I just read that for the American car company Ford, “quality” has become problem #1.
In the first seven months of this year, Ford issued 46 separate recalls pointing a finger at 6.8 million vehicles with possible flaws and malfunctions. Ford spends billions each year on warranty repairs and recalls, an expense that drops to the bottom line of net earnings for its owners.
In the 1980’s and 1990’s, some of you may recall Ford’s boast was that “Quality is Job 1.”
Over these many years, I have often asked myself, “Why does nobody talk about the quality movement anymore?”
The Americans, W. Edwards Deming and Joseph Juran, were pioneers in stakeholder capitalism, but now seem to be roadkill on the highway of progress.
Deming’s business philosophy was for a company to take care of employees and customers first and foremost, so that its value would be maximized and be of greater benefit to its shareholders.
The Quality Movement – in Japan – was the impetus for the first meeting of the Caux Round Table in 1986. American and European business leaders were confounded by Japanese success with consumer electronics and automobile manufacture. Japanese companies were taking market share in America and Europe to the distress of those business cultures. Thanks to quality initiatives like just-in-time delivery of parts to assembly plants and decentralization of decision-making to workers in quality circles, Japanese companies were making better quality goods at less cost. This was a win/win/win/ capitalism for customers, employees, companies and society.
Deming’s 14 points were:
1. Create constancy of purpose for improving products and services.
2. Adopt the new philosophy.
3. Cease dependence on inspection to achieve quality.
4. End the practice of awarding business on price alone. Instead, minimize total cost by working with a single supplier.
5. Improve constantly and forever every process for planning, production and service.
6. Institute training on the job.
7. Adopt and institute leadership.
8. Drive out fear.
9. Break down barriers between staff areas.
10. Eliminate slogans, exhortations and targets for the workforce.
11. Eliminate numerical quotas for the workforce and numerical goals for management.
12. Remove barriers that rob people of pride of workmanship and eliminate the annual rating or merit system.
13. Institute a vigorous program of education and self-improvement for everyone.
14. Put everybody in the company to work accomplishing the transformation.
A separate, but similar business philosophy to the Quality Movement was the credo set for his company by Robert Johnson in 1943. The Johnson & Johnson credo is:
We believe our first responsibility is to the patients, doctors and nurses, to mothers and fathers and all others who use our products and services. In meeting their needs, everything we do must be of high quality. We must constantly strive to provide value, reduce our costs and maintain reasonable prices. Customers’ orders must be serviced promptly and accurately. Our business partners must have an opportunity to make a fair profit.
We are responsible to our employees who work with us throughout the world. We must provide an inclusive work environment where each person must be considered as an individual. We must respect their diversity and dignity and recognize their merit. They must have a sense of security, fulfillment and purpose in their jobs. Compensation must be fair and adequate and working conditions clean, orderly and safe. We must support the health and well-being of our employees and help them fulfill their family and other personal responsibilities. Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, development and advancement for those qualified. We must provide highly capable leaders and their actions must be just and ethical.
We are responsible to the communities in which we live and work and to the world community as well. We must help people be healthier by supporting better access and care in more places around the world. We must be good citizens – support good works and charities, better health and education and bear our fair share of taxes. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources.
Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative programs developed, investments made for the future and mistakes paid for. New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realize a fair return.
Should we not give credit to the Quality Movement and its pioneering Japanese advocates for showing that corporate social responsibility/stakeholder capitalism is generically a good?