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Heresy

We once managed to upset what seemed like the entire world with an article titled "TQM - The Quality Myth". Personally, I thought the use of the acronym was rather clever, but legions of TQM devotees voiced their disagreement. As I listened to and read their comments I was amazed at the nature of so many of the responses. Rather than the carefully considered rebuttals I had anticipated, so much of what I heard simply sounded like cries of "Heresy".

If TQM is a cult or religion, I am a non-believer.

It is not that I am against quality, in fact, I endorse many of the processes the TQM devotees teach. What I oppose is the blind misuse of sound TQM principles by people who have learned to chant the TQM mantra but have failed to grasp its meaning.

What Is Quality?

Quality processes, quality products, when you use the word "quality", what are you talking about? Is quality defined by a consultant, your engineering department, a quality circle, who defines what quality means to your company?

Although some companies have good answers to that question, the question has usually been answered with a mixture of defensiveness and mysticism. I had to find out why.

Quality In A Vacuum

It seemed that in too many cases the definition of quality was created in a vacuum. Perhaps a consultant determined the quality levels of your competition and established quality goals based on that research. On the other hand, maybe everyone bought into some arbitrary number of defects per thousand that just sounded right (achievable, but distant), perhaps even being bold enough to shoot for the ultimate, "zero defects".

The problem with all of this is that what you think about quality is totally unimportant. The only people with the right to define quality are your customers - they are the ones buying it! Pleasing your consultants, engineers, and quality circles won't necessarily sell a single extra widget or increase margins by a cent, and that's what it is all about

How Much Quality Is Enough?

Your customers are the only people who can define what a quality product is. What about those quality processes? In the real world, you should run the company in the manner that most efficiently produces the product your market wants to buy. Now in many cases, that will involve the processes that are normally part of the TQM kit, but don't lose track of the real objective, pleased customers (not pleased TQM consultants).

Your customers can define which features (characteristics) of your product they care about, and how they determine what constitutes the acceptable levels of quality for those features.

They can also tell you how much more or less they will pay for your product at various quality levels. Most companies find that their customers have minimum levels of acceptable quality, and higher quality levels are appreciated until a point of diminishing returns is reached.

We Needed More Quality

Quality issues became pronounced at a time when consumers felt that American automobiles and electronics had fallen below an acceptable level of quality. They expressed their preferences by purchasing those products from Asian and European sources, shocking the American producers into a game of catch-up.

Many other industries embraced the push for TQM, and some soon found that they were fixing something that was not broken. Their customers were more than willing to accept the higher quality, but were also quite willing to accept the old quality levels.

Unlike the automotive and electronics industries, many companies were already producing an acceptable level of quality and received little benefit from the market place when they increased quality levels.

Is Quality Really Free?

The phrase "quality is free" became very popular as quality gurus explained that a company could produce a higher quality product without any negative effect on the bottom line and without having to raise prices, thus (theoretically) gaining an advantage in the market. It works like this:

Increased product quality may cost more, but those increased costs are accompanied by improved management and increased productivity (reducing costs), so the gains in one area offset the costs in another, so the improved quality costs the company nothing. It's sort like magic.

Profitable Quality Management

But there is another way to look at the process. Let's say that improved management and increased productivity does significantly reduce costs (and it is my experience that they generally do). Let's also say that the majority of the market is satisfied with the current level of quality. Now let's say that we don't use any of that money we gained by reducing costs to subsidize increased quality.

Now we have a lot of extra profit margin that we can either put in the bank or use to decrease prices - which would  increase our market share. If our increased market share helps us achieve even greater economies of scale we may be able to further reduce our prices and achieve market dominance.

This benefits the consumer by providing an acceptable product at a better price, and it benefits the producing company rendering attractive margins on a larger share of the market.

Or, you could have decided to subsidize quality instead.

Optimizing Quality

Quality is a product feature, just like the product's color.  Like every product feature, you need to determine how much of it the customer is willing to pay for.

Automobile companies could offer every model of car in fifty different colors with twenty different interior choices, but they don't. Why? Because that many choices would drive up the costs of the entire product line, past what the market is willing to pay for the increased choices.

The optimal level of quality should be set the same way car companies decide how many color choices you get, by asking what you want and what you are willing to pay. The truth is, most of us are not willing to pay for zero defects. In some cases we are. Smart companies do the research to set the right level.

The other companies set the levels based on some other criteria.

Guess who wins....

Best Picks...

....If you are in a hurry and can only read a few articles, the following five are the ones we hear the most about...

They are a bit longer than most of the others, but they will give you something to think about....

Could You Run A Winning Football Team Like You Run Your Company?

Teamwork - Coaches and players speak to business professionals, encouraging them to build teams that can win.  Let's compare your company to a professional football team....

Eating The Heart Of The Watermelon

The heart of the watermelon is the sweetest and lowest hassle part - so why bother with the rest?  You may not want to follow this thinking at your next picnic, but it sure works when making customer and product decisions!

Quit Your Company - An Exercise

This exercise will force you to see your company and the competitive landscape differently than ever before.  It will help you decide what needs to be done in order to stop the competition you don't even have yet...

Dealers And Distributors (Short Version)

You may need dealers and distributors- or not.  The real issue is whether your end users feel that they need your dealers and distributors!  Companies win when they offer end users what they want....

Dealers And Distributors - And "Going Direct"

If you have a dealer and distributor network, should you consider "going direct"?  Let me ask you this - if a major competitor did, what would happen to you?  That's your answer - this will help you see how to do it....

Management Theories

Not all management theories work - and this section discusses some theories that have problems

Reality Instead Of Theory

You can't believe everything you have been taught about business.  Most of it is true, good information - the trick lies in knowing which parts to believe, and which parts to reject.

