for the team

·      Openly share ideas and plans to improve

Alfie Kohn said in his book, No Contest, “Let’s work together so our workplaces and classrooms, our playing fields and families, begin to provide opportunities for us to succeed together instead of at each other’s expense.”

Business Improvement Primer

Basic Business Cents

A critique often used of business people is that they do not have time to do things right, but they always have time to do them over. People, managers and workers alike, want to do things right but are so busy they believe they don’t have time to work on improving their work. A small investment in time now can save a lot of time long term. Everyone knows that but not all know how to start.

Think of the workplace as a system made up of individual processes. Dr. Deming defined a system as a network of interdependent components that work together to accomplish the aim of the system. This aim must be clearly defined by management so that all may work together moving in the same direction. The interdependent components or processes can be reviewed for ways to improve, as no process is perfect.

An easy way to start is the Plan-Do-Study-Act cycle.

Start by identifying a process that may be an irritation or a suspect of a problem. List all the steps involved and look for opportunities to improve. Always keep in mind the system aim and Plan a change that will help to achieve it. It need not be a big change, just an improvement in the right direction.

Then Do it, make the change on a pilot basis if possible. This can be done on an individual basis or in conjunction with other workers in the process and a supervisor. Document what you have done and list all of your assumptions. Often at a later time we wonder why we took some action so it is good to be able to look back and refresh our memory.

Study the results, does the change improve the outcome or make it worse. Collect data when possible to be able to support your Plan or disprove it. Share if desired or needed. Study the impact, not only on this process, but ramifications in other parts of the organization. Our studies in physics taught us, for every action, there is an equal and opposite reaction somewhere else.

If the Action works, document it so the change is permanent and knowledge gained can be used elsewhere in the system. If it doesn’t obtain desired results, go back to the plan step and find another improvement to try. By the same token, if it works, also plan another change. PDSA is a cycle, not a linear path with a finite end to go around on a continual basis.

As always, communication is important. Ensure you know why things are done in a certain way before you change them. Share your knowledge learned with fellow workers and management.

Finding ways to improve the organization is very satisfying. The quality of the processes defines the quality of the work. Everyone wants to be proud of his or her work and continual improvement of the work processes provides that satisfaction.

“Small Ball” Performance Improvement

Basic Business Cents

Small Ball is a term used by baseball teams who compensate for lack of power hitters by focusing on the fundamentals of the game and using team speed to win games.

Some years ago, Billy Martin, a major league player and manager with six different teams including the Minnesota Twins and five different stints with the New York Yankees used the same concept which was called Billy Ball .  He was a fiery competitor who won several championships with his relentless focus on speed and fundamentals.

Does this attention to the basics apply to business? Dr. W. Edwards Deming developed the following chain reaction theory based on the work of Walter Shewhart and various Japanese engineers:

1.     Improve the quality of work processes. Results have shown that productivity does indeed improve as variation is reduced.

2.     Quality Increases and Costs Decrease. With variation reduced in the individual work processes, less waste is produced, time is saved by less rework, and a more consistent product is produced.

3.     Higher Customer Satisfaction. With higher quality products, more timely delivery, and lower cost the customer will by better satisfied.

4.     Increased Revenue and Profit. With higher productivity and lower costs, financial rewards will be realized.

5.     Business Prospers. With higher customer satisfaction, better product, better productivity, and more profit, the company excels.

Putting this plan into action requires a focus on the fundamentals, an application of “small ball”. A plan without action is useless so we want to get all employees involved in improving their own work processes. It is not rocket science. Every employee, including managers, should write down all steps in each of their key activities and then study their list to examine for a better and simpler way. If they do something because it is the way it has always been done, it is probably wrong. They should look for reducing variation in how it is done from time to time, distance either the material or the worker moves, time involved in each step including wait time, rework, redundancy, and wasted time and material. It is surprising how much is learned by looking at the steps on the paper staring back. Discuss surprises, ideas to improve, and recommendations to supervisors and fellow employees to get approval to change. Document the new way to prevent slipping back into the old way.

