TRENDS

One of the nation's foremost organizations in the field of quality management, Juran
Institute has become as much a witness of managerial triumphs and tragedies as a
trailblazer of innovative management techniques.This article examines the role of the
Institute in the quality arena, its perspectives on the total quality movement over the past
20 years, and ten of the top trends that enlightened business leaders would do well to
track as they prepare for the challenges of the 21 st century.

by G. Howland Blackiston
Let's go back to 1976. The United States was celebrating its
200th birthday. Rocky was number one at the box office,
and Nadia Comaneci was the star of the summer Olympic
games in Montreal.
That year also marked Joseph M. Juran's 31st year as
an independent consultant, author, and lecturer. Working out
of his New York apartment, he operated pretty much as a
one-man gang. His lectures were scheduled and sponsored
by the American Management Association. Administrative
support was provided (sometimes reluctantly) by his wife,
Sadie Juran.
There was an emerging interest in this country for
training in quality matters. Eager to implement quality improvement within their organizations, manufacturing companies were sending increasing numbers of managers to Dr.
Juran's lectures. They were motivated by a very real competitive threat from overseas. Japanese industries had swallowed up a number of U.S. companies and were threatening
others.
Dr. Juran was convinced that there was a need to spread
his knowledge in quality management throughout organizations. To be effective, this would have to be done on a
scale beyond what was possible through his public lectures.
It seemed that the medium best suited to accomplish this
was videocassettes. The idea was to create a video-based

series that could be used by companies to train their entire

management team.
Using his own financial resources, in 1979 Dr. Juran
founded Juran Enterprises, Inc. as the vehicle for creating
and marketing this new video product. The fledgling threeperson operation was based in a seemingly cavernous office located on the tower floors of Dr. Juran's apartment
building in Manhattan. Approximately one year later, Juran
on Quality Improvement went on the market.
During the time the company was developing this video,
it began to sponsor and market quality-improvement courses
on its own. By the end of 1982, Dr. Frank Gryna, former
dean of the college of engineering and technology at Bradley University, had joined Juran Enterprises full-time as the
company's first quality professional employee. Also at that
time. Juran Enterprises changed its name to Juran Institute
to better reflect the educational focus of its offerings. Before long, clients were asking for direct support, in Ihe form
of in-company training and counseling, in addition to training materials and courses.
The years that followed brought more changes. In 1984
the 12 employees of Juran Institute settled into a facility in
Wilton, Connecticut, about 50 miles northeast of New York
City. In 1987, Dr. Blan Godfrey, head of quality and theory
at AT&T Bell Labs and one of the world's foremost experts

As president of Juran Instrtirte. inc.. in Wilton. Connecticut, G. Howland Blackiston leads the organization's new business development efforts.
Having colaunched the Institute with Dn Joseph M. Juran in 1979, he is the creator and executive producer of over 150 videos on quality,
including Juran on Quaiiry Improvement, the best-selling video on quality ever pnDduced. He is also the creator and e>fficuttve producer of An
fmmjgront's Gift, a recent PBS television documentary on the life of Juran.

NATIONAL PRODUCTIVITY REVIEW/Winter 1996

1996 John Wiley & Sons, Inc. Repnnted wrtb permission by JURAN INSTITUTE. INC.

15
CCC 0277-8556/96/1601015-09

16

G. Howland Blackislon

in quality management, joined Ihe Institute as its new chairman and CEO. By 1988. Juran Institute had grown to nearly
50 employees, forcing the organization to move to its present
facility, also in Wilton. Shortly thereafter, the growth of
business outside the United States prompted the opening of
Juran Institute's overseas offices in the Netherlands, Toronto,
Madrid, and North Sydney.

