The question “What is the Business Value of a Quality and Process Improvement Program?” invariably gets asked again and again in many forums within an organization (in Management Review Meetings, Project Review Meetings, Team Meetings, Quality Steering Group Meetings, Corridor Meetings etc.) and even outside (in Seminars, Conferences, etc.).
And at times, pointed questions centered on specific improvement models or standards (CMMI, ISO 9001, MBNQA, etc.) such as “What is the Business Value of CMMI?” get asked rather than the generic question “What is the Business Value of a Quality and Process Improvement Program?”
What is the Business Value of a Quality and Process Improvement Program?
The question “What is the Business Value of a Quality and Process Improvement Program?” can actually be traced to the following mental models prevalent in the business world:
For answering this question, it will be good to rather answer the related question – “Do Quality and Process Improvement Programs really have any value?” The best way to answer this question is take a zero-based approach and hypothesize how things would be if it is assumed that there is no Quality and Process Improvement Program in an organization.
View/Perception/Impression 1:
“Quality and Process Improvement Programs add little or no real business value”
In Reality:
Let’s define “Business Value” first. All would presumably agree with the statement that business value of any activity would be a function of its direct or indirect impact on increasing sales and revenue and/or reducing cost of operations. The use of both words ‘direct or indirect’ are deliberate here as the benefits accruing from certain activities may be difficult to measure in a direct sense.
Now, let’s see how having no Quality and Process Improvement Program (including internal implementation and external third-party certifications, appraisals) in an organization will impact.
“The implementation of a Quality and Process Improvement Program is often viewed as more of creating and maintaining documentation and less of doing ‘real work’.”
In Reality:
Even “real work” would need some way to capture and demonstrate the interim work-products and final deliverable (like technical specifications of a manufactured component – how many organizations would risk manufacturing a component without approved and base-lined technical specifications?). In addition, how will the various stakeholders be informed about progress of work, risks and issues, etc.?
The key here is to understand that many types of information and data need to be created, collected, maintained, and communicated as the “real work” happens. One shouldn’t see a document as a document but rather as a container for the information and data required for and by business. Automated work-flows could be employed instead to bring in the same effect.
View/Perception/Impression 3:
“It’s relatively easy to manage the journey to get certified to ISO9001? or appraised to CMMI Maturity Level ‘N’ (N being 2, 3, 4, 5) or similar achievements on other improvement models or standards.”
In Reality:
The extent of ease depends on whether an organization chooses to “earn” its external certification or “manages the journey to get certified”.
It is important to dissect this question further by understanding the primary motive of the various stakeholders involved with an external certification by articulating their concerns and priorities in terms of questions they might ask:
Certification As Means to an End and not as an End
This takes us back to the fundamental point - whether an organization chooses to “earn” its external certification or “manages the journey to get certified”. Any improvement model is good as how it gets applied by the Sponsors, Model Implementers and Auditors/Appraisers. The rigor and care exercised in model implementation depends more on the intent and motive for implementation than the technical expertise and resources available to get it implemented. An organization may climb the ladder really fast and very well only to find in the end that they did not climb the ladder they should have.
There is also a tendency to label the improvement models as the culprit which is absolutely unfair. This is similar to the hanging a pistol that was used by someone to kill another person. The pistol did not kill the victim, the person who shot the bullet did. The pistol was just a weapon of offense used to commit the crime and could have been as well used to win an Olympic Gold Medal in the shooting competition.
Quality and Improvement Programs Add Enormous Business Value, If Run the Right Way
At the end, it can be concluded, that Quality and Improvement Programs do add value to business. The way organizations have generally adopted the improvement models, especially if it involves external certification or appraisal, is holding them back from leveraging the true value from their Quality and Improvement Programs.
One way to bring this change in the mind-set of organizations is to approach their Quality and Process Improvement Program with a balanced focus on both the aspects – internal implementation and external certification. All the three key stakeholders - Sponsors, Model Implementers and Auditors/Appraisers – need to play their roles in the act with heightened awareness that both the aspects are important and a balanced view can generate highest value, in an overall sense, to the business.
Remember, the stamp of external certification can help win more customers but what will make them stay on will depend, amongst many things, on the strength of internal implementation.
And at times, pointed questions centered on specific improvement models or standards (CMMI, ISO 9001, MBNQA, etc.) such as “What is the Business Value of CMMI?” get asked rather than the generic question “What is the Business Value of a Quality and Process Improvement Program?”
What is the Business Value of a Quality and Process Improvement Program?
The question “What is the Business Value of a Quality and Process Improvement Program?” can actually be traced to the following mental models prevalent in the business world:
- There is a deep-rooted perception in the minds of many that Quality and Process Improvement Programs add little or no real business value.
- The implementation of a Quality and Process Improvement Program is often viewed as more of creating and maintaining documentation and less of doing ‘real work’.
- And finally, there is this general impression that it’s relatively easy to manage the journey to get certified to ISO 9001 or appraised to CMMI Maturity Level ‘N’ (N being 2, 3, 4, 5) or similar achievements on other improvement models or standards.
For answering this question, it will be good to rather answer the related question – “Do Quality and Process Improvement Programs really have any value?” The best way to answer this question is take a zero-based approach and hypothesize how things would be if it is assumed that there is no Quality and Process Improvement Program in an organization.
View/Perception/Impression 1:
“Quality and Process Improvement Programs add little or no real business value”
In Reality:
Let’s define “Business Value” first. All would presumably agree with the statement that business value of any activity would be a function of its direct or indirect impact on increasing sales and revenue and/or reducing cost of operations. The use of both words ‘direct or indirect’ are deliberate here as the benefits accruing from certain activities may be difficult to measure in a direct sense.