It is amazing how much improvement can be made in the organization with these simple steps. As time goes on, training can be obtained to enable the workers to make even further improvements to improve the work and therefore the business. The key is to get everyone involved and focus on the fundamentals of the work processes.

Lorne Ames, the President of INCO (International Nickel Corporation) Manitoba once said he now realized that what is important in performance improvement is not giant strides but baby steps—little by little, better and better.

Dynamic Apathy

Basic Business Cents

One of my fellow employees once said, “The trouble with our company is we have too much dynamic apathy.” He was speaking of the comfortable feeling shared in the company about where we were and how we were doing. It was preventing us from getting better. A popular saying in Japan is, “The good is the enemy of the better.” We need to constantly strive to improve. 

There never was a company that could not improve. There never was a process that was perfect. We need to overcome the culture of good enough. If someone tells you the reason they are doing something in a certain way because that is the way it has always been done, you know it is wrong. It could be better. The reason for status quo is sometimes fear of failure, fear of criticism for deviating from old ways, or fear to try new methods. Sometimes employees do not understand the aim of the organization or the culture of the organization is not aligned with the top-level aim. Possibly the pay is low, working conditions are terrible, good work is not appreciated, or higher level people take credit for successes or place blame for failures. Those types of conditions will lead to a shrug of the shoulders and a who cares attitude.

Gripers, complainers, self-proclaimed prophets, and armchair quarterbacks abound. People who rise above this and think positively and take action are rare and to be treasured. It is easy to analyze, scrutinize, and talk but is more important to improve the performance of each individual work process. We need people who will not just discuss a situation but do something about it. We tend to get what we expect from people; we frequently underestimate people. One woman was asked how to improve her work and she came up with some great ideas.  When asked why she didn’t come forth earlier, she said, “No one ever asked me before.”

Another time, a division vice president was explaining a dilemma to Dr. W. Edwards Deming about how a corporate decision had negatively impacted her division.  She said, “It came down from corporate, what can I do?”  Deming responded, “You have more power than you think you have, you only need to exercise it.”

Care must be taken to ensure the culture of the organization allows and encourages employees to present ideas to improve the performance of the organization. This not only improves the odds of success of the organization but also provides more job satisfaction for the employees.

Statistical methods for process improvement are useful where data can be collected. The seven management tools developed in Japan can be used where data cannot be collected. Workers and managers alike can read about them in books and technical papers, or take training.

Higher-level managers can use similar approaches to systems, but probably more important is to address the culture of the organization. People should not have a fear of failure if they are working to improve. Communication must be open, and free up down, and across the organization so improvement attempts, successes, and failures are shared in mutual learning. The overall aim and strategy must be shared, understood, and committed by all. 

No organization can stand still for long; it must constantly, forever improve. When in doubt, do something!

Job Description for Vise President of Culture

Basic Business Cents
Job Description for Vice President of Culture

• A.K.A. Director of Human Resources for large organizations
  
• A.K.A. Personnel Manager for medium organizations
  
• A.K.A. Owner for small organizations
  The typical job description for the office of personnel management reads something like, Maintains the organizations human resources by planning and evaluating employee performance systems. Not very exciting so far but it goes on,
  

• Maintains the work structure by developing job descriptions
  
• Counseling managers on candidate selection
  
• Maintains employee benefits
  
• Ensures legal compliance
  
• Manages the system of employee reviews.
  People work to get a feeling of satisfaction of performing worthwhile activities and the above descriptions do not appear very rewarding. Perhaps the most satisfying feelings of accomplishments typically come from short term projects handed down from the CEO.
  Employee annual reviews tend to be a downer in most organizations. Employees are filled with apprehension as the review can impact their chances of salary increase or promotion. Managers detest it more; it is not enjoyable to point out people’s shortcomings. It normally takes ten positive comments to balance one negative one. What should have been done is to provide feedback in real time so both parties know why and how to improve.
  That’s the old school description; now let’s look at the role of the future.
  A client once said, “Culture eats strategy for lunch every day.” Every organization has it’s own unique culture. If it is aligned with leadership, the aim of the organization and the strategy to reach it, the organization can move mountains. On the other hand, if culture is not in sync with the aim, not much will happen. So, developing, nurturing, and expanding this positive culture is one of the most important roles in the organization. The new job description has three major components.
  