THE SUBJECT OF QUALITY EVOLVES

Since the needs and demographics of the Institute's clients determine the products and services that are created.
the Institute's business is a good barometer of quality trends
in this country and abroad.
As the 1970s came to a close, it was not just the manufacturing industries that were looking for help in quality.
Service industries began to position themselves to better
understand how quality could improve their businesses. And
it was not just training "materials" that these companies
needed. The Institute's "training product" orientation was
being driven to a more well-rounded offering of products,
public courses, conferences, in-house training, and counseling and appraisal services. More and more companies
outside the United States began to contact Juran Institute
for guidance. Soon overseas clients would account for nearly
50 percent of the Institute's business.
Quality was dramatically changing the way many organizations were conducting business. There was a new
buzzword being used by managers: total quality management, or TQM. What emerged as some of the key motivators of the push for TQM? At first, sheer terror motivated
many U.S. businesses. About the time Juran Institute opened
its doors, some U.S. companies were seeing what was happening to their markets. These companies realized that quality was a matter of life and death. Indeed, many U.S. manufacturers of consumer electronics died before they could
react.
Xerox watched as its share of the U.S. copier market
dropped from a dominant 85 percent in the early 1970s to
13 percent in the early 1980s. Chipmakers found the Japanese electronic companies could make better chips cheaper
than they could. Even the Big Three auto companies feared
for their lives at some point in the years that followed. U.S.
companies could not survive, much less compete, unless
they were good, very good.
Another important motivator for quality initiatives was
the concept of "the costs of poor quality." This relates to all
the costs that would disappear in an organization if everything
were done correctly from the start. Most companies were
throwing away about 25 percent of their sales revenues on
scrap, repairs, warranties and other obvious costs of quality.
That's what Hewlett-Packard found in 1980 when it
made a close study of the costs of poor quality in two
divisions. The interesting thing is that a decade later, after

NATIONAL PRODUCTIVITY REVIEW / Winter 1996

Hewlett-Packard had made all kinds of efforts to improve

quality, it figured the cost of quality was still probably around
25 percentnot because the effort to improve had failed,
but because the understanding of the costs of quality had
enlarged. In 1980 Hewlett-Packard had thought of quality
only in the context of hardware, but by 1990 it was also
looking at the cost of poor business processes and the costs
of software errors. In 1990 Hewlett-Packard sampled the
costs of failure in its software research and development
and came up with a total estimate of $400 million a year.
That came right off profits and was enough to reduce earnings per share from five dollars to three dollarsand that
was just from quality failures in software.
As the years went by. the reasons for implementing
TQM piled up. Customers became more demanding. Many
corporations insisted that their suppliers adopt TQMor
else. As companies opened their eyes and looked outside
their walls, they found they could learn from others how to
do things much better. As products, particularly electronic
products, became more complicated, they had to be better if
they were to work reliably.
In a recent interview. Dr. Juran shared his thoughts on
the various forces that have been driving quality efforts since
he launched the Institute.

There are a number of forces that are driving

the whole world to higher quality. One of them, of
course, is the growth in international competition.
It isn 'tjust the Japanese quality revolution. You 've
got all these multinational companies. And that has
intensified competition considerably.
As technology arises, you need more precision.
And there seems to be no end in sight there.
You have these national quality awards. And
we 've got them right now in quite a few countries,
as well as even in areas. That has stimulated a good
deal of competition, realizing that the awards confer not only prestige but shares of market.
You have the people that get to world-class
quality realizing that they can't really stay there
unless their suppliers give them goods and services
that are also world-class quality. You can't build a

Juran Institute: A Barometer of Trends in Quality Management

world-class automobile unless you 've got world-class

components. So the companies put demands on their
suppliers. Each supplier also has suppliers, which
then have to transmit demands to their suppliers.
And that set of pressures has extended to
academia. Schools are being told: Here's something
that's gotten to be terribly important, and you just
can't continue in your old ways. You 've got to revise
your curricula, the means of bringing out graduates
that will be knowledgeable in this field. And they will
be in a position to serve the companies without companies having to supply what is missing.
So, it's been a very widespread phenomenon
of rising demands and, thereby, the need for rising
compliance."
Making quality actually happen, however, is not easy.
Although the methods for achieving high quality are simple
and commonsensicalisn't it obvious you should pay attention to your customers?applying these methods can
be extremely difficult because it requires organizations to
throw out the traditional ways in which they have worked
and managed since the beginning of the century, and leam
new ways. They have to look at what they do in a different
light. They can't inspect in quality; they must design it in
and build it in. Quality does not take longer; in fact, it produces results faster. Organizations that are serious about their
efforts to improve quality will most likely have to break
with some long-held traditions.

