REENGINEERING QUALITY--DEMING STYLE

ASQC 48th Annual Quality Congress
May 24-26, 1994
Las Vegas, Nevada

by Richard E. Winder

SUMMARY

The simplicity of Dr. Deming's Aim-Plan-Do-Study-Act cycle, coupled with the Five Dimensions of Quality, provide a comprehensive five-dimension model for strategic quality planning. Capturing quality dynamics, this model permits reengineering of the quality function to become an integral part of the organization's strategic planning process.

INTRODUCTION

Recent criticism of total quality management in the popular press causes us to reexamine quality thinking. We must assess whether it is simply another passing management fad or whether it is a dynamic, integrated, operating philosophy with lasting value. Dr. Thomas Lee described quality as more than a management method. He said quality is a grassroots philosophy that will have a greater impact on the global economy than any other movement this century.⁽¹⁾ Similarly, Joel Barker says that the quality paradigm is essential to excel in the 90s, but by the turn of the century it will be necessary to even be in business.⁽²⁾

Yet, as other management theories emerge, the popular press portrays quality as a passing fad that has a diminishing impact as the leaders of the quality movement age.⁽³⁾ Some modern management gurus try to set their theories apart from the total quality management movement.⁽⁴⁾ They do this by using a narrow definition of quality and then distinguishing their management method from that definition. This only causes further fragmentation of an already confused quality world, and makes it even more difficult for organizations to choose from among the many approaches to quality. Nevertheless, as these management theories emerge, their implications regarding the quality function itself are profound. Under a comprehensive definition of quality as envisioned by Dr. Deming, these new management techniques are, in fact, useful quality tools. Moreover, a comprehensive understanding of quality permits integrating these tools with quality rather than seeing them as competitors against quality.⁽⁵⁾ But in order for this integration to take place, quality thinking must be reengineered to eliminate the fragmentation and provide a simple, complete, universal quality framework.

This simple framework is a five-dimension structure which incorporates not only the experience, measurement, and systems and processes of quality, but also the underlying paradigms and dynamics (see Chart 1). It is completely consistent with Dr. Deming's Plan-Do-Study-Act (PDSA) cycle for continuous improvement (sometimes referred to as the Plan-Do-Check-Act or PDCA cycle). The Plan stage of the cycle is related to the Interconnectivity dimension, where the quality environment is created. The Do stage is related to the experience dimension, where vision is brought into actualization; it deals with the use of learning theory to develop core competencies. The Study stage is related to measurement, which provides us with knowledge of the system. The Act stage is related to standardization, which reduces variation through formalization of the systems and processes. The highest dimension of quality, value sharing, is expressed as follows: "If I give you something that has more value to you than it does to me, then together we are better off as a result of the trade." In the quality context, this concept is expressed in the phrase, "Delight the Customer" (or, "Give the customer more than he or she is paying for" or "Consecrate resources to the customer"). Dr. Deming has also recently added this highest dimension to the concept of quality by insisting that every system must have an Aim. As noted by Dr. Deming, the aim of a system must always relate directly to how life is better for everyone.⁽⁶⁾

Quality itself is a system which is either mapped over, adjunct to, or integrated with the organization's operating system. Every viable organization has a quality system--whether inadvertent or formalized--through which it builds and sustains relationships with its internal and external customers. An organization which destroys, or which does not have, a quality system loses its ability to sustain its relationship with participants (employees, owners and shareholders, and customers) who provide the human, information, and capital resources to sustain the organization. Without these life-sustaining resources, the organization cannot continue to exist. The reengineering of quality under the framework of the five dimensions permits us to understand and map the existing quality system, whether or not it is a formal system, and then to modify the system to more effectively and more efficiently accomplish its aim. This is the essence of strategic planning, and the use of the five dimension model permits us to completely integrate quality with the strategic planning function.

TEXT

Reengineering is defined as "the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service and speed."⁽⁷⁾ To emphasize that reengineering is the complete redesign of the process rather than simply the modification of existing processes, reengineering has been described as "starting with a clean slate." It involves restructuring a process or a system to better respond to customer needs instead of merely fitting the process to the design of the organization. For example, one firm reengineered an order/billing process to provide better response to customers when the process had become so fragmented (because various steps in the process were handled by different departments) that customers were unable to verify the status of an order without significant delay.

