The Evolution Of Excellence

The Evolution of Excellence Paul J Steel President, Total Quality Inc., USA [email protected]

Today I want to discuss what I have learned from observing and participating in efforts to improve quality and achieve excellent performance over the past fifty years by individual and by organizations. I speak not as an expert but as a student. A student who has had some very distinguished teachers including Dr. W. Edwards Deming, Dr. Armand V. Feigenbaum, and Dr. Curt Reimann. I worked seven years with Drs. Deming and Feigenbaum and my work with Dr. Reimann began in 1988 and continues today more than twenty years later. I have also learned much from assessing hundreds upon hundreds of organizations worldwide. More than this, I have learned from discussions with Dr. Joseph Juran, Phillip Crosby, Masaaki Imai, from Dr. Kaoru Ishikawa studying a Total Quality System Management project I was leading in Brazil in the early 1980s, and from reading the works of many acknowledged leaders in the evolution of excellence including Dr. James Harrington. So, as you can see, I have been fortunate to have some of the best teachers and today I want to share with you what I have learned. I also realize that all of us here today are students and that what you have learned may be different and in some cases in conflict with what I am about to report. Sharing our views is what learning is all about and I look forward to listening to your inputs and improving my personal learning in our discussion following my talk. Excellence in the 1950s – The Era of ‘Inspiration’ Let me begin in the 1950s. I was a young boy at the time and so what I learned about quality was limited to my exposure to what I read, what I heard in conversations, and what I saw on television. While this may appear on the surface to be a simple and unscientific approach to understanding true quality, it actually may be an effective approach based on what a good friend and mentor once told me. His name is Frank Caplan and he is author of the The Quality System. Frank told me that “the only real quality is perceived quality”. In effect what I understood him to mean is that it is that true quality is what the customer perceives to be most important. Over the years, I have come to agree strongly with Frank’s insight. Here are some interesting examples. In much of the world, Japan had a reputation for poor quality and they were the source of many jokes about the inferior quality of their products. In the United States, I remember being impressed by a Zenith television commercial. The advertising slogan was: “The quality goes in before the name goes on.” It was an effective slogan at the time and for a while Zenith was very successful. But today, Zenith is only a brand name and the TVs with its name are made in Asia. The key message I learned from this is that quality is more than words and more than slogans. Zenith was initially able to create a perception of quality through their advertising slogan. In time however, the reality of better products from other parts of the world would gradually change this perception adversely for them. The Evolution of Excellence – Paul Steel – 25 July 2008 Tehran, Iran

Unknown to me at the time, inspection and sampling plans originated in the 1920s were being used in industry. Other events happened in the 1950s which did not have much of an impact internationally then but would lead to major changes decades later. The Japanese created the Deming Prize in honor of Dr. W. Edwards Deming. The Deming Prize recognizes Japanese companies for major quality improvements. In 1952, Dr. Juran would introduce quality management training in Japan at a time when many limited their quality improvement focus to the operations areas of their organizations. Dr. Juran was the foremost of the gurus as an educator and his introduction of the management of quality would later have a major impact on how excellence is pursued. Dr. Armand Feigenbaum wrote a book which would later be renamed ‘Total Quality Control’. The TQC acronym is credited to him. His book was similar in many ways to what Dr. Juran was promoting but Dr. Feigenbaum emphasized the concept of Total Quality. In the fifties, many thought that quality control and management belonged solely to operational process owners and users. Dr. Feigenbaum would later adapt TQC to TQMS (Total Quality Management System) to better describe his original message. We would later see TQM become wildly popular but not TQMS. Or, maybe TQMS is still here but with a different name. Please pay close attention later when I tell you a story about a mural in a train station. That story may provide us with the clue to the future evolution of excellence. These three events would gradually emerge as major forces in the evolution of excellence. One of them would dominate and contribute more to the evolution of excellence than the others. I will address which one at the end of my talk. Another observation I have of the Drs. Juran, Deming, and Feigenbaum based on my individual integrations with them is that they each considered the others as competitors and each sought to win the competition. If I were to try to sum up the focus of quality during the 1950s in one word, that word would be “inspiration”. Excellence in the 1960s – The Era of ‘Conformance to Specifications’ I began the 1960s as a student and ended that decade as an engineer in industry. I studied statistics while in school and learned about sampling as a technique for helping to ensure that the quality of products conformed specified requirements. Military Standard Sampling (known as ABC Standards internationally) continued to be used in many companies. When I started work at the Ford Motor Company in the late sixties as a Manufacturing Process Engineer, I was given an assignment in the Supplier Quality Assurance Department. This work involved inspecting parts to ensure that the suppliers could produce acceptable parts in advance of authorizing them to ship them to the factories. I recall a strong emphasis on reducing cost but I detected no emphasis on improving quality from the customer‘s perspective. The lack of emphasis on the customer perspective was also apparent in educational courses. For example, when I first studied Queuing Theory the constraints used related to minimizing the cost of how many employees are needed to service customers. There were no constraints for minimizing customer wait time which is often a major contributor to customer dissatisfaction. During the 1960s, approaches (quality techniques) for achieving organizational excellence gained in popularity. Teamwork in the form of the Quality Circles technique was first used in Japan in 1962 and Kaoru Ishikawa is often credited with originating them. Dr. Juran became familiar with the use of Quality Circles in Japan while in Japan in 1966 and immediately The Evolution of Excellence – Paul Steel – 25 July 2008 Tehran, Iran

