- Email: [email protected]
Quality: How to make it pay?
ABST’
One.-way soundproof mirrors let outsiders participate better. O:her words of advice are to keep from telling test subjc :cts that there is a “test, ” keep te.sts simple if possible, work fast, look for major findings in the data with.Jut seeking trivia, publicize results around the firm. (1.0 gain confidence and credibility), and use smal I number statistics (via t-test). PC rsonal experiences and feelings are given in these shon presentations, but the thrust is clear: Designers must involve the customer in more than the beginning investigations. Customers can try out the design output, ,eveal whether the design is able to do what it was desie.ned to do, and the work can be done quickly and inexllensively. The major caution in the articles was by one writer who said that usability (actual use of the prod ic?) is only One step forward; she said studies go on ii to need-fulfillment and problem-solving, more diffuult issues that will require more resources and willi agness to deal with occasional unfavorable information, Imp-oving the Process of Product Innovation, Davi:l H. Gobeli and Daniel J. Brown, Research Techzology Management (March-April 1993), pp. 3844 This is a study of 116 advanced technology companies in the northwest U.S. Participants were upper managers ir volved in the new product process in their firms. They were asked what their principal problems are, and rlesults were organized by four process stages. Dixcovery. In this early stage, respondents said that, nainly, their firms were too often diverted to 8:urrent problems, leaving new products with too ittle time, money, and people. Unfortunately, hey had few suggestions on how this problem ~:ould be solved. Secondly, ideation was discour,,iged by failing to understand the market, too litle market research, and not listening to the cusI orner. Third, general managements are often not :,upportive at this early stage in the new product 1Drocess. Decision. This stage is the pretechnical evaluation of ideas and concepts. The principal problem these managers have is, again, inadequate resources. The supply of engineering experts is short, and management lets the limited supplies be diverted to current problems. Firms often have no clear decision process, technical upper man-
J PROD INKOV 1995:12:163-175
MANAG
I69
agements are biased, and there are too many good new product ideas that splinter the focus. Some felt that better strategic analysis and integration of engineering perspectives would help. And again, there is too little market knowledge by people who have to make these decisions. Development. Again, they saw inadequate resources as their principal problem. especially affecting the supply of engineering talent, and again attributed to the excessive work load caused by too many projects. A second problem in development came in poor project management. Too few qualified project managers, poor cooperation between R&D and marketing, and a general lack of knowledge about the marketplace. Third, manufacturing and marketing are too often hindered by changes in priorities at top management Delivery. Again the major problem was inadequate resources, this time in manufacturing. There is often a poor marketing plan (especially on targeting, distribution, and advertising). Third, there are product troubles, caused by design changes involved in making a premature launch, and by revisions during the process. The authors proposed three general remedial actions. First, strengthen the customer orientation program, especially by putting more engineers and customers together. Second, do continual new product process improvement, which here means in all phases of it. Criticisms gather around the general points of “inadequate resources,” so the real need is to learn how we can manage the available resources better. Third, strive for total employee involvement. This means not only the engineers just mentioned, but all employees who have ideas to submit, manufacturing people early in new product projects, and top managements at all points. They urge the use of “quality” tools, because the new product process is like other processes and responds to quality programs. Quality: How to Make It Pay?, David Greising, Business Week (August 8, 1994), pp. 54-59 (DTV) Countless managers have heeded the siren song of total quality management (TQM) only to discover that quality doesn’t always pay. At Johnson & Johnson, quality teams for several product lines criss-crossed the country, benchmarking against other companies, but costs skyrocketed. In 1990, Wallace Company
170
I PROD INNOV 199S:12:163-17s
MANAG
won the Malcomb Baldridge National Quality Award. Two years later the oil equipment firm filed for Chapter 11, as the cost of its quality programs soared and oil prices collapsed. Though often successful, too many companies find their push for quality badly misguided. It can be popular with managers and their consultants, but it can evolve into a mechanistic exercise that is meaningless to customers. When that happens, it usually won’t pay off in improved sales, profits, or market share. That is why a growing number of companies and management thinkers are starting to refine the notion. Today’s rallying cry is return oy1 qualirji. Better product designs and swifter manufacturing are not being rejected, but advocates of the new theory reject the narrow statistical benchmarks worshiped by some TQM supporters. Instead, managers want to make sure the quality they offer is the quality their customers want. And they are starting to use sophisticated financial tools to ensure that quality programs have a payoff. The return on quality (ROQ) revisionism is attracting a growing number of corporate devotees across a wide spectrum of industries. Banking giant NationsBank Corp., for example, now measures every improvement in service, from adding tellers to offering new mortgage products, in terms of added revenue. Listening to customers is the easy part. Doing what they want, without spending into oblivion, can be difficult. After its dispiriting experiences with TQM, Varian has focused on finding less expensive ways to please customers and boost quality. It may be a while before companies get it right. ROQ measurements can be maddeningly inexact. Among the uncertainties: How much of a return is enough? How fast can a company expect a payoff? And the new quality revolution depends heavily on customer surveys, which, as UPS learned, can be misleading if they are not carefully designed and executed. That eye on financial results keeps quality programs from running amok, ROQ proponents argue. And, for the first time since Deming launched the quality imperative, companies can start developing precise tools to measure results. With a well implemented retumon-quality program, they can get more than a sense of a job well done and good PR. They can get results that they can take to the bank. The article includes examples of a growing number of companies focusing their efforts to improve quality on measures that produce tangible customer benefits
