Archive for the ‘Social Responsibility for Sustainability’ Category

Is quality the cheapest option?

November 1, 2013

Some of us instinctively think quality products should cost more. But by removing the costs of nonconformity, quality products actually cost less to produce. Nonconformity, by the way, is a failure to meet the requirements including the requirements of customers. Some managers pay the price of nonconformity instead of making quality a reality for employees and customers.

At the normal 2 or 3 sigma, the price of nonconformity is 40% of turnover. Many times the level of profit for most organizations. Leaders may not need to measure these avoidable costs to eliminate the causes of failures to meet requirements from their systems. They may even help their suppliers to remove these avoidable costs too.

But more product verification will not help because it is too late. Inspection or testing merely sorts bad product from good product. Therefore, verification of the product is part of the price paid for failing to design capable processes. Capable processes are validated to result in products that need no inspection or testing.

Accordingly, we work to make sure our organizational management systems help employees and suppliers to add value for each customer. Adding value faster while preventing loss sooner. Having prevented nonconformity in our goods, we should also design the service part of our products so we avoid paying the price of service nonconformity too.

Leaders, who choose to avoid paying the price of nonconformity, invest in their process-based organizational management systems so more work is right the first time. They discover that buying and delivering quality costs a lot less than the alternatives. What’s more, in markets, where quality rarely is delivered, customers may be willing to pay a little more to have their requirements fulfilled exactly.

Even so, “quality is free” because it is cheaper to buy and deliver quality than not. Here we see the cost of quality at its lowest when the product exactly meets the requirements of the customer:

Earlier versions of these cost of quality curves mistakenly showed costs tending to infinity with perfection. The old curves showed perfection is not quality. Thankfully, in 1999, these curves were corrected to accord with reality and Crosby’s 1979 definition of quality. Of course, by then Taguchi had also showed that any deviation from the requirement increases costs to society.

In summary, managers of quality prevent nonconforming products to assure quality and satisfy customers. They govern their organizational management systems for creating more successful customers by making and keeping more competitive promises. Tomorrow’s managers of quality will also be focused on sustainability for all by creating more successful stakeholders.

As we can see, designing and producing quality remains the cheapest sustainable option.

Sustainable Efficiency

October 8, 2013

“Designed in California and Made in China” or “Designed in Cambridge and Made in China”.

What do these source declarations reveal? Do they show the companies optimized their inputs for sustainable outcomes to create stakeholder success?

Efficiency can be shortsighted and remorseless. Since the 1980s, developed economies have exported jobs to take advantage of much lower wages. Outsourcing to factories based thousands of miles from customers in the name of efficiency. Considering only the wage costs and the transportation costs can result in half-baked decisions to offshore manufacturing.

What could go wrong? Chasing efficiency with incomplete reasoning is not true efficiency. Sustainable efficiency is much more complicated. Sustainable organizations work to ensure their business networks to address the needs of all stakeholders.

The Raspberry Pi Foundation soon found their costs were higher than they had hoped. Their shoestring venture had to make and sell 10,000 computers at $50 each before ordering another 10,000 units. So many units had failed to meet requirements that the Foundation had to pay for quality control oversight in China to get computers as designed. Nonconformity costs had threatened to sink the fledgling venture.

The Cambridge-based Foundation went back to the drawing board to continue their reasoning and costing including the nonconformity costs. They then opened a Raspberry Pi factory in Britain. Run by Sony, British workers are expertly baking these tiny educational computers in Wales.

The Foundation has now sold 1.75 million basic little computers but it cannot stop improving. The educational computer outstrips the computing and programming skills of their teachers. Many of whom have not ventured far beyond their tablets or packaged software programs.

By engaging more stakeholders to understand their needs, we may see a sustainable future for the Raspberry Pi enthusing future engineers of computers, software and the web. Moreover, failing to recognize and meet stakeholder requirements the first time will probably decrease overall efficiency.

Serving the People to Lead the Organization

May 26, 2013

Live and work to serve the people. This is the vital but rarely mentioned part of any effective management system. Servant leaders live and work this way. They foster a community that shares commitment to the needs of others. Indeed, servant leaders are selfless. They put themselves last. They put first the interests of the community, so their organization can make a positive difference. Next, they put the well-being and interests of the people who rely on them. Last, and last all the time, they consider their own interests.