However, in the quality context, reengineering is more than just "starting over." Rather, it is starting with an inquiry into the dynamics underlying the process or need, then discerning some sense of order from the dynamics to formulate principles and paradigms, and finally building or re-building the delivery systems around those dynamics and paradigms. A simple example illustrates the importance of understanding these dynamics in the reengineering process. It also illustrates the power of reengineering:

My desire for orange juice for breakfast was at times left unsatisfied on mornings when I had a tight schedule, because the pitcher was empty. It took five minutes to make a new batch of orange juice from frozen concentrate. I spent a great deal of time trying to improve the process of making orange juice but was able to reduce the cycle time only slightly. I attempted to employ various tools to expedite the three-step process of: (1) extracting the frozen orange juice concentrate from the can by squeezing the can or running hot water over it to loosen it (cycle time of one to three minutes--use of the microwave oven was ineffective and even dangerous at this point because of the metal lid on the can); (2) mixing the frozen concentrate with three cans of water by using a wire whip or electric hand mixer to break up and mix the frozen concentrate; or by using the microwave to thaw the frozen concentrate, then using a wire whip to mix it with water (cycle time of one to three minutes); and (3) cleaning the mixing tools (cycle time of 15 to 30 seconds--this step was often postponed for batch processing with other dirty dishes).

With little success at reducing the mixing cycle time significantly, and realizing that the need to mix often arose when time was at a premium, I attempted to establish a policy of requiring that whoever emptied the pitcher was required to make the next batch of orange juice. This policy fell victim to human nature.

Then I began to explore the underlying dynamics of preparing orange juice: (1) frozen orange juice concentrate, a solid, is difficult to extract from the can; (2) frozen concentrate, a solid, does not mix well with water, a liquid: it must be thawed or broken down; (3) unfrozen orange juice concentrate, a liquid, mixes well with water, a liquid, but will spoil at room temperature after a period of time.

Until now, my total effort to improve the process had been directed toward improving the existing process of mixing frozen orange juice concentrate (which focused on the first two dynamics). Inherent in my process were certain assumptions which were not necessarily valid. I had assumed, for example, that orange juice had to be made from frozen concentrate. Not until I "suspended" my assumptions (I did not "set them aside,"--instead I "suspended" them--I held them up and looked at them) and focused on reengineering the entire process with a focus on the third dynamic did I discover that I could reduce the cycle time for preparing orange juice from concentrate to fifteen seconds--a 1000% to 2000% improvement over the existing process.

The solution was simple: I now place one can of frozen orange juice concentrate in the refrigerator. By the time I am ready to mix it, it is no longer frozen (yet it does not spoil at refrigerator temperature). In a liquid state, it mixes so well with water that no mixing tools are needed. The action of pouring three cans of water into the pitcher containing the liquid concentrate provides sufficient agitation to mix the orange juice without a wire whip or hand mixer. Using a kan-ban system, I replace each can I remove from the refrigerator with a can from the freezer (the removal of the can from the refrigerator is the signal of consumer demand and is the signal to replace it with a can from the freezer).

Not only has the reengineered process dramatically reduced cycle time, it has also eliminated two of the three steps in the process: no longer is extraction from the can necessary (the liquid can be poured from the can), and no longer is it necessary to clean the mixing tools (since none are used).

It is the comprehension of the underlying dynamics of a process or a need, then, which provides a framework for reengineering (see Chart 2). If our focus is on surface structures or delivery systems (the performance, the measurements, and the systems and processes) which are out of alignment with the underlying paradigms or which ignore key dynamics, then we may never gain the insight necessary to align the process with the dynamics. This reduces efficiency and creates a form of waste that may never be discovered.

What, then are the dynamics underlying the quality system which permit us to reengineer quality? The recent shift in the quality paradigm, from the "customer satisfaction" standard to "delight the customer" elucidates an essential dynamic of quality--the relational dynamic--and provides the kernel for reengineering quality. This dynamic, though not overtly expressed in the above example, is nevertheless present: it permitted the participant, who was victimized by the process of mixing frozen concentrated orange juice, to apply a quality process to move to a state of liberation. This is the practical impact of quality: by fulfilling stated and implied needs, it assists individuals and organizations to move from a state of limitation to a state of liberation; from a state of punishment to a state of participation; from a state of captivity to a state of captivation, and from a state of victimization to a state of actualization in which their desires are realized rather than thwarted. In fact, under the expanded view of quality, the focus, or aim, of quality must be the building and sustaining of relationships by assessing, anticipating and fulfilling stated and implied needs. An aim that is purely focused on anything other than relationships does not have the power to sustain the organization. If, for example the focus is purely on profits, the firm may actually erode its relationship with customers and employees by asking for more than is required.