became a strong proponent of their use. This approach would later become popular internationally in the 1970s and the concept of teamwork in general would gain widespread support and enthusiasm. One of the characteristics that I admired about Dr. Juran more than the other quality gurus that I worked with was his openness to listening and to learning about the reaction to his views. He was a perpetual student of excellence and always searching for validation of what he taught. Dr. Ishikawa also effectively deployed his now common causeand-effect diagrams which are often referred to as Ishikawa diagrams or Fishbone Diagrams. If I were to try to sum up the focus of quality during the 1960s in one word, that word would be “conformance”. Excellence in the 1970s – The Era of ‘Continuous Improvement’ Many significant changes began to occur and become visible in the 1970s although many of these improvements were not evident until the late 1970s. For example, Japanese products especially automobiles and electronics transitioned during the 1970s from a perception of ‘low price and low quality’ to ‘low price and acceptable, good, and even excellent quality’. The trend became clear that the Japanese were evolving into the perceived leaders in quality. Use of statistics shifted from a focus on sampling to a focus on analysis of variation using methodologies such as Statistical Process Control (SPC). SPC emerged as the favorite in part due to its more practical perception. Dr. Deming accelerated to shift to SPC by stating in my presence that using MIL-STD-105D to set a 1% lot tolerance percent defective (LTPD) ensures that you will get a minimum of 1% defective. It was his way of ridiculing what he considered to be inappropriate use of sampling techniques. In the late 1970s, awareness of the Japanese recognition awarded to Dr. Deming for his work in helping them to favorably transform their image created a frenzy of interest in learning what he and the Japanese did that was so successful. The irony is that Dr. Deming advocated the use of SPC in the United States in the 1950s but while many in management listened to him with interest and supported training in SPC, few followed up and acted on the signals from the control charts leading to their disuse. In 1979, Philip Crosby published his book “Quality is Free”. He stressed the importance of ‘meeting customer requirements’. Critics would later point to his emphasis on only ‘meeting’ customer requirements as opposed to exceeding them. Critics also later questioned his work on identifying and reducing ‘Quality Cost’ as being questionable in terms of it producing realistic, accurate and meaningful information In any event, Mr. Crosby’s book became a best seller and it led to many organizations shifting their focus to include more of the customers’ perspectives. The paradigm of how organizations viewed quality was changing and Philip Crosby was instrumental in getting organizations to think differently and consider changing their focus. His work was aided by Dr. Juran’s call to overcome what he referred to as ‘cultural change’ which how emphasized in his 1962 book Managerial Breakthrough. But something else was about to occur in 1980 that would take advantage of this new open mindedness of organizations to change . . . Excellence in the 1980s – The Era of ‘Total Improvement’ In 1980, NBC published a Paper’ by NBC titled “If Japan can, why can’t we”? It ignited frenzy among many organizations to learn the secret to the Japanese success. Everyone wanted to know what they had done that transformed the image of their products from worst to best. It seemed everyone wanted to visit Japan and visit these organizations to try to learn what needed to improve their own organizations. Some say that the term ‘industrial tourism’ The Evolution of Excellence – Paul Steel – 25 July 2008 Tehran, Iran