BREAKING WITH THE PAST TO

CREATE A NEW CULTURE
The traditional procedure for sending flowers from one
city to another seems reasonably straightforward. Most likely
everyone is familiar with FTD's process. But when you look
behind the scenes, you can appreciate how involved this
process actually is.
You call your local florist who, in turn, places a call to
another participating florist who selects and delivers the
flowers. Note that the participating florist has ordered these
flowers from a distributor, who got the flowers from a wholesaler, who bought the flowers from a fanner. By the time
the flowers are delivered, they are eight to ten days old. But
then came Ruth Owades.
Before Owades, everyone simply accepted this traditional, time-consuming process as a given. The secret of
her success was looking at an existing process from an entirely different perspective, and knowing when and how to
break the rules. She reengineered the process to remove
every one of the nonessential steps. Customers call Calyx
& Corolla's toll-free number and order from photos in its
catalog. The order is transmitted by computer directly to
the flower farmer whothanks to training from Owades

17

has a talented flower arranger right there on the farm. The

order is packed in special containers and delivered the next
day hy Federal Express. In reengineering the process,
Owades eliminated three unnecessary steps and the associated costsand the recipient has flowers that are up to nine
days fresher.
Those who break with tradition or try to change the
way a whole organization has been doing business for decades, often are not welcome. For example, the tradition of
confrontational relations between labor and management,
especially in the auto and steel indusu^ies, had to be overcome before teams could function smoothly. At Buick City,
management and labor sat down together for the first time
in 1977 in what were then called Quality of Work Life teams.
But it was not until ten years later that Buick City got its
teamwork right, on the third try.
The concepts of "quality" seem so simple, and yet getting quality right can take years. And doing so becomes
even more challenging when there are obstacles in Ihe way.
Sometimes these obstacles are bureaucratic; sometimes they
are cultural.

WHAT CAUSES TQM EFFORTS TO FAIL?

Juran Institute figures that 80 percent of the companies
that tackled TQM in the 1980s failed. Surveys by Gallup,
Opinion Research Corporation, and the American Quality
Foundation support the idea that most executives have been
disappointed with the results of TQM and that there may be
a growing disenchantment with it. What is contributing to
this disappointment? Juran Institute research has uncovered
some of the major causes.
The CEOOften the cause of TQM failures is the
CEO. The CEO thinks others have to change but that he or
she does not. The CEO does not set an example. He or she
asks for total quality, but does not change the reward system to bend the people in the right direction. The message
does not get across to everyone, from the board to the plant
floor, so a big segment of the company is ignored.

Often the cause of TQM failures is the CEO.

The CEO may be the first in a company to intellectually accept the value of TQM, hut thinks it applies to the
rest of the company, not to him or her. In truth, TQM may
be tougher on CEOs than on anyone else because it requires
more of them. John Hudiburg of Florida Power & Light and
Philip Anschutz of Southern Pacific both made the mistake
of leaving middle management out of the loop when they
started their quality programs. Bob Galvin, one of the best
models of a quality CEO, made the mistake of starting the

NATIONAL PRODUCTIVITY REVIEW /Wirrter 1996

18

G. Howland Blackiston

training at the bottom of Motorola, rather than at the top.

Becoming a quality leader (and not just a quality cheerleader) is the result of personally taking charge of quality
efforts. In an interview. Dr. Juran clearly identified the
nondelegable tasks of top management:

upper managers are pretty busy people. And

they 've got habits formed based on what they
learned in school and what they learned from each
other. And one of the basics of learning how to
manage is to delegate. Good managers delegate.
But in the case of quality, we haven't properly identified what things should not be delegated.
When we go into a quality initiative, we create
a quality council, which is to guide and coordinate
the quality initiative. One of the nondel-egable roles
is to personally sit on that quality council.
Of course, the approval of the vision and the
policies, that's inherently nondelegable. Choosing
what quality goals are to enter the business plan,
that's nondelegable. That has to be done by the
upper managers.
And then participating in the deployment processthis process of identifying what deeds are to
be done to reach those goals; provide the resources;
assign responsibility. There's no escape from upper managers participating in that.
Seeing to it that we have measures on the company instrument panel so that we can measure these
critical things about quality that we have never
measured before, like customer satisfaction and
competitiveness.
Upper managers must personally review performance against the quality goals just like they 've
always reviewed performance against the sales
goals and profit goals.
And in the case of recognition, upper managers should personally he there to hand out the
plaques and preside at the ceremonial dinners and
the like. If the upper managers don't participate, it
sends a message as to what importance they give
to this matter of quality.

