The Mckinsey Quarterly recently published an interview with Armand Feigenbaum, a long-time proponent of Quality, former Director of Worldwide Manufacturing at GE, and renown author on Quality. The interview is not terribly interesting, but he does share some very obvious things worth reiterating:
the customer is not an inspector and the customer judges quality based on the value of the whole offering.
The Armand Feigenbaum quality philosophy has added much to the quality field. Learn more below.
Specifically, he claims:
Some companies have an outdated idea of quality and how to improve it. Managers think of quality as minimizing defects, especially in production. This aspect has long been an entry-level requirement in competition but is no longer enough from a customer perspective. Customers expect to buy products that work perfectly. They evaluate quality based on the value of the entire offer.
There is often a large gap between a company’s quality criteria and those of its customers—especially for car and computer manufacturers. Company statistics may indicate that quality has improved: products have fewer defects and more functions. Meanwhile, however, sales are declining because customer satisfaction has dropped—whether it’s because the service is unsatisfactory, the user’s guide isn’t acceptable, or a spare part can’t be found anymore. Customers increasingly take factors such as annoyance and time wasted into account. Many companies aren’t attuned to this.
What Feigenbaum is describing here is the popular claim of “products that are perfect in quality but nobody wants them”. The dimension he adds, which is important and obvious, is that quality, from a customer’s perspective, is on the whole offering, not just the point-of-interaction with the product or immediate service. In other words, if a product, which works perfectly, but their customer service has issues, then I will not be a satisfied customer.
Then, McKinsey asks: Why don’t these messages from customers get through?
Many companies don’t understand that new market conditions require extensive changes in management methods. Consider speed. Whereas companies used to be able to secure market leadership for a year through their investments in R&D, today it’s only a few months or weeks. And success in the ever-shortening periods between product launches greatly depends on whether companies can develop quality systems, processes, and technologies that enable shorter development, production, and sales times. Meanwhile, the company must guarantee full functionality of its products and services at market launch. This is also true of digital products such as software. There can no longer be any introduction periods in which the product functions poorly. The user is not an inspector.
McKinsey: What should companies do in response?
It’s not particularly complicated—and I’m afraid that’s where the problem lies: the messages seem too trivial for some people. Ask your customers. Don’t assume you know what they want. Talk to them—personally. How many CEOs still meet their customers in person? Have top managers visited customers in the past quarter? The answer is a key indicator of their quality leadership.
Companies must also analyze their processes from the customer’s perspective and determine the costs. Many people have a firm grasp of the costs of various business units such as purchasing or sales, but few know the extent of their quality costs because they don’t account for the relevant indicators. They need to include both the costs that are necessary to ensure quality, as well as those incurred because of a lack of quality—such as lost sales. Unnecessary internal costs caused by poorly organized processes are part of the calculation. For many businesses quality costs defined in these terms can reach 20 percent of revenues, whereas with well-organized companies this amount is only 5 to 10 percent or less. The competitive benefits that improvements here can bring, therefore, are enormous. But this is not “slash and burn.” When done well, these benefits are truly sustainable.
Feigenbaum shares some obvious, but not often practiced principles. Indeed, principles and concepts worth reiterating.