Com Competing on the Eight Dimensions ons of Q ualit ality
D O N O T C O P Y
D avid A. G arvin
Harvard Business Review
No. 87603
H BR
D O N O T C O P Y N O VEMBER VEMBER–DECE –DECEM M BER 19 8 7
Compe Competting on the Eight ght Dimensions ons of Quality D avid A. G arvin
U .S. .S. m anagers anagers kno know w that they have ha ve t o improve i mpr ove the qua lity of their products products because, because, alas, U .S. consumers have told them so. A survey survey in 1981 1981 repor reported ted tha t n early 50% 50% of U .S. consumers consumers believed believed that the qualit y of U .S. products products had droppe dropped d during the previprevious five years; more recent recent surveys have found t hat a qua rter of consumers are ‘‘ ‘‘not a t all’’ confident t hat U .S. industry ca n be depended depended on t o deliver reliable reliable products. roducts. M any companies companies have tried tried to upgr upgrade ade their quality, adopting programs that have been staples of the quality movement for a generation: cost of quality calculations, interfunctional teams, reliability engineering engineering,, or stat istical q uality control. Few Few companies, however, have learn ed to compete o n quality. Why? Pa rt of th e problem, problem, of course, is tha t unt il Japanese Japanese and Europ European ean com petition petit ion intensifi intensified ed,, n not ot many companies seriousl seriouslyy t ried ried to m ake qualit y programs programs work even as they implemented them. But even if companies h ad implemented the traditional principles of quality control more rigorously, it is doubtful tha t U .S. consumers w ould be satisfied today. In In my view, m ost of th ose principles principles w ere narrow in scope; scope;
D avid A . Garvin is an assoc associat iat e professo professorr of business adm in istra- tion at t he Harv H arvard ard Bu siness iness Schoo Schoo l. He has published num erous erous a article rticles s on qual q ual ity i n H BR an d other journals and is th e recipien recip ient t of McKi nsey nsey Aw ar ards ds for best b est H BR article ar ticle in 1982 and an d 1983 1 983.. This a r t i c l e d r a w s f r om om h i s b o o k , Managing Quality, to be b e published publish ed by Free Press.
Copyright
1987 1987
they w ere ere desig designed n ed as pure purely ly def defens ensive ive measures measures to preempt failures or eliminate ‘‘defects.’’ What managers agers need need now is an aggress aggressive ive strategy to gain and hold markets, with high quality as a competitive linchpin.
Q uality ality Control Control
To get a better grasp of the defensive character of traditional quality control, we should understand w hat t he quality quality m ov oveement m ent in the Unit ed States has achieved achieved so far. fa r. How much expe expense nse on quality qualit y w as tol erable?H ow m uch ‘‘ ‘‘qua lity ’’ w as enough? enough? In 1951 1951,, Joseph Juran tackled these questions in the first edition of his Q u a l i t y C o n t r o l H a n d b oo o o k , a publication tha t becam e the quality mov ement’s bible. bible. Juran observed that quality could be understood in terms of avoidable and una voidable costs: the former resulted resulted from defects an d product product failures like scrapped scrapped mat erials or labor hours required required for rew ork, repair, repair, and complaint processing; processing; the latt er w ere ere associated associated w ith prevention, i.e., inspection, sampling, sorting, and other qua lity control init iatives. Juran Juran regard regarded ed failure costs as ‘‘gold in t he m ine’’ ine’’ because they could be reduced reduced sharply sharply by investing in qua lity improvement . He estimat ed tha t avoidable qualit y losses losses typically ranged ranged from $500 500 t o $1,00 1,000 0 per productive operat operat or per year—big m oney back in th e 1950 1950s. s.
by the President President an d Fellows of H arvard C ollege. ollege. All rights reserved. reserved.
Reading Reading Juran uran’’ss book, book, executive executivess inferr inferred ed roughl roughlyy how much t o invest invest in qualit y improvement: expe expennd it it u r es es o n pr ev ev en en t i o n w e re re ju s t if if ie ie d i f t h e y w e r e lower than the costs of product failure. A corollary princip rinciple le w as that decisi decisions ons made early early in the proproduction chain (e.g., when engineers first sketched out a product’s product’s design)have design)have implications for for the level level of quality costs incurred la ter, both in the factor y a n d t h e f i el d . In 1956, Armand Feigenbaum took Juran’s ideas a st ep further further by proposing proposing ‘‘ ‘‘tot al q uality control’’ (TQC). Companies would never make high-quality products, he argued, if the manufacturing depa rtm ent w ere forced to pursue qua lity in isolat ion. TQC TQC called for ‘‘interfunctional teams’’ from marketing, enginee engineering, ring, purchasing, purchasing, and ma nufacturing. These These teams would share responsibility for all ph ases of d es es ig ig n a nd nd m a n u fa fa c t u ri ri n g a n d w o u l d d i sb sb a n d o n ly ly when they had placed a product in the h ands of a satisfied customer—w customer—w ho rema ined satisfied. satisfied. Feige eigenbaum nbaum no noted ted that all new produc products ts m moved oved through through three three stages stages of activity: des desig ign n control, control, inincoming m aterial ateria l control, control, and produc productt o orr shopfloor sh opfloor c o nt nt r o l. l. Th i s w a s a st st e p i n t h e r ig ig ht ht d ir ir ec ec t i o n. n . B ut ut Feigenbaum eigenbaum did not really consider consider how q uality w as first first of all a strategic question for any business business;; how, for instance, quality might govern the development of a desig design n a nd t he choice choi ce of feature featuress or