Chasing Quality (Your Economic Life Depends on It)

William is a guy I work with. Ever since he drunkenly proclaimed at happy hour that he has royalty in his family tree he’s been known around the office as Prince William. He’s a bright guy – a business analyst specializing in developing markets – and is good for an ernest breakroom conversation once or twice a week. He’s also adept at ordering jello-shooters in Mandarin Chinese; though that’s both off-point and a matter of faith on my part I find it interesting enough to mention. Recently I let it drop to Prince William that I believe most companies that are known for being quality-focused actually aren’t quality-focused at all – they’re merely famous for an ad campaign that’s quality-focused. He of course demanded I back that claim with data, and since I had none I challenged him to rattle off statistics demonstrating China and India already have – as Prince William often claims – arrived as our economic rivals to be most feared and respected. what he said floored me. I’ll paraphrase:

- The smartest top 25% of people in China represent a population greater than all of North America.
- As you are reading this entry, 60 babies will be born in America. 351 will be born in India (+/- depending on your reading speed).
- China has more honors students than the US has students (India does, too).
- The U.S. ranks 20th in the world for broadband penetration.

He went on, but to be honest I tuned him out. I was already thinking that Brzezinski’s Choice might be an apt model for our economic relationship with China and India. (Brzezinski was Jimmy Carter’s Chief of Staff and he argued in his book, The Choice, that the US is at a decision point, with pursuit of a position of world leadership as the left fork in the road and pursuit of world domination as the right fork.) As Prince William hammered home point after winning point, I was thinking, choose wrong and we’re Rome, choose wrong and we’re England circa 1900.

How does this relate to quality? I might be wrong of course – please, tell me why if you think so – but I think US organizations need to make a strategic choice to lead the world in innovation and quality-focus, which I’m arguing will be our two critical differentiators in the world marketplace during the next hundred years. Because, to be honest, when I hear statistics like the ones Prince William trotted out, I can’t help but think that there is no way in the world we compete and win on efficiencies or price with countries who can bring it like China and India will be bringing it in the decades to come.

So it might be time to get a little radical in our thinking. How, specifically, does an organization encourage innovation? How does an organization create an atmosphere of creativity? How are these ideas linked back to developing a culture that lives securely within its quality-focused intentions? We’ll have to develop this thread more fully, but a central idea that I’m attracted to involves a change in direction. Not working harder, with cultures that cultivate and encourage our (on average) 55 hour work weeks, our 60% vacation utilization, our focused pursuit of MBAs. Work smarter, by creating cultures that chase connections, leaps of insight, inspiration – things that only come to us individuals when we’re in the shower, taking a stroll, slowing down.

Zombie, Inc. (The Walking Dead)

In my experience, you have to get someone’s attention if you want what you have to say to sink in; I make this next statement in that spirit. Two-thirds of the organizations currently listed on the world’s stock exchanges are going to fail. In all likelihood, you work for one of these walking corpses, and in all likelihood they’re failing now, as you read this.

Reality checks are good for attention grabbing. Here’s the historical reality on which the above statement is based: no more than a third of today’s major corporations will survive in an economically important way over the next twenty-five years. We know this is true, and we know it’s because most organizations are unable to sustain meaningful growth. No more than ten percent of all companies will be able to sustain above-average returns for more than a decade. As always, the interesting question, and the question to which the answer provides the best antidote to stagnation and failure, is why. Why do organizations find it so difficult to maintain meaningful growth?

The answer lies in the strategic approach to driving innovation and the willingness of organizations to adopt process-focused management practices. The linkage between innovation and growth, as measured things like by R&D spending, patenting, and innovation counts, is undeniable. There have been enough studies on the topic now to accept the linkage on its face and move on to the next point of focus, and the next focus point should relate to how innovation should be factored in to each organization’s strategic planning. The reason so many organizations have trouble maintaining growth is that most executives believe that the future is now, and therefore do not take the time to institutionalize innovation. Too many decision makers focus on generating a great new innovation or two to pump up growth in the relative near-term, as opposed to developing a systematic process focus that can create an innovation engine capable of driving growth indefinitely. The argument for a longer-term approach seems to be a simple one – after all, the ability to maintain growth is tied, by definition, to what an organization does over time. It’s amazing how much push-back the simplest ideas can generate.

Companies that buy into the truth of this argument find that it leads them in a very specific direction: they define innovation as one of their critical processes, and they become more process-focused generally. They also adopt some innovation-specific critical-to-quality (CTQ) metrics, such as lead time required for innovation and differentiated competitive advantage resulting from innovation, by which they can measure their progress. The bottom line is that companies cannot succeed and survive in an economically important way by being occasionally innovative. They must be consistently innovative over time at a rate that exceeds the rate of their competitors.