I just read an article that appeared on Quality Digest Daily, “The Quality Crisis in America,” by David C. Crosby. The gist of the article is that the nation is in the midst of a quality crisis that has been with us for a very long time. The problem, according to Crosby, “is that the ‘big boss’—and most of the little bosses—are more interested in the stock price than the defect level.” He goes on to point out a fundamental truism, “They don’t understand that the stock price and the quality level are connected.”
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I urge every manager to read this article and ask a simple but potentially revolutionizing question, “Does this apply to us?”
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Comments
Who is the “big boss”?
Mr. Crosby had a bit of a reaction when I commented that I thought he was undeservedly bashing the big boss. I will maintain my position that we want to bash the big boss more because we want to bash “somebody” and the big boss is the most popular target. And please, I understand the technical points in this article and his and it is clear to all of us the role that leadership plays in determining performance and how important it is.
Executives and managers are smart folks. Not much chance they don’t “get it”. They were here for the “quality revolution”, all the lean six sigma gurus, and have listened for years to all the Demming worshippers out there blathering on about how it takes some sort of special enlightenment that they don’t have to provide successful quality and value. I feel like I am hearing more preaching to the choir and less connection with the real world.
It’s nice to read the academic version and definitions of value presented in these fine pages but it seems to me the real world equates value 95% equal to cost. Think about it – the executive (whom you are referring to as the big boss) is a slave to the stockholders, where a cascading effect takes place from board rooms through Wall street, the media and ultimately consumers. So we blame the big boss who has to control costs or he will get fired. Because he didn’t provide value to the shareholders. It won’t matter whether or not he provided value to anybody else. He is responsible for all our quality problems? I think we all contribute to it.
I contributed when I bought those cheap hedge clippers at the major retailer. And when was the last time you tried to buy a good set of Christmas lights to replace one of your old sets? I couldn’t find a better quality set last time I tried – and I think I’ll be lucky if they last half as long as the old ones did. I call value not having to keep replacing this inferior crap the world keeps pushing on us.
And take a look at some advertisements. Save big money at this grocery store, cheapest prices at that retailer. Buy for less here, etc. Compare the ratio of advertisements that claim low price vs those that claim good value by any other way of measuring value. I bet cost wins. So the real world appears to define value a different way than the academic world, and we all share the blame, because in the end market we are all the big boss.
The real world definition of value
Dave has raised a couple of interesting points about value. Let's take a closer look at a couple of these.
1. He points out that executives and managers are smart folks - "not much chance they don't get it". I disagree. I have met many executives and managers who don't get it, for any number of reasons. On this point I agree with Mr. Crosby. It's not that they aren't smart but they are not market focused. These folks are very product oriented and their sense of quality and value is limited to the product and product features. This leads to the second point.
2. The connection to the real world. The real world is made up of customers, both current and potential. Quality or value when divorced from the "real world" has no meaning. Where do so many organizations get their understaning of value or quality - from the real world or from some internal source? My experience indicates that many rely more on a conformance definition rather than a customer definition. The definitional gap that exists for value is not a real world definition versus and academic definition but rather an organizational definition versus a customer or market definition. As a consultant working in this area for the last 20 years I would point out that this gap is immense in many organization - hence the title of the article involving "followers and leaders".
3. Cost wins as a measure of value. I would ask Dave if, after his new clippers break of fail to work properly, will he go back and buy the same pair? I would hope not since I suspect Dave is smarter than that. Instead, I would suspect that he has learned about value, the relationship of quality to price and whether the clippers were indeed "worth it". He will probably pay more for a higher quality clipper. Many companies offer brands at a lower cost to offset the less than stellar quality they offer. There is a strong relationship between value and repurchase rates accounting for one of the reasons why so many companies are followers and not leaders. Your company's value proposition is a critical asset since it sends a strong buying signal.
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