Got a Tough Problem-Work It Out

I'm reading a new book that everyone should go out and buy. Its called The Brain Advantage, Become a More Effective Business Leader using the Latest Brain Research. A friend of mine is a co-author so I got a copy from him to read through. I've made several connections to my own experiences in leadership.

I'm going to share one of them with you here, then you go right out and buy the book.

We've all been there. You have a tough problem that you just can't figure out. You have the best experts in the field working on it with you, the best collective brainpower around and still the answer eludes you. What do you do? The authors of The Brain Advantage suggest; walk away for awhile, go do something else, take a nap, have a workout, chit chat with friends, whatever. Do anything except focus on that problem, anything that allows you to relax, that is. So The Brain Advantage strikes again, more folklorish knowledge is confirmed through science. I think we all know instinctively that when we need to solve a tough problem, its best to cool off, do something "mindless" and magically, the Eureka moment comes to us. For me, I do my best thinking while on the bike for a long ride. I usually come back from a long ride outside with several new ideas. I routinely bring back notes on my cell phone for ideas for posts on this blog. Usually the sleep thing does not work for me. If I try to go to sleep with a problem on my mind, I'm awake for a significant part of the night.

In The Brain Advantage, the authors discuss research that shows that that creative people tend to be more flexible in their thinking and relaxed than people not considered creative. Neuroscientist Mark Jung-Beeman discovered that people who were in a good mood solved more problems with insight than those who were not in a good mood. Dr. Jung-Beeman observed that this may help explain why people find solutions to their problems in the shower or during a short nap or some other activity that is relaxing and allows the brain to unwind. So the next time you have a sticky problem that is haunting you, just walk away, go have some fun, and the answer may come to you.

You can pick up a copy of The Brain Advantage here.

ISO Stuff: The Audit

I went through my third party ISO 9001 assessment recently. That got me thinking a little bit about the experience. I thought I'd share some of what I've learned over the years about this unique experience. First, some background. There are three "registration" avenues that a company can follow. Those are:

Self-Declaration, 2nd Party Assessment, and 3rd Party Assessment.

The difference between these is dramatic so let me explain a little about each.

Self-Declaration is just what is sounds like. If you believe that you have a good solid Quality Management System that, in your opinion and assessment, meets the intent of the relevant quality standard, you can self-declare that your organization complies with the standard. The benefit of this is mainly cost and effort. No cost associated with hiring a registrar to come in and spend several days assessing your system, and no lost time associated with the aforemetioned audit visit. The drawback of this approach is that no one will believe the declaration. It's akin to the "fox watching the henhouse" euphemism.

Second Part assessment is assessment by a customer. The benefits of this approach are similar to Self-Declaration above. No cost. However there is the time component that is in play. You will have to spend time preparing and conducting the assessment. The downsides of this approach are many. Starting with the portability issue. If one customer assesses you, will other customers accept the results or will you find several other customers at your door wanting to conduct an assessment visit also? Additional negatives of this approach are that you won't want to reveal anything except the best parts of your QMS to any customer, for fear of a negative impact to purchasing decisions. This inhibits improvement of the QMS.

Third Party registration is by far the most common approach around the world. There are several reasons why third party is the preferred approach. Third party registrars are independent and accreditted by an international body that ensures their competence, thoroughness, and impartiality. Third party registrations are pretty much universally accepted by any customer. Third party registrars have a unique relationship that presents either a downside or an opportunity, depending on the maturity of the QMS, the attitude of management towards the QMS and the confidence of the Quality Manager. Let me explore this area in more detail.

The relationship with the registrar is a strange symbiotic relationship. The registering company is hired by the company seeking registration, which from a buiness standpoint creates a desire to continue the business. Afterall, we are all in business to make money, even registrars. So the registrar must walk a fine line between "finding" too many things that might harm the relationship and letting the QMS off too easy. This is a big challenge for auditors, again, depending on the maturity of the organization being auditted. Third party registrars are prohibited from "consulting" as this is a conflict of interest that undermines their impartiality. Individual auditors can and do, share information on a one on one basis about potential improvement opportunities that they observe but may not include in their report.