1. Coordinate Staffing. Working with the managers, determine needs for new or replacement talent. As work processes are improved, the amount and kind of talent changes. If someone no longer fits in the position, termination is the last straw. The organization placed them in that position, has an investment in them, and has an obligation to find them a position that fits their shills, either within or without of the organization. Hiring and finding a new

© Louis E. Schultz

position should always be a win-win scenario. Encourage two-way feedback between the manager and employee in real time in a spirit of improving the work. Assure legal compliance with federal and state requirements.

2. Achieve Alignment of All Employees with the Aim of the Organization. True unity cannot be forced. People need to understand the reason for achieving the aim, what it means for them, the customers, the organization, and the community. Communication has two equal halves, sending and receiving. People need to understand why and true dialogue must take place in communication.
   
3. Responsible for the Pride and Work Satisfaction of the Workforce. People need to have a sense of accomplishment with their work. They need to achieve happiness in what they are doing, know that their work is important, that they are performing well, and are a part of a proud, dynamic team. The Marines call it esprit de corps, a feeling of pride, fellowship, and common loyalty shared by members of a particular group.
   

The leader of culture may be the second most important position in the organization. Culture and leadership are the two most important drivers of the success. CEOs of American corporations have tended to come from the finance department; in Japan from engineering. Could it be that the path to the top in the future is through culture management?

© Louis E. Schultz 

The Interactive Organization Chart

Basic Business Cents
The Interactive Organization Chart
The organization chart is a diagram of the reporting relationships of employees and defines the chain of command. The typical org chart shows the top executive at the top of the diagram with direct reports in a row below, followed by the next layer of reporting relationship and so forth with the first line of employees at the bottom layer. This is referred to as a vertical or top down organization. It implies that decisions are made above and no matter where you are in the chart you do as you are told by the person above. Communication is hampered by layers of management who buffer communication by passing on what they deem necessary or what is to their advantage.
Many organizations today prefer a horizontal or systems view org chart. This chart also starts with the top executive at the top but horizontal lines of key processes of the organization. An example might be product A portrayed across the chart from suppliers to design, assembly, inspection, distribution and marketing. Products B, C. etc. would be in lines under product A. The reporting relationship would then be the product managers to the top executive.
As more is learned, thoughts on the proper org chart change. A more complete chart is the Interactive Organization Chart that depicts key functions as shown below. The Top Executive title is replaced by Leadership, recognition is given to the office of Strategy, Process includes the horizontal layers of the horizontal structure listed above, Marketing is recognized as a key process, and the importance of organizational culture is portrayed as an equal department.
LEADERSHIP
STRATEGY PROCESS MARKETING
CULTURE
Leadership means defining the aim or vision of the view of the organization at some point in the future and then modeling the way to achieve it.

© Louis E. Schultz

Strategy embodies responsibility for strategy planning, acceptance by the entire organization, deployment throughout the organization, and completion.
Culture may be the most important element and is overlooked by most organizations. Today’s Human Resources Manager or Personnel Manager is saddled with a thankless task, driving the periodic employee reviews. Employees don’t like them and managers really don’t like giving them. They are thought necessary because many managers do not provide performance feedback to employees in real- time as they should so this process was created to force feedback, at least once a year. Now this office has something meaningful and challenging. Leadership might provide direction but Culture drives the organization. Elements of this position include communication, understand and acceptance of direction, explanation of “why”, listening, working conditions, happiness, and satisfaction of the workforce. A job performed well by this office will be reflected in employees who are self- motivated, enthusiastic, inspired, and compelled to achieve the aim of Leadership.
As you can see, none of the functions can stand alone. Silos with moats around them will not be acceptable or useful, each function must interact with other functions yet each has a definite area of responsibility. By working together as a team in this model, success is more likely to be achieved.