The insight that this new paradigm provides permits us to radically redesign our thinking of quality (or, to "reengineer" quality) to see quality as more than statistical process control, as more than quality circles or teams, and as more than "zero defects" (or the current standard, "six sigma"), although each of these may be an important part of the quality function.

Traditional quality thinking was limited to a three- dimensional model with three components: Quality Performance, Quality Measurements, and Quality Processes (see Chart 3). These components are the surface structure, or delivery system of quality. Reengineered quality contains two additional components: Quality Vision and Quality Planning, which provide a framework or environment for quality to thrive. Drawing a metaphor from the financial management environment, Dr. Juran added planning as a critical element, expanding the quality system to four dimensions. But even a system which is planned does not necessarily have an aim directed toward the needs of all participants, and without an aim which, as Dr. Deming says, relates to how life is better for everyone, the system will not operate optimally.

In quality reengineering the focus must start with vision--with what drives the system--rather than with the processes which define the current capacity (and, consequently, the current limitations) of the system. Without an aim, the quality system may wander and become fragmented. Vision is at the core of the system and it is vision that ties the system together. Where there is no vision, the system is fragmented because there is no central force to hold it together.

Vision is at the heart of the Quality Model (see Figure 1). It supports the quality paradigms and delivery systems. Vision is the comprehension of our value to society. In the Five Dimension Model, Vision is described as the common good in a relationship. It deals with the existence of a need on the part of one participant and the capacity on the part of the other participant(s) to fulfill that need.⁽⁸⁾ Under this dynamic view of vision, it is always adjusting to meet the needs of participants. If the needs change, the capacity is developed to meet the modified needs. The focus moves toward sustaining relationships rather than simply satisfying needs.

Vision, then, is enhanced by knowledge of our capacity, including our competencies, measurements, and systems.⁽⁹⁾ Our capacity relates to our ability to fulfill needs. A true knowledge of our capacity gives us a true knowledge of the needs we can assist in fulfilling. This is the reason we are constantly amazed at what is accomplished by visionaries. It is not that they walk on water or have angel wings. Rather, it is that they understand their capacity, and they do not limit their capacity by thinking in traditional paradigms. President John F. Kennedy, when he painted the vision of being on the moon within a decade, was not simply describing a future hope. He was describing a capacity which he knew existed. Since all the resources were not currently available at that time, part of that capacity involved the ability to put together the resources that were needed in order to fulfill the vision. If our view of our capacity is limited, so is our vision. Consequently, limitations on our vision, and the resulting limitations on our capacity, are often self-imposed.

The vision of quality reaches its highest fulfillment in the value sharing ("delight the customer") paradigm, when all of the dimensions of quality are fulfilled. When participants engage in value sharing, an interesting economic dynamic takes place.⁽¹⁰⁾ Long-term relationships are built, because the participants (1) give more than is required, (2) become "sustaining members" (loyal customers or long-term employees), and (3) share the vision of the organization with others (e.g., through word-of-mouth advertising or by creating "moments of truth" which live on in the minds of customers). Where this type of relationship exists, a "buyer" will pay more and a "seller" will accept less. This expands the trading range and increases the likelihood that a trade will take place. But more importantly, the relationship becomes more important than the trade, and the focus turns from "selling to the customer" to "fulfilling customer needs." Price becomes less important, and is adjusted to meet the needs of participants. The relationship becomes one of partnership and participation--what Dr. Deming describes as an "arms around" relationship--rather than an arms-length or controlled relationship.

Because vision is directed toward linking needs with resources, it is able to rise above the hum drum of everyday operations to scan the horizon for other needs seeking fulfillment. For this reason, vision is an integral part of strategic planning. Vision permits organization leadership to see beyond the boundaries of the current system and to expand or modify the system as vision is reshaped on a continuous basis to respond to new needs. In fact, Dr. Deming notes that it is a responsibility of management to be ready to change the boundary of the system to better serve the aim.⁽¹¹⁾ Changes may require redefinition of components of the system to match the aim.