What are the other attributes of the leaders who serve to lead?

Servant leaders understand the power of their organization as a system. They take responsibility for their system. They ensure their organizational management system is responsive to the needs of stakeholders. They consider the needs of employees, customers, suppliers, owners and others affected by the organization. A servant leader does not blame others for the poor performance of their system. They make followers less fearful of speaking up; however unpopular the truth may be.

Servant leaders ensure departments collaborate effectively. Their management system is cross-functional or process-based. Such systems enable organizational learning of future opportunities. Such systems also reduce the associated adverse risks. Servant leaders persuade, monitor and coach users to show respect for the requirements. They also show their respect for the organizational management system. They ensure it is improved and changed as necessary to enable the organization to improve its performance for stakeholders.

Servant leaders know their strengths and weaknesses. They understand that their team members have innate strengths and weaknesses too. They ensure process teams blend the different strengths of individuals for shared success. They nurture the personal, professional and spiritual growth of individual team members so individuals can make the best use of their talents.

Servant leaders are able communicators. Their systems gather data. After data analysis, information helps with effective decisions. Servant leaders actively listen and encourage active listening by decision-makers. Servant leaders also observe and seek to understand the needs of any silent stakeholders.

Servant leaders see beyond the limits of their organization with respect for customer needs and the needs of other stakeholders. Servant leaders focus on long-term organizational change. They develop future leaders so their organization continues to enable success for the stakeholders.

Servant leaders exemplify, align and share the behaviors, ethics and values of their organization. Their inspirational organizational culture creates and sustains a healthy work environment. It is integral to the holistic management system that is conducive to quality in everything the organization does.

Why no social responsibility certification?

April 25, 2013

Many organizations now are developing their management systems to deliver social responsibility for sustainable stakeholders. They realize that, as with ISO 14001, they must go way beyond compliance with the law to be ethical and socially responsible.

Indeed, our supplier networks must be helped over many years to fulfill requirements while preventing loss and improving lives of their stakeholders.

As organizations create sustainable stakeholders we can learn enough to specify viable requirements (perhaps in ISO 26001) from years of adopting the recommendations of ISO 26000. This may be helped by the mother of all international management system standards, ISO 9001, turning ISO 9004’s sustainability recommendations into requirements (audit criteria).

We need to learn from the effective socially responsible organizations creating sustainable stakeholders all over the world before we develop the definitive audit criteria necessary for any credible certification scheme.

Meanwhile, we among the world’s citizens should not rely on ISO (or auditors!) to protect our rights. We must continue to fight for our rights so we value them and protect them.

How do I measure the effectiveness of training?

February 19, 2013

Why do we feel a need to measure the benefits of doing the right thing? We find this in quality costing too. Most quality costing is about the cost benefits of keeping promises instead of the cost benefits of making the promises valued by customers. Likewise, we need to do enough of the right thing the right way with our organization as a system to fulfill our collective objectives of creating (and keeping) more successful customers.

People, of diverse innate abilities, benefit in different ways from education and training. Some employees benefit immediately from the formal education and training. Others benefit more from workplace experiences following the education or training. Moreover, we all benefit from a process-based management system that helps us to determine requirements and coordinate our work to fulfill requirements.

Taking the individual out of the system, one could measure the abilities, skills and knowledge of each individual before and after the training session. However, we cannot change the innate abilities of anyone and the slower learners from workplace experiences may be marked down. This is not to mention the contributions or impediments of the leaders and the rest of the system.

Diverse process and project teams comprising individuals of different strengths and weaknesses help each other to fulfill objectives. Managers wisely play to the strengths of their people and avoid exposing their weaknesses. We cannot make everyone the same like robots.

What counts is competence of the individual, the process, leadership and the system of which all three are part. Therefore, we have to optimize the system (parts that work together) so it adds value faster and prevents loss sooner. $ per millisecond may be the ultimate metric appearing on the dashboard for all to see as a smoothed moving average.

What is the value of quality?

January 4, 2013

Some organizations survive by reducing their price of nonconformity from 40% to 20% of revenue. These organizations inspect and audit to stop bad quality from reaching the customer. Reducing the price of nonconformity (PONC) is their laudable quest. If the organization served no customers or delivered no product, PONC would be zero! Quality management therefore requires another metric.

