Quality wars: a report from general Juran.
If there are two Americans more important to the Japanese victories in quality than Drs Joseph M Juran and W Edwards Deming, I don't know who they might be. Juran showed them how and Deming showed them why. Unfortunately for us, the Japanese listened intently to their message 30 years ago and we ignored it. Only because of our numerous defeats on the quality front since then are we just now beginning to listen to their quality message.
To help promulgate his concepts, in 1982, Joe Juran formed the Juran Institute (now in Wilton, CT), and to save wear and tear on himself, he videotaped a series of lectures and training programs. His annual conference on quality improvement (for tape-series users only) has grown from 300 attendees in '83 to an expected 1000 for this year's meeting in November.
Clearly, the tide is turning in the quality battle. As a European immigrant who has fought that battle for over 50 years (from both sides of both oceans), Joe Juran can take pride in the fact that we all now recognize that the enemy is poor quality, not each other.
After all the years of struggle, Juran hasn't lost his dedication--or his sense of humor, as a little joke he related to me during the following interview showed. "People are getting fed up with hearing about the Japanese: A guy arrives at a meeting late and all out of breath. He apologizes for being late and explains. "My watch stopped. That's the bad news. The good news is it's Japanese.''
Question: How goes the quality battle today?
Juran: There's very wide agreement we've got a crisis. Automobile companies are improving quality faster than they have ever done in history, and that's encouraging. First, they put the heat on their own people to improve, and then within a year or two, they put the heat on their suppliers to do the same thing. But the auto people didn't really accept the idea that they had been leap-frogged in quality until about five years ago.
Q: When did they first turn to programs such as yours?
J: That's a sketchy thing, because some have gone down roads that I wouldn't advocate. To this day, there's an overemphasis on slogans, hype, and banner waving; and an underemphasis on identifying specific problems and making clear whose job it is to clean them up.
The bigger problems are the collective problems of the worker or the individual manager. A symptom shows up in one department, and the cause is not only elsewhere--it's not even known. So there's a lot of fingerpointing--blaming each other and covering up.
Q: How can you handle this?
J: Well it's not as simple as urging everybody to do better--they already feel that they are doing pretty well. Instead, you must get the people who are blaming each other to work together on the same team--tell them they now have to fix this thing.
Q: Isn't your project-by-project approach similar to Japanese quality-circle techniques, but applied at the management level?
J: Of course, but you can't really do anything unless the very top people are involved. For example, changing from an adversary relationship with a lot of suppliers to a comfortable relationship with a few suppliers is something that has to be done by the people at the top.
Q: Are you saying that top management now has the quality message, but they still don't have the method?
J: Yes, they would love to solve this problem without adding to their own workloads. Using slogans is a convenient way to do this. They feel that everybody else will do it for them, which isn't going to happen, but they will dedude themselves into thinking it will--even some with the best of intentions. For most, it's just a cop-out. Telling everybody to do it right the first time is not leadership, that's just being a cheerleader!
Q: So how do you get upper management involved?
J: If they are honest, they will say to themselves, "I'm part of the problem, what should I do differently from what I'm doing now?' Well, one thing they should be doing is to sit on the qualifity-improvement steering committee that selects the problems to be solved. That committee sets a new direction for the company--sets new policies--and quality has to be its number one priority. Yet, when the chips are down, sometimes they don't follow up, usually because the top people aren't directly involved.
In the past, the job given to the various middle managers was an operational job--"Here's your department responsibility, the schedule, the budget, and the results you're supposed to get. Now you go ahead and meet those standards.' What has not been added to this is the responsibility this manager must also have to be the means for improving what the company is doing.
Improvement is different from conducting operations, just as product development is different from manufacturing the product. Product development is off to one side; it's a well-accepted improvement process and separately funded.
Q: But doesn't this require a separate organization with interdepartmental functions?
J: Right, but the methodology is what's neglected in most cases. It's not hoisting banners. It's simply hard work.
A steering committee must be set up to identify projects to be worked on. So they go out and beat the bushes, asking "What needs improvement?' And they come back with over a thousand nominations. But you couldn't possibly solve that many in a year, so you pick the 50 most important. They probably account for half of your trouble anyway.