© Louis E. Schultz 

Setting the Direction for Our Lives

Basic Business Cents
There are two similar models to find your proper niche, one for your business and one for your personal life. The “Hedgehog Concept” developed by Jim Collins and described in detail in his book, Good to Great, is a useful tool to use to make sure you stay focused on what is important in your business.
Three questions the organization must research deeply as depicted in this chart. If the employees are not deeply passionate about what they are doing, the quality and quantity of their work will not be very good. The next question is what can you be the best in the world at means that “pretty good” is not good enough. You need to find a niche at which you are very good, even the best in the world. This talent needs to be defined and discovered; if not in the organization it must be obtained. The third question is what drives your economic engine. If you cannot make enough money from this pursuit to fund costs and a reasonable profit, then the niche needs to be further refined. The spot in the middle is ideal position to satisfy these three needs. This concept is often used as a check and balance on the organization’s strategic plan to see if the three questions are satisfied.

The Japanese have a concept for personal guidance, which they call “Ikigai”. The term ikigai is composed of two Chinese characters, iki which means life and gai which means what one hopes for in life. Everyone, according to the Japanese has an ikigai but it takes a deep self-examination to discover it in order to bring satisfaction and meaning to life.

That Which You Love

That Which The World Needs
Vocation
That Which You Can Get Paid for

Mission

Ikigai Passion

That Which You Are Good At

Profession

The overlap area which you love and that which you are good at is defined as your passion in life. The overlap of what you love and what the world needs is your mission in life. The overlap of what the world needs and what you can get paid for is your vocation. And, the area of overlap between that which you are good at and that which you can get paid for is your profession.
The area in which all four circles overlap, Ikigai, is the secret to enjoy life. A lot of soul searching, thought, education, training, and maneuvering may be necessary to find your niche in life but the rewards of happiness and self-satisfaction make it very worthwhile.

The two models are very similar; maybe repetition will drive the point home. It is a tragedy in life if we don’t find the right direction in which we find a need in the world that matches what we are good at, we love doing it, and we get paid a reasonable income for doing it. 

Basic Business Book

The new book, Basis Business, by Green Ivy Publishing contains more than 150 of the Basic Business Cents articles for your reference.  It is not a novel to be read from cover to cover but a collections of lessons learned that can be read one at a time to give time to reflect on how it relates to your business and what you can do to improve.
All organizations need to continually improve performance. Large businesses hire consultants and send employees to training sessions for that purpose. Small businesses have trouble with this because of time and cost investments. Basic Business consists of short articles on performance improvement that can be read at the pace and convenience available of the small business people.

Memorable Quotes by Deming, Part II

Continuing the discussion of often-used quotations from Dr. W. Edwards Deming, we find more comments on the inevitability of change in our work.

• “It is not written anywhere that survival is mandatory.” One only needs to look at the changes over the years of the companies listed on various stock exchanges. In my early years in the computer industry, we talked about IBM and the Seven Dwarfs-Burroughs, Control Data Corporation, General Electric, Honeywell, National Cash Register, Univac, and Xerox Data Systems. None of them capitalized on the change to minicomputers. Digital Equipment, Data General, and Varian became the leaders. However, none of them were a factor in the next generation of microcomputers and Apple, IBM (yes they came back), Dell, and Compaq capitalized on the new opportunity. Apple and IBM made the transition into tablet computers. As Deming said, change is not an option.
  
• “If you want to be ahead, then you have to get ahead.” We all want to get ahead in life or have our company get ahead. We won’t get there unless we do something different. We have to improve, innovate, and dare to make breakthroughs to get ahead.
  
