|An organization starts a quality initiative. But what’s the quality of the quality initiative. Here are some examples where quality was less than ideal and some recommendations to position quality to senior management so that these problems are less likely to occur.
A high level executive, rumored to retire as he has not progressed for the last few years, is given a new assignment to lead a quality initiative for the organization. To start, each department holds several sessions during lunch to roll out the new quality program.
What’s wrong with this picture? First, the leader of the quality program sounds like an executive who no longer has much value to the organization. His next step was to be out of the organization but he was given this assignment instead. This sends a message that an assignment in quality is for losers. This high level message will permeate through all levels of the organization.
Second, meetings are held during lunch, with lunch provided. Now lunch is supposed to be a break from work. Some people exercise, others read a book, surf the net, and so on. Having the quality meeting during lunch sends the wrong signals:
A successful quality initiative requires the right culture to be in place as well as the right tools. The above are examples of quality problems with the culture. Another example of a cultural quality problem could be bringing in consultants to conduct the quality initiative (ok, this is a more sensitive issue, since I am a quality consultant). How the quality consultant is brought into the organization determines whether this is a cultural problem. If there is no attempt to obtain in-house expertise, then quality will not be perceived as a core value.
I once participated in an all day off site meeting to try to improve the reliability of a new medical diagnostic instrument system that has just gotten underway. The previous instrument had poor reliability, yet during the meeting there was no evidence anything was in place to prevent a recurrence of reliability problems. Around the room, each person said things like, “I’m not going the make the same mistakes again.” I couldn’t help thinking, of course not, who would, you will make new mistakes. The point is that for quality improvement to be meaningful, there needs to be
Yet, in this meeting, there was an unrealistic goal, no system proposed to measure progress, and no new tools.
Almost all organizations make decisions based on financial considerations, hence the case for quality should be financial. Whereas this has been said before, here are my opinions.
When not to worry about quality – You are trying to get new technology to work – for example a completely non invasive glucose assay. You don’t have to worry about quality until after the technology works (and you’ve convinced the FDA).
How not to make a case for quality – Use non financial arguments such as “it’s the right thing to do”, “it’s what the customer wants”, “it’s part of our core values” etc. These arguments may result in the culture and tools problems mentioned above.
How to make a financial case for quality – The financial case for quality typically includes two situations:
The reduction in cost is straightforward and can be made using standard financial analysis. For example, for a medical diagnostic instrument, a service call for a system under warranty may cost the company $1,000. If there are 5 service calls per instrument per year and 1,000 instruments under warranty in the field, then this costs the company five million dollars per year. If you could reduce the service call rate to 3 service calls per instrument per year, you could save the company two million dollars per year minus the cost of the quality program. There might also be a staff reduction in service for an additional savings.
Unfortunately, risk reduction is extremely important but cannot be quantified using standard financial analysis. However, decision analysis based financial models will account for improved profitability based on programs (e.g., quality programs) that reduce risk. These models are probabilistic. So just as one can smoke and never get lung cancer, on average the risk for lung cancer is higher for smokers. Similarly, companies can quantify the gains in profit on average for the amount of money spent on quality programs and the amount that risk is reduced. However, risk reduction is a hard sell compared to the non invasive glucose program, which might be sold as bringing in over a billion in revenue when released and of course solutions are in place for the last remaining technical problem.
Increased revenue was not included as a bullet. In the medical field it is a hard case to prove as most medical consumers expect quality. This may change if quality measures become available to consumers.
By the way, if you work for a non profit organization, all of the above still applies.
The quality of quality initiatives