options. Rather, design control meant for Feigenbaum mainly prep reproduction roductio n asses assessments sments of a new design’ design’ss manufacturability, or that projected manufacturing techn i q ue ue s s h ou ou l d b e d eb eb ug ug ge ged t h r ou ou gh gh pi l ot ot r un un s . Materials co ntrol included included ven vend dor or evaluations evaluati ons and i n co co m in i n g i n sp spe c t io i o n pr o c ed u r e s . In TQ C , q u al al it it y w a s a k in in d o f b u rd rd en en t o b e shared— shared—no single single department department shouldered shouldered all the reresponsib sponsibility. ility. Top Top ma nagement nagement w aass ultim ately acc o un un t a b le le f o r t h e ef fe fe ct ct i v en en es es s o f t h e s y st st e m ; Feigenbaum, like Juran, proposed careful reporting of the costs of qualit y t o senior executives executives in order order to ensure their commitment. The two also stressed stat statistical istical approac approaches hes to quality, incl in cl uding uding proce process ss control charts that set limits to acceptable variations in key variables variables aff affeecting cting a produc product’s t’s produc production. tion. They endors endorsed ed sampling sampling proce procedur dures es that allow allowed ed m a n a g er er s t o d ra ra w i n fe fer en en c es es a bo bo u t t h e q ua ua l i t y o f en t i re re b a t c he he s o f pr od od u ct ct s f ro ro m t h e c o nd nd it it i o n o f i t em em s i n a s m a ll ll , r an an do d o m l y s el el ec ec t ed ed s a m pl pl e. e. D espite espite their att ention t o these techniques, Juran, Juran, Feigenbaum eigenbaum , and other experts experts like W. Edw ards D eming w ere try ing to get m ana gers gers to see beyon beyon d purely purely statistical controls controls on o n quality. Meanw hile, hile, aanother nother branch of the quality movement emerged, relying even even more heavily heavily on probability probability theory and stat istics. This w as ‘‘ ‘‘reliability engineering,’’ engineering,’’ w hich originated in the aerosp aerospace ace and electr electronics onics industrie industries. s.
In 195 1950, 0, only only one-third o ne-third of the U.S. U .S. Na vy’s vy’s eele lecctron ic devices w orked prope properly. rly. A subsequent st udy b y t h e R a n d C o r po po ra ra t i o n e st st i m a t e d t h a t e v er er y v a ccuum tube the military used had to be backed by nine others others in w arehouse areh ousess or on order order.. Reliability Reliability engineering addressed these problems by adapting the law s of probability probability to th e challenge challenge of pre predicting dicting equipm equipm ent stress. stress. R el i a b i l i t y en gi n eeri n g m ea s u res l ed t o :
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Techniques for reducing reducing failure rates w hile products products were still in the design stage.
Failure ailure m ode and effect effect analysis, w hich systemat ii-cally reviewed how alternative designs could fail.
Individual Individual component analy sis, w hich computed the failure probability of key components and aimed t o el el im im i n a t e o r s t re ren gt gt h e n t h e w e ak ak es es t l i nk nk s. s. D erating, erating, w hich required r equi red that parts parts be used used below their specified stress levels. Redundancy Redundancy,, w hich ca calle lled d fo forr a paralle parallell syste system m to back up an important com ponent ponent or subsystem in c a se se i t f a il il ed ed .
N aturally, an effective effective reliability reliability progr program am required required managers to monitor field failur es closely to give company engi enginee neers rs th thee infor informat mat iion on neede needed d to plan plan new designs. Effective Effective field failure reportin reportin g also demanded the devel develop opment ment of systems of data colleccollection, including return of failed parts to the laboratory f or or t e st st i n g a n d a n a l y si si s. s. Now, the proponents of all these approaches to q ua u a li li t y c o n tr t r o l m ig i g h t w el e l l h av av e d e n ie ie d t ha h a t t he h ei r view s of quality w ere ere pure purely ly defensive. defensive. But w hat else else w as implied by the solutions they stresse stressed— d—ma ma terial controls, outgoing batch inspections, stress tests? P e rh rh a ps ps t h e b es es t w a y t o s ee ee t h e i m pl pl i ca ca t i o n s o f t h e ir ir logic is in traditional q uality control’s control’s most extreme form, a progr program am called ‘‘Zero D efects.’’ efects.’’ No other proprogram gram defined defined quality so stringently stringently as an a bsence bsence of fa failu ilure res— s—and and no wonder, wonder, since si nce it emerge emerged d from from the defense industries where the product was a missile w hose flawless oper operation ation wa s, ffor or obvious obvious reasons reasons,, imperative. I n 1961, t h e M a r t i n C o m pa n y w a s b u il il di di n g P e rrshing m issiles issiles for th e U .S. Army. The The design design of the m i ss s s il il e w a s s ou ou nd n d , b ut ut M a rt r t i n f ou ou n d t h a t i t c ou ou ld ld maintain hi gh qua lity only through a massive program of inspection. It decided to offer w orkers incentiv es to low er th e defect defect rat e, and in D ecember 196 1961, 1, delive del ivere red d a Pershing Pershin g missile missile to C ape C anaveral anavera l w ith ‘‘zero discrepancies.’’ Buoyed by this success, Martin’s general general ma nager in Orlando, Florida accepted accepted a chal challe lenge nge,, iissue ssued d by the U .S. Army Army ’s missile missile command, to del delive iverr th thee first first fiel field d Pers Pershing hing one mon month th HARVARD HARVARD BUSINESS REVIE REVIEW W