Positive Reinforcement Myths

Positive reinforcement can result in training and motivational miracles - but there is one little catch...everyone in the "real world" seems too well fed for it to work!

Truth About Advertising - What Advertising Awards Mean To You

Advertising awards are something ad agencies love to display - perhaps it gives them a feeling of credibility.  It's a shame those awards don't reduce their client's advertising costs or increase their client's sales...

"One Size Fits All" Management Fads

Management fads do a lot of damage - they send companies off in wrong directions, and they erode the confidence of managers.  How?  Managers try the latest fad, and when it doesn't work, they assume it is because they were not good enough - it's a shame, because their instincts are almost always more effective than the fads...

TQM - The Quality Myth

TQM has been a major force for a number of years.  Although it has lost some of its luster in many circles, its proponents (consultants getting wealthy, perhaps) continue to re-invent it under a constant flow of new names....

Your Departments

The last group of articles in this section apply to sales and marketing.  The reason this area is receiving so much attention here is that there seems to be more confusion in that area.  Let's just take a quick look at some of your key departments...

Accounting Excitement

If business was a sport, the accounting department would be keeping score.  Unfortunately, the accounting department seldom provides the kind of information managers need in order to make good decisions....

Purchasing

Purchasing is more than "buying what you said you wanted", it is a proactive role that investigates better products and anticipates demand.

Engineering And R & D

Engineering creates your "new and improved" products - you need to make sure they know what your company and your customers want from them.

Manufacturing

Manufacturing - Manufacturing efficiencies largely determine your costs - and costs largely determine your competitive position!  Efficiency requires great management, management willing to do what it takes to attract and retain the very best people.

Entering New Markets - Then Closing The Door Behind You

Entering new markets - you couldn't do it if the companies already in those markets were staying in touch with their customers!  Remember that after you enter a market - or you may become someone else's "new market"!

Innovate, Renovate, But Satisfy Your Customers

Things have changed faster than most companies have changed - the web, overnight delivery, long distance charges, longer lasting products, direct (to consumer) sales - there are many ways to combine these things to satisfy your customers - and gain market share.

A Winning Marketing Campaign - Lousy Sales

Heartbeat Of America.  The ad campaign won awards, but market share slipped.  Winning companies match great marketing with great products - then the competition loses while consumers win.

Strong Companies Win In Efficient Markets

Marketing is not the art of lying without getting caught.  When your product is the best choice, there is no need to lie.

Applied Market Research - Satisfied Customers

Market research can come from a consultant, but it should also come from your own employees.  Having market research means nothing, however, if you don't use it to make customer driven decisions.

Selling To People - Not Markets

Sometimes we can forget that markets don't buy anything, people do.  Market research is valuable, but make sure it tells you about real people.  Nobody wants your product - they want a way to solve a problem or meet a need - perhaps your product can help them accomplish that.

Advertising For Sales, Not Awards

Advertising - why are you doing it?  If it is for sales, you may need to make sure your agency understands your priorities - instead of pursuing "awareness" and "impressions" - if you want sales, hold them accountable for sales!

The Rest Of It...

Not everything fits into a file, box, or compartment - this is the rest of it....

StrategiesThatWork.com Homepage

Marketing should not be a lie - build a company with productive labor, efficient purchasing, great design, accurate accounting, rational distribution - and the result is a truth you are proud to tell.  Marketing becomes a simple matter of telling the truth to people who are interested!

Eating The Heart Of The Watermelon

The heart of the watermelon is the sweetest and lowest hassle part - so why bother with the rest?  You may not want to follow this thinking at your next picnic, but it sure works when making customer and product decisions!

Dealers And Distributors - And "Going Direct"

If you have a dealer and distributor network, should you consider "going direct"?  Let me ask you this - if a major competitor did, what would happen to you?  That's your answer - this will help you see how to do it....

Dealers And Distributors (Short Version)

You may need dealers and distributors- or not.  The real issue is whether your end users feel that they need your dealers and distributors!  Companies win when they offer end users what they want....

Quit Your Company - An Exercise

This exercise will force you to see your company and the competitive landscape differently than ever before.  It will help you decide what needs to be done in order to stop the competition you don't even have yet...

Three Kinds Of Employees

The right employees are one of the most important resources a company has. Most employers are quite aware of how valuable a great employee can be, but have a difficult time figuring out who the great ones are.  It helps to divide the work force into three groups.... 

Your Mission Statement - What It Means

A mission statement is not something you can carve in a plaque next to your door, because it needs to change.  Mission statements establish priorities, and if customer satisfaction is not at the top of those priorities, you may have a problem.

Could You Run A Winning Football Team Like You Run Your Company?

Teamwork - Coaches and players speak to business professionals, encouraging them to build teams that can win.  Let's compare your company to a professional football team....

Performance Reviews

Performance reviews.  Yawn.  While performance reviews are not exciting, few things can do more to shape your company.  Done right, they can make a big difference...

"Honey, We Need To Talk"

"Honey, we need to talk" are terrifying words when they come from your spouse.  You may feel that you have an "open door policy", but walking in that door feels a lot like "Honey, we..." to most employees.  You need an easy way to stay in touch - like lunch!

Partnering And Sole Sourcing

Partnering - we hear a lot about it, but if you aren't willing to be a partner in your purchasing, you are not ready to ask your customers to trust you in that role....walk in their shoes for a moment.

Customer Focus

"Customer Focus" is something we hear a lot, but seldom results in much action.  Funny, isn't it, that customers are the only people who leave money in your company - everyone else is there to take some out....

Science Of Yourco

You don't have to look further than the nearest business magazine to find a few easy steps to management success - so why bother to develop a "Science Of Yourco"?