^4ATIONAL PRODUCTIVITY REVIEW/Winter 1996

And then, the matter of revising the reward system (to include quality]. No one revises the reward
system unless the upper managers have agreed to it.
Choosing the wrong strategyTen years ago, it seems
that everybody starting on the road to TQM got off on the
wrong foot. They picked the wrong strategy, or the wrong
tools, or they picked only one of the tools, and then wondered why quality did not improve.
The classic mistake was to put the burden of improving quality on the workers. After all, they were the ones that
produced poor quality, weren't they? That led to quality
circle fiascos at places like Nashua, Westinghouse, and many
other companies. Quality circles on their own got nowhere
because it turned out that it was not the workers but management that was responsible for most of the poor quality.
On the other hand, if a company had an overall quality strategy, then quality circles or teams proved very valuable.
Many American companies have had great difficulty
in choosing the correct TQM strategy. In a recent talk. Dr.
Juran identified some of the roads that have turned out to be
dead ends.
American companies have been flailing away.
Some of them tried to keep the imports out and get
tariffs established; to get quotas established; to file
lawsuits against the Japanese; and so on. And that
had .some effect, but it's not a basic solution. The
basic solution is to become more competitive.
And then you had efforts to stir up the troops.
Put up the banners and shout the slogans, and otherwise go into exhortation to urge people to do
better. We went through maybe a decade of that,
and did a lot of damagecreated a lot of divisiveness of the companies.
More inspectionthat was another way. Try
to keep the had products from going out to the customers. And of course, it has effectiveness, but it's
a costly way to do it. The way to do it is to stop
making defectives.
And you had training in various directions,
especially training in tools. That has merit when
it's done at the right time and on the right subjects.
But if we start the training in tools, we're starting
at the wrong end. The starting point is to train the
top people to establish the proper goals and learn
about how to manage, so that those goals are going to be reached. And then the training in tools is
one of the last things we do.
So we had our managers really flailing away.
They honestly didn't know what to do. They had
been detachedfrom this subjectfor years and years,
and they had delegated it to the quality departments. They honestly didn 't know what to do. They

Juran Institute: A Barometer of Trends in QuaWy Management

19

were guessing. And there were so many options, it

was very hard for them to guess right.
Ignoring the customerLotig before anyone had
heard of TQM, IBM had the right ideas about making the
customer happy atid doing things right. But did IBM really
listen to the customer?
In 1986 the new chairman, John Akers, invited a few
major customers to sit in on the company's sacrosanct annual strategic planning conference. They gave the IBM executives an earful about quality and IBM's insensitivity to
their problems. So Akers declared 1987 to be the Year of
the Customer. In reality, 1987 turned out to be the Year of
MIAwhat IBM calls "management-initiated attrition."
Management focused not on quality but on costs and productivity. New quality plans followed regularly. Then. 1989
became the Year of Market-Driven Quality, which supposedly made the customer the final arbiter. But customers still
found IBM unresponsive and insensitive. Although the
company's talk was about quality, its actions said cut and
save. Then the unthinkable happened: In 1991, for the first
time in its history, IBM lost money. Now, 15 years after
IBM started to worTy about quality, management is still trying to set things right.
It's all very well to satisfy customers. But in the past
few years, it has become clear that the leading quality organizations dazzle customers with unexpected quality.
For example, at the Ritz-Carlton Hotels quality service
is a way of life that goes way beyond offering mints on a
pillow. The luxury hotel chain has created ways to continually surprise guests with quality, build customer loyalty, and
ensure repeat business.
It all starts at registration. Guest preferences are noted in
a centra! computer and can be recalled whenever that guest
visits any Ritz-Carlton hotel. The hotel knows her preferred
room type; what newspaper she reads; what radio station she
tunes to. The hotel has even noted what beverages she prefers
in the minibar. And if this is standard procedure, how much
ftuther will they go to dazzle their guests? When a guest complained about not having enough room for shoes, a hotel employee built and installed a custom shoe rack in the guest's
room. Another guest's preference for pens with black ink is in
the hotel's computer. Any time that guest registers, his room
has pens with black, not hlue, ink cartridges.
Companies that continually surprise and dazzle customers with quality can build customer loyalty that is difficult,
if not impossible, for competitors to challenge. And delighting the customer is just part of an overall quality program
that links improvement efforts with an organization's longterm goals. As Dr. Juran notes:
The customer has to be the focus of all efforts.
Quality has to move to the top priority, which it
has not had in previous decades.

Companies have to think through their vision.

Where do they want to be X years ahead? What
btisiness do they want to be in ?
In the case of setting strategic goals, those are
just a wish list unless you can identify the deeds
needed to meet those goals. What resources are
needed to do those deeds? Who's going to he responsible for doing those deeds?
We need new measures to determine whether
we have customer satisfaction, to measure whether
we 're meeting what the competition is doing. What
is the amount of waste due to poor quality? And
then get these measures on the instrument panels
of the top people. Otherwise, they are flying blind
and run the risk of catastrophe.
We need a much greater use of recognition.
That has turned out to be one of the useful elements from the behavioral sciences. We need to
revise the reward systems in the companies to include quality.