Now, let’s see how having no Quality and Process Improvement Program (including internal implementation and external third-party certifications, appraisals) in an organization will impact.
- The organization is excluded from participating in certain bids. If external certification is used as a screening criterion for awarding contracts, it holds immense commercial significance for an organization to get certified. Getting an external certification would, even in the worst case scenario also, definitely change the organization in certain ways, howsoever insignificant those changes may be. These changes generally inject systems and process approach into an organization and tend to make decisions and operations more systematic and structured compared to what it would be otherwise.
- The customer perception may not be positive. Remember ‘a known devil is better than an unknown angel’. No one will trust you blindly even if you repeatedly claim to be the best – external recognition does matter!
- Many employees attach value to external certifications their employer has, so attracting and retaining top talent may be difficult. The same principle ‘a known devil is better than an unknown angel’ applies here also. We all know how significantly employees can impact the business – in fact; sustained business success of an organization rests on the shoulders of its employees more than anything else.
- The “real work” will get done but not consistently and predictably. These two factors are important for making sensible and realistic commitments to the customers and business partners and finally meeting them too. Not only that, lack of documented policies, processes and procedures pose a major risk to smooth conduct of business
- Rework in many forms (re-design, re-manufacturing, re-programming, scrap, etc.) will tend to be higher. The cost of rework needs to be recovered and hence will be apportioned to the ‘quality’ products and services that ultimately reach the customer thereby raising the selling price.
- Management of operations (including engineering) will neither be accurate nor transparent resulting in poor operational efficiencies especially on the activities which are labeled as “Overheads” in Cost Accounting terms. All expenses which do not fall in the category of the Direct Labor or Direct Material cost are “Overheads”. And this, by the way, includes running the management and oversight functions so it is imperative that poor efficiency of these processes will have significant business impact.
- Workforce will not be motivated and focused as they will always be challenged to determine and define the ‘way to work’ first before they actually get down to doing the work. Then there may be more disagreements amongst employees in the absence of clarity on ‘who does what and when’.
“The implementation of a Quality and Process Improvement Program is often viewed as more of creating and maintaining documentation and less of doing ‘real work’.”
In Reality:
Even “real work” would need some way to capture and demonstrate the interim work-products and final deliverable (like technical specifications of a manufactured component – how many organizations would risk manufacturing a component without approved and base-lined technical specifications?). In addition, how will the various stakeholders be informed about progress of work, risks and issues, etc.?
The key here is to understand that many types of information and data need to be created, collected, maintained, and communicated as the “real work” happens. One shouldn’t see a document as a document but rather as a container for the information and data required for and by business. Automated work-flows could be employed instead to bring in the same effect.
View/Perception/Impression 3:
“It’s relatively easy to manage the journey to get certified to ISO9001? or appraised to CMMI Maturity Level ‘N’ (N being 2, 3, 4, 5) or similar achievements on other improvement models or standards.”
In Reality:
The extent of ease depends on whether an organization chooses to “earn” its external certification or “manages the journey to get certified”.
It is important to dissect this question further by understanding the primary motive of the various stakeholders involved with an external certification by articulating their concerns and priorities in terms of questions they might ask:
- “We heard one of our competitor has become ISO9001 certified; let us also go that way. Do you think we can be there in N months?” – The primary motive here is to get certified as fast as possible otherwise the competitors/market may leave the organization behind.
- “Let’s do a gap analysis to know where we are and then we should be able to arrive at a realistic time frame. Going by the common experience, N months may not be enough but N + N1 (which has to be greater than N, trivially speaking) should be good enough. However, with more resources and a bit of stretching N should still be possible” – The primary motive here is to not go against the management directive
- “You want to do this in N months. Fine, just follow what I say and you should be comfortably getting there. We have, in fact, done it in N – N2 (which has to be less than N, trivially speaking) days for a client of ours” – The primary motive here is to win one more certification services contract (revenues and profit margins matter to all kinds of business)
Certification As Means to an End and not as an End
This takes us back to the fundamental point - whether an organization chooses to “earn” its external certification or “manages the journey to get certified”. Any improvement model is good as how it gets applied by the Sponsors, Model Implementers and Auditors/Appraisers. The rigor and care exercised in model implementation depends more on the intent and motive for implementation than the technical expertise and resources available to get it implemented. An organization may climb the ladder really fast and very well only to find in the end that they did not climb the ladder they should have.
There is also a tendency to label the improvement models as the culprit which is absolutely unfair. This is similar to the hanging a pistol that was used by someone to kill another person. The pistol did not kill the victim, the person who shot the bullet did. The pistol was just a weapon of offense used to commit the crime and could have been as well used to win an Olympic Gold Medal in the shooting competition.
Quality and Improvement Programs Add Enormous Business Value, If Run the Right Way
At the end, it can be concluded, that Quality and Improvement Programs do add value to business. The way organizations have generally adopted the improvement models, especially if it involves external certification or appraisal, is holding them back from leveraging the true value from their Quality and Improvement Programs.
One way to bring this change in the mind-set of organizations is to approach their Quality and Process Improvement Program with a balanced focus on both the aspects – internal implementation and external certification. All the three key stakeholders - Sponsors, Model Implementers and Auditors/Appraisers – need to play their roles in the act with heightened awareness that both the aspects are important and a balanced view can generate highest value, in an overall sense, to the business.
Remember, the stamp of external certification can help win more customers but what will make them stay on will depend, amongst many things, on the strength of internal implementation.
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