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a h ea ea d o f s c h ed ed ul ul e. e. B ut ut h e w e nt nt e ve ven f ur ur t h er er. H e promised promised that the missile w ould be perfe perfect, ct, w ith no hardw are problems problems or document errors errors,, and t hat all equipment would be fully operational 10 days after d el el iv iv er er y (t h e n o rm rm w a s 90 d a ys y s o r m o re re ). Tw o mont hs of feve feverish rish activity follow ed; Mart in asked asked all employee employeess to contribute contribute to building building the missile exactly exactly right right t he first first t ime since there w ould be vir virtually tua lly no n o time for for the usual usual insp inspectio ections. ns. M Mananagement worked hard to maintain enthusiasm on the plant floor. In In February February 1962 1962,, Mart in delivere delivered d on time a perfect missile that was fully operational i n l es s t ha ha n 24 h o u r s . This experience experience w as eye-opening eye-opening for both M art in and the res restt of the aerosp aerospace ace industry. industry. After After careful caref ul review, management concluded that, in effect, its ow n changed chan ged attit ude had assure a ssured d th thee proj project’ ect’ss sucsuccess. cess. In t he w ords of one close observer observer:: ‘‘The on e ti time me management demanded demanded perfe erfection, ction, it happened!’’ M a r t i n m a n a g em em e n t t h e re re af af t er er t o l d e m ployees ployees tha t the only acceptable acceptable qualit y standard w as ‘‘zero defects.’’ defects.’’ It in stilled t his principle in the w ork force force through through training, training, spec special ial events, events, and by postin ostingg qualit y results. It set goals for w orkers orkers and put great great effort effort into giving each w orker orker positive positive criticism. Formal techniques techniques fo forr proble problem m solving, solving, how ever, ever, rem a i n ed ed l im im i t ed ed . Fo Fo r t h e m o st st pa rt r t , t h e p ro ro gr gr a m focused focused on m otivat ion—on ion—on changing the att itudes of e m pl o y e e s .
c o ns ns u m er er el el ec ec t ro ro n ic ic s a n d c a rs rs , t h e v o la la t i l e m a r k et et in semiconductor semiconductorss provide provi dess a telling telling example example of change. In March 198 1980, 0, Richard W. Anderson, Anderson, general general manager of Hewlett-P acka rd’s Data Systems Divis io io n , r ep epo rt rt ed e d t h a t a ft f t er e r t es e s t in in g 300, 00 000 16K R AM AM chips from from t hree U .S. and t hree Japanese Japanese ma nufact urers, ers, Hew lettlett-Packard Packard had discove discovere red d w ide disp dispariti aritieess in quality. At incom incoming ing inspec inspection, tion, the Japanese apanese chips chips h had ad a failure fa ilure rate rate o off zero; zero; the comparable comparable rate rate for the three U .S. manufact urers urers w as betw een een 11 and 19 failures failures per per 1,0 1,000 00.. After 1,0 1,000 00 hours of use, use, the failure rate rate of the Japanese Japanese chips w as betw een een 1 and 2 pe r 1, 000; u s a b l e U .S .S . c h i ps f a i l e d u p t o 27 t im im es es per per t housand. Sever Several al U U.S. .S. semiconductor semiconductor companies companies reacted reacted to the new s impulsively, impulsively, complaining that the Japanese Japanese w ere ere send sending ing only their best best components components to the allall important U .S. market. Others disputed the basic data data.. The most perce perceptive pti ve market analysts, how ever, ever, noted how differences in quality coincided with the rapid rapid ascendancy ascendancy of Japanese Japanese chip ma nufacturers. nufacturers. In In a few few years the Japanes J apanesee ha had d gone gon e from from a standing start to signific significant an t market shares shares in both the 16K 16K and 64K 64K chip ma rkets. rkets. Their m essage— essage—intentiona intentiona l or not—w not—w as that q uality could be a potent strategic weapon. U . S . s em em i c on on du du ct c t o r m a n u fa fa c t ur ur e r s g o t t h e m e sssage. sage. In 16K 16K chips the q uality gap soon closed. closed. And i n i n d u s t r i es a s d i v ers e a s m a c h i n e t o o l s a n d ra d i a l tires, tires, each of w hich had seen seen its position position erode erode in the face of Japanese competition, there has been a new seriousness seriousness about qualit y too. But how t o translate seriousness seriousness into act ion? Managers who are now determined to com pete pete on qualit y have been been throw n b a ck ck o n t h e o l d q u es es t i on on s : H o w m u c h q u a l i t y i s enough? What does it take to look at quality from the customer’ customer’s vanta vantage ge point? poin t? These These are still hard questions today. To achieve quality gains, I believe, managers need a new way of th inking, a conceptual bridge to the consum er’s er’s van ta ge point. Obviou sly, m arket studies acquire a new iimpor mportance tance in t his context, as does does a careful review of competitors’ products. One thing is certain: high quality means pleasing consumers, not just protecting them from annoyances. Product designe designers, rs, in turn, should shift their at tention from prices prices at t he tim e of purchase purchase to life cycle costs costs t hat include expenditure expendituress on service service and ma intenance— t h e c u st st o m e r’ r ’s t o t a l c o st st s . Ev en en c o ns ns u m er er c o m pl a in in t s pl a y a n ew ew r ol ol e b ec ec a u se se t h e y pr ov ov i de de a valuable source of product information. But managers have to take a more preliminary step—a step—a crucial one, how ever ever obvious it m ay appear appear.. Th ey ey m u s t f ir ir st st d ev ev el el o p a c l ea ea r v o ca ca b ul ul a ry ry w i t h w h ic i c h t o d is is cu cu ss ss q u a li li t y a s strategy. They They must break break dow n the w ord qualit y into ma nageable parts.
