Quality Management for Emerging Businesses (Part Two)

Last week, we explored the definition of “quality”, the international quality standard (ISO 9001), and the six processes no business can do without. In this week’s installment of Quality Management for Emerging Businesses, we’re going to consider objectives and we’ll have a quick look at the PDCA Cycle, also known as the “Deming cycle”.

So, what are your organization’s objectives? Besides “making plenty of profit” or “keeping the doors open”, that is. What does your firm plan to do better than, faster than, or different from anyone else? Do you have a target customer in mind for your product, whether it be soda pop, electric motors, or business services?

Do you have a set of long-term (strategic) and short-term (tactical) objectives? How do you plan to achieve those objectives? Go ahead — find your Business Plan. Look for the section on Goals and Objectives. (For those of us who haven’t reviewed our business plans in a year or more, now is an excellent time to catch up.)

What are your stated goals and objectives? Did you consider them “SMART objectives” at the time you wrote them? Of course, you did. But in hindsight, do you still consider them SMART objectives?

What are SMART objectives? Well, SMART is a mnemonic device, an acronym. The letters stand for:

  • Specific — Naturally, we all want to be the best at what we do and we need to be profitable but “to be the best” or “to be profitable” is an awfully general objective. If it applies to every other business, it isn’t specific enough. Chances are good that at least one other company in your market or your line of business has objectives that are nearly identical to yours. Why did you get into business if not to do something faster, better, or more effectively? You don’t increase the likelihood of hitting a specific target by drawing a larger bulls-eye. Narrow your focus.
  • Measurable — There’s a truism in quality circles that goes something like, “If you can’t measure it, you can’t improve it.” I weigh myself every day and note my weight in a spreadsheet. A couple of times a month, I look for a trend (steady or, even better, downward). If the trend is in the wrong direction, I work out a little longer and/or adjust my diet. Business works the same way: measure, and improve.
  • Achievable — According to the CDC Body Mass Index calculator, my “ideal” weight is between 122 and 164 pounds (55-74 kg). I’m a tad over 164 — 170, actually — so it wouldn’t take much for me to get in that ideal weight range. My objective, however, is not to get there — I know I can — but to stay within that range. The term “achievable” in this context implies continual improvement and sustainability. If your company grossed $1.1 and $1.0 million in each of the last two years, why not shoot for $1.2 million this year?
  • Relevant — How many click-thrus did your site get last year? How many “likes” did your Facebook page get? More than the year before? How much more? Did you see a corresponding sales increase from two years ago to last year? It’s possible that “increase click-thrus by 20%” is irrelevant to your larger objectives. Ideally, there’s a cause-and-effect relationship between department objectives and organizational objectives. Make sure that your objectives are in overall alignment.
  • Time-bound — This category also has to do with measurement: if our objectives don’t have a time limit, we cannot tell if we’re improving. Objectives without deadlines aren’t objectives — they’re wishful thinking, like “I want to be a billionaire.” Putting time limits on reaching our objectives forces us to think — think about the processes of setting and achieving our goals — in detail.

The “PDCA Cycle”

This is the heart of ISO 9001. The PDCA cycle is all about continual improvement, one of the key concepts of the international quality standard. Processes modeled on the PDCA cycle are generally more efficient and more effective.

Also known as the “Deming” or “PDSA” cycle, the PDCA cycle has four components:

  • PLAN – This is where we determine the process’s intended results, or objectives, how we’ll get those results (the plan), and the process details. We determine how we will measure success — what data we need and how to collect them.
  • DO – We implement, or act out, the process as designed. While we’re doing, we’re collecting data.
  • CHECK (or STUDY) – At predetermined intervals, we analyze process data we’ve collected to date, or since the previous analysis. We compare actual results with our goals and expectations and we look for trends and anomalies.
  • ACT – If our results didn’t meet our goals, we use the data to drive changes to the process. And even if we’re consistently meeting our objectives, we may want to set our sights higher. 

Traditionally, we portray the PDCA cycle like this:

pdca_cycle

This flat diagram doesn’t illustrate the concept of continual improvement very well. Let’s look at the PDCA cycle in three dimensions, instead:

PDCA Slinky

Think of it as a three-dimensional “PDCA Slinky”. The distance between improvements is larger, at first, because we’re picking the low-hanging fruit. A 50% gain, or a 50% reduction in waste, is pretty darned impressive. Such initial gains make you want more. Subsequent gains may not seem as impressive — you might go from +50 to +20 to +5 — and the tendency is to lose focus on continual improvement. Don’t lose focus — don’t stop improving.

* * * * * * *

Next, we’ll look at topics like the voice of the customer and the cost of poor quality to your business. As always, I welcome your comments (below or via email). If you have questions or you want to get together to discuss your situation, don’t hesitate to get in touch.

Thanks.

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