Systems That Go the Distance
Using ISO 9001:2015 to improve your organization’s sustainability
by John E. "Jack" West and Charles A. Cianfrani
The final draft of ISO 9001:2015, the international quality management standard, is in the balloting process and is scheduled to be issued this year. Several concepts are expected to appear in the final version that can help improve organizational sustainability.
Some argue that these concepts are inherent with the management systems concept and, therefore, represent nothing new. Others see requirements that are not only new, but also intimidating.
The new version of ISO 9001 offers an opportunity to reassess the basis on which an organization’s quality management system (QMS) is founded. This column examines several of those concepts, including:
- The requirement for understanding and acting on the organization’s context (clauses 4 and 6).
- The requirement to use risk-based thinking and associated processes to consider threats and opportunities (clauses 6 and 10).
- The opportunity to reevaluate how you understand and embrace quality management principles (all clauses).
- The opportunity to review and update your mission and vision (clause 6).
- The opportunity to reconsider how you address and integrate objectives (clauses 5 and 6).
All of these concepts require attention to planning and deployment of processes that provide opportunities to not only incorporate activities into your organization’s QMS to ensure compliance with the requirements of the latest edition of ISO 9001, but also to consider how your QMS can be deployed to ensure your organization will exist in the longer term.
What planning and action plans are appropriate and value-adding? Figure 1 illustrates the process as we see it.
An essential element of long-term survival is planning for the future. The strategic part of planning is often overlooked, however, because of the emphasis on evaluating current and projected market conditions and forecasting short-term sales trends, revenues and margins. These tactical activities may be needed, but they may only scratch the surface of future market conditions.
A logical element of a management system is to ensure that an organization has processes in place to understand the future market and business conditions it will face and to compare current and projected products and processes with that picture of the future.
This applies to more than just the organization’s products and services. Organizations also must plan changes to their QMSs to meet future needs.
An organization should first consider developing a statement of the envisioned external market impacts over the next several years and the relationship of those conditions to the organization. This is what planners call an external scan of the market conditions and circumstances that can affect the business environment. It can be conducted by answering such basic questions as:
- What functions do your products provide for customers now?
- How will customers need or want those functions to be provided three to five years from now?
- What products will you need in three to five years to provide that functionality?
- What will customers be willing to pay to get the needed or desired functionality in three to five years?
- What changes do you see coming in the legal and regulatory environment that will affect the business?
- Do you need to make basic changes in your product or its cost structure in the next three to five years?
- Do you need to make basic changes to production or service delivery processes in the next three to five years?
- Do you need to make basic changes to supporting processes in the next three to five years?
- When and how do you need to act on basic changes required for products or processes?
Such questions should be answered periodically, and the conclusions drawn from the answers compared to those of the last few years. You must be able to detect market changes that gradually become apparent.
The sooner you detect a trend, the better you will be able to act on it and ensure your organization remains relevant. If you are fast enough in detecting basic market shifts, you may be able to make changes ahead of your competitors and thereby gain market share. These activities should not occur on an ad hoc basis. There should be a process deployed to ensure they occur.
Self-assessment, internal scans
Some organizations use a self-assessment process to trigger change. Following this strategy, the results of self-assessment can highlight the need to change. It is more common, however, for organizations to be driven to fundamental change by external forces—to react to an impending crisis and ignore self-assessment. This can be a mistake.
If your external scan indicates a need to make basic changes, a next logical step is to conduct a self-assessment. Most organizations conduct them every three to five years, but it is appropriate to perform an abbreviated version at least annually. This concept is called the internal scan, and it should look at current key indicators of performance as well as envisioned product and process issues.
This process must take into account the results of the external scan but should not be considered as a secondary effort. When done properly, it involves systems-thinking concepts. Top managers must think about how the internal system interacts with the external world.
The purpose is to identify changes needed to keep a system relevant under emerging conditions. Remember that changes in one part of a system can (and frequently do) have intended or unintended consequences in other parts of a system.
Asking the right questions
Planning implies development of action items to be successful in the future, but often action plans are based on incorrect information. The planning process inherently receives information relating to lots of questions, and questions are far more important than answers.
The right answers to the wrong questions can send the organization on a disastrous course. If time is spent developing the right set of questions, the answers will be a guide to future success.
Performing external and internal scans requires strategic thinking. The consequences of ignoring strategic thinking can be serious. If you fail to detect a basic shift in customer needs or wants, your competitors may meet those needs, and you may become completely irrelevant in that market. You could be forced out of business. At best, you would need to play catch-up to remain competitive.
Organizations are typically sensitive to determining the need to change their products, services and processes. It is not so easy to know when to address overall change to a management system.
The automobile industry serves as an example of this. For decades, U.S. automakers changed models practically every year, but they were slow to recognize and react to the shift in attitude of the marketplace toward the quality of the vehicles delivered.
When the need to improve quality became a crisis, the industry had to make basic changes.
As with products and individual processes, management systems can become stale, inflexible or even irrelevant. Long-term success depends at least partially on the organization recognizing when market shifts occur and acting in time to ensure survival, if not prosperity.