Lets spend a few minutes on maturity. What I mean by this is that different organizations are motivated by different things to achieve registration. Many are interested in getting the certificate on the wall to satisfy a customer demand. Once this demand is met, some organizations stop there and really don't mature much more. On the other hand, some companies enter into the registered quality management system with the motivation of improving their business or perhaps start from a demand from customers and mature into a more enlightened attitude about the value of their QMS. Those with a mature approach to their QMS registrar relationship understand that the registrar works for them and that the third party audit is a tool in their toolbox to help drive improvement in the QMS. The Quality Manager is the key player in making this happen by sharing information with the registrar about weaknesses in the system. Through enabling the third party auditor, the Quality Manager can leverage findings from them to force improvement in areas that may have been resistant to participating.

Third party registration is by far the most common approach used. Customers and competitors universally recognize an independent registrars findings. Due to the business relationship that exists, registrars are interested in adding value for the registered company by helping them mature and improve the QMS beyond just getting a certificate hanging on the wall.

Total Cost of Quality for the Total Picture

Happy New Year! Here's wishing everyone a healthy, happy 2010. Now on to business.

What is the financial impact of quality on our organization? Is it money well spent? What should we be spending our money on in regards to quality? Is inspection the right place to spend our precious capital or should we invest in automation? To what degree should we inspect for conformance. If any or all of these questions sound familiar to you, read on for the answers.

Enter Total Cost of Quality. Total Cost of Quality (CoQ) is a finanicial model of the costs incurred to operate and maintain the function of quality in a business. The CoQ model takes into account all of the activities that any typical company would perform in the name of providing good products or services to customers. The CoQ model, also known as The Economic Conformance Model, shows us the rising costs associated with proactive management of quality as compared to the decreasing costs associated with improving quality. The graphic below gives a visual representation of the CoQ model.

Before we get into that too much though, lets define the four components of the Cost of Quality model.

The first two categories of cost are associated with putting systems and processes in place to reduce the likelihood of a failure. First is prevention. Prevention is the category for those costs associated with preventing a quality problem from occuring in the first place. Typical costs that are included in this category are; training, procedure writing, ISO related costs, and process or equipment automation.

Appraisal is the next category. Appraisal is where we capture our inspection costs. Any activity we do that inspects the quality of the product or service falls in this category. Typical costs included here are; Calibration, instrumentation, and inspection and test personnel.

Internal Failure is the first of two categories associated with poor quality. Internal Failure are those costs associated with recognizing a poor quality characteristic exists BEFORE the product leaves the factory. The most common cost in this category is scrap, followed closely by rework costs.

External Failure is the worst of all possible situations. External failure is failure of a product or service at the delivery point or usage point of the customer. I say that this is the worst of all possible situations for two reasons. One, the product is fully burdened with cost, including transportation and storage costs. Second, reputation in impacted here. The customer experienced the failure, damaging the company reputation and hindering future sales.

Ok, now that we have that out of the way, lets talk about what this means to us. In the model above the total cost of quality is represented by a bowl shaped curve. The low point of the bowl shaped curve is called the economic conformance point. This point represents the lowest possible cost of quality that a company can expect to see. This point is the balance between the costs associated with preventing a problem from occuring and the costs of dealing with the problems that do occur. So, we might look at that graph and say, great, this is easy, all we have to do is balance costs in the four categories to achieve the economic conformance point, then we're done. Easy! Not quite. The thing to remember is that the economic conformance point can be moved lower and to the right through effort. The graph below shows the traditional view of Cost of Quality in the top left section, and in the lower right section shows the effect of applying an improvement methodology such as Lean or Six Sigma.

In the traditional view, there is a fixed minimum cost associated with the quality function. In a Lean or Six Sigma company, we can lower the costs associated with prevention and appraisal by building higher quality products. Higher quality products with less variation allow us to reduce our inspection routines to ever decreasing sampling strategies. Higher quality products also reduce the need for expensive automation systems and complicated work routines to ensure a mistake is not made. With higher quality comes higher confidence, and higher confidence brings lower costs.

Graphics excerpted from:

Cost of Quality: Not Only Failure Costs

by: Arne Buthman

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