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Juran on Leadership For Quality

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The subject of management for quality has undergone rapid and drastic change as a result of competition in the marketplace and the vulnerability of industrialized societies that depend heavily on the quality of goods and services. In this companion volume to his acclaimed Juran on Planning for Quality, J.M. Juran provides top-level managers with the specific, field-tested methods they need to successfully lead their companies on the quest for superior quality.

Managers have long recognized that the most sound response to a competitive challenge is to become more competitive. Today, informed managers also realize that quality improvement is the best source of competitive advantage. They know that return on investment in quality improvement projects is among the highest available. Yet, the means by which management can supply the leadership necessary to attain quality goals remains elusive. J.M. Juran has drawn on the experiences of thousands of chief executives in companies around the world to create a clear plan of action applicable to any industry, whether service or manufacturing.

The famous "Juran Trilogy," clearly presented step-by-step, shows how to apply the familiar business concepts of planning, control, and improvement to quality leadership. For each concept, Dr. Juran provides a succinct and proven series of actions. He gives criteria for selecting project-by-project improvements and mobilizing a team to carry them out. He also describes a realistic timetable of implementation and directs the formation of an ongoing quality council whose job is to launch, coordinate, and "institutionalize" annual quality improvement. The membership of this council, as Dr. Juran insists, must come from the ranks of senior managers; the stakes are too high for upper managers not to personally become the leaders and members of this vital council. Using real-world case examples of highly profitable quality improvements in such companies as Bethlehem Steel and Florida Power & Light, Dr. Juran illustrates how to guide a company into a continuing steep rate of improvement. The key, as Dr. Juran emphasizes, is that quality must be implemented from the top down. This essential handbook makes executive leadership the key to a company's quality revolution -- and to producing the real cost benefits over both the short and long run that superior quality brings.

Chapter 1

Quality: A Continuing Revolution

The purpose of this chapter is to provide a "lessons-learned" perspective on making quality happen.

The chapter shows that although human beings have always wished for high quality, they have over the centuries faced massive and changing forces requiring ever-changing strategies to reach their quality goals. It also shows that the current decades are uncommonly turbulent, requiring an unprecedented degree of managerial sophistication in choosing the needed strategies.

For supporting detail, the chapter traces out

1. How managing for quality has been undergoing continuing change over the centuries

2. Why quality has recently risen so much in importance

3. The origins of the quality crisis faced by so many companies

4. The responses of company managers

UNCHANGING DESIRES AND CHANGING FORCES

We start with the premise that all managers want their company to produce products of high quality and to do so at low cost. They want their company at the least to be competitive, and preferably to be the industry quality leader. These same managers also have personal goals that are affected by the results achieved with respect to quality: the results achieved by the company determine the image of the company managers.

These wishes of managers have not changed throughout recorded history. What has changed throughout recorded history are the strategies used to manage for quality. Such changes in strategy have been specifically designed to respond to specific political, social, and economic upheavals.

Recently such upheavals have reached convulsive levels. It is these convulsions that are causing upper managers to raise such critical questions as the following:

What role does quality play in the success of my company?

How can I evaluate my company's status with respect to quality?

How shall we, as a company, manage for quality in the face of the new challenges?

What must we, as a company, do that is different from what we have been doing?

What road shall we follow to go from where we are to where we want to be?

What should I, as a manager, do that is different from what I have been doing?

Such questions demand forthright answers. Our mission in this book is to supply those answers.

EARLY STRATEGIES OF MANAGING FOR QUALITY

We can gain perspective by looking back at the road traveled to date -- at the early processes of managing for quality.

Human needs for quality have existed since the dawn of history. However, the means for meeting those needs -- the processes of managing for quality -- have undergone extensive and continuing change (Juran 1977).

Prior to the twentieth century, managing for quality was based on some ancient principles:

1. Product inspection by consumers, which is still widely used in today's village market places.

2. The craftsmanship concept, in which buyers rely on the skill and reputation of trained, experienced craftsmen. Some craftsmen develop reputations that extend far beyond their village boundaries: they are viewed as living national treasures.

As commerce expanded beyond village boundaries, and with the growth of technology, additional concepts and tools were invented to assist in managing for quality:

1. Specifications by sample

2. Quality warranties in sales contracts

In large towns the craftsmen organized themselves into monopolistic guilds. These guilds were generally strict in their enforcement of product quality. Their strategies included

1. Mandated specifications for input materials, processes, and finished goods

2. Audits of the performance of guild members

3. Export controls on finished goods

The early American approach to managing for quality followed the practice prevailing in those European countries that had colonized the North American continent. Apprentices learned a trade, qualified to become craftsmen, and in due course might become masters of independent shops.

