L A SOCIEDAD ALTEÑA: LA SIMIENTE DE SU ORGANIZACIÓN

Focusing on the customer and the customer’s requirements and expectations is neither new nor revolutionary. This is precisely what the Service Management movement of the 1980s was about. The new message in TQM is:

1. In addition to focusing on external customers and their expectations and demands, it is necessary to focus on so-called internal customer and supplier relations.

2. To create customer satisfaction, it is not enough just to live up to the customer’s expectations.

These points require some elaboration.

The first point is meant to show that employees are part of the firm’s processes and that improving quality at lower and lower costs can only be achieved if a company has good, committed and satisfied employees. Before you can satisfy external customers, however, you must first eliminate some of the obstacles to the internal customers (i.e. the employees) and create the conditions necessary for them to produce and deliver quality. One such obstacle that must be eliminated in an organization is fear, while an example of the latter is education and training. Deming’s 14 points contain the most important obstacles to eliminate and conditions to institute in order to improve quality at lower and lower costs.

At the same time, improvements ought to be process-oriented. A firm can be defined as a series of connected processes, of which employees are a part, so any management interested in quality must start by looking at the firm’s processes. This is one of the reasons why the foundation of the TQM pyramid is called ‘management’s commitment’. The processes are established and function ‘on the shop floor’. Quality improvements can only be achieved where things happen, which the Japanese express as ‘Genba to QC’, which means ‘improve quality where things happen’.

In order to produce and deliver quality, employees need to know what both internal and external customers want/expect of them. Only when employees have this information will they be able to start improving the processes which is a first step towards becoming a ‘TQM firm’.

The second point is attributed to Professor Noriaki Kano of Tokyo Science University, whose expanded concept of quality, formulated in 1984, contains the following five types of quality:

1. Expected quality, or must-be quality. 2. Proportional quality.

3. Value-added quality (‘exciting/charming quality’). 4. Indifferent quality.

5. Reverse quality.

In order to deliver the expected quality, firms have to know what the customers expect. When/if firms have this knowledge, they must then try to live up these expectations—this is so obvious that the Japanese also call this type of quality ‘must-be quality’.

For many customers it is not enough, however, just to live up to their expectations. This in itself does not create satisfaction, it ‘only’ removes dissatisfactions. Creating satisfaction demands more. This ‘more’ is what Kano calls ‘exciting quality’. We have chosen to call it ‘value-added’ quality because this describes more directly that the producer has added one or more qualities to the product or service in addition to those the customer expects and that these extra qualities give the customer extra value. These extra qualities will, so to speak, surprise the customer and make him/her happy, satisfied, or excited with the product. This is why Kano calls it ‘exciting quality’. A closer study of the Japanese language reveals another name for this type of quality, however, namely ‘charming quality’, which is actually quite a good name for it.

Many firms seem to have had a great deal of difficulty in understanding and thus also accepting the relevance of ‘value-added’ quality. We will therefore try to explain this and the other types of quality with the help of an example which most of us are familiar with—hotel service.

Most people have a clear idea of the kind of service they expect at a hotel. Among other things, we expect the room to be clean and tidy when we arrive, we expect it to be cleaned every day and we expect there to be hot water in the taps, shower etc. We do not react much if these expectations are fulfilled—it is no more than we expected. We would not start singing the praises of a hotel that only lived up to these expectations. If, on the other hand, our expectations are not fulfilled, we immediately become dissatisfied and will often tell our friends and acquaintances about it. This is yet another explanation for the term ‘must-be quality’. In order to survive, firms have to at least live up to customers’ expectations.

When it comes to ‘value-added qualities’ in the hotel business, however, things may look complicated. Value-added qualities can be many things, limited only by our creativity and imagination. The main thing is to think about the customer’s requirements and not one’s own product.

Examples of typical value-added qualities are personal welcome cards in the hotel room, the morning paper every day, fruit, chocolates etc. although these do tend to be taken for granted these days. Another example is that the hotel provides a service which has nothing to do with the hotel’s main business of providing accommodation, e.g. advising about traffic conditions, entertainment requirements (e.g. always being able to get hold of theatre tickets) and the creation of a home-like atmosphere (e.g. the possibility to cook your own meals). In most cases, ‘value-added quality’ has an enormous effect on customer satisfaction, while costs are often minimal. It is therefore foolish not to try to give the customer more than he/she expects. At the same time, however, one must remember that ‘value-added quality’ is not a static concept—after a while, ‘value-added qualities’ become expected qualities. Customers always expect more and only those firms which understand this dynamism will survive in the longer term.

