Chapter 1

Introduction

The incremental approach to change is effective when what you want is more of what you’ve already got.

—Richard Pascale

Author, Managing on the Edge

Radical innovation, not incremental improvement, is needed to make clean, efficient energy technologies that can compete, unsubsidized, in big markets.

—Vinod Khosla¹

Established technologies are inevitably replaced by new technologies. There is nothing new about this. In prehistory, stone age technology was replaced by bronze age technology which in turn was replaced by iron age technology. Early adopters derived a technological advantage from the new technology which translated into domination and sometimes extermination of those desperately clinging to the old technology.

What is different today is the rapid pace of technological advance. In the words of Thomas Friedman, “[In 2004] Twitter was a sound, the cloud was in the sky, 4G was a parking place, LinkedIn was a prison, applications were what you sent to college, and for most people, Skype was a typo.”² We can update this observation to emphasize just how rapidly technological change is occurring. In 2011 when Friedman made this statement, Buzzfeed was a beekeeper’s supply, Sling TV was a novel way to wall-mount a flat screen TV, and Vox was part of a Latin phrase. In order to gain success in today’s competitive environment, organizations must be the developers or early adopters of these new ­technologies. In addition they must be continuously seeking the successor technology which will render their current business model outmoded, uncompetitive, and perhaps obsolete.

According to a 2017 survey by Protiviti and North Carolina State University, “keeping up with the latest digital innovations has replaced economic conditions and regulatory changes as the biggest concern for global executives. The risk rated highest by executives was the speed of technological advances and the possibility that innovations could occur more quickly than their company was able to adapt to, which had ranked as the fourth-highest risk in the previous survey. A related concern, that a resistance to change could impede the company’s ability to identify and adopt such advances in technology, ranked second.”3

Just as stone tools were replaced by bronze ones in prehistory, there are many examples of technology succession today. In 2011 the last roll of Kodachrome film was developed.⁴ This symbolized a major step toward the final passage of emulsion photographic technology in which Kodak was a dominate force, to digital photography in which Kodak is just one of many players. In October 2011 Kodak stock dropped precipitously on rumors it was declaring bankruptcy—rumors which it denied—but rumors that were proven to be true when it entered into chapter 11 bankruptcy early in 2012. Within a few weeks, Kodak announced it was ­discontinuing production of digital cameras. In early 2018, Kodak announced it was initiating a focus on digital crypto-currency—basing its future on a decidedly different paradigm than the one that made them successful for so many years. This is a perilous time for the company that introduced the first consumer camera in 1888 and which dominated the photography market for more than 100 years.

Juran⁵ defined quality as “fitness for intended use.” While there are many other definitions of quality which we will explore in this chapter, this is the one most often encountered in business today. Fitness for intended use goes well beyond “free from defects.” In order to be fit for intended use, a product must not only meet both quality of design and quality of conformance standards but must also represent the appropriate technology for the purpose for which the customer intends to use it. More than 2400 years ago Socrates, in Plato’s Greater Hippias defined quality as “fitness for intended use.” While there are many other definitions of quality which we will explore in this chapter, this is the one most often encountered in business today. Fitness for intended use goes well beyond “free from defects.” In order to be fit for intended use, a product must not only meet both quality of design and quality of conformance standards but must also represent the appropriate technology for the purpose for which the customer intends to use it. More than 2400 years ago Socrates, in Plato’s Greater Hippias, asked the question that can be translated “What is quality.” The dialogue ends without an answer to the question. Today, we still seek the answer to that question, and as we shall see, the answer to that question forms the basis for developing and maintaining competitive advantage in business. In this chapter we discuss the implications of how an organization defines quality.

Continuous improvement (CI) activities are crucial to the success of any business enterprise. However, the incremental improvements provided by CI alone are insufficient to establish and maintain a leadership position and indeed, in many cases, are insufficient to assure the survival of the organization over the long run. Continuous improvement of existing products, services, and processes assumes that the existing paradigm will continue. Continuous improvement alone fails when the existing paradigm is replaced by a new paradigm. Using Juran’s definition of quality, the most improved work horse (the 19th century paradigm) was no longer the quality solution to plowing after the introduction of the tractor (the 20th century paradigm). That work horse no longer fits Juran’s definition of quality as fitness for its intended use. The continuous improvement activities that had allowed some horse breeders to distinguish themselves as market leaders, failed to sustain the breeding operations in the new tractor-based farming paradigm. Similarly the best slide rule ­cannot compete with today’s typical pocket calculator, the best floppy disk is low quality compared to the smallest digital memory stick of today, and a defect-free Polaroid Land instant camera cannot compete with even a low end quality digital camera. Paradigm shifts resulted in the demise of manufacturers who had made great strides through continuous improvement but who were unprepared for the obsolescence of the technologies that had served them so well for so long.