The Industrial Revolution, which originated in Europe, created the factory system, which soon outproduced the small independent shops and made them largely obsolete. The craftsmen became factory workers, and the masters became factory foremen. Quality was managed as before, through the skills of the craftsmen, supplemented by departmental inspection or supervisory audits. The Industrial Revolution also accelerated the growth of additional strategies, including

1. Written specifications for materials, processes, finished goods, and tests

2. Measurement, and the associated measuring instruments and test laboratories

3. Standardization in many forms

When the Industrial Revolution was exported from Europe to America, the colonists again followed European practice.

THE TAYLOR SYSTEM AND ITS IMPACT

Late in the nineteenth century the United States broke sharply with European tradition by adopting the Taylor system of "scientific management" (Juran 1973). Central to the Taylor system was the concept of separating planning from execution. This separation made possible a considerable rise in productivity. It also dealt a crippling blow to the concept of craftsmanship. In addition, the new emphasis on productivity had a negative effect on quality. To restore the balance, the factory managers adopted a new strategy: a central inspection department, headed by a chief inspector. The various departmental inspectors were then transferred to the new inspection department over the bitter opposition of the production supervisors.

The extreme dimensions of this strategy of inspection can be seen from the situation prevailing in the Hawthorne Works of Western Electric Company during the late 1920s. Hawthorne was at that time virtually the only manufacturing plant in the Bell System. At the peak (about 1928) it employed forty thousand people, of whom fifty-two hundred were in the inspection department.

Note that during this progression of events the priority given to quality declined significantly. In addition, the responsibility for leading the quality function became vague and confused. In the days of the craft shops, the master (then also the chief executive) participated personally in the process of managing for quality. What emerged was a concept in which upper management became detached from the process of managing for quality.

THE GROWTH OF VOLUME AND COMPLEXITY

The twentieth century has brought an explosive growth of goods and services, both in volume and complexity. Vast industries have emerged to produce, market, and maintain such consumer goods as automobiles, household appliances, and entertainment devices. These goods are ever more complex and hence more demanding with respect to quality. Goods for industrial purposes (e.g., manufacturing facilities) are no less demanding.

Service industries have also undergone explosive growth in volume and complexity. The complexity is evident in the huge systems that provide energy, communication, transportation, and information processing. These systems likewise are ever more demanding as to quality, especially with respect to continuity of service, which is based on the reliability parameter.

Most of the strategies that have emerged to deal with these forces of volume and complexity can be grouped under two generic names for specialties:

1. Quality engineering. This specialty traces its origin to the application of statistical methods for control of quality in manufacture. Much of the pioneering theoretical work was done in the 1920s by the quality-assurance department of the Bell Telephone Laboratories.

The staff members included Shewhart, Dodge, and Edwards. Much of the pioneering application took place (also in the 1920s) within the Hawthorne Works of the Western Electric Company. The staff members included this author, who had joined the Hawthorne Works in 1924.

At the time, this pioneering work had little impact on industry or, for that matter, on the Bell System. What survived to become influential in later decades was Shewhart's control chart. By the 1980s it was in wide use as a major element of what was commonly called statistical process control.

2. Reliability engineering. This specialty emerged largely during the 1950s, as a response to "complex systems." It has spawned a considerable literature relating to reliability modeling and formulas, and data banks for quantifying reliability. It includes concepts for improving reliability during product design by, for example, quantifying factors of safety, reducing the number of components, and attaining quality at levels of parts per million.

GROWTH OF THE QUALITY DEPARTMENT

These new specialties needed a place on the organization chart. Companies met this need by creating broad-based departments variously called quality control, quality assurance, and so forth. These departments were headed by a quality manager and housed the quality-oriented activities: inspection and test, quality engineering, and reliability engineering.

The central activity of these quality-oriented departments remained that of inspection and test, that is, separating good product from bad. The prime benefit of this activity was to reduce the risk that defective products would be shipped to customers. However, there were serious detriments: This centralized activity of the quality department helped to foster a widespread belief that achievement of quality was solely the responsibility of the quality department. In turn, this belief hampered efforts at eliminating the causes of defective products; the responsibilities were confused. As a result, failure-prone products and incapable processes remained in force and continued to generate high costs of poor quality.

