Tom posed an interesting question on The Whiteboard.
Has anybody else noticed that quality is taking a back seat lately due to the tough economic conditions? Things are tough everywhere, but I’m seeing more and more evidence of companies taking short cuts (to cut costs) where the end result is poor quality.
I’ll say what I think, but I would also like to invite anyone else to comment as well. This is an important issue.
First, it is important to understand that the term “quality” carries at least three definitions. There may be more, but here is how I came to understand them.
- Grade: The product’s position in the market.
- Fitness for use: Whether the product is suitable for the customer’s intended purpose.
- Conformance to specification: Whether the product is as the producer intended it.
In air travel, there are two (and sometimes three) grades of service offered on a typical flight. Coach is basic transportation. It gets you there quickly and safely. First Class gets you there just as quickly and just as safely as coach. But there are more amenities offered, the seats are bigger, in general it is more comfortable. First Class is a higher grade of product.
In the automobile market, we have expensive luxury cars, such as top-end BMW or Lexus. We have middle grade cars, we have basic cars. Even within a specific make and model, there are different trim levels that each carry a different “feel” as well as a different price.
Thus, the grade of the product reflects an effort to create higher value by adding features and amenities that probably go above and beyond the basic purpose.
It is important to understand that the grade of the product is set by the producer’s decisions on market position. They are trying to deliver more value in order to command higher prices.
Fitness for Use:
Fitness for use is defined from the perspective of the customer. The product is sold as being suitable for some purpose, and the customer buys it to fill a need. How well it fills that need is ultimately defined by the customer’s experience of the product in use. This is probably the easiest to screw up, as many companies tend to rely on internal experts or the highest-paid-person’s opinion rather than getting their shoes dirty and actually paying attention to what customers do with the product. It is easy to delete or alter a feature which turns out to be very important to the customer. Customers can also surprise you and find uses which were never intended by the original design.
Conformance to Specification:
Once the research is done, and the product designed, some kind of production system must be established to actually produce the product (or actually deliver the service, it is the same issue). Conformance to specification defines how well the product delivery actually matches the design intent. Where a Hilton Hotel may offer a higher grade of room than Motel 6, if both rooms are clean, ready for guests, and meet their respective hotel’s standards, then both conform to specification. The Hilton will have some kind of specification for how they deliver room service. Motel 6 has a Denny’s next door.
One More Example
If I am interested in knowing what time it is, a $35 Timex will do exactly the same job as a $5000 Rolex. With today’s quartz technology, they are both accurate within a second or two per month. So if knowing the time is my intended use, both watches are fit for use.
Clearly, however, there is a difference. The Rolex is a higher grade of product than the Timex. If my purpose is to demonstrate wealth or success, or present an extravagant gift, the Rolex is also more fit for that use.
But if they each work out of the box exactly as intended, have no scratches or other defects, then both watches conform to the specifications of their respective manufacturers. Both companies have excellent reputations for “quality” in that sense.
So now to Tom’s question.
Companies facing dramatically declining sales are under great cost pressure. Very few have limitless sources of cash to burn, and publicly held companies must also maintain the goodwill of their investors. In addition, many companies have credit covenants which require them to maintain certain ratios of debt, liabilities, assets, liquidity, etc, or face issues with their banks.
With that background, let’s look at how these pressures could drive decisions that affect quality.
Deliberate decisions are most likely to affect grade. Cheaper materials may be substituted, amenities or extra services can be cut back. Anyone who flys frequently has seen the steady erosion in previously “free” services and amenities as airlines come under increasing cost pressure. The danger here, of course, is that these decisions also reduce value in the eye of the customer, and with that, can reduce the price they are willing to pay or send them to a competitor. Thus, these “savings” can end up backfiring unless the entire industry is following pretty much the same path.
I think the more dangerous effect of turbulent times, however, is in the area of conformance to specification. But I don’t think this is the result of deliberate shortcuts. Rather, I think it is an unintended consequence at the intersection of a couple of other factors.
First, relatively few companies, be they production and manufacturing or service delivery, have an effective system of assuring that things are done the way they expect. When times are good, and employment is stable, the people develop their own individual feel for what is right and do their very best to do it. The level of quality will reach some kind of tolerable norm which may, or may not, conform to the specification.
Now mix things up. Lay off some of your workers, and move the others around. Different people are doing different jobs. Because the work is not well specified in the first place, and because there is likely no process to transfer “how to do it” (like TWI Job Instruction), people have to learn the hard way – by making mistakes. Add to the mix a perceived time pressure, and people will take shortcuts in a good faith effort to get the job done the way they think they are expected to.
If the “specification” itself is poorly defined as well, then the new “norm” for the organization could very well end up different (and worse) than what it was before. Add to that a management culture of acceptance of “what is, is” (an excused-based culture, more common than you think, especially in large companies), and you get a seeming erosion.
So here’s what I think – if Tom is seeing an erosion of quality, he is likely seeing the effect of the economic turmoil rather than deliberate decisions to cut corners. Further, is impossible to deliberately cut corners if no one has ever defined where the corners are in the first place. And that situation is more normal than not.
What is your view?
Do you see quality eroding?
If so, why do you think it is happening?