ABSTRACTS
while lowering costs or increasing sales-among them: AT&T, UPS, Federal Express, GTE, Varian Associates, and Zebra Technologies. Business Week’s prescription on how to make quality pay: Start with an effective quality program. Without the basics (e.g., process and inventory controls) firms will find a healthy return elusive. Calculate the cost of current quality initiativeswarranties, problem prevention, and monitoring all count. Measure these against the returns. Determine what key factors retain customers, and what drives them away. Conduct detailed surveys. Forecast market changes, especially quality and new product initiatives of competitors. Focus on quality efforts most likely to improve customer satisfaction at a reasonable cost. Roll out successful programs after pilot testing the most promising efforts and cutting the rest. Monitor results and publicize success stories. Improve programs continually. Measure results against anticipated gains. Four Ways to Accelerate New Product Development, Simon J. Towner, Long Range Planning (April 1994), pp. 57-65 The importance of cycle time, or time-to-market, is well known. But as products become more complex, as higher levels of customer service become necessary, as information technology is built into goods and services, and as strategic alliances grow, old models of the new product development process must be created. This author sees four generalized techniques helpful in the process, and cites some structural requirements for them to work. Streamline each stage of the development. This is the area of activity most often discussed in new product literature. The author believes that two dimensions of the activity need more emphasis-finding new ways for computers to be useful, and involving customers in work with technical and marketing people, especially in the concept development stage. Undertake development activities in parallel. Again the general thrust of activity is well known, but the author emphasizes putting outsiders (suppliers, alliance members, etc.) into the parallel systems more. Launch the product simultaneously in world markets. Historically many firms have used a country-bycountry rollout policy, but the ability of worldwide
One.-way soundproof mirrors let outsiders participate better. O:her words of advice are to keep from telling test subjc :cts that there is a “test, ” keep te.sts simple if possible, work fast, look for major findings in the data with.Jut seeking trivia, publicize results around the firm. (1.0 gain confidence and credibility), and use smal I number statistics (via t-test). PC rsonal experiences and feelings are given in these shon presentations, but the thrust is clear: Designers must involve the customer in more than the beginning investigations. Customers can try out the design output, ,eveal whether the design is able to do what it was desie.ned to do, and the work can be done quickly and inexllensively. The major caution in the articles was by one writer who said that usability (actual use of the prod ic?) is only One step forward; she said studies go on ii to need-fulfillment and problem-solving, more diffuult issues that will require more resources and willi agness to deal with occasional unfavorable information, Imp-oving the Process of Product Innovation, Davi:l H. Gobeli and Daniel J. Brown, Research Techzology Management (March-April 1993), pp. 3844 This is a study of 116 advanced technology companies in the northwest U.S. Participants were upper managers ir volved in the new product process in their firms. They were asked what their principal problems are, and rlesults were organized by four process stages. Dixcovery. In this early stage, respondents said that, nainly, their firms were too often diverted to 8:urrent problems, leaving new products with too ittle time, money, and people. Unfortunately, hey had few suggestions on how this problem ~:ould be solved. Secondly, ideation was discour,,iged by failing to understand the market, too litle market research, and not listening to the cusI orner. Third, general managements are often not :,upportive at this early stage in the new product 1Drocess. Decision. This stage is the pretechnical evaluation of ideas and concepts. The principal problem these managers have is, again, inadequate resources. The supply of engineering experts is short, and management lets the limited supplies be diverted to current problems. Firms often have no clear decision process, technical upper man-
J PROD INKOV 1995:12:163-175
MANAG
I69