What emerged de facto was a concept of managing for quality somewhat as follows: Each functional department carried out its assigned function and then delivered the result to the next functional department in the sequence of events. At the end, the quality department separated the good product from the bad. For defective product that escaped to the customer, redress was to be provided through customer service based on warranties.

By the standards of later decades this concept of prime reliance on inspection and test was unsound. However, it was not a handicap if competitors employed the same concept, and such was usually the case. Despite the deficiencies inherent in this concept of "detection," American goods came to be well regarded in terms of quality. In some product lines American companies became the leaders in quality. In many product lines American companies became the leaders in productivity. In addition, the American economy grew to superpower size.

WORLD WAR II AND ITS IMPACT

During World War II American industry was faced with the added burden of producing enormous quantities of military products. A part of the grand strategy during World War II was to shut off production of many civilian products, such as automobiles, household appliances, and entertainment products. A massive shortage of goods developed amid a huge buildup of purchasing power. It took the rest of that decade (the 1940s) for supply to catch up with demand. In the interim the manufacturing companies gave top priority to meeting delivery dates, so that quality of product went down. (Quality always goes down during shortages.) The habit of giving top priority to delivery dates then persisted long after the shortages were gone.

During World War II, there emerged (or reemerged) a new strategy: "statistical quality control" (SQC). The War Production Board, in an effort to improve the quality of manufacture of military goods, sponsored numerous training courses in the statistical techniques evolved by the Bell System during the 1920s. (Interestingly, Dr. W. E. Deming, who became widely publicized during the 1980s, was one of the lecturers at some of the War Production Board courses. He was also briefly employed at the Hawthorne Works during the 1920s, but not in quality-related activities.) Many of those who attended became enthusiastic, and collectively they organized the American Society for Quality Control (ASQC). In its early years ASQC was strongly oriented to SQC and thereby stimulated further enthusiasm.

As it turned out, most of the applications in the companies were tool oriented rather than results oriented. So long as government contracts paid for everything, the companies could not lose. In due course the government contracts came to an end, and the SQC programs were reexamined from the standpoint of cost effectiveness. Most of them failed the test, resulting in wholesale cutbacks.

THE JAPANESE QUALITY REVOLUTION AND ITS IMPACT

Following World War II the Japanese embarked on a course of reaching national goals by trade rather than by military means. The major manufacturers, who had been extensively involved in military production, were faced with converting to civilian products. A major obstacle to selling these products in international markets was a national reputation for shoddy goods created by export of poor quality goods prior to World War II.

To solve their quality problems the Japanese undertook to learn how other countries managed for quality. To this end the Japanese sent teams abroad to visit foreign companies and study their approach, and they translated selected foreign literature into Japanese. They also invited foreign lecturers to come to Japan and conduct training courses for managers.

From these and other inputs the Japanese devised some unprecedented strategies for creating a revolution in quality. Several of those strategies were decisive:

1. The upper managers personally took charge of leading the revolution.

2. All levels and functions underwent training in managing for quality.

3. Quality improvement was undertaken at a continuing, revolutionary pace.

4. The work force was enlisted in quality improvement through the QC-circle concept.

In the early post-war period the affected American companies logically considered Janapese competition to be in price rather than in quality. Their response was to shift the manufacture of labor-intensive products to low-labor-cost areas, often offshore.

As the years unfolded, price competition declined while quality competition increased (Juran 1981).

During the 1960s and 1970s numerous Japanese manufacturers greatly increased their share of the American market. A major reason was superior quality. Numerous industries were affected, for example, consumer electronics, automobiles, steel, and machine tools. Some researchers quantified the quality differences (Juran 1979; Garvin 1983).

The American companies generally failed to notice the trends. They adhered to the belief that Japanese competition was primarily price competition rather than quality competition. Some observers sounded warning signals: "The Japanese are headed for world quality leadership and will attain it in the next two decades because no one else is moving there at the same pace" (Juran 1967). The alarm was sounded at the Conference of the European Organization for Quality Control in Stockholm. The date was June 1966.

The most obvious effect of the Japanese quality revolution was their massive export of goods. The impact on the United States was considerable, especially in certain sensitive areas: The affected manufacturing companies were damaged by the resulting loss of sales. The work force and their unions were damaged by the resulting "export of jobs." The national economy was damaged by the resulting unfavorable trade balance.

