Quality Yields Invaluable Competitiveness
Last month, the Strategy Column turned one year. It has been quite exciting, sharing deeper strategy based insights, especially on trending issues that are of interest to us all. It has been refreshing bringing out the business theory, as relates to our routine strategic experiences, at not only personal and organizational, but also national perspectives. Thank you all readers for keenly following the column.
This second year of the column starts with a matter that is largely taken for granted, yet it means so much to our personal and organizational lives, as well as that of the nation. The concept of quality is largely overwhelmed by the belief in quantity in most situations. Most people fundamentally think in terms of how much money earned or due; how many hours worked; how many items produced; how many items sold; how much food available; how many degrees or certificates acquired and so on. Sadly, these considerations drive most individuals, organizations and the national situation as well.
Even our higher educational system is driven by the number of universities, courses offered and so on. Quality if at all is only remotely considered, especially in the public education system. No wonder, 50% of the degree holders are reported to be unemployable. Why? Many candidates graduate with degree certificates, ‘minus knowledge.’ In other words, the learning process is rarely internalized, thus only meant for passing examinations that lead to pursuance of employment opportunities.
Apparently, our governments (national and counties) may not escape blame on this glorification of quantity, in total disregard of quality. This is proven by fact that the level of human resource placement in the governments is almost always, dependent on the number of degrees and other certificates held. Worryingly though, certificates will never guarantee competence. Could that explain persistent mediocrity as well as high levels of the unemployable graduates?
Meanwhile, the price becomes the basis of competition in the exchange of goods and services, whenever quality is disregarded. Based on the same premise, quantity and price are ideally the main forces at play in the business of tenderpreneurs. Obviously, there are other dynamics at play, which are rather not discussed in this forum.
The truth however is that we can only ignore the holistic quality concept, at the risk of suppressing progress, at all performance situations in the society. In the absence of quality, individuals, organizations and the nation will constantly condemn themselves to mediocrity. Growth may only happen by chance. Moreover, unleashing full performance potential becomes elusive, under such circumstances.
Nobody knows the importance of quality better than the nation of Japan. This focus on quality helped the nation to painfully regain its status, as a powerhouse of the global economy. Those who were around in the early 1980’s can recall one thing about quality. It was then associated with only the USA and European nations. Machinery, commodities, cars, electronics and domestic appliances as well as other utilities were never perceived valuable, unless sourced from the then quality giants.
Japan was at the time still recovering from the impact of the Second World War. The country’s economy had been turned upside down, courtesy of the Hiroshima bomb tragedies. Thus, the products of a struggling Japan were for many years perceived as poor quality, as is the case with some well known Asian countries. The products were therefore no match from those of Europe and America.
But, memorable lessons in total quality management (TQM), a component of International business studies, bring out very interesting dimensions on matters quality. One of them is that “quality is free; you get things right first time; there is no re-work or wastage of resources,” a philosophy advocated by William Edward Deming, a pioneer Japanese quality guru. Deming had been an American war arsenal engineer, during the Second World War. However, he soon thereafter migrated to Japan, to contribute to the national re-building process.
As the westerners got complacent with statistical quality theories, which advocated various levels of confidence in the production processes, the Japanese developed and cemented zero defects policies. Indeed, the entire production lines were to maintain zero defects as the standard. Alongside, the continuous improvement process, today associated with the Kaizen concept took shape. In Japan, no vehicle model for example lasts in the assembly line for more than 6 months. Probably, they never want the lust for Japanese cars to be distracted, by the adage advocating that ‘familiarity breeds contempt.’
Seemingly, all those in manufacturing, buying and selling of goods as well as services need to adopt new paradigms on quality. This inevitably involves the SMEs, Corporate business and all others that are playing different roles in the value chain. They may need to revise the continued focus on only quantity and price. That no doubt could have been a major hindrance to the entire national growth process.
Minus quality, business becomes seriously threatened by rivalry and other forces of competition, which largely focus on price. As of now, the local insurance industry is bedeviled by business rivalry that is largely driven by price undercutting. The price regulations imposed by Commissioner of Insurance seem not to be adhered to, by all industry players. That could sadly lead to incapacitation of some of them. But, can focus on quality effectively tame this preoccupation with prices?
Most probably yes. Based on research conducted in the US, it is only less than 30% of buyers, who are influenced by price as the main consideration. Ninety four percent (94%) of purchases are non-price driven. Moreover, price is always the last item considered by the customer, during the buying process. That is why revisiting Deming’s “quality is free” philosophy could be quite refreshing. Upon adopting it, the pre-occupation with price as a competitive factor, becomes relegated to irrelevance.
Why so? Firstly, it is fair to accept that there is a difference between price and cost. Ostensibly, price is the first cost of acquisition. Secondly, there is likelihood of cost of defect or breakdown, whenever quality is ignored.
Thirdly, incidence of repairs could be another cost – the cheaper the item/service, the higher the chances of repairs or repetition. Fourthly, cost of delay and unavailability of repair items could come into play. The 5th consideration is direct and indirect cost of transport of returned items. The 6thcould definitely be the cost of frustration. One may end up being unproductive and losing out on hourly revenue, while worrying over hassles and frustrations caused by poor quality items/services. The seventh concern is the opportunity cost of the other things that one could do, with the time and money involved in acquiring the product or service.
Adding up all these costs occasioned by poor quality products or services leads to three pertinent questions. Why not buy quality, even if slightly more expensive initially, as opposed to buying cheap and getting exposed to further costs and frustrations? In addition, is quality not exposed to lower risk compared to cheap buys? Finally, as we digest and internalize these quality concepts, where does the human capital fit in these considerations?
As variously advocated in this column, any change anywhere starts with an individual; many individuals form a team; many teams form an organization, whereas many organizations form a nation and so on. It follows that the concept of quality needs to be embraced right from the individual perspective, for the organizations and the nation to acquire the pathway to exploiting full performance potentials.
Consequently, we need to focus more on the quality education meant for each individual. That enables us to embrace purposeful living that leads to quality jobs that eventually yield quality products and services. This alignment is no doubt inevitable in a highly competitive and globalized environment.
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