originated at this time. Dr. Deming was entering his eighties when this occurred but he would overnight become the most sought after management consultant. His message was the same as it was in the 1950s but this time he understood that he needed to get management’s commitment if SPC were to be effectively implemented. I learned this the first day when I met him on the first day that he came to work as a consultant for Ford Motor Company. He made Dr. Deming made two demands before he would agree to visit Ford Motor Company. He insisted on a meeting with the CEO and he wanted a separate meeting with someone who had enough statistical knowledge to work with him and conduct his training at Ford and its 10,000 supplier locations. Ford CEO (Red Poling) and President (Donald Peterson) agreed to meet him for breakfast. Donald Peterson was the one to step forward and assure Dr. Deming that he would provide and sustain the necessary management support. Dr. Deming also required a person competent in statistics be assigned to work with him. I was selected for this role of working with Dr. Deming because I was the only one at that time known to have extensive education and practical experience in applying statistical process control (SPC) and other related statistical analyses. During our meeting at Ford World Headquarters, Dr. Deming quizzed me on statistics and I asked him to recommend how best to implement the techniques that worked so well in Japan at Ford's suppliers. The meeting got off to an awkward start because after I asked how we could effectively use SPC with our 10,000 suppliers, Dr. Deming responded by saying: "10,000 suppliers! I have no idea!” I was shocked and cautiously asked again and he responded by shaking his head and staring at the floor while repeating his "I have no idea!" reply. Out of desperation, I suggested an approach as to how I thought we could do it. He shook his head favorably and said he thought that approach would work. I did well on his statistics quiz but not well enough to avoid getting a homework assignment. He later authorized me to give his statistical process control seminar internally at Ford and with our suppliers. I still have and treasure the copy he gave me. As the meeting ended and he needed to go to the auditorium to address the Ford quality managers who had been flown in from all over the world to listen to him, he stopped in the meeting room doorway and waited for me. He extended his hand and said to me that he looked forward to working with me. At that moment, I knew I wanted to become a consultant. Within a year, I left Ford to work as an international quality management systems consultant for Dr. Armand Feigenbaum. I owe much to Dr. Deming for the inspiration and knowledge that he gave me but he was not the person I learned the most from related to achieving world-class excellence. Do you remember Quality Circles and teamwork that took root in the 1960s in Japan? They continued to be heavily promoted in the eighties. In fact, what surprised me is that I had not associated teamwork with Dr. Deming but I observed first hand that when he visited our Ford facilities and met with the workers and/or managers that he made it a point to always emphasize the value of working together and respecting the knowledge that all employees at all levels have. The call for change, the call to overcome resistance to change, and videos on escaping from your paradigms were everywhere. People bought books and went to seminars to learn more about the need to change and learn from organizations that had changed. The flights to Japan were full of people seeking to learn how to overcome the resistance to change. Today, the interest to make cultural change is well understood but the high level of interest in this topic has faded. As an observer, I believe that the seminars, books, and visits all failed to provide a The Evolution of Excellence – Paul Steel – 25 July 2008 Tehran, Iran

