Quality Management Systems: Adding Business Value
The business case for ISO 9001 begins with its central mission—namely, enhancing world trade. ISO 9001 was developed during the same relative time frame as the European common market. Representatives from throughout the world met during the 1970s and 1980s to determine best business practices and requirements for each such practice to ensure consistent and conforming output of goods and services. The underlying principle was and remains a simple idea: Two companies operating in much the same way can expect equal treatment in managing everything from new orders to customer complaints. Of course, developing such a standard is also a rather ideal undertaking. By their very nature, all standards define an ideal state within which people—and indeed entire societies—work cooperatively, ever mindful of the best interests of all. ISO 9001, by recognizing the ideal state as rarely achievable but nonetheless a worthy aspiration, established the concept of continuous improvement to guide and motivate organizations to advance and succeed.
None of this works if you don’t know who you are or where you’re going. ISO 9001 therefore requires organizations to analyze their current state of affairs, define and set goals to achieve future expectations, and then monitor progress toward those goals. Top management, which is responsible for defining these goals, is therefore in need of feedback to determine how best to distribute resources. Those departments or processes that are most challenged become candidates for receiving additional resources. ISO 9001 defines all these interrelationships, some of which also require records to prove that decisions were developed and implemented based on facts, not assumptions.
Of course, this is all just “good business.” Leaders decide policy and set goals to move the organization forward. Metrics are established to monitor progress. When it becomes clear that metrics are below expectations, additional resources are provided to improve performance. Finally, those same metrics are used to determine the return on investment for those additional resources. Through this activity, the company becomes an improvement engine. Assuming that the marketplace embraced and supported the outcome of all this effort, the obvious result should be sustained success—that is, a win-win scenario for both the organization and its customers.
ISO 9001 is good business on several levels, but perhaps most importantly it offers proof of performance and therefore accountability at all operational levels. Businesses and business leaders are accountable to any number of internal and external demands. A few examples serve to illustrate this point. Shareholders want improved earnings, while the accounting department is clearly correct in submitting a costly requisition for new enterprise resource planning (ERP) software. Customers, though not willing to pay more for it, are increasingly interested in additional software functionality, even though the design team needed to accomplish the upgrade is currently cost-prohibitive. These and similar scenarios are commonplace in today’s market. ISO 9001 offers a consistent set of methodologies for managing these kinds of countervailing demands. Of course, once the plan is established, the work must then be done. Performance that meets its goals becomes centermost within the organization. Expectations are defined and progress is monitored. The overall result is a new level of accountability, involvement, and visibility.
Traditional top management oversight is accomplished through analysis of monthly financial statements. If the numbers are good, especially the “bottom line,” further action is less important than would be the case if profitability was reported to be under projections. But where, exactly, is the problem? Can financial statements alone provide the right answers? In many respects they can, especially if the question is directed to which losses occurred and where they happened. But financials alone do a relatively poor job of answering why and who was responsible for the loss. At best, they are the starting point for further inquiry. Without high-level objectives and department-level goals to achieve them, and without a clear and compelling vision of the future state, ailing performance often skips wildly, from month to month, from one area of the company to another.
Without mutually agreed, high-level goals, the company is a rudderless ship—and behaves like one. Although the captain may want to achieve maximum speed, the crew can, and often does, cite the weather or excessive sea conditions for poor progress. It is also clear that one function—one type of activity that’s controlled by the crew—can rarely make any real difference, given the lack of a deep and solid rudder under the ship. And so it goes, month to month, swaying with each variable breeze and hoping for success. The shipping company’s financials simply report that income is down, not that any particular vessel is late to unload its cargo.
ISO 9001 and Innovation
Businesses are rarely static; that is, their products and services are always adapting to a changing marketplace. Competitors are constantly eager to improve their bottom line through any number of advances within your own organization’s existing customer base. Innovation is no longer an occasional threat; it is the new constant in business worldwide, announced through the Internet and the general media at the speed of light. Innovation is especially friendly to startups, which are eager to gain a toehold or to catapult their companies to mega-status through one or more new approaches to an existing model. Large firms often fall victim to smaller firms as they become comfortable with established sales volumes and less concerned with their ability to remain profitable. Market innovators often target companies such as these, applying their best designers in the quest to outperform the current players whose research and development (R&D) investments have slackened over the years. It is important to note, however, that such efforts are highly focused and deliberate.
It can’t be otherwise. Smaller businesses cannot afford extended R&D projects, cost overruns, and missed launch dates. They are small in number and at the mercy of limited supplies of capital and nervous investors. Time to market is critical not only to protect their ideas, but to stay in business at all. For these nascent organizations to succeed, it becomes crucial to produce. For those individuals working in these companies, risk and reward are high, but they are also the very reason why work is exciting and fun. The atmosphere is charged, and communication is immediate as everyone works to achieve the same outcome.
ISO 9001’s approach to innovation lies at the center point between the startup and the established company’s approach. Remembering that fearlessness is just one step away from recklessness, ISO 9001’s design requirements maintain proven risk mitigation criteria while allowing companies to move in any direction they believe to be appropriate. ISO is not restrictive in regard to innovation, but rather responsible. The key to successful design—to any innovation, for that matter—is to define new product expectations, features, and complexities. These are important to achieve focus and clarity as the work progresses. They keep the design team on track. Once the particulars are understood by the team, it is necessary to research any number of “resulting requirements” such as applicable legal issues, standards, or codes to ensure that the market can adopt the product with the assurance that it is free of any unanticipated shortcomings. Controls are defined to ensure that as the product is developed, several “go/no go” sessions are planned to assess the product’s ability to provide its originally intended design features. Once things are close to completion, two types of specialized controls are employed: verification and validation. Verification seeks to determine that what’s on the print is what was produced. Validation ascertains whether what was produced actually works in the marketplace. Both considerations are extremely important—and validation is especially critical from the perspective of the consumer. A solid design program is careful to spend time researching and interacting with the market prior to launch, if only to determine whether the color is right and the consumer is not irritated by the soundtrack while waiting for an operator.
The point of this discussion of innovation and ISO 9001 is to emphasize that both the established company and the innovator are equally supported by ISO 9001’s design requirements, and that neither is restricted by them. In fact, the startup may need ISO 9001 far more than the established company so that it can avoid the potential for costly omissions in its design. The established company can benefit from ISO 9001’s initial design planning requirements to avoid “design creep” and cost overruns. Both types of organizations can use ISO 9001’s design requirements to better plan and support their design processes, create new products that are embraced by the marketplace, and avoid excessive risk in the launch of new products and processes for managing their services.