Six Sigma
Last Word


Pat Townsend & Joan Gebhardt

Quality: It's a Power Thing

In order to understand why this quality thing doesn't seem to be going away despite efforts by groups of executives, 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 at any one time, and many people belong to all three at some point in their lives. 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 the majority of that power for thousands of years. They could pretty much 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 nineteenth century, workers in some countries began to demand a significant share of the power. The most common form that this took was the organization of unions; a political scientist would undoubtedly argue that communism was another form. Another manifestation was the legislation passed in various countries on everything from child labor to annual vacations. Although the workers' influence varied from country to country and from region to region, they 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 American marketplace. The consumer finally had real choices--all the more compelling because the new options not only worked better, they cost less and represented major purchases. It was called "quality." Then, as now, an informed consumer--especially one who's willing to invest a bit of time in the hopes of identifying a superior option--was the quality movement's best friend.

 One factor that made all this possible was that transportation costs had finally come down far enough so 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.

 Oftentimes, Plant B's ability to respond was 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 automobile manufacturers in America, where animosity has grown from casual to habitual to an art form), it made it all the more difficult for the organization to respond to the challenge.

 If the relationship was such that 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. And, in most cases, they would steadily lose market share and profits and never understand why.

 It is 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--that have been able to succeed consistently. Only if an organization realizes that the keys to its survival are held by the consumers will it also realize that quality (by whatever name) is not optional.

 This is particularly true in the service sector. Just as the drop in product transportation costs contributed greatly 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.

 Further accelerating the demand for continued increases in quality is the growth in the amount of information available through the Internet and other communication outlets. People now know what's possible in product and service performance, and if they can see that the people in another country can obtain something, it's an easy leap to question why they can't have it too. A provider who is low on the quality scale may survive for a short while if it happens to be the first one in a particular marketplace, but competition will be a magnet for informed consumers.

 The choice is straightforward: "Do quality" or get your corporate headstone ready, because consumers, reveling in their power, are both restless and relentless.

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


About the authors

 Pat Townsend and Joan Gebhardt have written more than 200 articles and six books, including Commit to Quality (John Wiley & Sons, 1986); Quality in Action: 93 Lessons in Leadership, Participation, and Measurement (John Wiley & Sons, 1992); Five-Star Leadership: The Art and Strategy of Creating Leaders at Every Level (John Wiley & Sons, 1997); Recognition, Gratitude & Celebration (Crisp Publications, 1997); How Organizations Learn: Investigate, Identify, Institutionalize (Crisp Publications, 1999); and Quality Is Everybody's Business (CRC Press, 1999).

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