agements are biased, and there are too many good new product ideas that splinter the focus. Some felt that better strategic analysis and integration of engineering perspectives would help. And again, there is too little market knowledge by people who have to make these decisions. Development. Again, they saw inadequate resources as their principal problem. especially affecting the supply of engineering talent, and again attributed to the excessive work load caused by too many projects. A second problem in development came in poor project management. Too few qualified project managers, poor cooperation between R&D and marketing, and a general lack of knowledge about the marketplace. Third, manufacturing and marketing are too often hindered by changes in priorities at top management Delivery. Again the major problem was inadequate resources, this time in manufacturing. There is often a poor marketing plan (especially on targeting, distribution, and advertising). Third, there are product troubles, caused by design changes involved in making a premature launch, and by revisions during the process. The authors proposed three general remedial actions. First, strengthen the customer orientation program, especially by putting more engineers and customers together. Second, do continual new product process improvement, which here means in all phases of it. Criticisms gather around the general points of “inadequate resources,” so the real need is to learn how we can manage the available resources better. Third, strive for total employee involvement. This means not only the engineers just mentioned, but all employees who have ideas to submit, manufacturing people early in new product projects, and top managements at all points. They urge the use of “quality” tools, because the new product process is like other processes and responds to quality programs. Quality: How to Make It Pay?, David Greising, Business Week (August 8, 1994), pp. 54-59 (DTV) Countless managers have heeded the siren song of total quality management (TQM) only to discover that quality doesn’t always pay. At Johnson & Johnson, quality teams for several product lines criss-crossed the country, benchmarking against other companies, but costs skyrocketed. In 1990, Wallace Company
170
I PROD INNOV 199S:12:163-17s
MANAG
won the Malcomb Baldridge National Quality Award. Two years later the oil equipment firm filed for Chapter 11, as the cost of its quality programs soared and oil prices collapsed. Though often successful, too many companies find their push for quality badly misguided. It can be popular with managers and their consultants, but it can evolve into a mechanistic exercise that is meaningless to customers. When that happens, it usually won’t pay off in improved sales, profits, or market share. That is why a growing number of companies and management thinkers are starting to refine the notion. Today’s rallying cry is return oy1 qualirji. Better product designs and swifter manufacturing are not being rejected, but advocates of the new theory reject the narrow statistical benchmarks worshiped by some TQM supporters. Instead, managers want to make sure the quality they offer is the quality their customers want. And they are starting to use sophisticated financial tools to ensure that quality programs have a payoff. The return on quality (ROQ) revisionism is attracting a growing number of corporate devotees across a wide spectrum of industries. Banking giant NationsBank Corp., for example, now measures every improvement in service, from adding tellers to offering new mortgage products, in terms of added revenue. Listening to customers is the easy part. Doing what they want, without spending into oblivion, can be difficult. After its dispiriting experiences with TQM, Varian has focused on finding less expensive ways to please customers and boost quality. It may be a while before companies get it right. ROQ measurements can be maddeningly inexact. Among the uncertainties: How much of a return is enough? How fast can a company expect a payoff? And the new quality revolution depends heavily on customer surveys, which, as UPS learned, can be misleading if they are not carefully designed and executed. That eye on financial results keeps quality programs from running amok, ROQ proponents argue. And, for the first time since Deming launched the quality imperative, companies can start developing precise tools to measure results. With a well implemented retumon-quality program, they can get more than a sense of a job well done and good PR. They can get results that they can take to the bank. The article includes examples of a growing number of companies focusing their efforts to improve quality on measures that produce tangible customer benefits
ABSTRACTS
while lowering costs or increasing sales-among them: AT&T, UPS, Federal Express, GTE, Varian Associates, and Zebra Technologies. Business Week’s prescription on how to make quality pay: Start with an effective quality program. Without the basics (e.g., process and inventory controls) firms will find a healthy return elusive. Calculate the cost of current quality initiativeswarranties, problem prevention, and monitoring all count. Measure these against the returns. Determine what key factors retain customers, and what drives them away. Conduct detailed surveys. Forecast market changes, especially quality and new product initiatives of competitors. Focus on quality efforts most likely to improve customer satisfaction at a reasonable cost. Roll out successful programs after pilot testing the most promising efforts and cutting the rest. Monitor results and publicize success stories. Improve programs continually. Measure results against anticipated gains. Four Ways to Accelerate New Product Development, Simon J. Towner, Long Range Planning (April 1994), pp. 57-65 The importance of cycle time, or time-to-market, is well known. But as products become more complex, as higher levels of customer service become necessary, as information technology is built into goods and services, and as strategic alliances grow, old models of the new product development process must be created. This author sees four generalized techniques helpful in the process, and cites some structural requirements for them to work. Streamline each stage of the development. This is the area of activity most often discussed in new product literature. The author believes that two dimensions of the activity need more emphasis-finding new ways for computers to be useful, and involving customers in work with technical and marketing people, especially in the concept development stage. Undertake development activities in parallel. Again the general thrust of activity is well known, but the author emphasizes putting outsiders (suppliers, alliance members, etc.) into the parallel systems more. Launch the product simultaneously in world markets. Historically many firms have used a country-bycountry rollout policy, but the ability of worldwide