Although I’ve spent my entire career working in the quality and process improvement fields, my undergraduate degree is in economics. I learned that economic cycles are normal. Economic downturns result when there is an imbalance in the economy. Past recessions have developed when businesses overestimated future demand and overproduced. When businesses realized their inventory was large relative to actual demand, they cut production and used various means to sell their excess inventory. Thanks in part to quality professionals implementing lean and other improvement processes, this source of imbalance is less common and less severe. However, as is now obvious, there are other ways to screw up an economy.
The current down cycle appears to be the result of an imbalance in the amount of money loaned to home buyers. During the last 70 years, various government programs were designed to promote home ownership, and more money was allocated to this segment of the economy than the market could bear, thus triggering a rise in home values that was largely uninterrupted. Money was loaned to marginally-qualified buyers with the expectation that they could borrow on their equity to make their payments. When home prices began to fall, securities backed by mortgages lost value. The devaluation affected the reserves of lending institutions and created a “liquidity crisis,” a fancy way of saying that there was no money to borrow. Not only did mortgage financing dry up, lending of all kinds all but ceased. Businesses that were otherwise in pretty good shape were unable to obtain financing for payroll, accounts payable, taxes, and other normal financial needs. A general contraction of economic activity ensued and, voilà! We’ve found ourselves in another recession.
So, despite our best efforts, here we are. The question is, what is our proper role as quality and process improvement professionals? I believe it’s a crucial one. There is little any individual or single organization can do to turn the economy, but there are things they can do to weather tough economic times. As it happens, our profession is uniquely equipped to help do this.
In tough times, organizations have more reason than ever to focus on doing the right things right and doing them efficiently. The right things are those for which customers are willing to pay--value-added things. The organization must learn precisely what their customers want. Use Kano analysis to identify basic, expected, and exciting quality factors. Use quality tools such as quality function deployment and tree diagrams to translate customer demands into meaningful internal critical-to-quality requirements. Use lean and Six Sigma to design and build processes to deliver these values with a minimum of wasted effort and resources. This means using lean to identify value streams and moving as close as possible to one-piece flow in these value streams. Where one-piece flow can’t be achieved, use logic and common sense to identify the reasons keeping you from this goal, then take the appropriate action quickly. When the causes of the problems can’t be readily identified by ordinary means, use Six Sigma techniques and rigor to ascertain the root causes. Use kaizen to address issues within a value stream and assign Green Belts and Black Belts to work on cross-functional, long-term, or larger systems issues.
Of course, the skills required to undertake these activities don’t happen by magic. The organization must fund training and development programs to provide these skills to their employees. Even in hard economic times, one must still invest.
Individuals can also take action on the one thing they are best able to control: themselves. During tough times you will be asked to perform new tasks. It’s no longer enough to be good at your routine job. You must help your organization survive by finding ways to improve service to stakeholders. Every dollar you can obtain and every dollar you can save increases the likelihood that your organization can afford to keep you. Volunteer for lean Six Sigma teams, ask to attend training programs, research lean Six Sigma, read a book.
If you are unemployed, consider upgrading your skills to improve your marketability. Studies confirm that certified lean and Six Sigma “belts” are more desirable employees and get better pay. Imagine your competitive advantage if you can tell a prospective employer that you’re a trained Green Belt or Black Belt who only needs a project to become fully certified--and you’d love it if it was their project. They would save a bundle hiring a trained professional, and they’d get a skilled change agent to help them weather the economic storm.
Tough economic times may be a dark cloud, but you may find refuge in the silver lining of process excellence.
Thomas Pyzdek’s career in business process improvement spans more than 50 years. He is the author more than 50 copyrighted works including The Six Sigma Handbook (McGraw-Hill, 2003). Through the Pyzdek Institute, he provides online certification and training in Six Sigma and Lean.
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