D O N O T C O P Y 1
Strat Strategic egic Q ualit ality Management ent
On t he w hole, U.S. corporations corporations did not keep keep pace pace with quality control innovations the way a number of overseas competitors did. Particularly after World War II, U .S. corporat corporat ions expanded rapidly and m any became complacent. Managers knew tha t consum ers ers w ouldn’t ouldn’t drive a VW Beetle, Beetle, indestructible as it w as, if they could afford a fancier car—eve car—even n if t his m eant more visits to the repair shop. B u t i f U . S . c a r m a n u f a c t u r e r s h ad gotten t heir heir products to outla st Beetles, U.S. quali ty managers still w ould not hav e been been prep prepared ared for Toyot a C orollas—or Sony televisions. Indeed, there was nothing in th e princip principles les of quality control t o disabuse them of the idea that quality was merel y so mething that could hurt a company if ignored; that added quality was the designer’s business—a matter, perhaps, of chrome and push buttons. The beginnings of strategic quality management cannot be dated precisel preciselyy because no single book or article marks its inceptio n. But even m ore than in 1. James F. F. Haplin, Z e (N ew York: McG raw -Hi ll, 1966), 1966), ero ro Defects Defects (N p. 15. HARVARD HARVARD BU SINESS SINESS REVIE REVIEW W
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O n l y t h e n c a n t h e y d ef ef in in e t h e q u a l it it y n i ch ch es es i n w hich to compete. compete. I propos proposee eight eight critical dimensions or categories categories of quality that can serve as a fram ework for strategic analysis: analysis: per perfor formance, mance, features features,, rel reliabil iability, ity, conforconformance, durability, serviceability, aesthetics, and perceived quality. Some of these are a re alw al w aays ys m utually reinforcing reinforcing;; som e are not . A product product or service can rank high high on on onee dim dimensio ension n of quality aand nd llow ow on another— another—indeed indeed,, an improve improv ement ment in one ma y be achieved achieved o only nly at the expens expensee of another. another. It is preprec i se se ly ly t h i s i n t er er pl pl a y t h a t m a k e s s t r a t eg e g ic ic q u a l it it y management possible; the challenge to managers is to compete on selected dimensions.
c l a ss ss es es . S o t h e q u es es t i on on o f w h et et h e r pe rf rf o rm rm a n c e d if if ference ferencess a re qualit y difference differencess m ay depend depend on circumst ant ial prefe prefere rences— nces—but but prefe preference rencess based on functional requirements, not taste. Some perfor erformance mance standards standards ar e based based on subjecsubjectiv e prefere preferences, nces, but th e prefere preferences nces are so universal that they have the force force of an objec objective tive standard. standard. The quietness of an automobile’s ride is usually viewed as a direct direct refle reflection ction of its quality. quality. Some peop people le like a dimmer room, but who wants a noi sy car ?
D O N O T C O P Y 2
1 Perform Performance
Of course, performance refers to a product’s prima mary ry oper operating ating chara characte cteris ristics. tics. For an automobile, automobile, performance would include traits like acceleration, handling, cruising speed, and comfort; for a television set, performance performance m eans sound and picture clarclarity, color, and the ability to receive distant stations. In service businesses— businesses—say, say, fast food a nd airlines— airlines— performance performance oft en m eans prompt service. service. Because Because this di dim m ension ension o off quality invol involve vess m ea ea-surable attributes, brands can usually be ranked ranked obje ct ct i v el el y o n i n di di v id id ua ua l a s pe pec t s o f per fo fo r m a n ce ce . Overall perf ormance rankings, however, are more difficult to develop, especially when they involve benefits that not every consumer needs. A power shovel shovel w ith a capacity capacity of 100 100 cubic cubic yar yards ds per per hour w ill ‘‘ ‘‘outperfo outperform’’ rm’’ one w ith a capacity capacity of 10 cubic ya rds per per hour. Suppose, Suppose, how ever, ever, tha t t he tw o shovels possessed the identical capacity—60 cubic yards per hour—but ho ur —but achieved achieved it diffe differe rently: ntly: one w ith a 1–cubic-yard bucket operating at 60 cycles per hour, the oth er wit h a 2– cubic-yard cubic-yard bucket operating operating at 30 cycles per hour. The The capacit ies of the shovels w ould then be the same, but the shovel with the larger b uc uc k et et c o ul ul d h a n dl dl e m a s s iv iv e b ou ou l de de rs rs w h i le le t h e shovel w ith the sm aller bucket bucket could perform perform preciprecision w ork. The ‘‘super ‘‘superior ior performer’’ depends depends entirely tirely on the task. Some cosmetics wearers judge quality by a product’s resistance resistance to smudging; others, others, w ith m ore sensens it it i v e s k in in , a s s es es s i t b y h o w w el l i t l ea ea v es es s k i n irritat ion-free ion-free.. A 100–w 100–w at t light bulb provides provides greater greater candlepow candlepow er tha n a 60–w 60–w att bulb, yet few custom ers ers w ould regard regard the differe difference nce as a measure of qualit y. The bulbs simply belong to different performance
2. This framew ork first first appeared, appeared, in a preliminary form, in my article ‘‘What Does ‘Product Quality’ Really Mean?’’ Sloan Man Man- - agem agem ent Review, Fall 1984. 104
2 Feat Featu ures