HAS TQM's TIME COME AND GONE?

There is mounting evidence that "the most important
single factor affecting a business unit's performance is the
quality of its products and services relative to competitors."
That's what the Strategic Planning Institute of Cambridge,
Massachusetts, said in a study that has been tracking the
performance of corporations since 1972, Companies that
rated high for quality can charge premium prices. Quality is
the best route to grow and gain market share.
When a journalist recently challenged Dr. Juran about
the quality payoff, he responded, "Look to see what's happened to the shares of the winners of the Baldrige Award
compared to the mine run of shares on the stock exchange."
Business Week magazine took Juran up on his challenge.
Its editors hypothetically invested $1,000 in each publicly
traded Baldrige winner on the day its award was announced.
As a control, they invested the same amount of money in
Standard & Poor's 500 stock index. Standard & Poor's fund
increased 33 percent. Not bad! But the "Baldie Fund" increased
a whopping 89.2 percentalmost triple the market index.

NATIONAL PRODUCTIVITY REVIEW/Winter 1996

20

G. Howland Blackiston

Total quality provides a new rallying cry for husiness. a

new reason for going to work, a new way of managing. Free
markets may work, but they do not inspire many people. Total
quality management, however, does offer a philosophy and a
system to encompass a new and better way to run a company.
Many organizations that have found quality too difficult to implement or they have mishandled it are turning
their attention to new elixirs: reengineering, the virtual corporation. In truth, TQM has far outlived the normal span
allotted by impatient managers to fads in business.
The 15 years or so that have passed since America woke
up to the need for quality was just the beginning, almost an
experimental time. Certainly it was a time of disappointments, but by now organizations know enough to do it right.
In fact, after the slow experimental growth of TQM in the
1980s, there has been an explosion of efforts in the 1990s.
Three-quarters of the large companies practicing TQM
started after 1990, a majority of American hospitals have
launched quality efforts, most of them since 1991, and threequarters of the government agencies practicing TQM started
in the 1990s. TQM, then, is not a dying fad, but an emerging strategy.
Whole industries have turned themselves around using
the ideas that came out of the quality movement: the auto
industry, the steel industry, the railroads, the electronics industry. They are all quite different from what they were 15
years ago. They design products differently. They manufacture them differently. Labor and management treat each
other differently, The roles of managers, supervisors, and
workers have changed. The customer is treated with a new
regard. And, of course, the products and services are much,
much better. For many, TQM has become a way of life.
This is true not only in the manufacturing sector, but also in
the service sector.

The impact of TQM has already caused

some radical changes in the way people^
companieSy and even entire societies
are working together.

The banks seem to have been the first service businesses

to have undertaken quality efforts seriously. Long lines were
the most obvious of the insults that big city banks threw at
their customers. A decade ago, customers of the First National Bank of Chicago stood in line for as long as 45 minutes for the privilege of getting at their own money. Even
the bank's own employees did not like using the bank. Today, the average wait is about two minutes. By expanding
the lobby hours, having supervisors ready to move into
empty teller slots and adopting other improvements devised

NATIONAL PRODUCnVIPr REVIEW/Winter 1996

by employee teams, the bank licked the waiting time. That

is one of 150 quality measures the bank tracks weekly on
the retail side. On the commercial side, the bank tracks 500
quality indicators.
When it comes to professionalsteachers, lawyers,
doctorshow can TQM improve their work? If you view,
say, a surgeon's work as part of a system, then TQM can
help. The surgeon's success depends on other doctors, nurses,
orderlies, pharmacists, administrators, admission clerks, and
many others. Quality failures account for enormous differences in the number of operations performed, the success
rates, the costs, and the bills. At the LDS hospital in Salt
Lake City, Utah, the elementary application of quality methods revealed the best time to give antibiotics to surgical
patients and substantially reduced the rate of postoperative
infections, which are a major problem and cost for hospitals. This kind of application of TQM, plus the intense pressure to contain costs, has moved many hospitals to adopt
TQM.
In both federal and state government, quality efforts
have been under way for more than a decade. The giving
has been slow, however, because politics and quality do not
mix easily. Politics is ideological; TQM is fact-based. Politics is sporadic; quality is continuous. Politicians care little
about management; TQM is all about management. Nonetheless, there are pockets of serious effort in government,
the IRS, and some military units.