• “Customers expectations are only what you and your competition led them to think.” We all know we have to meet, if not exceed, customers’ expectations, but Deming has a point; what leads customers to develop their expectations. Certainly, specifications to make their systems work are an input. But designs tend to be based on what is available in the industry. They review offerings of you and your customers and design around them or change their purchasing to reflect what they believe is realistically available.
  
• “We can’t make it on satisfied customers, they will switch. We need loyal customers who will wait in line and bring friends. Profit is six to ten times greater with a loyal customer.” Advertising and promotion costs are significantly higher to attract new customers, and communication and testing costs are minimized with existing customers.
  
• “Doesn’t anyone give a hoot about profit anymore?” This comment usually followed a discussion of his chain reaction theory introduced to Japanese leaders in the summer of 1950. It is:
  

o “Improve quality. Costs decrease because of less rework, fewer mistakes, fewer delays, snags: better use of machine time and materials which leads to-
o Productivity improves-
o Capture the market with better quality and lower price-
o Stay in business-
o Provide jobs and more jobs.” This chain reaction became engraved in
Japan as a way of life. “Simple, so simple”, he would often say to emphasize the point.

• Deming’s work provokes people to think, whether it’s in a classroom or on a drive across town. At New York University where he taught for many years, Deming often liked to ask his students which other courses they were taking that would help them have a positive impact on the U.S. balance of trade. “Looking at their faces, you can see them getting mad as they realize their other classes really do not contribute to reducing the balance of trade”, he said.

1. “The Japanese have much to teach Western enterprises, such as eagerness of top management to learn and to treat people as treasures not as assets.” Considering the investment in training, coaching, and understanding strengths of employees, turnover is very costly. Retaining loyal employees is not only the moral thing to do, it is also makes sense economically.
   
2. “Dogs like a pat on the back, and so do people.” Positive reinforcement is useful in encouraging employees. Pride in work and receiving satisfaction from doing work that is valued is key to employee motivation. This doesn’t mean that you never coach employees to improve but do not be overly critical.
   
3. “He who tooteth not his own horn the same doth not get tooteth.” Don’t be arrogant but at the same time have a conviction that what you are doing is right and good. Don’t hide your light under a bushel.
   
4. Closing out his famous four-day seminars where he talked about the futility of people doing their best in processes which were not capable of providing the output expected of them, he would say, “And now I leave you with five words, I have done my best.” He was reinforcing what he often said about workers, they are doing their best and he was too. At this point in his last seminar, 10 days before he passed away at age 94, there was not a dry eye in the house. 
   

New Book

I have been a volunteer for SCORE for nearly ten years.  During that time, I learned that small companies have the same problems as large ones and what I learned in my career is helpful to them.  That led to writing a newspaper column for small businesses and that led to a book.  Basic Business is a collection of over 150 lessons learned over 30 years of management consulting tailored to the small organizations.  It is available through local bookstores or online in hard copy or in electronic format.

Memorable Quotes by Deming, Part I

Basic Business Cents

Dr. W. Edwards Deming was one of the great statisticians employed by Stanford University to teach American industry about methods that allowed them to rapidly ramp up production of war-time goods during World War II. After the war, the Japanese leaders invited Deming to teach them these techniques. They were an island nation, production capacity destroyed by the war, and few natural resources, so they were desperate. He is generally credited with turning their economy around and helping them become a factor in the world economy. He then focused on improving the quality of American industry through his process thinking methods.

Some of his oft-quoted comments are:

·      “Good intentions are not enough. They must be accompanied by profound knowledge. Deming often said, “People are doing their best.” Workers and managers alike intend to do a good job but their processes and knowledge may be limiting their results. Dictionary definitions of profound and knowledge can be interpreted to mean deep understand of perceived truth. It involves knowledge of variation, understanding that no process is perfect, and variation always exists. Quality for international trade must be good enough to command a market.” If the quality of the product or service is not sufficient to entice people to buy it, there is no market.

