Sustainable Growth in a Standardized World
by John E. “Jack” West
Many believe an organization is either growing or dying and that growth includes more than just size.1
If this is true, organizations need to think about how growth can be sustained because sustainable growth is the key to organizational survival. They need to learn to produce relevant results.
In a recent Harvard Business Review article, Roger L Martin, dean of the Rotman School of Management at the University of Toronto, observes, “A company that produces reliable, predictable, but meaningless results is not unlike a well-tuned car that runs full speed off a cliff.”
Martin continues, “To save themselves, corporations will have to figure out how to become more welcoming for people who are comfortable handling fuzzy data, using their judgment and creating a sense of purpose in the workplace. ...They need to understand variability in outcomes is as likely to be a sign of creativity as a sign of bad management, and that the more they drive out variability, the more they ensconce mediocrity.”2
While this thinking may seem a bit extreme to quality professionals, it certainly is provocative when considered from the viewpoint of the overall sustainability of an organization.
Signs of the Irrelevance Virus
To achieve sustainable growth, an organization needs to be able to adapt to changes. In adapting to change, an organization needs to innovate but should also take into account its own strengths and culture.3
Quality management systems (QMSs) meeting the requirements of ISO 9001 and its related sector specific documents—such as QS-9000 and ISO/TS 16989 for the automotive industry, TL 9000 for telecommunications, ISO 13485 for medical devices and AS9100 for aerospace—often bring order out of chaos.
Organizations that have been somewhat disorganized have used these systems to stabilize and standardize operations. In general, organizations report they achieved good initial results from implementing formal QMSs. This is not surprising because standardization of methods and reasonable organizational stability can be beneficial.
On the other hand, organizations frequently express frustration because several years after initial implementation, they no longer see big benefits from the system. The predictability of results makes the QMS seem irrelevant as a driver of success.
Ah, you may say, my company isn’t one of those; we have a robust, integrated management system, and ongoing improvement is a part of our daily lives. Clearly this article has nothing for me! On the contrary, if this is your situation, you are fortunate. But the irrelevance virus can strike quickly, and you need to be prepared. So, read on.
Spotting the early stages of the irrelevance virus can be a bit tricky. It is somewhat like diagnosing the West Nile virus that infects people. Both you and your doctor know you are sick, but the symptoms are so strange and varied West Nile may not even be an initial suspect.
Early indicators of the irrelevance virus can be such symptoms as:
- Top managers express frustration the audit program no longer seems to find real problems.
- People express frustration the QMS is not quick in responding to problems.
- Problems are being solved outside the formal QMS, and people are reverting to ad hoc means to correct unsatisfactory conditions (as distinguished from taking corrective action to address the cause of the condition).
- A new product or service is to be introduced, and top management makes it clear this new project “is very important and is to be handled in a ‘different’ way as an exception to the formal QMS.”
Why would a system become irrelevant?
- It may have lost its close connection to a changing business mission.
- It may have devolved to a focus on procedures and form rather than process and substance to produce results.
- It may not be linked to top management’s vision for the organization’s future.
- It may have become overly complex.
- It may not have adapted to changing external conditions.
Nature of External Change
In short, the root cause of the irrelevance virus is very likely to be a failure of the formal QMS to correctly address changing conditions. We live in a changing world. Some of the many drivers of change that impact organizations include:
- Changes in customer perception of the organization’s products and services. Competitors may improve market share at your expense by changing customers’ perceptions of their product and services vis-á-vis yours. Or, your actual performance may have declined.
- Rapid changes in technology. This is occurring in many industries.
- Rapid changes in market conditions. Factors such as e-commerce may be changing the way customers purchase products and services.
- Increasing regulatory requirements. An organization participating in regulated markets may face new regulations that could reduce flexibility.
- Deregulation. An organization in a stable, highly structured market may find itself opened to unbridled competition.
- Situations related to financing the organization. Organizations often face increased pressure for improved returns on investment to get loans or sell equity to finance ongoing operations and growth.
- Pressures related to stock price and dividend. Equity markets and stock analysts may demand improvements in performance.
- Board of director pressure. Major changes requested by a board may well be based on data or perception of impending changes in the external environment.
Most organizations are experiencing at least one of these drivers right now, and some large organizations may be experiencing all of them. An organization may find its QMS is ill equipped to sense or understand this situation, much less address it.
Change sometimes offers quality professionals unusually valuable opportunities to improve the perceived value of the QMS. The Sarbanes-Oxley law, for example, may offer an opportunity to increase the value of the QMS, as viewed by top managers.4
Getting It Right Over Time
If an organization were subjected to only one of these changes over a decade or so, that change could probably be accommodated with minimal difficulty. In the current business environment, however, most organizations are facing at least one of the changes most of the time. And there is no indication the rate of such changes is declining.
Achieving sustainable growth in the presence of these types of frequent external changes requires revitalization of the QMS—not just once, but periodically. That revitalization is not the same thing as making a small change to procedures to accommodate a new product line or revamping the design control process to make it more efficient—types of system changes that should happen routinely. But smaller changes may prove useful because they help the organization learn, and learning is the single most important concept related to achieving sustainable growth.
Adapting to external change re-quires the organization to develop the ability to:
- Understand the external business environment through data gathering.
- Analyze the data on the external business environment to gain insight into its impact on the organization.
- Develop innovative capabilities to capitalize on these impacts.
In other words, the organization needs to learn to make QMS changes that will change potential negative impacts into competitive advantages.
Preparing the Workforce
The process of revitalizing a QMS inevitably involves change. Successful change requires the organization to take advantage of people’s innovative abilities.