After needed changes are identified, it is always worthwhile to revisit the organization’s mission and vision statements. If the needed changes are truly significant, one or both of these may need to be revised.
The drivers of change
The need for basic systemic change can be driven by several external and internal factors. External factors include:
- Changes in customer perception of the organization’s products and services. Competitors may improve their market share at your expense by changing customers’ perceptions of their product and services vis-à-vis yours. Or, your actual performance may have declined. An organization may find its management system is ill-equipped to sense or understand this situation, much less address it.
- Rapid changes in technology. An organization may find technology is changing rapidly.
- Rapid changes in market conditions. Such factors as ecommerce may be changing the way customers expect to be able to purchase products and services.
- Increasing regulatory requirements. An organization participating in regulated markets may determine new regulations could significantly reduce flexibility.
- Deregulation. An organization in a stable, highly structured market may find itself open to unbridled competition.
- Situations related to financing the organization. Often, organizations face increased pressure for improved return on investment to get loans or sell equity to finance ongoing operations and growth.
- Pressures related to stock price and dividends. Equity markets and stock analysts often demand real and perhaps unrealistic improvements in performance.
- Direct pressure to change the management system. The organization’s whole industry may be moving to compliance with a management system standard, such as ISO 9001, or customers may demand that suppliers become certified to ISO 9001.
- Board of directors (BOD) pressure. Major changes requested by a BOD may be based on data or perception of impending changes in the external environment.
Internal drivers of the need for basic change to consider may include:
- Competitive advantage. All organizations seek to achieve advantages over competitors, and top management may believe a better, faster, smarter management system may enable the organization to attract customers.
- Self-assessment results. Through review of the organization’s internal self-assessment, top management may decide there is a need to make basic changes to the management system.
- New markets. Top managers may perceive major opportunities in markets never before penetrated, and these markets may be half a world away.
- New product lines. If current markets are saturated and highly competitive, there may be a need to create whole new lines of products or services while maintaining growth of current offerings.
- Related markets. Top managers may perceive opportunities for growth in tangential markets for existing products.
- Product obsolescence. The organization’s only products are like typewriters and slide rules; they will be replaced quickly with different items that perform the same function better and faster.
For most, there is only one reality related to the drivers that are causing the organization to need change: There is nothing they can really do about them. If the changes are driven by external conditions—and most really are—even top managers can have little effect on these external forces. Organizations must, however, have processes to sense them early and to consider actions to address them swiftly.
Review organizational basics
The action plan to review organizational basics is a responsibility of top management, and sometimes it is viewed as a part of the strategic planning process. Such a review should consider:
- The organization’s basic principles and core values against needs for the future.
- The organization’s formal mission. If there is a basic shift in product strategies, there may be a need to make a major change in the organization’s formal stated purpose or mission.
- The organization’s formal vision of the future. 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 probably should be updated to reflect this expectation.
- The organization’s basic business model. Considering any major changes that are needed, the business model must describe how the organization will achieve adequate financial results. This may be a relatively simple assessment of the projected return on the investment required to make the changes, or it may require a basic revision to an organization’s business model.
Reevaluate objectives, alignment
To attain and maintain a condition of sustainability, another important activity is to ensure assignment of responsibilities for review of an organization’s objectives. If major changes are needed, there is normally a need to revise the formal organizational objectives and establish new measurements and targets. An organization will need to change its objectives to reflect results that are needed to meet the new future vision.
Establishing organizational objectives and ensuring alignment are activities that can be done only by the organization’s top management, but top management cannot do this alone. They must involve the appropriate functional leaders, supervisors and—to an appropriate extent—workers.
New key processes
An action plan and a process must describe how an organization will identify processes most important to making change, meeting a new vision, and achieving the new objectives.
This work also should start with top management but, as with determining measurements and targets, it also needs to involve others at appropriate levels. Most organizations already will have determined key processes that are appropriate for the current conditions.
The issue here is to determine which processes are important to achieving the vision and the needed future results. An action plan also must describe responsibility for development of these processes and integration with other system processes so that the system is re-optimized to meet its new objectives.
All of this is difficult work but, if done well, it builds a strong foundation on which a robust, sustainable organization can be constructed and prosper.
- For more information on the topics discussed in this column, read John E. "Jack" West and Charles A. Cianfrani, Unlocking the Power of Your QMS: Keys to Business Performance Improvement, ASQ Quality Press, 2004.
John E. "Jack" West is a member of Silver Fox Advisors in Houston. He is past chair of the U.S. Technical Advisory Group to the International Organization for Standardization Technical Committee 176 and lead delegate of the committee responsible for the ISO 9000 family of quality management system standards. He is an ASQ fellow and has co-authored several ASQ Quality Press books.
Charles A. Cianfrani is a principal consultant for Green Lane Quality Management Services in Green Lane, PA. An ASQ fellow, Cianfrani is a U.S. expert representative to ISO/TC 176. He has an MBA from Drexel University in Philadelphia and a master’s degree in applied statistics from Villanova University in Pennsylvania.