Five years ago, the Sony Corp. announced it was discontinuing production of its Walkman personal cassette stereo system after many years of continuous improvements made to the product.⁶ When first introduced in 1979 the Walkman represented the answer to the demand for the capability to listen to personally selected music anywhere. Today, audio cassette technology is simply not competitive with MP3 technology. But unlike the horse breeders, slide rule and floppy disk manufacturers, Sony Corp., which was a major producer of audio cassettes, is participating in the new paradigm of digital music recording and reproduction with its line of Walkman MP3 players.

What is needed to create and maintain leadership and to survive disruptive technological advancements and paradigm shifts is a new way of thinking that applies creativity and innovation to defining quality beyond continuous improvement. We refer to that new way of thinking as insight. How do we change our way of thinking in order to go beyond continuous improvement in managing quality, operations, new product and service development, and the supply chain? That is the subject of this book.

The book will assist in determining the essential things you and your organization should do to improve quality through insight. It is designed to be inspirational, not prescriptive. We will provide you with new ways to think about quality and new ways to use familiar tools.

After reading this book you should be able to list several actions that are best suited to making your organization more effective—more insightful—in producing high quality products and services. Each reader’s list is likely to be different because of differences in the organization’s culture and the environment in which it operates. In 2011, Newsweek7 published a list of 10 things, shown in Table 1.1, that were essential to the way Steve Jobs managed the creative process at Apple Computer. Armed with that list, how many of us would feel prepared to take over as Jobs’ ­successor at Apple? Probably very few of us. Will this list work just at Apple ­Computer with Steve Jobs in charge? Possibly. Do you think that Job’s successor at Apple, Tim Cook, has continued Apple’s success by sticking exactly to these commandments? Probably not. Will this list work equally well in all organizations? Probably not. Does the list provide any benefit to those of us seeking to manage better? Absolutely! It provides a view of how one top manager was so successful in a particular environment. That view can inspire us to think about which of the items on that list might be adapted to the specific environment of our own organizations and thereby enable our organizations to be more effective in delivering high quality products and services. One scary item on this particular list is number 7: keep your secrets. If that indeed is one of the keys to Steve Jobs’ success, how can we be sure he was really sharing all of the true secrets to his success in this list?

Table 1.1. The 10 Commandments of Steve Jobs

Go for the perfect

Tap the experts

Be ruthless

Shun focus groups

Never stop studying

Simplify

Keep your secrets

Keep teams small

Use more carrot than stick

Prototype to the extreme

We feel that the real path to the success of organizations achieving their goal of effectively and consistently delivering high quality products and services is for managers to think about quality in a different and insightful way. Doing so will enable them to develop lists that are best suited to accomplishing their goals in their particular organizational environments. That is what we are trying to facilitate in this book.

New Ways to Think About Quality

What is Quality?⁸

Since the dawn of the modern quality movement in the 1930s, we have struggled with the definition of quality. But the debate over the nature of innate excellence is at least 2400 years old. Socrates, Plato, Aristotle, and other thinkers of ancient Greece were concerned with the true nature of things, and though they did not use the word quality, one can see ­elements of quality in their discussions. So, one would have to look at related notions such as goodness, excellence, and beauty to see how philosophers have thought about the concept of quality without using the word.

According to the writer Owen Barfield, Plato deserves credit for inventing the term quality.

(T)he word quality is used by most educated people every day of their lives, yet in order that we should have this simple word, Plato had to make the tremendous effort…of turning a vague feeling into a clear thought. He invented a new word “poiotes,” “what-ness” as we might say, or “of-what-kind-ness,” and Cicero translated it by the Latin “qualitas”…⁹

From its invention by Plato, the word quality has been used with a variety of meanings, for example, the sense of quality as simply one of the properties or characteristics of a thing. The variety of meanings can be accessed by consulting the Oxford English Dictionary (OED).¹⁰ The earliest use of the word quality to mean inherent excellence that the OED reports is found in a 14th century work by Chaucer, Troilus and Criseyde.