means or a process to enable making change in your organization when you returned to it. In retrospect, the need and value of change was advocated but the means to achieve it were not effectively communicated and certainly not widely implemented. People who visited organizations that had successfully changed their culture also learned that the new cultures were not the same from organization to organization. Logically, the question of why should we change our culture if we do not know what culture we should change to was not consistently answered. Dr. Deming and SPC were highlighted for most of the 1980s but two major events were occurring that would change how excellence is pursued dramatically. At Motorola, Bill Smith had taken some of the popular quality improvement techniques such as SPC and bundled them into an approach he titled Six Sigma. The technique components of Six Sigma had long been proven to be effective. Bill Smith however synergistically bonded them and validated their effectiveness. As was so often the case, widespread understanding, acceptance, and application of Six Sigma would take years. Unlike TQM and Reengineering, Six Sigma is defined practically and the steps to effectively using it are validated and accessible allowing for application which is frequently successful. Even today however, several areas of the world have not deployed this methodology extensively. Six Sigma is designed to improve processes and so is another improvement approach that gained popularity in the 1980s. Kaizen was developed after 1946 in Japan but received significant international attention in the 1986 when Masaaki Imai published his book Kaizen: The Key to Japan’s Competitive Success. I have had the pleasure of spending time with Mr. Imai both socially and at his Kaizen Institute from the mid 1980s into the early 1990s. But there was someone else who was unknown in the quality world at that time who would accomplish little in his lifetime but who would eventually have a greater and more lasting impact on excellence as we now know it than some of the gurus. His name was Malcolm Baldrige and he was US Secretary of Commerce when he died from a rodeo accident in 1987. More conveniently, he was a close friend of President Ronald Reagan. It was President Reagan’s last year in office and so he did not have to worry about politics. He wanted to honor his friend who had died suddenly while serving in his Cabinet. When he learned that Malcolm Baldrige had been promoting a national quality award, Reagan asked some members of Congress to pass a law creating the Malcolm Baldrige National Quality Award. More importantly, Reagan insisted that only the best companies could win it. The concept of ‘world-class’ was overnight elevated to the level of the most prestigious business award in the country. A chemist (Dr. Curt Reimann) at the National Institute of Standards and Technology (NIST) was given the responsibility to develop the award process and manage it. He astutely realized that the award would never endure if it was based on subjective judgment of quality experts who each had a differing view of the definition of quality. Dr. Reimann also realized that there were several differing schools of thought as to the best approaches to achieve excellence. For examples, the gurus each advocated vastly different approaches. To counter this, Dr. Reimann consciously decided not to follow the approach of any one expert. He interviewed them all and then he wrote the first version of what we now know as the ‘Criteria for Performance Excellence’. Dr. Reimann also designed the Baldrige assessment scoring guidelines to not be prescriptive. One of the key advantages of making the Criteria non-prescriptive was that organizations did not have to change their cultures to pursue excellence. This was counter to what others had long advocated and it was less threatening to managers and leaders who wanted to achieve excellence but who had difficulty The Evolution of Excellence – Paul Steel – 25 July 2008 Tehran, Iran

making the leap of faith to change their organizational culture without clear evidence that it would be valuable to do. Dr. Reimann did something else with the Baldrige Criteria that has resulted in a major change in how excellence is pursued. He made Leadership the first area to be addressed when being assessed. The big question was: Why had nobody effectively done this before? Dr. Reimann is arguably responsible for the most remarkable breakthrough in the history of the evolution of excellence due to his work in 1987 but the world would not begin to become widely aware of it until the next decade and much of the world still has not understood its value. The 1980s were exciting times for those of us in quality and it is difficult to succinctly summarize what happened. From my perspective, the pursuit of excellence began to shift strongly away from its operational processes boundaries to a ‘total’ focus where everyone and all processes were to be included. Do you remember which guru emphasized the importance of a ‘total’ approach to excellence? Excellence in the 1990s – The Era of ‘World-Class Excellence’ The 1990s saw strong support and a high level of activity related to seminars, training, and attempts to implement TQM (Total Quality Management) and Reengineering. Both of these approaches would peak and fade in popularity and use in the mid 1990s. The reasons they became so popular and the reasons they faded are debatable. For me, the fundamental principles of TQM are still valid and valuable. Some have concluded that they were fundamentally without merit and over promoted. My experience leads me to disagree that they were without merit. The problem I observed was that TQM was not defined well. This allowed anyone to claim that they could teach you or consult with you on the subject or TQM. This confused the market and the well-publicized failures that resulted from trying to implement the weakly defined concept of TQM by incompetent individuals contributed to its early and painful demise. Even today, when someone wants to introduce a new approach to quality in an organization they are likely to hear: “That sounds like another version of TQM and we all know that did not work”. Reengineering also became extremely popular in the 1990s but soon failed in the minds of many but for different reasons. Unlike TQM which was not defined well, the concept of Reengineering was well-defined and promoted by Michael Hammer and James Champy in their series of books on this subject. For me, the failure of reengineering to sustain itself was rooted in the fact that this powerfully valuable concept was not made practical by the originators. It remained mainly at an academic and conceptual level. The concept was endorsed by eager business leaders and middle management but most stumbled when they tried to implement it without the benefit of a defined implementation process that had been tested and proven. In short, it was rushed into production before it was ready and it failed miserably in many cases leading to word-of-mouth criticism that resulted in its decline. There is a silver lining to the Reengineering story. The authors and users added the words business and process and the term business process reengineering became part of everyday business language. The lasting benefit here as I understand it is that there was an increased focus put on processes at all levels of all types of organizations. This was important because years earlier the focus had been largely limited to the operational processes in manufacturing organizations and times were changing. Service organizations were now enjoying success and growth at a faster rate than their manufacturing cousins. More than this, education and health The Evolution of Excellence – Paul Steel – 25 July 2008 Tehran, Iran