‘Proportional quality’ or ‘one-dimensional quality’ is more straightforward. If the product or service—or an attribute of a product or service - lives up to some agreed physical condition then satisfaction for some people will be the result and if not, dissatisfaction will become the consequence. Taking the hotel business once again, the variety of the breakfast may be an example of proportional quality. It should be noticed, however, that what is proportional quality to one customer may be regarded as expected or value-added quality by another customer.

Previously this ‘one-dimensional quality view’ was the most dominating and this is the reason why quality management was also more simple than it is today. Today the customers are more complicated and this is one of the reasons why quality and TQM have become so important.

The last two types of quality—‘indifferent quality’ and ‘reverse quality’—are also straightforward and easy to understand in theory. As both types of quality may be important to identify in practice we will discuss them below.

Any product or service consists of a large number of quality attributes and some of the customers will always be indifferent if a specific attribute is or is not inherent in the product. This is the characteristic of ‘indifferent quality’.

For some specific quality attributes we sometimes experience that customers become dissatisfied if the attribute is inherent in the product/ service and the customers become satisfied if it is not. It is seen that these attributes have a reverse effect on customer satisfaction. This is the reason why Kano calls this type of ‘quality’ attribute ‘reverse quality’.

Walt Disney Corporation is one of the firms to have incorporated some of the new concepts of quality in its definition of ‘quality service’ (Dahlgaard, Kristensen and Kanji, 1994, p. 5): ‘Attention to detail and exceeding our guests’ expectations’.

Disney gives the following explanation of the importance of this definition: • Our guests are considered to be VIPs—very important people and very individual

people, too. What contributes to Disney’s success is people serving people. It is up to us to make things easier for our guests.

• Each time our guests return, they expect more. That is why attention to detail and VIP guest treatment is extremely important to the success of the Disney Corporation.

These definitions and explanations are not only relevant for the Disney Corporation. They are as relevant for any firm, whether they are production firms or service firms. The customers, including the internal customers, are the starting point of all quality efforts.

However, while internal customers and internal processes are very important, one must never lose sight of the fact that, in the final analysis, the main purpose of focusing on internal customers is to create satisfied external customers.

Unfortunately, in their eagerness to improve the processes, many firms totally forget their external customers, which a 1989 Gallup Survey of American corporate leaders, undertaken for the American Society for Quality Control, clearly shows. The main results of the survey, which reports on the best methods of improving quality, are shown in Table 4.1 below.

Astonishingly, all the most important methods focus on internal processes. Not one of the methods concern relations to the external customers. This carries the considerable risk that despite vastly improving its internal quality, the firm will still lose market position. If the company wants to survive in the longer term, improved internal quality must be accompanied by improved external quality. Internal and external quality will be discussed further in section 4.4.

Table 4.1 Quality improvement methods of American

corporate managers (1989) Area % 1. Motivation 86 2. Leadership 85 3. Education 84 4. Process control 59 5. Improvement teams 55 6. Technology 44 7. Supplier control 41 8. Administrative support 34 9. Inspection 29

Source: American Society for Quality Control.

The overall conclusion of this section is that one must always ensure the customer’s satisfaction. Satisfied customers today are a condition for a satisfactory business result tomorrow. It is therefore imperative that firms establish the means to check customer satisfaction. On this score, Western firms leave a lot to be desired. This can be seen from the international survey on the use of TQM (the QED project), from which the above figures on the existence of systems for continuous monitoring of customer satisfaction are taken (Figure 4.3).

From Figure 4.3 it is seen that in general the level in the East is higher than the level in the West apart from small companies. No less than 86% of the large companies in the East report to have a system for monitoring customer satisfaction. In the West the figure is 73% and we find corresponding differences for the other sizes of groups except for the

small companies. The results in the samples have not been weighted with the number of manufacturing companies in the different countries. Had this been the case we would have seen even larger differences than the ones reported in Figure 4.3.

Fig. 4.3 System to check customer satisfaction,

(a) West developed; (b) East developed.