THE TEN TRENDS TO TRACK

There is a sharp contrast between how the more enlightened companies are run today and bow they were run for most
of the 20th century, In a sense we are emerging from the Dark
Ages of U.S. businessthe period from 1950 to 1980when
managers believed in short-term results, shaving costs, focusing on finance and marketing rather than products and processes, and making deals instead of serving the customer. Although most executives are probably still in the Dark Ages,
the impact of TQM has already caused some radical changes
in the way people, companies, and even entire societies are
working together. In Juran Institute's view, there are ten trends
that have emerged as a result of TQM efforts.
(1) Expansion of Quality to All Industries and Functions. This may be the most obvious of all the trends. At
Juran Institute's annual conferences on quality management,
law firms, accounting practices, medical services, government agencies, military services, engineering construction
firms, manufacturing companies, aerospace companies,
universities, farming, oil companies, dentist offices, and
transportation companies are all represented.
Almost every function imaginable in a company is also
represented at the conferences: marketing and sales, research
and development, production, accounting, fmance, clerical.

Juran Institute: A Barometer of Trends in QuaJity Management

laboratories, transportation, distribution, and senior management. The expansion of quality management concepts,
methods, and tools to alt industries is evident among the
winners of the Malcolm Baldrige National Quality Award
and various state quality awards. These have included hotels, state police departments, a school system, and land
surveyors and architects, as well as a wide variety of manufacturing and service companies.
(2) Qualitj' Improvement at a Revolutionary Pace. For
many companies, quality improvement at a revolutionary pace
is now simply becoming good management. Companies routinely average more than one improvement per person per year,
some even approaching one improvement per person per week.
These improvements take many forms. Arising from people
all over the company, they are collected, processed, and put in
the hands of the right person for quick action. Some companies manage this whole process in less than 24 hours.
Other improvements are intradepartmental, based on ideas
that can be handled by people during their normal work. Every week, or even every day, time is set aside to examine the
daily work processes, explore ways to improve these processes,
and select some of these ideas for quick action.
The large improvements are usually the result of interdepartmental or cross-functional quality improvement teams that
tackle the chronic problems that have been in the way of company progress for a long time. These are the vita! few problems that create breakthroughs in quality by reducing waste
and improving customer satisfaction dramatically.
(3) Partnering. This is one of the most exciting trends.
Many companies are including key suppliers and customers in quality improvement, planning, and control activities. The ISO 9000 series of standards, the internationally
accepted definition of a quality assurance system, provides
a good starting point for contractual relationships by defining a solid quality management structure.
But many companies are going far beyond contractual
relationships. Many customer-supplier relationships in the
United States are evolving quickly to resemble those pioneered by Toyota and other leading Japanese automotive
companies. Quality improvement teams across companies
were first introduced by an Alcoa-Kodak team several years
ago. This was a striking event at the time. Now it is common practice. A chemical company producing plastic films
recently described how it has worked with the converter
and the food-producing company that uses the plastic packages to improve package quality and reduce costs. In two
years together they have removed 30 percent of the total
costs. Only a few years ago personnel from the different
companies were not even allowed inside each other's plants
because of "proprietary processes." Now team members even
have ID cards for all three companies so they can walk in on
weekends and evenings if they need to make a process change.

21

(4) Education and IVaining. Any company that has

been actively engaged in moving toward TQM in the past
few years knows the importance of education and training.
The concepts, methods, and tools for modem quality management are new for most members of the companymanagers, professionals, and workforce.

The investment in education and training

is high, hut the rewards are great.
The investment in education and training is high, but
the rewards are great. Reports from companies show just
how high this investment is. One reports 105 hours per training per employee per year. Another reports 169 hours per
employee. One of the Baldrige Award winners is averaging
almost 100 hours of training per employee per year now,
but expects it to grow to 150 hours within the next five years.
For many companies this investment in training and education is already 1 to 2 percent of total revenues, and one of
the high-tech Baldrige Award winners expects its investment to be as high as 5 percent of revenues.