LIFE BEHIND THE QUALITY DIKES

A further significant post-war phenomenon was the rise of product quality to a position of prominence in the public mind. This growth in prominence was the result of the convergence of multiple trends:

Growing concern about damage to the environment

Action by the courts to impose strict liability

Fear of major disasters and near disasters

Pressure from consumer organizations for better quality and more responsive redress

Growing public awareness of the role of quality in international competition (e.g., in trade and weapons)

Collectively these trends are a consequence of mankind's adoption of technology and industrialization. Industrialization confers many benefits on society, but it also makes society dependent on the continuing performance and good behavior of a huge array of technological goods and services. This is the phenomenon of "lifeN behind the quality dikes" -- a form of securing benefits but living dangerously. Like the Dutch who have reclaimed so much land from the sea, we secure the benefits of technology. However, we need protective dikes in the form of good quality to shield society against service interruptions and to guard against disasters.

RESPONSES TO THE IMPACTS

American companies' responses to life behind the quality dikes had a good deal of commonality about them. The strategies they adopted included

1. The creation of high-level committees to establish policies, goals, and action plans with respect to product safety, environmental damage, and consumer complaints

2. The establishment of specific programs to be carried out by the various functions (e.g., product design, manufacture, advertising, and legal)

3. Audits to assure that the policies and goals were met

In contrast, the responses to the Japanese quality revolution took many directions. Some of these directions consisted of strategies that had no relation to improving American competitiveness in quality. Rather, these were efforts to block imports through restrictive legislation and quotas, criminal prosecutions, civil lawsuits, and appeals to "buy American."

However, most upper managers recognized that the soundest response to a competitive challenge was to become more competitive. Not being trained or experienced in managing for quality, these same upper managers sought advice from the experts, internal and external. It turned out that the various experts proposed numerous strategies, including motivation for the work force, QC circles, statistical process control, and "awareness" for managers and supervisors. Still other strategies included computation of the cost of quality, project-by-project improvement, complete manuals of procedure, revision of organization structure, incentives for quality, automated inspection and test, and robotics.

Everyone of these (and other) directions has some merit under appropriate conditions. The upper managers were then faced with selecting one or more of the available strategies as the basis for a plan of action. They were experienced managers, but not in managing for quality. Generally they opted for "action now" -- that is, do something plausible promptly rather than endure delay.

The results were generally less than satisfactory. In some cases the strategies selected (e.g., statistical process control and project-by-project improvement) were effective for specific fundamental quality needs, with resulting significant gains. More usually the strategies chosen had little relation to the companies' fundamental quality problems.

LESSONS LEARNED

The changing forces and the associated responsive strategies can be tabulated as in Figure 1-2. Figure 1-2 clearly demonstrates the following facts:

1. "Changing forces" has been a continuing phenomenon.

2. Meeting the goal of quality leadership has required continuing change in strategy and, therefore, in expertise in managing change.

3. Generally managers have been quite sensible in their choice of strategies as applied to the then-existing conditions. However, as conditions kept changing, some of the prevailing strategies became increasingly out-of-date.

The experiences of all those companies have also provided a body of lessons learned: which strategies produced useful results, and why; which strategies failed, and why. Some of these lessons apply so widely that they will become a vital input to future grand strategy.

It has become evident that quality competitiveness for the years ahead requires a new basic approach. Merely adding new methods or tools to the traditional approach is not enough. The new basic approach is centered around the concept of enlarging the strategic business plan to include quality goals. The processes for meeting these quality goals then parallel the processes long used for meeting traditional goals such as for sales, product development, and profit.

This new basic approach is the subject of the remainder of this book. As we shall see, to make such an approach effective, upper managers must personally provide leadership in managing for quality to a degree that is unprecedented in most American companies. So fundamental a change should be preceded by a clear understanding of how to think about quality. To that end, the next chapter is devoted to how to think about quality.

HIGH POINTS OF CHAPTER 1

The purpose of this chapter is to provide a "lessons learned" perspective on making quality happen.

Human needs for quality have existed since the dawn of history.

Over the centuries the strategies of managing for quality have undergone continuing change in response to a continuing procession of changing political, social, and economic forces.

During this progression of events, upper management became detached from the process of managing for quality.

The Japanese revolution in quality was based on the creation of unprecedented strategies:

Upper management in charge

Training for all functions, at all levels

Quality improvement at a continuing, revolutionary pace

Work-force participation through QC circles

The phenomenon of life behind the quality dikes requires that we provide good quality to shield society against service interruptions and to guard against disasters.

Quality competitiveness for the years ahead requires a new basic approach.

Copyright © 1989 by Juran Institute, Inc.

More books from this author: J. M. Juran