Daily Archives: October 4, 2016

The Quality Curse

Throughout my education and career there has been a major focus on quality. In the United States, W. Edwards Deming is often regarded as the force behind this focus. After World War II General MacArthur initially requested his help in conducting the census in Japan. Ultimately, he became a major force in Japan’s industrial recovery. US industry was doing great—built up during the war years, it had almost no competition since it was the only industrial base spared significant wartime damage.

However, just as pride goeth before a fall, US industry focused on quantity rather than quality. In the late 1970s and early 1980s, Ford Motor Company was losing billions; a scathing report on 60 Minutes featured an employee who drove the new cars from the assembly line to a parking lot. When the steering wheel came off—on camera—he merely sat it on the seat, because his job only involved moving the cars.

Ford sought Deming’s help. They figured he’d talk quality, but instead he talked management. Deming told Ford that 85 percent of all their problems were caused by management (Dilbert’s pointy-haired boss, take note). By 1986, Deming had helped Ford turn things around. His secret (oversimplified): 1. It’s better to do it right than to do it over. 2. Improve the production process instead of relying on statistical samples—unless the product was complex and expensive, like an airliner, then do both. 3. No one knows more about how to do a job than the person doing it. It worked.

However, much to my chagrin I have recently come to question the value of producing a quality product. It’s difficult to get hard data to support this, but it seems to explain what we are experiencing these days. Companies that are recognized for quality products (e.g., those that get J. D. Powers Awards) get the attention of investors. Naturally, they desire to purchase a significant portion of the company’s stock. However, when these investors have sufficient equity to exert control, they want their results NOW! They implement the usual bean-counter tactics—reducing investments in research and development, cutting corners to reduce costs, moving jobs to another country, manipulating the tax code, and raising prices. The next thing you know, the product, the reputation, and the company all suffer

Motorola was a Malcolm Baldridge Quality and J.D. Powers Award winner. Once a major player in cellular telephones, their telephone business is now owned by a Chinese company under the name of Moto.

In 2015 Pantech, another cellphone manufacturer won the J.D. Powers commendation, went bankrupt and was sold (that same year.) Cadillac won the Baldridge Award, but its parent company GM went into Chapter 11 bankruptcy in 2009. The list goes on.

As near as I can tell, if you want to provide a quality product or service and survive as a business, you need some type of “poison pill” to scare away investors. Recent winners of the award, who may (excuse the Vulcan reference) live long and prosper, include MidwayUSA and PricewaterhouseCoopers (both privately owned), Charter School of San Diego (which operates under the approval of the San Diego School Board and the California Department of Education), Charleston (West Virginia) Area Medical Center Health System, and Mid-America Transplant (both not-for-profit organizations).

Once we took pride in our workmanship, and I believe that those who actually produce still do, but the investors are only concerned about the current quarter’s performance and a quick return on their investment. While rapine and pillage are generally not acknowledged as modern tactics in the developed world, they actually are, and today’s perpetrators may be better dressed, but are no better than their forebears.