(5) Self-Directed Work Teams. Companies are

moving quickly toward control by the workforce. Work
scheduling, hiring, training, salary administration, tool
design, process improvement, process design, redesign,
and reengineering are being done by teams of people
working across the company instead of by external planners who set standards and review performance. These teams
are achieving continuous improvement on a remarkable
scale.
The concept of empowered employees embraces many
new ideas. Empowered employees have the means to measure the quality of their own work processes, interpret the
measurements, compare these measurements to goals, and
take action when the process is not in control. But the concept of empowered employees goes far beyond self-control. Employees also know how to change the process and
improve performance, boasting both the effectiveness and
the efficiency of the process. They also understand how to
plan for quality. They understand who their customers are;
what the customers need, want, and expect; how to design new goods and services to meet these needs; how to
develop the necessary work processes; how to develop
and use the necessary quality measurements; and how to
continuously improve these processes. In summary, they
understand and use daily the three basic processes for
managing quality: quality planning, quality control, and
quality improvement. These three universal management
processes, often called the Juran Trilogy*, are the first building block of total quality management.

NATIONAL PRODUCTIVITY PfVIEW/Winter 1996

G. Howtand Blackiston

(6) Information and Analysis. Measurement and information are key elements of any organization's infrastructure. Donald Peterson, former chairman of the Ford Motor
Company, stresses the importance of having the right information. When Ford benchmarked Mazda, it was impressed
with how well Mazda manages this part of the business.
Peterson states, "Perhaps, most important, Mazda had been
able to identify the types of information and records that
were truly useful. It didn't bother with any other data. [At
Ford] we were burdened with mountains of useless data and
stifled by far too many levels of control over them."
Information systems are a key part of the infrastructure
for total quality management. Yet, in far too many companies they are still embryonic, or worse yet, they exist and
are not used. At Juran Institute's 1991 conference, Tim
Schlange presented a remarkable paper describing his Ph.D.
research on quality information systems in two Swiss companies and four U.S. companies. He found that only one
company actually used its quality information. That company, Xerox, closed the loop by turning the data collected
into useful information that could be translated into action.
The information was used to improve the next generation
of products, improve business processes, reduce time cycles,
improve distribution, improve field service, better understand the needs of customers, and design products and services to meet these needs. According to Schlange's research,
the other five companies had similar data, but did not use it.
(7) Process Management and Process Engineering.
For many years companies in the United States and other
western countries have focused most of their efforts on product design. Process design has received only secondary
emphasis. Today, the focus is rapidly shifting, as companies discover the importance not just of coming up with
new products, but designing new processes by which those
products are manufactured. One stunning fact serves to illustrate this point: The typical Japanese company spends
one-third of its R&D budget on product design and twothirds on process design. The typical U.S. company's spending is just the reverse: one-third on process design and twothirds on product design. By continuously redesigning its
manufacturing processes, Sony has managed to take over
50 percent of the labor out of many of its high-tech products in the past four years. This continual improvement is
producing the results needed to remain competitive.
As process technologies become more and more the heart
of the competitive equation, it will become more and more
necessary to have senior executives, middle managers, professional staff, and workforce members who understand modem process technologies. And process management skills
are necessary not just on the production line; they must be
applied to all key business processes as well. A close look
at the key business processes in most companies reveals
processes that have become hopelessly bureaucratic, inefficient, ineffective, defect laden, and often obsolete.
NATIONAL PRODUCnviTY REVIEW / Winter 1996

Many U.S. companies have made significant strides in

this area in the past few years by systematically identifying
business processes considered crucial to their organizations'
success. Owners of these vital cross-functional processes
are charged with process effectiveness (meeting/exceeding
their customers' needs/wants) and, once effective, with being efficient at least cost. The owners with their process
teams apply a rigorous, ongoing management approach to
reengineering their processes, which includes the planning
and development of a newly designed process based on satisfying customer and business needs.
Results from the inception of the process quality focus
have been stunning. For example, product development cycle
times are being reduced by 50 to 90 percent generating major
revenue increases through earlier, more timely product introductions. Some of these cycle-time reductions have been
equally amazingfor example, AT&T telephones from 24 to
12 months and Hewlett-Packard computer printers from 54 to
22 months. In addition, billing/accounts receivable processes
have reduced collection cycle times (days outstanding), and
defects and inaccuracies are being driven to near zero, resulting in expedited cash flow and savings. Manufacturing process reengineering efforts are also crashing through previously
undreamed of cycle-time barriers, routinely cutting overhead
and resultant product costs, increasing inventory turns from
once respectable two to three times to near ten and beyond,
and delivering defect-free products to delighted customers.
There have also been remarkable changes in process cycle
times. Examples here include Motorola pagers going from a
cycle of three weeks to two hours, and GE circuit breakw
boxes from three weeks to three days.

