TQM: Can it work for you?

[As published in Company Director, September 1995]

Much has been written about Total Quality Management, but little is said about using it to manage a small business. Is it even suitable for such organisations? The answer, says Andrzej Gorecki, is a qualified 'yes'.

When in 1950 W. Edwards Deming told a group of leading Japanese industrialists that they could conquer world markets within five years if they adopted his methods, many listened in total disbelief. After all, 'Made in Japan' in those days meant junk.

Today, with the benefit of hindsight, we know that Deming was wrong. It didn't take five years, it was four years before worldwide demand developed for Japanese products.

Surprisingly, it took another 20 years before business leaders in western countries started to show interest in the man and the method behind Japan's economic miracle. Since then, many western companies have embarked on the implementation of Deming's Management Method, often referred to as Total Quality Management (TQM). Some companies were successful, others gained little, and proving the point that certain critical issues must be addressed before TQM can deliver.

Deming's Method and the small enterprise

Deming's Method is covered by many books and articles, but the majority of experiences in its use relate to large companies. One would be justified in asking whether it is even suitable for small organisations.

However, there is little doubt that, properly used, Deming's Method can have sizeable, positive impact on a small enterprise. The problem is that buying the necessary expertise to implement the method is usually beyond the reach of a small business operator.

But, is there another way? Could a small organisation benefit from Deming's Method without spending large sums of money? The answer is a qualified 'yes'. Extra effort is required, but if business owners are prepared to go the extra mile, TQM will work for them.

The essence of Deming's Method

Deming outlined his method through his now famous 14 Points, Seven Deadly Diseases, and Some Obstacles. The most important aspects are:

Recognition that the method requires a new way of thinking.
Implementation of true leadership.
Constancy of purpose (vision).
Continuing improvement.
Replacement of inspection with root cause analysis and elimination.
Cautious approach to numerical targets, quotas, and numbers in general.
Reduction of emphasis on short-term profits.
Wide use of statistical and graphical methods.
Focus on staff education and training.
Removal of barriers between staff.
Elimination of slogans and other appeals for better performance.
Elimination of fear within the enterprise.
Removal of obstacles to pride of workmanship.
Elimination of laying blame on the workforce for problems.
Caution in relying on examples and in copying outside solutions.

Where to Start

The first point on the list is clearly the most vital. Deming's Management Method is not just a technique which can be used to supplement the current way of managing your organisation.

It is a totally different way of thinking, which produces a distinct corporate culture. This is one of the reasons why the successful implementation of TQM is not easy.

Successful implementation of the method requires strong commitment from business owners. They must be able to accept that there is a body of important knowledge, which they don't have; vague ideas about TQM are not enough. In fact, this is the hardest obstacle to overcome.

Owners of small business (often with many years of reasonably successful performance) find it incomprehensible that they could have survived for so long, if some truly important information was missing. What they don't see are the opportunities they missed; the money they did not make, and the time and money they wasted on activities which were of little use or even counterproductive. Only after the need for new knowledge is recognised can organisations start moving towards Total Quality Management.

The next step is to gain that new knowledge, and in a small business situation it has to be the owner who becomes the resident TQM expert. The best method to develop the expertise is to rely on the primary source, rather than on third party seminars, books or articles. Two books written by Deming — Out of the Crisis and The New Economics — are vital for any serious practitioner of Deming's Method. These books need to be read a number of times until the reader fully comprehends this new way of thinking.

What follows theory?

Once a small business owner masters the principles of Deming's Method, it is possible to embark on a gradual introduction of the method to the business. The introduction needs to take two parallel paths: education of staff, and the actual adoption of new techniques and approaches.

The first priority is corporate vision and leadership. Leadership can be defined as the ability to give staff member's clear, correct, and balanced instructions, which advance the business towards its vision. To ensure the instructions meet this criteria, they must be extensively consulted with staff and any other relevant parties before being issued. An instruction issued by a true leader is rarely real news to staff members.

Leadership invariably ties up with the vision. True leadership is not possible if the vision is flawed. For a vision to play its role, it must be positive; i.e. legal, moral, beneficial and ethical. Furthermore, once formulated the vision must be used aggressively by all staff in the day-to-day running of the business.

If the vision is merely framed, put on the wall and forgotten, it will be useless and true leadership will not materialise.

People must be left alone

With the education process complete and leadership initiated, the organisation can begin to embrace specific TQM concepts in its approach to business. The most important is to give your staff a break.

The common business practice of blaming people for problems must stop. Asking people for better performance, criticising them for mistakes, appealing to them to achieve specific targets, have all been proven by Deming to be useless and often counterproductive. One of the biggest breakthrough's in Deming's Method was the recognition that people are usually responsible for less than 5 percent of business outcomes.

The remaining 95 percent of the responsibility rests with the business process. For example, in the case of a shop, its location has far greater impact on sales than can ever be exerted by its staff. Proper stock range and pricing policy are also more influential than staff's selling skills. Management should never appeal to staff for better performance unless it has already addressed all such process-related issues.

Business owners who appreciate this concept can benefit greatly by focusing their attention on the real causes of business problems and leaving their staff alone. This can make the business a better place to work, and reduce staff turnover.

Is there a simple way to implement this notion? There is: whenever something goes wrong, look into your systems and processes to identify the root cause, and resist the urge to blame your staff. People want to do a good job, and if it ever appears that they are at fault, you have probably given them wrong instructions, failed to communicate, set their work environment incorrectly, or maybe — you shouldn't have hired them. They may not have the education or attitude needed for the job. If this is the case, review your method of hiring; it is also a part of your business process.

The next step

When the new philosophy, constancy of purpose, leadership, and focus on business process (rather than people) are embraced by your organisation, you are on your way to success.

Through the use of other concepts and tools available in Deming's Management Method you can, among a host of other factors, bring about continuing operational improvements, cost reductions, and better customer satisfaction. With the philosophical and cultural fundamentals in place, this should not be difficult.

What positive outcomes can be expected?

Is Deming's Management Method suitable for small business? Absolutely. While it requires time and effort to understand and embrace, the method can bring into a smaller enterprise enhanced employee relationships, more positive attitudes, improved customer service, smarter use of resources (due to constancy of purpose), and in general better business decisions.

In addition, through the use specific TQM techniques, small businesses can gain better understanding of their operations. While this may not necessarily lead to sizeable cost reductions, it can still save time and make jobs easier. In a small enterprise, where resources can be scarce, even small improvements are invaluable.

Andrzej Gorecki is a Director and principal consultant with Melbourne-based Retail Directions Group, which develops and supplies state-of-the-art software solutions for retailers worldwide.

Retail Directions