Vision cannot be brought into actualization in a vacuum. It is only brought into actualization through rules which govern the operation. These rules, or this paradigm,⁽¹²⁾ become the logic under which the system operates. The operational paradigm drives the behavior of the system,⁽¹³⁾ often because it prescribes the measurements, and the participants in the system then respond toward the measurements. If the measurement system is inconsistent with the vision, then the system either becomes fragmented through inconsistent response by the system, or the system as a whole operates inconsistent with the vision. For example, the computer consulting firm which began measuring quality by the number of lines a programmer wrote during a day created a system that was inconsistent with the need of the firm's clients for programs which were efficient and not memory consumptive. And, as noted by Dr. Peter Senge, the focus on measuring cycle time reduction for product development actually led to less sophisticated products, reducing the value of the firm's shares.

It is the formal and informal processes which provide life and continuity to an organization. These processes define the capacity of the system and, as a consequence, set its boundaries just as the rim of a bowl sets the boundaries for the capacity of the bowl. Organizations must look inwardly through the eyes of vision to the true underlying needs and dynamics and the competencies that the firm has developed to meet those needs in a unique manner. If an organization is constantly attempting to look beyond these processes and ignoring the dynamics and needs, it can become fragmented through a process of chasing markets that its competitors may be pursuing with their unique core competencies. In addition, benchmarking may in fact limit an organization's capacity by limiting its thinking to what the competitors are doing rather than what the market may need. These are the dangers of benchmarking in a competitive environment. To simply copy another organization which on its face has a similar market but in fact utilizes different core competencies is a prescription for benchmarking failure.⁽¹⁴⁾ However, a focus on the underlying dynamics can make benchmarking a very useful tool, because it permits benchmarking even beyond one's own industry and can provide some significant insight to the reengineering process.

Limited vision of quality in the organization, and the consequent limitation of the quality system, is often related to one of two factors: departmentalization of quality, and a limited view of quality. If the quality function exists as a separate department within an organization rather than as an integrated function in the firm, it may fall victim to some of the same fragmentation that exists with other business processes. For example, if the production department looks to the quality department for statistical process control, the production department may never understand how variation in production processes impacts on the quality of the goods produced, and may continue to rely on inspection to ensure the quality of goods delivered. Furthermore, a narrow view of quality can limit a firm's ability to fully integrate quality. Seeing quality as just a three dimensional processes or system can create a vision based on the system itself rather than the underlying needs and dynamics. Seeing quality as just zero defects or as just statistical process control, or conformance to requirements, or even continuous improvement provides a working model for a specific aspect of quality, but imposes limitations on what quality can be.

Reengineering does not start from scratch. Rather, it begins with the vision of the common good among the participants in the organization, with an understanding of existing paradigms and dynamics, and with an understanding of core competencies. It begins with an understanding that systems define our boundaries, but vision enables us to extend beyond those boundaries to a higher good as new needs arise and markets change.

The dynamics of the five dimensions of quality provide a model for quality reengineering. These dynamics provide the theory base for understanding and applying quality that is essential to Dr. Deming's Theory of Knowledge component of profound knowledge. It is this theory base that permits us to turn information into knowledge and knowledge into prediction which is so critical to management of the system.⁽¹⁵⁾

The Five Dimension Quality Model can be seen in terms of its core components. These are: core vision, core logic, core competencies, core measurements, and core systems. Quality reengineering and strategic planning are both accomplished by ensuring that there is complete alignment among all functions. The core vision is the common good among all the participants in the organization: customers, employees, management, shareholders, etc. If the core vision is anything less than this it will not have the aligning power necessary to knit the organization together and to help the participants become sustaining members. For example, a vision of "we will be the most profitable in our industry," defined under an achievement paradigm, may delight shareholders in the short term, but may discourage customers in the long term, to the ultimate detriment of shareholders. The core logic becomes a policy expression of the vision. It becomes the operational paradigm of the organization. If it is built on sharing value among the participants, it will support a vision of common good among participants. If it is built on a competition paradigm, the organization may find itself even competing with its customers (always bargaining on price) or its employees (always having to negotiate what gets done for what compensation).