Similar t hinking can be applied applied to features, a second dimension of qual ity that is often a secondar y aspect aspect of performance. performance. Features are the ‘‘bells bells and w hist les’’ of products products and services, th ose cha ract eristics that supplement their basic functioning. Examples include free drinks drinks on a plan e, perm perm anent -press press cycl cycleess on a w ashing machi m achine ne,, aand nd autom atic t uners uners on a colo r television set. The The line separat separat ing prim prim ary performance characteristics from secondary features is often difficult dif ficult to draw. What What is crucial crucial,, again, again , is tha t features features involve objective objective and m easurable easurable att ributes; objective individual needs, not prejudices, affect their translation into quality differences. To many customers, of course, superior quality is less a reflection o f the availa bi lity of particu la r features than of the total n um ber o f options available. Often, choice is qual ity: buyers may wish to customize or personalize their purchases. Fidelity In Inve vestments stments and ot her mutual fund oper operators ator s have pursued this more ‘‘flexible’’ approach. By offering their clients a wide range of funds cover ing such divers diversee fields fields as hea health lth care, care, techno technollog ogy, y, and energy—and by then encouraging clients to shift savi n gs gs a m o n g t h e se se—t h e y h a v e v i rt rt u a l ly l y t a i l or o r ed ed investment portfolios. Employing Employing the latest in flexibl flexiblee m an anufactur uf acturing ing technology, Allen-Bradley customizes starter motors for its buyers without having to pri ce its products prohibitively. Fine furniture stores offer their custom ers ers countless variations in fabric and color. Such strategies strategies impose heavy deman ds on operating operating m anagers; agers; they are an aspect aspect of qua lity likely likely t o grow grow in importance w ith t he per perfection fection of flexible flexible manufacturing t echnology. echnology.
3 Reliability liability
This dim ension reflects reflects th e probability probability of a prodproduct m alfunctioning or failing failing w ithin a specifie specified d tim e period. period. Among the most comm on measures of reliareliaHARVARD HARVARD BUSINESS REVIE REVIEW W
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b il il i t y a re r e t h e m ea ea n t i m e t o f i rs rs t f a il i l u re re, t h e m ea ea n time between failures, and the failure rate per unit ti time. me. Because Because these these measure m easuress require r equire a prod product uct t o be in use for a specified period, period, th ey are m ore releva releva nt to durable durable goods goods than tha n to products products and service servicess that are consumed instantly. R el el ia ia b il il i t y n o rm rm a l l y be be co co m e s m o r e i m po po rt rt a n t t o consumers as downtime and maintenance become more expensive expensive.. Farm ers, ers, for example, are especially especially sensitive to downtime during the short harvest season. Reliable Reliable equipment equipment can mean the diffe differe rence nce bebetw een een a good year and spoiled spoiled crops. crops. But consum ers ers iin n other other markets are more attuned than ever ever to prod prod-uct reliability reliability too. C omputers and copying copying ma chines certainly certainly compete compete on this basis basis.. And And rece recent nt m arket arket research shows tha t, especially for yo ung women, reliabi reliability lity has become become an automobile’ automobile’s most desire desired d att ribute. Nor is t he government government , our biggest biggest single consumer, imm une. After seeing seeing its expe expenditures nditures for m ajor w eapons repair repair jump from $7.4 billion in fiscal year 1980 1980 to $14. $14.9 9 billion in fiscal y ear 1985 1985,, th e Department of Defense has begun cracking down o n c o nt nt r a ct ct o r s w h o se se w ea po po n s f a il il f re re q ue ue nt nt l y i n t h e field.
pr oa oa c h t o c o nf nf or or m a n c e h a s e m e rg rge d. d. I t i s c l o se se l y a s so so c ia ia t e d w i t h Ja pa pa n es es e m a n u f a ct ct u r er er s a n d t h e w ork of G enichi enichi Taguc Taguchi, hi, a prizewinning prizewinning Japane Japanese se statistician. Taguchi begins with the idea of ‘‘loss function,’ function,’’’ a measure measure of llos osse sess from from the ti time me a prod prod-uct is shipped. shipped. (T (These losses include w arrant y cost s, n o n re re pe pe a t in i n g c u st st o m e rs rs , a n d o t h er er pr ob ob le le m s r eesulti ng from from performa nce failure.)Taguchi failure.)Taguchi t hen compares pares such losses to tw o alt ernative approaches approaches to quality: on the one hand, simple conformance to speci specifications ficati ons,, and on the other, other, a measure measure of the degree to which parts or products diverge from the iide deal al t arget arget or center. center. He demon strat es th at ‘‘ ‘‘toleran ce sta ck-up’’ ck-up’’ w ill be w orse— orse—more more costly—w costly—w hen the dimensi dimensions ons of of parts parts are more distant from the center than when they cluster cluster around aro un d it, even even if some parts parts fall outside outside the tolerance band entirely. entirely. According t o Taguchi’s aguchi’s approach, proach, production production process process 1 in the Ex is better Ex h i b i t is even though some items fa ll beyond specification limit s. Traditional approaches approaches favor production production proprocess 2. 2. The The challenge for qualit y m ana gers gers is obvious. In ncc i de de nt nt a l l y, y, t h e t w o m o st st c o m m o n m e as as u re re s o f failure in conformance—for Taguchi and everyone else—are else—are defect defect ra tes in t he fact ory a nd, once a product is in the hands of the customer, the incidence of servic servicee calls. calls. But these measures measures negle neglect ct other deviations from standard, like misspelled labels or shoddy shoddy construction, construction , th that at do not lead lead t o service service or repair repair.. In service service businesse businesses, s, measures of conformance normally focus focus on accuracy accuracy and t imeliness imeliness and include include counts of proce processi ssing ng error errors, s, una unanticinticipa pate ted d delays, dela ys, and other oth er fre frequent quent m istakes. istakes.
