Reality: What A Concept
Reflections On The Baldrige Winners
H. James Harrington Responds
When you stop improving, you don't stand still; you start slipping backwards because your competition, both within and outside the organization, is continuously improving. You and your organization can never stop changing. The question is not: When should you stop changing? It is: When has an individual act or product progressed to an acceptable level so that you or your organization should redirect your efforts to another activity or product? Although everyone in the world theoretically would like perfect quality in everything they come in contact with, I believe there is no one who would recognize when this theoretical state occurs, if it could occur. If all of us required perfection, we would still be in the womb because individuals are imperfect when they are born and they become less and less perfect until they pass away.
The question is not: How do you produce perfect products? It is: How imperfect should a product or service be in order to provide best value to one's self and the other stakeholders (management, external and internal customers, suppliers, investors, the community and your family)? The objective is to change your processes to ensure that they provide best value to all of the processes' stakeholders, not to provide the perfect product. There is a big difference between what we need, what we want, and what represents best value to us (what we buy).
For example, as far as my
transportation is concerned:
My perfect car would look like a
Ferrari, drive like a Mercedes Benz, ride like a Lincoln
Continental, be as fast as a Maserati, run on solar
batteries, and cost less than Mattel's hot wheels. In
addition, it would be replaced free of charge every night
while I slept so that it would always be clean and never
need to be repaired. Impossible, you say, and I agree.
Perfection is impossible. What we need to do is reach a
balance between cost, schedule, quality, pollution and
performance to optimize the value of what we deliver as
viewed by all stakeholders. To make this situation worse,
different stakeholders have very different views of what
represents value to them. The young man wants speed, the
environmentalist wants zero pollution, the salesperson
who spends most of his/her time riding in a car is
concerned with the ride, the investor wants profit, the
suppliers want long lead times, manufacturing wants a
constant order flow, employees want job security, and the
community wants more jobs. "Perceived value" is the term
at which all changes should be directed. The concept of
best practice or perfection is an outmoded concept. What
we need are processes that represent best value to the
o Best-Practice Solution is defined
as: The approach that will produce the best results for a
set of conditions (e.g., minimum cycle time to produce
and process an order).
We benchmarked an order entry process
and found that the minimum order cycle time from the
salesperson to the scheduling computer was five seconds
[Case #1]. At another organization we benchmarked the
same process and found a cycle time of two days [Case
If the question is when should you stop improving, that answer is never. If the question is when should you stop improving an item you are working on, the answer is continue to improve until you meet your customer's requirements, then continue to improve to the point where the customer is unwilling to pay for any additional effort required to exceed his/her requirements and/or the maximum value point is reached. The maximum value point is reached when the gap between what it costs to provide the item and what the customer is willing to pay for the item is maximized. This gap is commonly called "profits," which fund our government, pay our salaries, maintain our retirement funds, and finance our charities. Profit is not a four-letter word as many employees treat it. It is what makes our economy tick. When profits go down, everyone loses. For example, in the early 1990s when IBM stopped being profitable, top management was replaced, over 150,000 employees were removed from the payroll, and their retired employees had one of their major income sources (stock dividends) cut by 75 percent.
As employees it is our responsibility to maximize our value to the organization that we work for. There is no doubt about it. After you have met your customer requirements it becomes purely a value proposition. There is a point when you should stop improving the quality of the item you are working on and move on to something else that adds more value to your organization and your customers. Remember that an item has no value to your customers if it has not been delivered to them.
Rule #1 for all
Organizations that live by Rule
My advice to you is very simple: Don't try to get all the lumps out of the gravy or your potatoes will be cold before the gravy is put on the table.