Six Sigma
Last Word


Last Word
Pat Townsend and Joan Gebhardt

Quality: It's a Power Thing

The revolution in idea transportation promotes global quality-based competition.

To understand why this quality thing doesn't seem to be going away despite efforts by groups of exec-utives, unions and employees to either pronounce it dead or announce it done, it's important to know who controls the marketplace.

 Three major groups control commerce worldwide: owners and managers, workers, and consumers. Virtually everyone belongs to two of the groups, and many people belong to all three at some point. Yet each person's thinking often varies radically depending on which hat he or she happens to be wearing at the moment. For example, an executive may spend an afternoon railing against consumer demands that his or her operation improve its quality and then, that same night, send a steak back to the chef if it's not grilled exactly to the executive's wishes.

 Although the three groups now share the power of deciding what will be made or provided and at what price, the owners and managers held most of that power for thousands of years. They could unilaterally decide what to make, what to charge for it and what they would pay their employees to make it. Due to the lack of competition (caused in part by the enormous cost of transportation to bring comparable products made elsewhere to the same marketplace), employees and consumers had little choice but to accept the wages and prices, respectively. If the wages were too low or prices too high, their only option (and just about their only source of power) was to physically move to a different area and hope that the competition-free owner in that area was more benevolent.

 Late in the 19th century, workers in some countries began to demand more power. The most common form that this took was the organization of unions. Another manifestation was the legislation passed in various countries on everything from child labor to annual vacations. Workers were able to influence what was to be made, and, because of their wage demands, they also had an impact on prices. Transportation remained relatively expensive, so although competition between regions in single countries was beginning to increase, international competition was still unusual. There were "foreign" items for sale, but they didn't actually compete head-to-head with domestic products.

 In the 1970s, everything changed when Japanese cars and electronics were introduced to the U.S. market. The consumer finally had real choices--all the more compelling because the new options not only worked better, but they also cost less. Then, as now, an informed consumer willing to invest the time to identify a superior option was the quality movement's best friend.

 Finally, transportation costs had come down enough that the price of Plant A's product plus the cost of moving it to Plant B's "natural sales territory" was often less than what Plant B was charging. If Plant A's product was also demonstrably better, the race was on.

 Plant B's ability to respond was often greatly affected by the status of the previous power shift from owners and managers to workers. If that relationship had been poisoned (e.g., the relationship between the unions and the major automakers in America, where animosity has grown from casual to habitual to an art form), it was all the more difficult for the organization to respond to the challenge. If the owners and managers had retained virtually all control, they could fool themselves into thinking they were still in charge and simply tell the workers to make things better and at lower costs--or they could attempt to compete on price alone. In most cases, they would steadily lose market share and profits and never understand why.

 Only those organizations that managed to forge a partnership between owners or managers and workers--or that came along later and included the already-established power shift to consumers in their business plans--have been able to succeed consistently. An organization which acknowledges that consumers hold the keys to its survival will also realize that quality is not optional.

 This is particularly true in the service sector. As the drop in product transportation costs greatly contributed to the initiation of the quality movement, the more recent drop in the costs of transporting ideas (via the Internet, mainly) has opened up service providers to quality-based competition from all over the world.

 The growth in the amount of available information further accelerates the demand for increased quality. A provider who is low on the quality scale may survive for a short while if it happens to be the first in a particular marketplace, but competition will be a magnet for informed consumers.

 The options are straightforward: quality or a corporate headstone. Consumers, reveling in their power, are both restless and relentless.

 The first power shift took thousands of years; the second--giving the power to the consumers--only took decades. Barring the return of totalitarian governments, the controlling vote in what should be made or provided and (within reasonable margins) at what price is now where it will rightfully stay--with the people whose lives are directly affected by the use of their chosen purchases. The 1960s protesters may have had it right after all: "All power to the people!"

About the authors

 Pat Townsend and Joan Gebhardt write a monthly column available exclusively online at www.qualitydigest.com. E-mail them at ptownsend@qualitydigest.com .

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