D O N O T C O P Y
4 Conform onformance ance
A related related dimension of qualit y is conforma nce, or the degr degree ee to which a produc product’s t’s desig design n and oper operating ating characteristics meet established standards. This dimension mension ow es the most to the traditio traditiona nall approache approachess to qualit y pioneer pioneered ed by experts experts like Juran. Juran. All products and services involve specifications of s om om e s or or t . Wh en en n ew ew d es es ig ig ns ns o r m o d el el s a r e d e velop veloped ed,, dimensions dimensions are ar e set set for parts par ts and purity purity sta ndards for ma terials. These These specification specification s are normally expr expres esse sed d as a target target or ‘‘ ‘‘center’ center’’; ’; deviance deviance from t he cent cent er is permit permit ted w ith in a specified specified range. range. Because Because this appr approach oach to confor conformance mance equates equates good goo d qualit y w ith operating inside inside a tolerance band, there is llittle ittle in inter teres estt in w h hethe etherr speci specifications fications have been been met exactly. Fo r the most part, dispersion w ithin s pe c i f i c a ti t i o n l i m it i t s i s i gn o orr ed . One drawback of this approach is the problem of ‘‘tolerance tolerance stack-up stack-up’’ ’’:: w hen t w o o orr m or oree parts parts are to be fit together, the size of their tolerances often d et et e rm rm i n es es h o w w e ll ll t h e y w i l l m a t c h . Sh Sh o ul ul d o ne ne part fal l at a l ower limit o f its specification, an d a ma tching part at its upper upper limit , a tight fit fit is is unlikely. unlikely. Even if i f the parts are rated acceptable acceptable initially, i nitially, the link betw een een them is likely likel y to w ear more quickly quickl y than on e made from pa rts whose dimension s have b e e n c e n t er er ed m or o r e e x a ct ct ly ly . To address this problem, a more imaginative apHARVARD HARVARD BU SINESS SINESS REVIE REVIEW W
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5 Durabilit Durability y
A measure measure of produc productt life, life, durabili durability ty has both ecoeconom ic an d t echnical dim ensions. ensions. Technically, Technically, duradurability bility can be define defined d as the amount of use use one gets gets from a product product before it deteriorates. deteriorates. After so so m any hours hours of use, use, the filament of a light light bul bulb b burns burns up and the bulb must be replaced. Repair is impossible. Ec o n o om m is i s t s c a ll ll s u c h pr o d u c t s ‘‘o n e -h o oss s s h ay ay s’ s’ ’ (after t he carriage carriage in the Ol Olive iverr Wendel endelll Hol Holmes mes poem poem tha thatt was desig designed n ed by the deacon deacon to last last a hundred years, and whose parts broke down simultaneo u sl sl y a t t h e e nd nd o f t h e c en en t u r y ).). In other cases, consum ers m ust w eigh th e expected expected cost, in both dollars and personal personal inconvenience, inconvenience, of future repairs against the investment and operating expens expenses es of a n newer ewer,, more reliabl reliablee model. D urability, urability, then, may be defined as the amount of use one gets f r o m a pr o d u c t b e f o r e i t b r e a k s d o w n a n d r e pl a ce ce ment is prefer preferable able t o continued repair repair.. 105
Exhibit
Two approac approache hes s to conform onformanc ance e
Int In thefollowin he following g graphs graphs, shaded haded areas areasu under nder thecurvesi hecurvesindicat ndicate items whose measurem easurements meet specifications. specifi cations. W hite areas indicate item items not meeting specifications. specifications.
n not ot be the result result of t echnical echnical iimpro mpr ovements vemen ts or the th e use of longer-lived materials. Rather, the underlying economic environment simply may have changed. For example, e xample, the expe expected cted li life fe of an automobile rose rose during duri ng t he last decade decade— —it now average averagess 14 years—mainly because rising gasoline prices and a w eak economy reduced reduced the average average number of miles driven driven per year. year. Still, durability v aries w idely idely a mon g brands. In 1981, estimated product lives for major hom e appliances appliances ranged from 9.9 years (Westinghouse) to 13.2 years (Frigidaire) for refrigerators, 5.8 years (G (G ibson) ibson) to 18 years (May (May tag) for clothes w ashers, 6.6 6.6 years (Mon (Mon tgom ery Ward) Ward) to 13.5 13.5 years (Ma (Ma yta g) for dryers, and 6 years (Sears) (Sears) to 17 years (Kirby) (Kirby) for vacuum cleaners. cleaners. This w ide dispersion dispersion suggests tha t durability is a potentially fertile area area for further quality differentiation.
D O N O T C O P Y Production process 1 Specification limit Target
Specification limit
3
1.35
1.40
1.45
In product production ion proces process s 1 (favo (favore red d by Taguch aguchi), i), item items distribut ribute closely closelyaroun around d thet he target, arget, althoughsom althoughsome e items fall outsidespe side specicifications. Production process 2
Specification limit
Target
Specification limit
1.35
1.40 1.