So you set up 50 teams. They go to work, and by the end of the year, they clean those problems up. The trick is the machinery involved--the nominating of projects, the selection, and the assignment of teams. And those teams have to be given enough time to do the job! It's time consuming! Assets are involved. Yet, there is no higher ROI (return on investment!)
Let me give you an example (a company I'm working with now), just to show the admensions involved. Their sales are over $2 billion/yr, and they have $200-million porfit after taxes, which is very respectable. But they are in trouble because they were once clear leaders in their field, but now their competitors have narrowed that gap.
They don't know this yet, but their cost of poor quality--the amount of waste, just from the nature of their industry --I know to be in the range of 20 to 40 percent of sales, or a minimum of $400 million. Now if they can cut that in half in five years (a reasonable goal), they would double their profit. To do this conventionally--to double sales by doubling investment--could require investing billions.
Quality's not free?
Q: But this quality improvement isn't exactly free, and you can't really hire outside people to do this for you?
J: Right, there is a lot of work involved, and it's got to be done by the managers on the job.
Q: Doesn't that mean, theoretically at least, they will be doing less of something else?
J: Correct. But consider this number. It relates to the automobile industry and other major industries. To save $200 million, what must they gain from each quality-improvement project? We have built a substantial database on this, and the savings averages $100,000/project. So this means 2000 projects! That means 2000 teams spread over five years, or 400/yr. But this company I'm working with is hardly doing 40/yr.
And it's the same for the automobile people. Although they are improving at a rate faster than ever before, they aren't doing anywhere near the number of projects that they need. But the Japanese have been at this for over 30 years and churned out millions of projects! Their pace of improvement is much higher than ours. They devote much more time to improvement, and they keep doing it every year.
So, based on the rate of US improvement, I can state flatly that our quality will not match Japan's in this decade! There's no way it can! If we step things up rapidly now, it might happen next decade. Some of the best salesmen for the Japanese are all those consumers who go around bragging about how the color TV set they've had for ten years has never seen a serviceman.
Q: Isn't some US quality, cars for example, beginning to match that of Japan?
J: Not from the information I've seen. The last government report, based on data of two years ago, certainly didn't show that. I've seen a fair amount of more recent numbers from the car companies themselves, but that is confidential information. It's clear to me that we're not moving rapidly enough!
Q: Is the project approach the Juran approach?
J: If anybody is going to make real improvements, they must use it, no matter how they start out. I didn't invent the project-by-project approach. I simply studied a lot of improvements made by people 30 years ago, and discovered that is the way they do it. There is no other way. If you declare war on poor quality, you must identify specific enemies.
So I wrote the book, Managerial Breakthrough, describing that method in 1964. It was what all kinds of managers had invented and reinvented over the years, and they are reinventing it in the '80s. A few years ago, I published a methodology on video cassette, so I have a vested interest and I am an advocate of a specific method. Some companies are using these tapes extensively. Ford to some degree, GM very extensively, and a good many other companies.
Q: How much personal training does your organization provide?
J: A lot more and a lot better than we did in the past. For a while we were giving lousy service. We needed to hire more people--training professionals-- but we couldn't do it because we were located in Manhattan, and we couldn't get these people to live or commute here. So we moved to Connecticut to get the people we need, and we have improved our own quality.
Training is a one-short thing, and the cost varies with the size of the company. For a medium-sized company of 1600 people, for example, roughly 10 percent are on the management team and would need training--16 sessions at two hours each, which includes working on their first project. (I would guess the cost would be about $2000/person, including training materials.)
More important to the company is the cost of the time their people spend in meetings dealing with the actual projects. They will meet for about two hours a week, and take probably six months to complete each project. So in terms of salaries, each project might cost $10,000 to $15,000. Yet compared to the $100,000 return, that's a very good investment.
Q: What kind of follow up or remotivation is required?
J: One of the biggest things we run into is that these projects are set up, but then the managers fail to attend the meetings--they've got their schedules to get out.
A key reason is that the merit-rating system hasn't changed. The guy is still held responsible for all his previous responsibilities, and not given recognition for his improvement activities, so why should he spend time on them? This is something only the top people can change, and they must do this if they expect results.
