There was a time when delivering “perfection” at a low price was like a business miracle that customers get a “high” from – but not anymore. In this article, Christopher Surdak elaborates on customers’ perception of quality and cheapness, the “four horsemen” which limit organisations from adapting to an evolved market, and the looming end of Six Sigma.
The human body is an amazing machine. Our bodies are highly developed, remarkably complicated systems that produce complex outcomes from many complex inputs. With complexity comes errors, as the various parts of our bodies constantly struggle to maintain homeostasis in an ever-changing environment.
For such complexity to work there always has to be some function that cleans up these errors. Some system has to compensate for our bodies’ over- or under-response to the environment, because even the most sensitive and agile systems cannot compensate for every variable it encounters. In our bodies this sanitary function is largely taken up by our livers.
Livers are amazing organs that maintain the chemical balance in our bodies. They remove toxins, store surplus energy or nutrients for future use, and ensure that all of our functions operate in harmony. They are the biochemical equivalent of executive management, compliance, accounting and housekeeping all wrapped up into one.
A Disease of Excess
But like the processes and control mechanisms in organisations, our livers have their limits too. Among its many functions, the liver removes alcohol from our systems when we choose to imbibe. When we have one too many pints or that extra glass of chardonnay or merlot it’s our livers that step in and deal with our excesses, ensuring that we recover the following day.
Like all things in life too much of a good thing can be a bad thing and such is the case with alcohol. If we expose our bodies to too much alcohol for too long our liver runs out of capacity for maintaining balance and begins to actually scar from overuse. This condition is known as cirrhosis, and over time it is a fatal condition. It turns out that every time we overindulge in almost anything, alcohol, sugar, fat or cholesterol, our livers end up “taking one for the team”. Over time this eliminates our ability to compensate for systemic errors and stresses, and ultimately may kill us. While the trip along way may be fun, cirrhosis is a terrible place to end up.
Too Much of a Good Thing
So what does this have to do with six sigma, lean manufacturing and other quality initiatives? Six Sigma arrived after World War II, where global demand for products and services exploded as part of the peace dividend. Demand was also pushed along by the need to rebuild most of the civilised world and to fight a new, Cold War, but I digress.
Companies were hard pressed to meet the global demand for goods, and in many cases quality was sacrificed in the name of quantity. This was acceptable when people were happy to have anything, but as the global economy recovered, and then boomed, customers could afford to demand more from manufacturers, and so they did.
The inefficiency of producing defective or low-quality products annoyed one Edward Deming, a cantankerous American economist. At a time when customers were willing to buy almost anything that companies produced, Deming argued that improving quality could actually reduce costs, improve productivity and increase customer satisfaction. Like most revolutionaries, Deming was a polarising character. His notions were considered radical at the time, and companies in his native United States summarily ignored his advice.
Deming’s story is well-documented elsewhere so I won’t belabour it here. Suffice to say Deming’s quality revolution did indeed take place, first in Japan and much later in his home country. His belief that improved quality could actually reduce production costs, improve productivity and increase customer satisfaction has been proven conclusively. The world around us today is a product of the successful implementation of Deming’s then-radical ideas about quality and cost. We drank lustily from Deming’s fountain.
After 60 years of working to improve business quality perhaps we have drunk too much and our systems are now beginning to fail us due to over exposure. When product quality was horrible, as in the Post-War years, small improvements in quality could generate significant reductions in cost. These small improvements produced outsized returns because there was so much room for improvement. Cost-cutting works like compounding interest in reverse. With compound interest you earn more money overtime. With compounding cost-cutting you earn less and less overtime, but hopefully the savings outpace the reductions in revenues.
The challenge in all of this slicing and dicing is this: after decades of cutting perhaps we have gone too far. The fat in our processes was cut away long ago, yet we have continued to trim away. Now, many organisations find themselves cutting away at their muscle, sinew, and bone, or worse, allowing entire limbs to be severed; their functions left to others to provide.
We are habituated, even addicted, to cost-cutting as a means of creating value long after most of the value in cost-cutting has already been harvested. However, we continue to go back to that well, that bottle, over and over again because we hope to get from it the same benefits, or buzz, that we got before. But, not only is the high not what it used to be, the cost of going back for more keeps getting worse and worse.
About the Author
Christopher Surdak is an industry-recognised expert in Mobility, Social Media and Analytics, Big Data, Information Security, Regulatory Compliance, and Cloud Computing with over 20 years of professional experience. Mr. Surdak is author of “Data Crush: How the Information Tidal Wave is Driving New Business Opportunities”, published by AMACOM Publishing, recipient of GetAbstract’s International Book of the Year Award, 2014. He launched his own international consultancy firm Surdak & Company, providing strategic business and technology guidance to leading organisations around the world. To learn more about it, visit www.surdakandco.com