The Pulse

The difference between a fad
and a fundamental change

By RICHARD DAY

Over the years we have seen many business and management fads come and go — scientific management, management by objectives, managing by walking around, zero-based budgeting, etc. What causes these concepts to change from ideas to interesting fads?

I maintain that the important changes usually take place when organizations are faced with their very survival. However, before embarking on a fundamental change, there are usually years of fads, obfuscation and denial. At some point, an organization or institution either needs to change fundamentally or it goes out of existence.

The best models can be found in the business world because companies can and do go out of existence, unlike most governments and their agencies. To survive, businesses can spread their risk by diversifying, slashing employment and costs, or changing their culture and consciousness. Companies like Phillip Morris, General Motors Corp. and U.S. Steel survived by diversifying into other businesses, laying off U.S. workers and exporting jobs to Mexico and other lower cost countries.

Other companies have taken a different tack. They embarked on a revolutionary change in their consciousness, becoming manic about customer service and seeing the world through the eyes of the customer. This requires that companies empower their employees with authority and responsibility. Examples of this change are Federal Express and Schaumberg, Ill-based Motorola, both winners of the Malcolm Baldrige National Quality Award.

Quality at Motorola Summarized from speech by Motorola executive Robert Galvin: • Quality is a personal responsibility. • Training is not a cost; it is recouped immediately. • The cost of bad quality is about 40 percent of sales. • Keep records. You can't have too much relevant data to set your goals and measure your quality progress. • The only acceptable standard is perfection. Expect perfection. • Quality doesn't take time; it saves time. Thoughtful speed helps quality. • The most crying need for quality is in the service businesses. • Bring your suppliers into your quality building plan. Become a world class customer.

An example of employee empowerment at Federal Express is particularly dramatic.A couple of years ago when a little girl fell down a well in rural Texas, the eyes of the nation were fixed on her plight and rescue. Somehow, all of the equipment needed to extricate her arrived on the scene. When the story ended happily, some reporters began to ask how the response was handled so quickly and efficiently. They learned that a Federal Express plane was diverted from its usual route to pick up the equipment and deliver it to the site.

When the president of Federal Express was called, he said he knew nothing about it, nor did the head of operations. In fact, a clerk at one of their sites diverted a plane and helped save the little girl. It was possible because their employees are empowered with the authority to make decisions.

Federal Express has continued to grow and prosper even in the face of the facsimile revolution. The advent of the fax to send letters and messages was expected to put many of the overnight courier companies out of business and in fact it did. However, Federal Express has emerged apparently even stronger. Their employees' day by day decisions to solve customer problems may not be as dramatic as the little girl's rescue, but for their customers, these decisions can be vital.

The 1987 Baldrige National Quality Award winner was Motorola. A company that once made bad radios for bad cars is now at the leading edge in technolgy. Motorola exports products to Japan. Its cellular standard is so ubiquitous that a popular child's toy in Japan is a cellular phone and the name on it is "Motorola."

Ten years ago. Motorola embarked on a fundamental change of consciousness that not only saved its corporate life, but also made it a leader. In a word, the company

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embraced Quality and the concept of Total Customer Satisfaction. Motorola adopted a goal of "six sigma quality" throughout the company. Translated into lay terms, it means that they have a goal of no more than four defects per MILLION in everything that they do: hiring, accounting, legal, patent, production, etc. This required change not only in their vocabulary but in their behavior. These efforts have saved the company over $560 million, and executives maintain that was needed just to stay alive. In addition, they needed to improve their quality 1,000 percent to stay competitive.

When Robert Galvin, chairman of the Motorola executive committee, spoke to the Economic Club of Chicago in October 1990, I was there to hear him explain Motorola's goals. When he offered to follow up by conducting a seminar on six sigma quality, I was one of the more than 1,000 who attended. The presenters along with Galvin were the heads of the major divisions at Motorola: personnel, finance, legal, Motorola University, etc. It was a fascinating look at how a consciousness shift, permeating an institution, can produce results that can be described as revolutionary. The pride and commitment of these department heads was palpable.

Galvin states that a commitment to the principles of quality and its measurement would solve our nation's trade deficit. Imagine if there were a similar commitment to quality and its measurement in government and education. Imagine a six sigma standard, in which the goal was no more than four defects per million. Imagine if the public sector began to focus on, "Who is my customer, and how can I serve my customer better?'' Motorola has proven that quality doesn't cost money, it saves money. Motorola also stresses that it requires a fundamental change in the culture and a commitment that does not waiver.

If the public sector and education embraced the principles of quality, would children, other customers of government and taxpayers be better off or worse off? And if these people were better off, would politicians be better off or worse off? The question is: Will the problems of society and government get so bad that they will require a fundamental change or just another fad?

Richard Day has his own survey research firm, Richard Day Research, in Evanston.

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