Otherwise the system loses credibility. If they don't change the merit-rating system, they are giving their managers two different messages. One, that we will continue to rate you the way we always have. Two, that you must improve. So which will they believe? The one by which they are judged, of course!
A much more fundamental change is required than people realize. It isn't something you can paper over.
Q: What were your biggest disappointments in your quality battles?
J: What has dismayed me is how long it took the people in this country to realize they were being overtaken with respect to quality. They knew the Japanese were competitors in price, but they didn't realize how fast they were coming up in quality. That has bothered me a lot.
Now, within the past five years, the quality idea has been grasped, and I's glad to see that people are starting to move, but I don't like the pace. I don't like the fact that there is still too much emphasis on some cheap-jack way of getting improvement by delegating this responsibility through slogans.
Q: Didn't the consumer turn the tide when he no longer would accept poor quality?
J: Of course, but the fact that we had to wait for that to happen makes it clear that our system of alarm signals was awfully poor. We waited until the crisis was here, and it had already destroyed a lot of things.
There was a management mindset that the way to improve the company's performance was just to sell more stuff. To do that required more salesmen, more advertising, and more bells and whistles on the product. It took the Japanese to change that mindset.
Even Xerox. They came up with a wonderful new way of copying documents --better than anything anybody had ever had. So they were off on a tremendous tear of growth in sales and profit.
But their product was failure-prone! And they didn't solve those problems. They carried over those same failure-prone features model after model. Instead of correcting quality problems, they built up the field-service force.
Then, when others bypassed Xerox's patents and came up with something better, it torpedoed their business. Their mindset was to improve profit, just sell more stuff. So their engineers who might have been improving quality were busy designing new features or working on new applications, but not spending time on solving the basic quality problems. This was a company that was highly regarded, but they were not nearly as progressive as you might think.
Any good news?
Q: From your experience, do you have any good examples of companies that have been getting it right the first time?
J: No, there isn't anybody who doesn't need a change in their basic philosophy. You can look at companies who have been the leader in their field for decades--Corning, DuPont, Kodak, etc--and without exception, some of their product lines are being overhauled, they are scrambling hard, and trying to overcome a complacent mindset. Once a leader is subject to tough competition, their goals have to change, but their mindset just doesn't change quickly enough.
Improving quality gets you other major benefits. It's not just the $100,000/ project savings. You also improve your share of market, and if you are then able to get the leadership position, you are able to get a price premium of 10 to 15 percent that is all profit--it doesn't cost any more for labor or material, it goes right to the bottom line. That's why the three leaders I cited above have been so wealthy. They've enjoyed that price premium.
But to keep enjoying that, you must stay on top and keep improving your product at least as fast as your most aggressive competitor. Otherwise, you lose your leadership.
Doctor of philosophy
Q: Can you sum up your overall quality philosophy?
J: I once called it "Life Behind the Quality Dikes.' When I was little, I lived in a European village. We didn't have electricity, so there were never power failures, appliances breaking down, etc. Nowadays, we absolutely depend on the quality of others. Here in Richfield, CT, where I live, when the power goes off, we don't have any electricity or water. If the telephone fails, I'm cut off from the outside world.
Thus, the societies in industrial countries are at the mercy of the quality of the goods and services they depend on. So I call these quality dikes. We have a lot of breaks in the dikes, but most of them are minor. If my car doesn't start, I must get emergency transportation-- I'm out some money and some time. (Since mine's a Toyota, it probably will start.)
But some breaks in the dike are absolutely terrifying! Drugs like thalidomide. Three Mile Island. Bhopal, India. Product safety. Environmental problems. All of this has resulted in society rearing up and saying, "We're not going to put up with this anymore!'
The result is legislation in product safety, the environment, health, etc, regulating nearly everything. A whole new major dimension has been added to our lives, and it has reached a point where some companies will be torn apart and sold to the lawyers and plaintiffs.
If we are lacking any reasons why the top people at these companies should be more personally involved in quality, this is surely one of the good ones.
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|Title Annotation:||Joseph M Juran|
|Author:||Sprow, Eugene E.|
|Publication:||Tooling & Production|
|Date:||Jun 1, 1985|
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