1.45
In production production process process 2 (favored (favored in i n traditional approaches), approaches), item items all distribut ribute within within spec specificat ifications ions,, but but not not tightly ightly around around the the target. Source: L.P. .P. Sullivan, ‘‘Reduc Reducing ing Variability: Variabi lity: A N ew Approach Approa ch to Quality,’’ Quality July 1984, 1984, p. 16. Q uality Progress, July
This approach approach to durability has tw o important implications. plications. First, First, it suggests suggests tha t durability and reliability are closely linked. A product that often fails is likely to be scrapped scrapped earlier earlier than one t hat is more reliable; repair repair costs w ill be correspondingly correspondingly higher and the purchase of a competitive brand will lo ok that much more desirable. Because of this linkage, companies sometimes try to reassure customers by offering lifetim e guaran guaran tees on their products, as 3M has done with its videocassettes. Second, thi s approach implies that durability figures should be interpre terpreted ted w ith care. An An increase in product product life may 106
6 Serv Serviceabilit iceability y
A sixth dimension dimension of quality is service serviceabili ability, ty, or the speed, courtesy, competence, and ease of repair. Consumers are concerned not only about a product breaking dow dow n but also about t he tim e before service is restored, the timeliness with wh ich service appointments are kept, kept, the nat ure of dealings dealings w ith serservice personnel, personnel, and the frequency frequency w ith w hich service calls or repairs repairs fail t o correct out standing problem problem s. In those cases w here proble problems ms are not im mediately resolved resolved and com plaints are filed, filed, a com pany’s complaint-handling procedures are also likely to affect customers’ ultimate evaluation of product and service quality. Some of these va riables riables reflec reflectt differing differing personal personal standards of acceptable service. service. Others can be measured sured quite objectively. objectively. Responsivene Responsiveness ss is ty pically measured by by t he mean t ime to repair, repair, w hile technical competence is refle reflected cted in the incidence incidence of mult iple service calls required to correct a particula r problem problem . Because Because m ost consumers equate rapid rapid repair repair an d reduced dow ntim e wit h higher higher quality, these elem elem ents of serviceabilit y a re less subject subject to personal in terpreterpretation than are those involving evaluations of courtesy or sta ndards of professional professional behavior. Even Even reactions reactions t o dow ntim e, however, can be quite com plex. In certain env ironm ents, rapid response response becom es critic al only aft er certain t hresholds have been been reached. reached. D uring harvest season, farmers generally generally accep accept downt ime of one on e t o six hour s on harvesting equipm equipm ent, such as combines, wit h litt le resi resistance. stance. As dow ntime increas increases es,, t hey become anxious; beyond eight eight hours hours of dow ntime they become fr franti anticc 3. Roger B. Yepsen, Yepsen, Jr., ed., T h e D u r a b i l i t y F ac Penn: ac t o r (Emmaus, Rodale Press, 1982), p. 190. HARVARD HARVARD BUSINESS REVIE REVIEW W
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and frequently frequently go to great great lengths lengths to continue harvesting even even if it means purchasing purchasing or leasing additional equipment. equipment. In markets llike ike t his, superio super iorr service can be a powerful sel ling tool. C aterpillar guarantees delivery of repair parts anywhere in the world within 48 hours; a competitor offers the free loan of farm equi pment during critica l periods periods should its custom ers’ ers’ m achines achines break dow n. C u s t o m e rs rs m a y r em em a i n d is is sa sa t i s fi fi ed ed e ve ven a f t er er com compl pletion eti on of repai repairs rs.. How these complaints complaints are h a n dl dl ed ed i s i m po po rt rt a n t t o a c o m pa pa n y ’s ’s re re pu pu t a t i o n f or or quality and service. Eventually, profitability is likely to be affected as w ell. A 1976 1976 consumer survey survey found found that among h house ousehold holdss that th at initiated com comp plaints laints to resolve resolve proble problem m s, more than 40% 40% w ere ere not satisfied w ith t he results. results. U nderstandably, nderstandably, t he degree degree of satisfaction w ith complaint complai nt res resolution olution closel closelyy corre correlated lated w ith consumers consumers’’ w iilli llingne ngness ss t o repu repurchas rchasee t he offending brands. Companies dif fer widely in their appr oaches to com compl plaint aint handling h andling and in in the importance importance they attach to t his element element of serviceabil serviceability. ity. Some do their best best to resolve resolve complaints; complaints; others others use lleg egal a l gimgimmicks, the silent treatment, and similar ploys to rebuf rebufff dissatisfi dissatisfied ed customers. customers. Recently Recently,, G eneral eneral Electric, lectric, Pill Pillsb sbury ury,, Procter Procter & G amble, Polaroid, Polaroid, Whirlpool, hirlpool, Johnson & Johnson, and other companies have sought t o preempt preempt consum er dissatisfaction dissatisfaction by installing toll-fre toll-freee telephone telephone hot lines to their customer relations departments.
or even even agree agree on w h hat at it means. C ompani ompanieess theref therefore or e have to search for a niche. On this dimension of quality, it is iimpos mpossib sible le to pleas pleasee everyone everyon e..
