Saturday, November 27, 2010

Measures/indicators and measuring in quality management

Quality management calls for appropriate and systematic tracking of appropriately selected performance measures and indicators. Such measures are used to describe important phenomena of the business. Measurements serve organizational management in business direction, including control, continual improvement, transformations and quality assurance.

Measurements form a basis for effective communications and implementing strategies into practice. A measure/indicator is a directly measurable factor, or a combination of these that is used to determine the current value of the thing being measured in singular instances. A measure may indicate directly the phenomenon or factor (e.g. market share) in interest or be a measure that depicts or anticipates such (e.g. number of complaints).

Measurement means (i.e. meters) should be specified clearly in order to facilitate correct measurements and to prevent risks of mislead.

Measurement issues are often in disarray due to historical reasons. There also may be the divorce between factual information and praxis of management. Concerning strategic measures and indicators, a good approach is to apply the methodology of strategy card, e.g. a balanced scorecard, e.g. in order to prevent increasing productivity measures at the expense of satisfaction amongst major customers.

ls our set of measures a "flea market"? Do we measure results by inputs? What can I do?

  • I am aware of what phenomena our measures concern. I will distinguish strategic and operative information from one another.
  • I will use really correct measurement data in management.
  • I will make sure that I won't use ad hoc noise data for management. Measures pertaining to random phenomena, such as system availability, are difficult to manage.
  • I know what the quality of our process data is.

Tuesday, November 16, 2010

What do costs have to do with quality?

Can luxury be cheap? No. Can an anonymous mass production item be expensive? No. Both of these can be produced either cost-efficiently or inefficiently, but the grade of performance of the product determines the price level. According to the ISO9000 standard, the grade means a category or rank given to different performance requirements for products having the same functional use. Therefore the grade is definitely the point of departure of the product costs planning.

Is quality free? What does lack of quality cost? Can quality costs be optimized? Nothing is free, but the lack of quality always causes so much costs that prevention of quality-related problems is worthwhile.

Is cost-efficiency quality? What happens to quality when costs are cut? Cost-efficiency in the appropriate cases forms an essential part of performance, as otherwise the only destination that will be reached efficiently is a dead-end. If the issues are the right ones, the only way to cut costs without causing quality-related problems is to improve processes. In practice, this implies more effective structuring of processes, re-engineering functions, and process performance control.

What can I do?

  • I will learn to understand and consider the real overall costs accrued to a customer from our products.
  • I will understand that the value-added we create should surpass clearly these costs.
  • I will consider what a customer looses by selecting us. Is it something else besides money? How about in comparison with selecting our competitor?
  • What did a customer lose by selecting our competitor? Was it worth it?
  • I will know what we pay due to making mistakes, fixing them, unproductive work, and dissatisfaction. Who pays for all that? The perpetrator? With what and when?
  • I will distinguish between fixed and variable costs.

Saturday, November 13, 2010

Teams and networks are different


The team concept is often used very vaguely. A useful definition to consider team-issues consistently is as follows: "A team is a group of individuals appointed from one or more organizations that works together for achieving a common purpose. The team operates by self-managing selection, design and implementation the necessary tools and means it needs for achieving its intended purpose.” 

This definition includes three basic characteristics of a team:

  1. The team consists of certain named persons.
  2. The team has its own clearly defined purpose. 
  3. The team works through self-management. 

These aspects do not yet fully define the essence of a team. Teams may differ greatly between different organizations or even within the same organization. However, all groups within a specific project or work-task are not necessarily teams.

Genuine, effective and efficient team work has the following characteristics:

  • The team purpose and goal are common to all team members and known by everybody of them. 
  • The atmosphere in a team work is based on trust and transparency – team work is full of joy.
  • Communication and exchange of information in a team is effective.
  • Everyone feels the genuine team cohesion.
  • Diversity is appreciated in teams.
  • Team members are encouraged to creativity and risk-taking, and a team is capable to fix or improve its working procedures.
  • Team members feel a need for each other and each other's skills to achieve the common goal. 
  • Decision-making and leadership are based on consensus - every team member is a resource.


A network may be defined as ”a group of interconnected independent individuals or other actors who exchange information, contacts, and experience for professional or social purposes”.

In all networks there are knots and links. Relationship is the most significant issue.

There are networks everywhere:

  • Biological nature
  • Physics and chemistry
  • Mathematics
  • Human aggregations
  • Business communities
  • Economy
  • Technics
  • Societies

Genuine business networks are primarily unplanned, emergent aggregations. Their growth is sporadic and self-organizing. An actor’s role can be characterized by centrality in the network: Activity, Betweenness, and Closeness. Networks may not be managed in a traditional way like organizations because they are not any single systems. E.g. networks may not have shared values, strategies, etc.

The network as a whole is managed by nobody but each actor has its own characteristic impact in the network:

  • Access = actor’s easiness getting to the resources of the network
  • Reach = actor’s potential wielding influence in the network
  • Control = actor’s ability to control over the resources of the network

Thursday, November 11, 2010

Satisfied, dissatisfied or indifferent?

Is a customer satisfied if he says so when asked? Usually yes, but not always and with certainty; he or she might say "yes" out of politeness or without realizing that satisfaction does not mean merely lack of dissatisfaction. However, if a customer says he or she is satisfied without being asked, he or she might very well be. This is so especially if he tells this to good friends at his or her own initiative. Is a customer satisfied if he buys more of what he or she is satisfied with and possibly even something else? Usually yes, but not always. It could be, for example, that repurchase takes place out of habit or he or she might be a satisfied user yet dissatisfied payer, despite the purchase.

Customer satisfaction is generated when expectations are surpassed appropriately at the right time. This triggers a pleasure reaction and increases goodwill. However, customer dissatisfaction is a completely different matter. If there is something that the customer does not like he or she is, in principle, dissatisfied but may nevertheless accept the situation out of e.g. habit or due to a lack of options. He or she may also blame him- or herself, another customer, or the industry practice for the issue.

Feelings of dissatisfaction eat into goodwill resources and, when strong enough, causes negative feelings, which increase badwill potential. When this badwill potential is realized, it ruins the customer relationship and, in the worst case, damages the reputation of the product or the company in the market for years to come.

Most commonly, however a customer is indifferent. He or she does not feel satisfied nor dissatisfied, even regardless of how well his or her needs are satisfied. Those who are not indifferent are usually simultaneously satisfied and dissatisfied and can easily make their purchases anywhere.

Satisfaction and dissatisfaction are not any opposite issues:

What can I do?

  • I will not trust customer satisfaction surveys blindly but I will create multifaceted customer satisfaction measurements.
  • I will measure customer satisfaction and dissatisfaction separately.
  • I will try to affect the large group of indifferent customers. That is the real challenge!