Results from the inception of the process

quality focus have been stunning.
Clearly, process management and process engineering,
also known as business process quality management
(BPQM), bring total quality and all its cultural and technical tools and techniques together in an ongoing laser-like
management focus on processes critical to the organization
and, more importantly, to its customers. By dint of its success to date, BPQM is bound to be a major trendsetter into
the next century and beyond.
(8) Customer Focus. Today, companies are focusing
on customers beyond what we have ever believed reasonable or even possible. The importance of going beyond the
goal of satisfied customers, to loyal or delighted customers,
was demonstrated by a recent Bane One example. Even
though banking is not a thriving business in the United States,
Bane One has been doing welt. In fact. Bane One is
the second most profitable bank in the world. There are

Juran Institute: A Barometer of Trends in Quality Management

important lessons to be learned in its approach to the

customer.
Bane One has developed several statistical models to
understand customer behavior as a function of customer
satisfaction. It has found that a delighted customer is five
times as likely to buy other financial products from the hank
as a customer who is merely satisfied. Moreover, these delighted customers are also four times less likely to leave the
bank than ones who are just satisfied.
(9) Benchmarking and Self-Assessment. These are
among the most useful trends to have developed in the past
12 years. Companies in Mexico, Australia, South America,
Europe, Africa, Southeast Asia, and even Japan are using
the criteria of the Baldrige Award to assess their current
performance against a reasonable set of guidelines for TQM.
Many other companies are using the ISO 9000 series of standards both for self-assessment and assessment by third parties. In Europe, companies are also beginning to use the
new criteria of the European Quality Award to measure their
performance against a stringent set of requirements.
These assessments can provide senior managers with a
clear baseline of current quality performance levels. When
these managers are willing to take the time to understand
the criteria, what their own assessment scores mean, and
what is necessary to improve these scores, they can proceed
to develop meaningful and realistic action plans for improving their organizations.
(10) Strategic Quality Management It is much easier
to discuss all of these wonderful ideas^-customer focus,
process design, benchmarkingthan to put them into practice. In the past few years, there has been an increasing
emphasis on strategic quality management. Indeed, in many
competitive markets, quality has become the most important single factor for success.
In testimony before the U.S. Congress, Dr. Curt
Reimann, past director for quality programs at the National
Institute of Standards and Technology, United States Department of Commerce, stated, "There is now far clearer
perception that quality is central to company competitiveness and to national competitiveness." The elements of strategic quality management are not too difficult to understand.
Hideo Sugiura, former chairman of the Honda Motor Company, has explained the roles of senior management and strategic quality planning better than anyone. He described these
four "sacred obligations" of management.

Defining a clear vision of where the company is

going, and communicating it to every member of
the organization in language that he or she
understands.
Clearly stating the small number of key objectives that must be achieved if the company is to
realize its vision.

23

Translating these key objectives throughout the

entire organization so that each person knows
how performing his or her job helps the company
achieve the objectives.
Conducting honest appraisals so that every
employee knows how his or her performance
contributes to the organization's efforts to
achieve the key objectives, and providing
guidance on how the individual can improve this
performance.

In the United States, this process of defming the vision, stating the objectives, translating these objectives, and
conducting appraisals throughout the organization has come
to be known in most companies as strategic quality planning. In some companies it is sometimes called hoshin kanri,
meaning policy deployment, or hoshin planning. For some
organizations, it has become the single most important management tool, allowing the organization to set clear priorities, establish clear target areas for improvement activities,
and allocate resources to the most important things that must
be done. For others it has become a bureaucratic nightmare,
one more excuse to resume "paralysis by analysis" and allow endless meetings and planning to take the place of real
action or accomplishment.

To be effective, strategic quality planning

must be used as a tool^ a means to an end,
and not as the goal itself.
To be effective, strategic quality planning must be used
as a tool, a means to an end, and not as the goal itself It
must be an endeavor that involves people throughout the
organization. It must capture existing activities, not just add
more activities to already overflowing plates. Finally, it must
help senior managers face difficult decisions, set priorities,
and eliminate many current activitiesnot just start new
ones. Strategic quality management is not a project that
an organization undertakes, like benchmarking, or process
design, or even focusing on the customer. For those companies that have truly learned and adopted the theory and practice of strategic quality management, it is the way they do
whatever it is that the organization does.
Industry is creating a new way to workand it is better. TQM has given companies an umbrella theory for running an organization that represents a marked improvement
over the old theory of management. And in the view of Juran
Institute, U.S. companies have become much stronger competitors because of it.
For more information on Juran Institute, visit it on the World
Wide Web at http://www.juran.eom.
NATIONAL PRODUCTIVITY REVIEW/Winter 1996