Whatever the precise history of the word, the philosophical debate over the nature of quality in the sense of true excellence can be traced from the time of the Greeks through the ages in the writings of ­Augustine, Aquinas, Adam Smith, Jeremy Bentham, John Stuart Mill, and G.E. Moore, among others. But Walter Shewhart¹¹ was the first modern-era quality expert to wrestle with the definition of quality. Shewhart suggested that quality has two aspects. The objective aspect, which refers to quality of a thing as “an objective reality independent of the existence of man,” and the subjective aspect, which refers to quality as “what we think, feel, or sense as a result of the objective reality.” According to Shewhart, although it is the objective aspect of quality that people usually try to measure, it is the subjective aspect of quality that is of commercial interest. Building on Shewhart’s work, quality guru Joseph Juran¹² defined quality as “fitness for use” and Armand Feigenbaum¹³ as “best for certain customer conditions.” These definitions form the basis for the modern definition of quality. ­Parasuraman, Zeithaml, and Berry¹⁴ and others define ­quality as meeting or exceeding customer expectations, but in W. Edwards ­Deming’s¹⁵ words: “Just to have the customer satisfied is not enough…You have to do better than that.” We need a new way of thinking about quality in order “to do better than that.”

The Transcendent Approach to Defining Quality

Many think of quality in very narrow terms such as the prevention of defects or reduction in variation which are among the major objectives of many CQI programs. Quality surely involves defect prevention and variation reduction, but it is much more. Dictionary definitions are inadequate to help us understand the concept, and it seems that every quality expert defines quality in a somewhat different way. There are a variety of perspectives that can be taken in defining quality, for example, the customer’s perspective or a specification-based perspective. The transcendent perspective is the least understood and least utilized of the five approaches identified by Garvin¹⁸ and listed in Table 1.2. At best, the transcendent approach is mentioned as being in the realm of philosophers before discussion is quickly shifted to more “practical” approaches. So, for example, almost twice as many managers in a survey (62.4 percent vs. 33.3 percent) defined quality in user-based terms (Quality is realized when customer satisfaction is maximized because the product/service fits its intended use) as in transcendent-based terms (Quality is innate excellence).¹⁹

Table 1.2. Garvin’s Five Approaches to Defining Quality^16,17

The transcendent approach: “Quality is synonymous with excellence” and is “absolute and universally recognizable.”

The product-based approach: Quality is “a precise and measurable variable” that is a composite of all of the attributes that describe the degree of excellence of a product.

The user-based approach: Quality is defined by the customer.

The manufacturing-based approach: Quality is “conformance to (engineering and manufacturing) requirements.”

The value-based approach: Quality is defined “in terms of costs and prices.”

During the early to mid-20th century, value judgments of any type tended to be written off as nothing more than the expression of subjective feelings. After Shewhart, David Garvin²⁰ was among the first to return to Plato’s “transcendent approach” to understanding quality. According to the transcendent view, quality is synonymous with “innate excellence.” It is both absolute and universally recognizable, a mark of uncompromising standards and high achievement. Furthermore, proponents of this view claim that quality cannot be defined precisely; rather, it is an unanalyzable property that we learn to recognize only through experience. This definition borrows heavily from Plato’s discussion of beauty as one of the “platonic forms,” and, therefore, is a term that cannot be exhaustively defined. Like other such terms that philosophers consider to be “logically primitive,” beauty (and quality as inherent excellence) can be understood only after one is exposed to a succession of objects that display its ­characteristics.

Following this, when Reeves and Bednar²¹ construct their survey of definitions of quality and give attention to the notion of quality as “excellence,” they cite Garvin’s discussion as a source. They reference ­Pirsig’s²² philosophical definition of quality as excellence: “It is understood ahead of definition…as a direct experience independent of and prior to intellectual abstractions.” In listing the strengths and weaknesses of the “quality is excellence” concept, they acknowledge the concept “provides strong marketing and human resource benefits” because it can be used to articulate an attractive-sounding vision for employees and customers. But they assert that the weakness of defining quality as excellence is that it “offers little practical guidance to managers.” This is because “a definition of quality based on excellence makes it difficult, if not impossible, to measure and compare the impact of quality on performance and other variables of interest.”²³

But it is exactly the “difficult to measure” that may be of the ­foremost importance. In most cases it was the quality of excellence of the products introduced by Apple Computer under Steve Jobs and the designer Jony Ive that was of greatest impact on the success of the products. Granted, quality of design, freedom from defects, and conformance to specifications were important, but these aspects of quality were not responsible for hordes of people lining up to buy the latest iMac, iPod, iPad, and iPhone when they were introduced. Nor were these products really the result of meeting expressed consumer needs (fitness for intended purpose). The Macintosh, for example, created an intended use rather than responded to one. Many people had no idea they needed a Macintosh until they saw what it could do. Is the quality of Apple products simply the product of one man’s genius that few can hope to attain, or are these products the result of a new way of thinking about quality which we can all learn from?