The term “value of quality” makes us think about this. Customers pay for whatever they value. They buy when they are confident that what they buy will fulfill their needs. These needs include affordability. Therefore, we manage quality to deliver value. This includes preventing loss.

Organizations prosper by ensuring they add value faster than their competitors do. They ensure their organizational management systems enable employees to add value quickly. Organizations apply this thinking (summarized as $ per millisecond) when developing, using and optimizing their management systems to deliver more value even faster. Consequently, they can earn a lot more with services and products that are highly valued by more customers.

Leading organizations design, make and deliver services and products that exactly fulfill the needs of their intended customers. They avoid waste in hitting this target. They learn of new needs and new ways to add value – faster and perpetually. They know that sorting good product from bad (aka inspection) slows the velocity of adding value. They know that falling short of customer needs wastes valuable resources. They know that exceeding customer needs, in terms of what they value, increases costs without reward. They may reach a design dilemma: features that do not fulfill customer needs are a waste but delivering more features than customers initially say they require may expose needs not fulfilled by competitors.

The product and its outcomes may include the customers’ wider perceptions of value. Customers used not to care how well their favorite company treated its suppliers or paid its taxes. Increasingly even the most loyal customers care enough about any suffering in how the product is made. Imagine destroying a valuable brand by misusing it as a tax dodge. Customers and employees care about global organizations paying taxes where they work and live. They value social responsibility enough to influence their buying decisions and their career choices.

Hence, quality includes value as perceived by our customers as well as services and products free of nonconformity. Organizations develop, use and improve their management systems to enable employees to add value faster while preventing loss sooner.

Playing our part in value networks

December 22, 2012

Stakeholders may dream of having their requirements satisfied by the organizations that affect them. Some politicians and NGOs say the stakeholders have the right to have their requirements fulfilled. Others say that stakeholders, who can, should earn that right. It is intensely political as the forces for “equal opportunities” fight the forces for “equal outcomes”.

Organizations can understand themselves as systems and then develop their process-based organizational management systems to enable workers to add value faster and prevent loss sooner to benefit all stakeholders. They reward employees for working to benefit customers so employees can look after their families, their communities and themselves.

Businesses network and these networks comprise many different organizations so they are complex. Members may organize themselves to become a value network. Organizations are the nodes in the value network. Each node interfaces with other nodes that use contracts to govern their relationships as customers and as suppliers. Building, supporting and running a value network requires transparent, voluntary, consensus standards. Some of these standards specify more reliable management systems. Organizations develop and use their management systems to govern their work. They may even show they are ethical and competent enough to join and remain members of the value network. Once a supplier promises a standard, customers may use contracts to enforce even the voluntary standards. Organizations can and do impose strict selection and re-selection criteria on the members of their value networks.

Of course, the leaders and managers of the value networks and the organizations that comprise these networks should personally be transparent and accountable. However, to encourage risk taking to generate wealth, the individual decision makers are largely protected by their organization becoming the person accountable in the eyes of the law.

This separation of the organization from the people that run it creates mistrust. How then are customers confident enough to do business? Personal relationships count for a lot in making and accepting promises. The organizational management system helps salespeople and sales processes to make and keep competitive promises for their customers.

Customers and other stakeholders rely more and more on the law to protect them from poor decisions and broken promises. Organizations can see the rules are changing and want to stay ahead by broadening their duty of care to include customers, employees and communities. Indeed, the 2006 Companies Act in the UK reminds company directors of these wider duties.

Now we see companies climbing on the long bandwagon named “Sustainability for ALL Through Being Socially Responsible in Everything We Do”. Even if it were available, ISO 26000 certification would not “prove” social responsibility or sustainability credentials.

Instead, organizations have to perform to prove their heads, hearts, decisions and actions are socially responsible to their stakeholders. Stakeholder trust may then grow from websites that truth-check the social responsibility and sustainability claims of any organization. Indeed, stakeholders may fund these websites directly or indirectly.

Instead of publishing socially irresponsible versions of “greenwash”, may we see more leadership by global companies benefiting their stakeholders wherever they operate?