By H. James Harrington
Recently, I was searching for a specific quote from a past IBM president. In trying to find the quote, I pulled out The Quality/Profit Connection, a book I had written 30 years ago. It included a series of interviews with the CEOs and presidents of 3M, AT&T, Avon, Corning Glass, Ford, General Dynamics, General Motors, HP, IBM, Motorola, and North American Tool and Die. After reviewing these leaders’ comments, I summarized the traits of a successful company, which I called “The Sixteen Golden Traits.” Looking back on this list three decades later, it’s interesting how little has changed in the business world with regards to quality and performance improvement. It is important to remember: These conclusions describe the important trends which developed in companies that had been recognized as successfully implementing performance improvement approaches around the world in the 1980s.
The Sixteen Golden Traits
1. Close customer relationships.
Successful organizations maintain close personal contact with their customers to ensure a full understanding of the customers’ changing needs and expectations. When problems arise, they react quickly, pouring oil over troubled waters.
2. Concern for the individual employee.
These organizations respect the individual’s rights and dignity, realizing that the company succeeds only to the degree that the individual succeeds. They respect the individual’s thoughts and ideas, realizing that he or she has more to contribute to the company than just physical labor. They not only encourage the participation of the employee, they require it. They look at the individual as part of the solution to their problem, not as the problem.
3. Top management leadership of the quality process.
Members of the organization’s top management have accepted their role in leading the quality activities of the company. Support groups such as qualityassurance offer advice, research problems, and provide data. But the company president sets the direction and establishes the standards. These presidents realize that their company is an image of themselves, and they understand that they must set the personal quality example.
4. High standards.
These organizations set extremely high standards for their products, services, and people. They strive to set the standard for their industry and are dissatisfied if they are not No. 1.
5. Understanding the importance of the team.
Successful organizations use teams to unite the company, improve working relationships, and improve morale. They understand that only management can solve 85 percent of the problems and that the employee teams are needed to address the other 15 percent.
6. Effort to meet and exceed customer expectations.
They are not satisfied with state of the art, and are always trying to provide better products and services to their customers and at lower cost. They understand their customers’ needs and go beyond them, realizing that simply fulfilling the customers’ needs will not capture future sales. They want their output to be valued by their customers.
7. Belief that quality is the first priority.
When a compromise between quality, cost, or schedule must be made, quality is never compromised. Successful organizations realize that poor quality causes most of their cost and schedule problems, and if they focus their attention on the quality problems, their cost and schedule problems will take care of themselves. They also realize that the quality personality of the company is extremely fragile, particularly during the change period, and that even the smallest compromise in quality can set back progress many years.
8. View of business for the long term.
Top management realizes that the important objectives are directed at the long-term survival and prosperity of the company. They give priority to long-range plans that will build a product and customer base, paying secondary attention to quarterly and yearly reports. They measure their success by their company’s long-term growth, not by short-term fluctuations, over which they often have little or no control.
9. Sharing of prosperity with the employees.
Successful organizations view employees as partners and establish programs that directly relate the success of the company to the employees’ earnings and their contributions. Programs like gain sharing, suggestion, and pay for performance are key parts of the employee benefit package.
10. Management and employee education.
They realize that education is not expensive; it is ignorance that is costly. These organizations realize that everyone is responsible for quality and that everyone needs education related to the quality tools if they are to meet this responsibility. As a result, heavy focus on quality education has been directed at the management team and key professionals. At the employee level, education has been directed at problem-solving methods and job training.
11. Management leadership rather than supervision.
They know that management must be leaders of the employees, rather than dictators. It is much easier to pull a string in the desired direction than to push it. For management to assume the leadership role has not been easy, and many of the companies are still working on this change in their company personality. After all, for the past 40 years we have trained our managers to be attack dogs, and now we want them to be purring kittens.
12. Investment in the future.
Research and development means investing in the future of the company. It ensures a steady flow of products and ideas needed to meet the expectations of the future market. Along with the need for research, a parallel need is providing employees with equipment that pushes the state of the art and allows them to perform at their very best. Companies that realize this have prospered. Those that have not, have failed or will eventually fail.
13. Focus on the business system.
They realize that the only way to prevent errors from occurring is by correcting the business system that controls the company activities. Employees work in the business system, while managers must work on the system.
14. Recognition systems.
Successful organizations realize that recognition takes many forms: financial, personal, and public. They have established a recognition system with many options to ensure that it meets the total needs of employees and management. A pat on the back is good, but sometimes a pat on the wallet is more appropriate. On other occasions, a personal letter sent to the employee is the best action.
15. Employee involvement.
They go out of their way to make all the employees feel that they are part of the business and that their contributions are important. They take time to involve the employees in their long-term plans and report progress back to them periodically. They make them part of the company by providing such things as a stock-purchase plan or gain sharing. They provide the employees with opportunities to meet and understand customers, the ones who receive their output. Sometimes a customer is outside the company, but more often it is another company employee. It’s not easy to care about customers when you never see or hear from them, but if the customer is the person who sits behind you or in the next office, the concept of customer satisfaction becomes a much more personal issue.
16. Decreased bureaucracy.
Management continually works at making all decisions at the lowest level. Maximum authority is given to each level of management. Checks and balances are used, but only when absolutely necessary. Management realizes that bureaucracy tends to work its way into the business systems, and they are continuously vigilant to minimize its impact.
We talk a lot about how things have changed, but the basic things that make for a successful organization have not changed. Fundamental tenets, such as respect for the individual, doing our best all the time, understanding our customer, investing in our employees, being honest, and finding win-win solutions, are as important today as they were in the 1980s—and perhaps even more important today.
Yes, things may move faster. We may have more competition, but we also have more opportunities. We can’t let the rush of today set aside these very important basic values or we all will fail.
Extensive research indicates that improved perceived product quality and reliability are the most effective ways to increase profits and the most important factors in the long-term profitability of a company. We need to ask ourselves if approaches like total quality management, Six Sigma, lean, ISO 9000, benchmarking, and business process improvement are the ways to accomplish our objective when the basic problems have not changed in the last 30 years promoting them. I agree it is a long road to excellence but shouldn’t we have accomplished more in the last 30 years? It’s time for some new, innovative thinking to accomplish much more in the next 30 years than we have in the last 30 years.
In the early 1980s, IBM was rated as the most admired company in the world by Fortune magazine. Fortune’s February 2, 2018 issue listed the world’s most admired companies today. Apple took the top spot, directly followed by Amazon. IBM was rated 35 out of the top 50 companies. IBM was ranked 24 th last year—a drop of nine positions in just 12 months.
We need to ask ourselves: What are Apple and Amazon doing that IBM is not doing? Maybe we need to ask the question turned around: “What is IBM doing that Apple and Amazon are not doing?”
Creative, innovative systems will provide your company with the competitive edge to put it ahead of the pack. We cannot hope to succeed by taking the same old technology, renaming it, and thinking we are doing something new and innovative. Don’t be left at the starting gate. The only way we can do it is by working together and never being satisfied with how good we are. The race is not over yet. Remember, you can’t win today’s race with last week’s press clippings.
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