The quality delivery system is comprised of core competencies, core measurements, and core systems. The core competency is based on the experience of the organization. What is the experience which the participants bring to the organization, which relates to the core vision? Experience becomes the foundation for core competency and provides the means for developing a division of labor needed to ensure that the work of the organization is accomplished. If the core competency is inconsistent with the core vision, then either the core vision must be modified to match the core competency, or additional core competency must by acquired in order to fulfill the vision. Without the core competency, vision will never be translated into reality. The core measurements provide a basis for understanding the system. They must be designed to provide knowledge of the system. Caution should be used in using measurements for other purposes, such as punishment or reward, because it is difficult to determine what part the system plays and what part the individual plays in any accomplishment.⁽¹⁶⁾ In fact, improper measurement can destroy a system. Dr. Peter Senge spoke of how measurement of cycle time in the product development process resulted in less sophisticated products and seriously affected the stock value of the corporation.⁽¹⁷⁾ Much thought must be put into defining and implementing the measurement systems and tying them with the core vision, because very literally, "you get what you measure." The core processes are the heart of the reengineering effort. It is these processes which give the organization life and continuity. It is these processes which make the organization "free of mortal risk."⁽¹⁸⁾ These processes must be designed and redesigned to constantly be in alignment with the vision of the organization, and they should be constantly measured to ensure that they are still meeting the needs of the participants whom they are designed to benefit.

This quality reengineering model can become the basic model for strategic planning in an organization, whether or not the organization currently has a formal quality system. In fact, this model will permit quality to become a central part of the strategic plan, rather than a functional aspect of the organization. In this manner, quality can live on from year to year as an almost transparent function which breathes life into the organization and enables it to keep its finger on the pulse of customer needs.

Strategic planning is the process of bringing the delivery system (the core competencies, the core measurements, and the core systems) into alignment with the underlying paradigms and the vision on which those paradigms are based. This first requires identifying exactly what needs the organization desires to fulfill. It is these needs which define the customer, because it is these needs which provide the link between the organization and the customer. Once the needs are identified, strategic planning must then formulate a means of developing the competencies needed to fulfill those needs. In this manner, strategic planning can move the pursuit of quality from a functional "silo" to a total integration of quality throughout the organization.

CONCLUSION

Notwithstanding criticism of quality in recent years, quality can become an integral part of the strategic planning function of an organization. This reengineering of quality from a functional department to a core planning philosophy can assist firms in focusing on delighting internal and external customers through alignment of core vision, core logic, core competency, core measurements, and core processes.

FOOTNOTES

1. Lee, Thomas, Keynote Address, 1991 Midwest Quality Conference.

2. Barker, Joel A., Future Edge, New York: William Morrow and Company, Inc., 1992.

3. Byrne, John A., "Management's New Gurus," Business Week, August 31, 1992, page 44.

4. Hammer, Michael, and Champy, James, Reengineering the Corporation, (New York: HarperBusiness), 1993, page 49.

5. See Winder, Richard E., "Sole Sourcing Modern Management Theory: Quality as the Source," ASQC Sixth National Quality Management Conference Transactions, January 26-28, 1994.

6. Deming, W. Edwards, The New Economics, Cambridge, Mass.: Massachusetts Institute for Technology, Center for Advanced Engineering Study, 1993.

7. Hammer, Michael, and Champy, James, p. 32. See also Lowenthal, Jeffrey N., Reengineering the Organization (Milwaukee: Quality Press), 1994.

8. Winder, Richard E., "Fulfilling Quality's Five Dimensions," 47th Annual Quality Congress Transactions, May 24-26, 1993.

9. Jeffrey Lowenthal links core competencies to vision. See Lowenthal, Jeffrey N., Reengineering the Organization (Milwaukee: Quality Press), 1993.

10. Winder, Richard E., Lindon J. Robison, and Daniel K. Judd, "The Economic Dynamics of Quality," addendum to "Fulfilling Service Quality Through Quality's Five Dimensions," 2nd Annual Service Quality Conference April 20, 1992.

11. Deming, page 53.

12. See Barker, Joel A., Future Edge, New York: William Morrow and Company, Inc., 1992.

13. Winder, "Fulfilling Quality's Five Dimensions."

14. Deming, page 37; Hammer and Champy, page 132.

15. Deming, pages 104-110.

16. Deming, page 173.

17. Senge, Peter, Keynote Address, Annual Quality Congress, American Society for Quality Control, May 24, 1993.

18. Dr. Eugene Jennings, Michigan State University.

BIBLIOGRAPHY

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