Building Quality Leadership - Being the leaders in our market sector as a result of our quality products and services

 ISO 9001 has a lot to say about leadership, but today I would like to address another form of leadership, leadership in quality, and being the market leaders in the market sector that your company is active in.

Traditionally we have always assumed that good quality products and services will give the company a larger share of the market. This is a valid assumption, but there are other factors that also need to be considered, as we have seen in my previous blog “Quality and the Bottom-line”. It is especially true for companies who take the time to find out what it is that really give them the advantage over others, which is part of the company’s context evaluation.

If a company gets it “right” when they first hit the market with a specific product or service, they quickly build a reputation for supplying quality products or services. The biggest challenge is to maintain this reputation. Competitors are always looking for ways to get a bigger share of the market, meaning that no company can afford to stagnate. Continual improvement is required to maintain the advantage over the competition. The importance of good marketing (in all its facets) cannot be over-estimated.

Once the advantage is lost, the results can be disastrous. A perfect example is the South African motor manufacturer Datsun (as Nissan used to be known in South Africa). In the late 1960s and during the 1970s they were known as manufacturers of excellent quality vehicles which were fun, reliable, and in many cases very exciting to drive. They were active in many of the market categories with a range of really quality vehicles. The uncomfortable truth is that they became so successful, that built-quality started to suffer by the end of the 1970s. Sales figures were starting to slip and they suddenly found themselves battling to stay afloat. The public simply lost all confidence in their products. At the same time Toyota in South Africa was seeing a huge increase in sales, due to the fact that their vehicles were now seen as superior quality. Nissan from Japan sent some of their best management people over to South Africa to try to salvage the situation. Drastic steps were taken. The name Datsun was replaced with Nissan. The model range was completely revamped. Production was changed to ensure that product quality could be improved, suppliers control was improved, etc. They started to involve workers in the factory through the implementation of concepts like Green Areas and suggestion schemes. And it worked – but not as far as sales were concerned. The new vehicles were great, but consumers were reluctant to buy them. The problem was loss of reputation, and that is not recovered very easily. One of the managers from Toyota said to me that if they could take the (then new) Nissan Maxima, and put a Toyota Camry badge on it, they would most probably not be able to keep up with demand, because the Nissan was that good in their eyes. But the public did not share their sentiment, because Nissan had lost its reputation as a producer of quality vehicles. Toyota went from strength to strength, not only in South Africa, but globally, based on the public perception that Toyota vehicles equals quality in the eyes of the public.

To gain the quality leadership advantage the company needs to apply its bets efforts, based on the results of analysis and evaluation (including context analysis). In time, customers should realize the results of these efforts, and support the company by paying for its products and services. It may take a lot of effort, but it is important to adopt a positive policy: “We want to be the market leaders, and we will do whatever we have to, to achieve this goal”. Well, whatever we have to within the value system adopted by the company, that is.

It is also important for the company to decide what it wants to be the leaders in if it wants to become the market leader. It may be specialized products, normal consumer goods, or both. Consider that the decision about what the company wants to be the leader in will decide where its efforts will be concentrated. If it wants to be a market leader in after sales service, efforts will be concentrated in this area, and product quality may suffer as a result. Once the decision has been made, the company must react appropriately, and do whatever it takes. But, like with all decisions, risk-based-thinking must be applied.

The following provides us with some guidance:

• If we think quality leadership consists of superior quality of design, we will emphasize product development and system development

• If we thing quality leadership consists of superior quality of conformance, we will emphasize manufacturing quality control

• If we thing quality leadership consists of availability of our products in terms of downtime, reliability, etc. we will emphasize reliability and maintainability programs

• If we think quality leadership consists of guarantees and field service, we will emphasize our field service capacity

And so on! If we focus on the right things and we are successful, we become market leaders. But what happens afterwards? While we are enjoying our good position, our competitors may have improved sufficiently to take over that position! The leadership position may be very short-lived, but with continual improvement and the right planning, it can last for a very long time.

A question that needs to be answered is the following: “Must everything in our products be perfect to afford us the leadership position?”

As human beings we are naturally looking for precision, beauty and perfection. But we also know instinctively that this is not always practical. We know that it will simply become too expensive to always manufacture the perfect product, or deliver the perfect service (we are often less forgiving when it comes to service delivery). If we come up with the perfect design a product may become so reliable that it will become obsolete before it wears out! This is known as over-designing the product.

We need to make a decision as to how good the product or service needs to be to give us the competitive advantage, which will make us the market leaders. But it is a matter of economics.

Consider the following:

• Quantify the economics

• Obtain additional knowledge on fitness for use once the product has been released on the market

• The customer is always right, but consider things that will not bother the customer, such as hidden surfaces, etc.

What I have read into all of this, is that the product or service does not have to be absolutely perfect to be acceptable to the customer. Considering what was discussed in the previous blog, the customer does not necessarily rate quality on conformance to specifications, but on perceived value for the money that they spend. I have also come to the conclusion that if the name attached to the product or service becomes a recognized brand name, the customer perceives the product as quality, even if the real quality is actually not as good as that of the competitors. Customers are also willing to pay premium price (sometimes exorbitant) for what they regard as quality. I have seen that a pair of brand name jeans did not last 2 years, but a generic pair that is comparable lasted up to 10 years. And at the time the price difference was enormous – R950.00 for the brand name jeans, as opposed to R220.00 for the generic brand. What counts is that the manufacturer or service delivery organization “gets it right”. Quality is important, no doubt, but there are other factors that also need to be considered. In South Africa, customers of the large mobile phone service providers qualifies for a free upgrade of their handset every two years. The question is: “What is the benefit of having a mobile phone that will last for 4 years and longer?” Companies have to do their homework and decide exactly what they are going to offer their customers, and at what price. If we get that wrong, we will not become market leaders, as some companies have, and some were able to maintain that position for many years.

In my next blog I would like to explore quality leadership inside the company, and how to organize for quality in the company organizational structures.

I trust that you have found this interesting reading, even if you do not agree with everything I have said! I welcome any feedback or questions. Please comment or e-mail me at koosgouws10@gmail.com. You can also visit our website at www.sheqmanagementsystem.co.za or, alternatively, at www.sheq-management-systems.webnode.com.

Regards

Koos