The Critical Success Factor Most Often Left Out

The Critical Success Factor Most Often Left Out
Douglas C. Wood

Most of us have seen many presentations about improvement approaches. Six Sigma, Lean, ISO registration, applying Baldrige criteria, etc. all share one aspect that every presenter mentions; the need for top management support. It doesn't matter whether it's called top executive support, leadership support, or top-down support, it's all about the same thing. You cannot have a successful organization-wide, long-term improvement effort unless the top leaders actively support the program. This is the most important "critical success factor" to implementation of an improvement program.

There is little room for dissent on this topic. While you can make some progress without top support, it will not last, nor can you roll out an improvement program in a wide area of an organization without this critical success factor.

There are some attributes that all top leaders share. They all have a lot to do, and very little time to do it. Their time is highly planned and structured to allow for maximum efficiency. Discussions with and among top leaders often focus on the vital few areas that have global impact on their organizations. To enable peak efficiency, top leaders utilize a common language in these discussions; the language of money.

The language of money starts with revenue and costs. Profit may or may not be a part of the organization's goals, but revenue and costs are always central topics when top leaders talk about their duties and responsibilities. Process variability, fraction defective, parts per million and other improvement measures are used on a much less frequent basis among top leaders.

The reason is that improvement or change programs use many different measures. The very name 'six sigma' refers to a complex statistical measure of variation. If you have been involved in Baldrige criteria, you know there is a different language in use there. Lean uses its own vocabulary and its own numerical measures, takt time, and so on. What do these languages and measures have in common with the traditional language used by top leaders? Nothing.

You can bemoan the lack of alternate language skills by top leaders, but there is something to the theory that things are the way they are for a good reason. Top leaders speak the language of money because it has been proven over hundreds of years to perform. Top leaders use the language of money because it works.

You can try and educate top leaders in the new terminology. The teaching process can be daunting. After all, as mentioned above, the top leaders are busy people. Education takes time, and the more specialized the language, the longer the process will take. This is not to say top leaders cannot learn new things, just that the process faces many hurdles.

Trying to communicate to top leaders without recognition of the need for a new language is difficult at best. Miscommunication will occur, and organization direction and momentum will be lost. If you have ever tried to work with top leaders in a language they are struggling to understand, you know the problem. They will ask for more time to study the issue, they will ask for definitions of the basics again and again. This is normal behavior when people are faced with a new language.

So what to do? There is one tool designed to communicate organization change to top leaders in the language of money. This tool is not new. It has been around since the start of global quality movements. In 1951 Juran's Quality Handbook mentioned the "gold in the mine" referring to measuring the cost of quality. The concept has changed some, and we have vastly improved our accounting and data handling processes since then, but the concept still has immense value.

Quality costs, cost of quality, cost of conformance/ nonconformance, cost of poor execution, all of these talk about the same things. When you convert the measures of quality (process and/or product) at your organization into money, you have a quality cost measure. The lack of a standard to compare quality costs between firms is not serious. There are many aspects of an organization that do not compare to another. Quality costs is an internal measure; one designed to focus the top leadership's decisions about quality in parallel, and in coordination with, all other organization functions. Can you talk about the value of quality to marketing? To new product development? To stockholders? With a quality measure based in its own complex vocabulary, the answer is no. With a measure of quality in terms of costs, the answer is yes.

The lack of a specific industry-wide standard for quality costs actually allows quality costs to be applied to any improvement methodology. Take six-sigma for example: you can look at the prevention costs associated with six sigma; training, certification, planning, etc. You can look at the costs associated with measuring and appraising the various six sigma processes. You can measure the costs of failure before and after the improvement program. In successful implementations, the payoff of the six sigma projects is then presented to top leaders in a way they understand. Because of this, the leaders will continue to fund the improvement program. Other quality improvement approaches can also be measured using quality costs.

Most improvement programs experiencing communication problems with top executives have not been using cost of quality techniques. You may have support of top leaders without using quality cost techniques, but such support is not guaranteed to be transferable. A change in leadership, a merger, a buyout, a reorganization, and suddenly you have a new set of leaders to retrain in the special language of your improvement program. This can happen with the most deeply imbedded improvement program. With quality costs as the means of communication to your leaders, you do not have to re-educate. The new leaders will immediately understand the value of the improvement program. The program may still be cancelled, but it will not be cancelled because no one understood the economic issue.

The old school methods still work. Adaptation of quality costs to the new process improvement tools is easy. Starting over after a wide-scale improvement effort has been untimely scrapped is very hard. To gain and keep the most important critical success factor (top leader support) in play, you will need quality cost methods.