Steve Jobs famously said that Apple did not conduct focus groups to understand what customers wanted. He is credited with knowing what customers wanted and needed before the customers themselves knew this. Building upon his knowledge of digital electronics, he looked at things and saw relationships that others did not. He discovered the mouse at the Xerox Palo Alto Research Center (PARC). Customers had not been clamoring for a mouse, whatever that was. Jobs recognized the quality of the invention and added it to the Lisa and later to the Macintosh and thus gave birth to the point-and-click, graphical user interface revolution in personal computing. Years later, Jobs is quoted as saying “If Xerox had known what it had (referring to its Alto personal computer with mouse and graphical user interface) and had taken advantage of its real ­opportunities, it could have been as big as I.B.M. plus Microsoft plus Xerox combined—and the largest high-technology company in the world.”²⁴

Jobs was not unique in the ability to see the real quality in seemingly unimportant things. How many apples had been observed to fall to the ground before the one which Isaac Newton observed? That observation prompted him to ask the question “Why should that apple always descend perpendicularly to the ground?”²⁵ This observation and the question it precipitated eventually enabled him to gain insight into the law of gravity. Art Fry at 3M saw the quality in a failed experimental adhesive and used it to create Post-It Notes as well as the market for that innovative product. How many humans have viewed burrs adhering to our clothing during walks through thick meadows as mere bothers rather than appreciating the quality in those burrs that inspired the invention of Velcro by George de Mestral?

The 2011 American Society for Quality Future of Quality Study found that “If innovation means the ability of a company to anticipate consumer needs—expressed or unexpressed, known or unknown—and bring products and services to the marketplace that excite customers, then clearly innovation is the fuel of growth in today’s changing world and more so tomorrow.”²⁶ It is this insight into “unexpressed” and possibly “unknown” consumer needs that is demonstrated by the individuals such as Jobs and Fry and organizations such as Apple and 3M discussed in this chapter. Our contention is that such insight does not just happen, but can be nurtured in individuals and in organizations. How to do that is the subject of Chapters 3 through 6. In the next chapter we will discuss why continuous quality improvement, while vital to an organization’s success, is unlikely to result in such insightfulness and thus is unlikely to provide what is needed for an organization to develop and maintain market ­dominance.

Conclusion

Today’s business environment is dynamic and becoming more so every day. In order to thrive, businesses must move beyond simply seeking to reduce defects and variation and define quality in much broader terms. Quality must be defined in terms of what customers need, whether they are able to articulate that need or not. An organization cannot achieve quality leadership by simply copying other organizations’ approaches. As brilliant as Apple Computer was under Steve Jobs’ leadership, simply copying his approach is unlikely to lead to such heights for other organizations. In order to become market leaders, insightful organizations should learn from others such as Apple and Jobs, but must develop their own paths to see what others do not and that are best suited for the environments in which they compete.

Insightful organizations:

• Capitalize on continuous incremental improvement activities, but prepare for the next paradigm shift—either as the ­paradigm shifter or as an early participant in the new paradigm.
  • Action Item: Stay alert.
• Realize that while all of Garvin’s aspects of quality are ­important, it is the transcendent aspect that is the basis for ­long-term success and market leadership.
  • Action Item: Rethink how your organization defines ­quality. Does it focus predominantly on defect prevention or does it focus on excellence and delighting customers? How is your organization’s definition of quality reflected in the mission and vision of your organization?
• Recognize that organizations can learn from other successful organizations, but it is unlikely they can achieve similar ­success by simply copying what they do.
  • Action Item: Examine how your organization reacts to ideas that come from outside. Are excellent organizations envied but deemed to be so different that nothing can be learned from them? If you benchmark, do you select conveniently accessible organizations rather than best-in-class organizations when seeking ideas for improvement? Does your organization blindly implement “flavor-of-the-month” programs and ultimately find that they just don’t work in your organization even though they have been responsible for success in many other organizations?