·      “Better quality is the answer to industrial survival in the western world.” Worldwide communications are so efficient today that people know where they can find the best value, i.e., quality vs. cost. People no longer have to accept poor quality.

·      “How would you know?”  Without data, you don’t know how to make proper decisions. We often expect people to know information that they have no way of finding or analyzing.

·      “When a system is stable, telling workers about mistakes is only tampering.” Using statistical methods, like control charts, to analyze data allows people to take correct action to improve the processes., and avoid incorrect action. If a manager takes action on individual points, the variation will only be increased. Deming called this action “tampering”. If the process is stable and the mean is not acceptable or if the variation is to be decreased, the process must be improved. Simply criticizing or making demands of the employees will just make it worse.

·      “People with targets and jobs dependent upon meeting them will probably meet the targets, even if they have to destroy the enterprise to do it.”  If the targets are arbitrary, people will find a way to achieve them even if it has a detrimental effect elsewhere. It the process is not able to achieve the desired target, the employee will find a way to reach it, no matter at what cost. If the process is capable of doing more than the target, the employee will tend to not go beyond the target.

·      “People hope for instant pudding,” People want immediate results, but improving quality is a long and never-ending journey. Dr. Noriaki Kano of the Science University of Tokyo said, “I wish quality was easy but unfortunately it is a hot and sweaty job.”

·      “Change is upon us.  It is not optional.” We cannot ever rest on our laurels. Changes in market desires, technology, transportation, communication, environment, and world politics contribute to change in the business climate. We must constantly and forever change.

We will conclude with some of Dr. Deming’s famous quotations in the next article.  It is interesting to note how they are standing the test of time.

Eliminating Defects

Basic Business Cents

Customers are assets that must be protected. It is costly, disruptive, and time consuming to find replacements if we have lost them because of defective products or services. A literature search will find books that say it costs five times as much to win back a lost customer as it is to get a new one and another book that says that is a myth. Whatever, most businesses do not want to lose good customers and therefore must identify and correct defects that cause customer dissatisfaction.

This subject is sensitive to me at present because of an experience last month. I was in the middle of a project when my printer failed. This was the third printer from this manufacturer that failed for me in the last nine years. It was only one year old and under warranty for two more years. After considerable time spent troubleshooting on my own and four hours with the manufacturer’s tech support, I was told the faulty parts were not covered by warranty and I would have to call another number to purchase the parts. I got out a competitor’s portable printer that I had not used in 15 years and it worked with only the replacement of a single ink cartridge and allowed me to finish my project. Guess which brand I bought to replace the office printer. This was a product defect compounded by service defects. I may not be an important lost customer to them, but how many others are having similar experiences?

Defects have long-term costs and need to be studied in order to find causes and eliminate or reduce them. Defects are caused by variation in the work processes. This variation can usually be categorized into four areas:

·      Variation in the method employed to produce or servicing the customer.

·      Variation in material employed possibly brought on by different suppliers

·      Variation in machines used, for example, different machines used or tool wear in he same machines

·      Variation in methods of detections or inspection. Yes, sometimes good products are thrown away by faulty inspection processes as well as defects passed.

There is variation in every process but not all cause quality defects in the same degree. They can be grouped into two categories, vital few and trivial many. By studying the causes of variation, the important few that result in defects to the customer can be identified and action taken to eliminate them. Experience and intuition can be helpful in diagnosing the variation causes, but limited. It is better to find the true causes of the variation causing the critical defects by examining the data with the use of statistical tools.

It has become common to provide statistical methods to engineers but it is most effective if all employees, management and entry-level workers alike, are taught the methods to improve their work by analyzing the data statistically. Depending on their positions, the training ranges from 16 to 160 hours in duration.

Defectives are caused by variations. If these variations are reduced, defectives will certainly decrease. This is a simple, strong principle, which holds regardless of types of products or service produced. This will allow us to keep desired customers while adding new ones and enabling the business to grow and prosper.