care and public sector organizations were examining how they could benefit from TQM, Reengineering, and other popular quality improvement approaches. Before we move on, I would like to point out that have observed many organizations successfully and consistently employ simple and effective approaches to Reengineering that have resulted in major improvements. In every case, they did a good job of developing the training and implementation processes which likely contributed to their success. In contrast to TQM and Reengineering, ISO certification was well defined in terms of requirements, an audit process conducted by trained auditors. As a result, ISO has survived and achieving ISO certification rapidly became a common goal for many organizations worldwide. ISO is beneficial in helping to ensure that your organization actually functions in the way its processes describe. I know of no reason not to achieve ISO certification if it is appropriate for your organization. But, can ISO take you to excellence. By the ISO definition, the answer appears to be no. If you are intent on achieving excellence, ISO is without a doubt good if not essential building block but it is not capable by its own definition of achieving excellence because it is a standard. If everyone is certified to the same standard, they are all equal by definition. Excellence is about being the best. Being equal to everyone else who is ISO certified is not being excellent. It is being equivalent. Then something different happened in the 1990s. Another approach to achieving excellence became wildly popular but unlike TQM, quality cost, and reengineering, it would endure and grow in use every year after. The Baldrige Awards for Performance Excellence were limited by law to US organizations but the Criteria for Performance Excellence were not. Soon, many countries began to use the Baldrige Criteria. Some developed their own versions but the core elements have always remained the same. For example, I was invited to work as a consultant to Xerox of Europe to help them in preparing for the first European Quality Award and they would soon become the first winner of the European Quality Award. My initial response was that I was not trained or familiar with the new EFQM criteria. However, after using them for about 30 minutes I realized that they were very similar to the Baldrige Criteria. The Europeans told me that they liked the American idea of a world-class award but they wanted to develop better criteria because the US was not recognized as a quality leader by most of the world. However, after years of work using quality experts from many European countries, they developed an excellence model and criteria which were fundamentally equivalent to the Baldrige Criteria. Today, I get to work in nations that use the EFQM Model and the Baldrige. They have strong opinions as to which model is best. However, the processes that the users must address are basically the same. And that similarity is very important to what we need to keep in mind as we look to the future. To me, the most important change that occurred in the 1990s was that organizations began to understand that sometimes you need to stop trying to improve a process that is incapable and look externally for a best process. Please note that I said best ‘process’ and not best practice. Unfortunately, too many times we are given a success story from some organization that cannot be adapted and used effectively in our organizations. We then realize that it is not the story that we need. We need the actual process that was used to achieve that high level of performance and we need it in a form that will be accepted by and can be used in our organization. I understood this most clearly when I worked with Xerox of Europe in 1992 when they won the first European Quality Award (EQA). Robert Camp of Xerox had written a book on Benchmarking in 1989 that became very popular in the early 1990s due to the need for organizations using the Baldrige Criteria and now the EFQM Model to obtain comparison data and information. The popularity of Benchmarking would eventually decline but continue The Evolution of Excellence – Paul Steel – 25 July 2008 Tehran, Iran

as a basic improvement tool. The lesson many organizations learned related to benchmarking is that a benchmark of itself is not actionable. What is really needed is the process that the benchmark source organization used to achieve benchmark-level performance. Unfortunately, these organizations do not often share the process due to competitive reasons and when they do, it is usually in a terminology that would not be accepted by people in your organization. I have a final note to make related to Reengineering. History has already written that Reengineering failed but it did succeed in accelerating organizations to look externally for a better process and not limit the focus to trying to make an incapable process capable through standard continuous improvement techniques. One lessen I have learned by this time in my career was that approaches that fail often provide valuable insight towards more effective means of achieving excellence. For me, the most important lesson I learned in the 1990s is that the focus should be on being the best which is more aggressive than complying to standards and continuous improvement. That is not to say that compliance and continuous improvement are not important and essential but rather to understand that achieving world-class excellence is the overriding goal.