Innovation is the key to making the right QMS changes and implementing them correctly. Organizational leadership needs to seek out new and innovative ideas and identify the people who have the intelligence, knowledge, experience and willingness to develop them.
Engaging employees in teams to perform many small improvement projects is one approach to building overall employee confidence and competence. The workforce culture, behaviors and capabilities need to be carefully considered. Capability shortcomings need to be identified and addressed. It is difficult to accomplish this quickly, so work on this needs to start early and is an ongoing challenge.
Confidence building can result from successfully completing many small projects that are conducted in good, stable times. So start preparing the workforce now—when the time comes for major change, there will not be time for this preparation.
Planning for Change
Quality professionals should find a way to get involved in the organization’s strategic planning process if one exists. If there is no strategic planning process, lead the development of one.
Make sure a study is conducted of the organization’s external business environment. Develop an organizational profile describing the current business capabilities and conditions the organization expects to face in the next few years. To produce a profile, an organization should identify the things that provide competitive advantage and necessary business success factors.
To identify these, the organization needs to assess the competitiveness of its products, determine the values the products provide to customers and define the significant capabilities needed to provide superior customer value.
Conduct an internal self-assessment. Use the guidelines found in the appropriate version of the criteria for the Malcolm Baldrige National Quality Award5 or the simpler Annex A of ISO 90046 as criteria for the internal self-assessment. Other approaches are available.7
Whatever approach is used, it is useful to tailor the criteria to focus on those areas most important for dealing with the business conditions indicated in the business profile. Keep it simple and directed on processes key to improving the organization’s capabilities to provide value to customers.
This part of the process determines the actions you will take, so it is very important. It is more important to ask the right questions than to get the right answers.
The self-assessment results should be analyzed in the context of the business capability profile to determine what issues need to be addressed, what performance gaps need to be closed and ultimately what changes should be made to the QMS.
Mission, Vision and Principles
At this stage it is appropriate to review the organization’s formal mission and vision statements. While the basic mission of the organization may remain the same for long periods, the stated vision can be less static.
If basic changes are projected over the next few years, the vision statement should probably be updated to reflect this expectation. It is also useful to review the organization’s operating principles or values to ensure they fit changing circumstances.
Measurement is the next step. Often, the determination of what will be measured is left until the end of implementation planning. This can be a serious mistake. Defining the objectives and how to measure those results makes planning the changes easier and increases the probability of success.
It may seem everything needs to be changed. Nothing could be further from the truth. Continuity is important. In fact, most organizations need many things to remain the same.
In another part of the Harvard Business Review article mentioned earlier, Thomas A. Stewart, the magazine’s editor, advised organizations to “define what lies outside the reach of change. It may be a business … it may be a process … it may be a belief. Every business worth working for has something worth fighting for, even in the teeth of tremendous pressure to change.”8
Role of Quality Professionals
Changes to the QMS are required, and organizations need to be innovative in making those changes. It is the quality professional’s job to make certain the organization is ready to make those changes when they are needed. This cannot all be done when crisis strikes. There must be prior work and planning. Start by working on some of the following:
- Work with top managers and HR people to prepare the workforce for change.
- Facilitate or participate in a process to understand what is changing around you, and fully understand your own QMS.
- Work with top managers to ensure your mission and vision are clear and address real current and future needs.
- Facilitate a process to determine QMS changes needed to address current and future needs.
- Work with other leaders to determine what things should not be changed.
- Lead the implementation of innovative changes to the QMS to ensure sustainable growth.
Early detection of irrelevance virus symptoms is a must. If the condition is not detected early, the result is often a crisis situation.
Better yet, start acting before you see any of the symptoms. When crises hit, quality professionals may be too busy dealing with details to take time to fix the underlying issues. If this happens to you, it’s time to polish the old résumé.
- This column is based on some of the many strategies and ideas contained in Unlocking the Power of Your QMS by John E. West and Charles A. Cianfrani (ASQ Quality Press, 2004).
- Roger L. Martin, “Seek Validity, Not Reliability,” item six of the HB List—Breakthrough Ideas for 2005, Harvard Business Review, February 2005, pp. 23-32.
- JIS TR Q0005 QMS Guidelines for Sustainable Growth, draft revision to 2003 version, Japanese Standards Assn., 2003. For inquiries contact Industry Science and Technology Policy and Environment Bureau, Conformity Assessment Division, Ministry of Economy, Trade and Industry, 3-1 Kasumigaseke 1-Chome, Chiyoda-ku, Tokyo 100-8901, Japan.
- Sandford Liebesman, “Quality Practitioners and Effective Corporate Governance,” Quality Progress, March 2004, pp. 74-76.
- Criteria for Performance Excellence, separate criteria available for business, education and healthcare, www.quality.nist.gov/Criteria.htm (case sensitive).
- ANSI/ISO/ASQ Q9004-2000, Quality Man-agement Systems—Guidelines for Performance Improvement, ASQ Quality Press, 2000, in paper and PDF versions at http://qualitypress.asq.org.
- West, Unlocking the Power of Your QMS, see reference 1.
- Thomas A. Stewart, “Wanted: A Continuity Champion,” item nine of the HB List—Ideas for 2005, Harvard Business Review, February 2005, pp. 23-32.
John E. “Jack” West is a management consultant and business advisor. He served on the board of examiners for the Malcolm Baldrige National Quality Award from 1990 to 1993 and is now chair of the U.S. technical advisory group to ISO Technical Committee 176 and lead delegate to the International Organization for Standardization committee responsible for the ISO 9000 family of quality management standards. He is co-author of six books including ISO 9001:2000 Explained and Unlocking the Power of Your QMS, both published by ASQ Quality Press.