UK: THE HEART OF THE QUALITY MATTER. - Improvement programmes that are conceived solely in terms of products and processes may achieve good results, says Robert Heller, but the gains won't have full value unless they are means to a strategic end.

Last Updated: 31 Aug 2010

Improvement programmes that are conceived solely in terms of products and processes may achieve good results, says Robert Heller, but the gains won't have full value unless they are means to a strategic end.

Management nostrums, like any consumer offering, have a product life-cycle. Notoriously, they blossom into worldwide popularity: mysteriously, they start losing their bloom - usually because they're overshadowed by the next exuberant growth.

Has this already happened to Total Quality Management? Even its seeming successor, business process re-engineering, is said to be drooping: books are already discussing the future beyond BPR. Yet total quality is by no means dead - the British Quality Foundation is gearing up for its second awards, and one of last year's winners, Rover Group, is plainly reaping the rewards of its long drive.

The key word is 'long.' You can win quick and great benefits from TQM. But establishing a lasting culture takes several years. That sounds off-putting, especially to managers whose personal product life-cycle may not last that long. But the duration is misleading - because the improvements gained along the road, viewed simply as stand-alone, one-year advances, can be enormous.

As a turnround tool, TQM has great power - as a revisit to SGS-Thomson recently demonstrated. Go back to 1987, and the company seemed to be flying on a wing and a prayer. Formed by a Franco-Italian merger (a patently volatile combination), it was losing $200 million a year, well-nigh a quarter of turnover, from a semiconductor business that seemed hopelessly outgunned by the non-Euro-pean competition.

Even in Europe, the company was outranked (nearly two-to-one) by the National Fairchild combination. It's now Europe's biggest, after annual compound growth of 17%. Turnover in 1994 rose by 30% for the second year running as the business improved on every parameter, from front-end yield to customer satisfaction. Without question, the management led by Pasquale Pistorio has been crucial to this spirited performance - but all its members pay tribute to TQM.

The scale of the quality activity sounds almost intimidating: 51 active programmes per 1,000 employees; 541 completed, and twice as many active or new; 7,594 people participating in teams and spending 42,271 hours on the process; three suggestions per employee per year. The measured savings from continuous improvement have exceeded $100 million: but that's almost irrelevant compared to the overall strength of the turnround.

It's plainly passed beyond turnround to the creation of new and powerful organic advance. That's been achieved, put quite simply, because it was the object of the entire exercise. Improvement programmes that are conceived solely in terms of processes and products may well achieve lovely results: sharp falls in defects, delivery times, etc. But these gains won't achieve their full value unless they are means to an end - and a highly ambitious, difficult objective, at that.

Analysis of failed TQM programmes invariably shows either lack of integration with strategic objectives, or wrong strategic choices. For SGS-Thomson, the ambition was to rise from its ragged condition to enter the top 10 in microelectronics worldwide. It's now knocking at the door. For Rover Group, the ambition - equally far-fetched at the start - was to rise from foot to head of the European quality and productivity league. The surge in sales and output (up 16% last year) is the result and the reward.

One example from SGS-Thomson shows what micro improvements underlie these macro advances. The company was installing a costly machine to manufacture a new device. The industry norm is a start-up period of 50/60 days. The 'champion team' that tackled the task was given about half this time as a target: 28 days. By working 12 hours seven days a week on the first and third stages, and two shifts seven days a week on the second, the team was producing the first wafer in 17 days, four ahead of schedule: the total time to full production was a brilliant 24 days.

The decisions on that punishing work schedule were taken by the team itself. It needed external leadership to launch the project: but 'built-up leadership' is what achieved the results. The build-up is what takes time. The outcome, says the manager in ultimate charge, is that the organisation becomes both 'stable and flexible' and 'hidden talents rise up.' That's the pay-off for continuous improvement in the working culture: 'it took four years to get to that point.' In a climate like that, adversarial relationships fall away. In a Britain where anything over 55% employee satisfaction is thought good, Rover has achieved 85%. Once again, this isn't the result of TQM in isolation. It's TQoM - total quality of management - sustained over time and targeted on critical objectives. It's not the quality achievements at companies like Rover and SGS-Thomson but the strategic and financial gains which the quality underpins that are impressive.

When they survey the gains of those companies, less successful managements should surely echo the famous response when you see a tempting dish on somebody else's table. 'Waiter, I'll have whatever he's having.'.

Find this article useful?

Get more great articles like this in your inbox every lunchtime