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What quality means for business

05 Aug

Not The Quality Manager surveyed the people seated on the black leather chairs round the table. “If quality means business, then perhaps the next question must be something along the lines of, ‘What does business mean?’”

The R&D Manager smiled easily and pointed at the side flipchart which contained their original suggestions. “We have the answer to that already.”

NTQM looked thoughtfully at the flipchart. ”Yes, there may be some useful things there that we could come back to, but if we are to create a consistent picture of what we mean by quality, perhaps we should start from the most important things in our business. Can I ask you this: What do we mean by ‘business’?”

The Finance Manager looked irritated. ”What do you mean?”

“Please bear me.” NTQM looked evenly back. “To build a coherent and actionable description of what we mean by quality, we must break down what we mean by ‘business’ into its component parts”

The Finance Manager’s eyes narrowed.

“Let me put it this way,” said NTQM. ”What do we do?”

“We build excellent products.” Said the Production Manager.

“Why?” asked NTQM.

“To sell to our customers.” Said the Marketing Manager.

“Why?” asked again NTQM.

“To buy more materials to make more products?” ventured the R&D Manager.

“Why? What’s it all for?” asked NTQM, looking innocently around the room.

“It’s all for our shareholders,” interjected the General Manager. “They own the business, and while we are here, let’s face it, they own us. If it weren’t for their investment, we wouldn’t have jobs here! Our basic aim must be to meet their needs.”

“Which means profit,” said the Finance Manager, firmly. “We need profit to pay shareholders, to pay our debts and to stay in business.”

“OK, we seem to have reached the end of this line. Shall I add ‘profit’ as the next point in our definition of business quality?” asked NTQM.

“Definitely. It’s the fundamental objective of our business,” confirmed the General Manager. “Quality means business means profit.”

“What are the primary components of profit?” asked NTQM. “If we add these, it might help to identify the next level of detail.”

“Before our esteemed Finance Manager gets into detail, could we keep profit as equal to revenue less costs,” asked the R&D Manager, grinning wryly across the table.

“Hmm. Very well,” said the Finance Manager, hesitantly. “That is broadly true, if we include things like bad debt and taxes under ‘cost’. I guess it’s clear and correct enough to use in this definition.”

“What about everyone else? Do you agree? Is profit the fundamental thing we need from our business?”

As everyone thought about this and showed their agreement, NTQM wrote on the main flipchart, under the word ‘Business’

PROFIT=REVENUE-COST

“Is this all that the shareholders need?” asked the Human Resource Manager. ”What about their dividends? And why is this more important than our people?”

“Well, with the risk involved, I’d guess they want at least as good return as putting their money in the bank,” commented the Service Manager.

“Our shareholders have not invested their money in the company for fun,” replied the Finance Manager. “They do, of course, want good dividends, although, I must add, not at any price. The company is their baby and their golden goose. If it died, they would be both upset and out of pocket.”

“Its also worth noting that not all of them are driven solely by money,” added the General Manager. “Some are interested in the finer things, like preserving the environment and serving the local community, although this, too, I suppose, must be paid for out of the profit we make.”

“Hmmmmm.” The Human Resource Manager looked thoughtful. “Perhaps company needs could be compared with human needs. Our fundamental business need must the same as that for any organism: survival. Only when such basic needs have been satisfied do we look to higher things.”

The Production Manager frowned. “This is still all common-sense stuff. Profit is all right, but it doesn’t relate too well to what my people do.”

NTQM nodded. “Yes, it is common sense, and much of what is called quality is nothing more, yet do we actually use that sense? Let’s consider the activities in this company. If we take the short-term fire-fighting on the one hand, and activities with a longer-term pay-back on the other, what is the real balance?”

“Well, I suppose we do spend a fair amount of time in dynamic situation,” said the Production Manager, “but that’s just the way things are. I know you quality people would have us spend half of our time trying to improve what we already do, but we have a business to run.”

It was NTQM’s turn to frown now. “Thank you. You’ve highlighted a very common problem: managers are continually trapped by urgent problems, while the quality people are pressing them to look to the longer term. It’s no wonder that they don’t see eye to eye. Both views are valid, and the key must be to find the right balance. We must both chop down tress and sharpen the axe. Failure to do either will, sooner or later, cause worse problems. Do you agree with this?”

The R&D Manager leaned forward. “Of course! We must invest for the future. By focusing too much on today’s problems we lose sight of tomorrow.”

“It does seem reasonable, but finding the right balance is not so easy,” commented the Human Resource Manager.

“You’re right,” said the General Manager. “It’s a question of balance. It’s too easy to be trapped by today’s problems and I include myself in this. We must give more thought to balancing the apparently urgent need for short-term survival with consideration for longer term growth.”

As he was talking, NTQM wrote on the side flipchart:

Balance:

Short term survival vs. Long term growth

She tore off the page and taped it to the wall. Afterwards, she turned to scan the faces of the people round the table. Good, she thought, we’re all still in agreement. They care a lot about this company which means we have a good chance of getting there together.

Straker, D. (1998 ) The Quality Conspiracy. Ed Gower. Aldershot, UK.

 
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Posted by on August 5, 2008 in Uncategorized

 

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