Excellence in the 2000s – The Era of ‘Total Integrated Excellence Systems’ It is somewhat easy to look back over the decades and see what has happened during the course of the evolution of excellence. In summary, here some of the major changes in how to achieve excellence I have observed: •

Meeting requirements → exceeding requirements

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Cost reduction → customer loyalty

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Operational areas-only → total (all areas of an organization involved)

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Manufacturing → service, health care, public sector, and education

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From audits and checklists to assessments of processes and systems

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Compliance → continuous improvement

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Continuous improvement → total integrated management systems

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Statistical sampling → statistical analysis

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Statistical analysis → synergistic bundling of statistical and other improvement methodologies

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Unproven concepts → validated approaches

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Gurus teaching us → excellent organizations teaching us

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Benchmarking → best practices

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Best practices → integrated systems of best processes

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Management and more importantly effective execution of management processes are understood → be a prerequisite to achieving excellence

It is more difficult to understand what is happening now during the decade in which we are living and to identify that which is most important and which will endure. Fortunately, history can sometimes help us predict the future. I would now like to tell you a story that The Evolution of Excellence – Paul Steel – 25 July 2008 Tehran, Iran

helped predict the future. I would then like to conclude by showing you what I understand to be the future of the evolution of excellence. After that, I invite your inputs and questions related to improving our shared understanding of the evolution of excellence. Several years ago, a friend invited me to meet him at the Cincinnati, Ohio train station to observe his model airplane fly. This airplane was made with very light wood and had a propeller that was driven by a rubber band. The rubber was special in that it also was light weight and could be stretched to provide power to the propeller for a long period of time. The plane is designed to fly in a circle and it gains altitude until the rubber band unwinds and fails to provide power. Contests are held and the winner is the plane that flies for the longest time. Since the planes are very light, a large building with a very high ceiling and little or no ventilation is needed for these contests. The Cincinnati train station fit this description because it was closed. The trains stopped running to this beautiful facility many years earlier. Let me say that I enjoyed watching my friends’ plane circle and climb in altitude for several minutes. After that, my neck started to hurt from looking up for such a long time. So, I began to look at the beautiful building I was in. It has many shops including a movie theatre but they had all long been closed. There was also a very large and beautiful mural that depicted the history of transportation from the early use of a wheel followed by the use of animals, boats, trains, cars, and finally airplanes. It was then that I realized that at the height of the trains popularity, it future was already shown. The mural was forecasting the future but nobody realized it at that time. You see, as the use of the train for transporting people would decline, the use of cars and airplanes would increase. And so, today as I enjoy the opportunity to share what I have learned about the evolution of excellence over the past fifty years with many fellow quality professionals, I would like to predict the future of excellence. No, I do not have a special ability to predict the future. However, like the mural in the Cincinnati railroad station, I believe the future is already visible to us. In fact, I believe it was visible to us in the 1950s when Dr. Feigenbaum wrote his classic book “Total Quality Control”. Now I would like to show you what has been visible for many years but which like the mural in the Cincinnati train station may reveal the future related to the Evolution of Excellence: Demonstration: Total Integrated Management System including these major subsystems: • • • • • • •

Leadership Strategic Planning Customer Relationship and Management Knowledge Management Workforce Management Process Management Results Management

So, now you have seen the future of excellence and like the mural in the Cincinnati Train Station, the future of excellence was predicted decades ago but few of us realized. To the best of my knowledge, the one person who saw it first in 1951 and who has practiced it for approximately sixty years is a long-time friend and my former boss – Dr. Armand V. Feigenbaum.

The Evolution of Excellence – Paul Steel – 25 July 2008 Tehran, Iran

Thank you. Now, I invite you to share your knowledge so we can all improve our understanding of the Evolution of Excellence and I will also be very pleased to answer any of your questions. List of graphics to be included in PowerPoint version of presentation: •

Evolution of Excellence chronology

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Cincinnati train station and mural analogy

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Total Integrated System of Best Practice Processes – graphic and mapping diagram

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Photos with Dr. Armand Feigenbaum and Dr. Curt Reimann

The Evolution of Excellence – Paul Steel – 25 July 2008 Tehran, Iran