D O N O T C O P Y 4
8 Perc Perceiv eived ed Q uality ality
C o n s u m er e r s d o n o t a l w a y s h a v e c o m pl pl et et e i n fo fo r m a tio n about a product’s or service’s service’s att ributes; indirect m e a su su re res m a y b e t h ei ei r o n l y b a si si s f o r c o m p a ri ri n g brands. A product’s product’s durability, for example, can seldom be observed observed directly; directly; it usually m ust be inferred inferred from various tangible and intangible aspects of the product. product. In In such such circumst circumst ances, ima ges, ges, advertising, and brand names—inferences about quality rath er than the reality reality it self— self—can can be critical. critical. For For this reareason son,, both H onda—w onda—w hich m akes ca carrss in Marysville, Marysville, Ohio—and Sony—which builds color televisions in San Diego—have been reluctant to publi ci ze that their produc products ts aare re ‘‘made iin n Americ Ameri ca.’ a.’’’ Reputat Reputat ion is t he prima prima ry stuff of perceived perceived quality. Its pow pow er comes from fro m an unstated ana analog logy: y: that the qualit y of products products today is similar to the quality of produc products ts yesterd yesterday, a y, or the quality of goods goods in a new product line is similar to the quality of a company’s established established products. products. In In the early 1980 1980s, s, Mayt ag introduced a new line of dishwa shers. shers. Needless Needless to say, salespeop salespeople le imm ediately emphasized the product’ product’ss reliability—not yet proven—because of the reputation of Maytag’s clothes washers and dryers.
7 Aest esthet hetics
The final tw o dimensions dimensions of qual quality ity are the most subjective. subjective. Aesthetics—how Aesthetics—how a product product looks, feels, feels, sounds, tastes, or sm ells— ells—is clearly a ma tt er of perpersonal judgment and a reflection of individual preference. Nevertheless, there appear appear to be som e pat pat terns in consumers’ rankings of products on the basis of taste. A recent study of quality in 33 food categories, for example, found that high quality was most often associated w ith ‘‘rich and full flavor, ta stes natural, tast es fresh, fresh, good aroma , and looks appetizing.’ appetizing.’’’ The a esthetics dim ension differs differs from subjective subjective criteria pertaining to ‘‘performance’’—the quiet car engine, engine, say—in say—in t hat aesthetic choices are not nearly universal. N ot all people people prefer prefer ‘‘ ‘‘rich a nd full’’ fla vor 5
4. TARP, C o n su su m er C o m p l a i n t H a n d l i n g i n A m er i c a: a: Fi Fi n a l R e - (Springfie ingfield, ld, Va.: Nat ional Technical Information Service, Service, port (Spr U.S. D epartment epartment of C omm erce, erce, 1979 1979)).
5. P. G reg Bonner and Richa rd Nelson, ‘‘Product ‘‘Product Attribut es and Perceived Quality: Foods,’’ in Perce Per ceived ive d Q ualit y, ed. Jacob Jacoby a n d J er er r y C . O l s o n (L (L ex ex i n gt gt o n , M a s s .:.: L ex ex i n gt gt o n B o ok ok s , D . C . Heath, 1985), p. 71. HARVARD HARVARD BU SINESS SINESS REVIE REVIEW W
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Competing peting on Q uality ality
This com pletes pletes the list of the eight dim ensions of qualit y. The The most t raditional notions—conforma notions—conforma nce and reliability reliability —rem rem ain im portan portan t, but they are subsumed w ithin a broader strat strat egic egic framew ork. A company’s first chal lenge is to use this fra mework to explore the opportuni ties it has to distinguish its products from another company’s wares. The quality qual ity of an automobile tire may refle reflect ct its tread-w tread-w ear rat e, han dling, tract ion in dangerous dangerous drivdriving conditions, rolling resistance (i.e., impact on gas m ileage), ileage), noise levels, resistan ce to punctures, or appe ar ar a nc nc e. e. H i gh g h -q -q u a l it it y f ur ur n it it u r e m a y b e d is is t i nnguished guished by it s uniform finish, an absence of surface surface flaw s, reinforced reinforced frames, com fort, or superior superior design. design. Even Even t he qualit y of a less tangible product product like computer software can be evaluated in multiple dimensions. These These dim ensions include reliability, ease of ma intenance, ma tch w ith users’ needs, needs, integrity integrity (the (the e xt xt e nt nt t o w h i ch ch u n a ut ut h o ri ri z ed ed a c c es es s c a n b e c o n trolled), trolled), and portability portability (the ease w ith w hich a propro107
gr a m c a n b e t r a n sf sf er er re re d f ro ro m o n e h a rd rd w a r e o r software environment to another). A company need not pursue all eight dimensions simultaneously. In fact, that is seldom possible unless it intends to charge unreasonably high prices. Technological echnological lim itat ions ma y im pose pose a further constraint. In some cases, a product or service can be improved in one dimension of quality only if it becomes worse in another. Cray Research, a manufact u r er er o f s up upe rc rc o m pu pu t er er s, s, h a s f a ce ce d pa r t ic i c u la la r ly ly difficult choices of this sort. According to the company’s chai chairrman, man, if a super supercompute computerr doesn’ doesn’tt fail every every mon th or so, it probably probably w asn’t built for m aximum spee speed; d; in purs pursuit uit of hi highe gherr speed speed,, C ray has deliberately sacrificed reliability. There are oth er trade-offs. trade-offs. C onsider the follow ing:
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These exam exam ples ples confirm tha t companies can pursue a selective quality niche. In fact, they may have no oth er choice, especially especially if com petit petit ors have esta esta blished reputations for a certain kind of excellence. Few products rank high on all eight dimensions of qualit y. Those Those that do—C do—C ross pens, pens, Rolex Rolex w atches, Rolls-Royce automobiles—require consumers to pay the cost of skilled w orkmanship.
D O N O T C O P Y
In entering U.S. ma rkets, rkets, Japanese Japanese ma nufacturers often often emphasize their their prod products’ ucts’ rreeliabi liability lity an and d conformance formance w hile downpla ying options and feature features. s. The super superior ior ‘‘ ‘‘fits and finishes’’ finishes’’ and low low repair repair rates of Japanese Japanese cars are well kno w n; less often recognized recognized are their their poor poor safe sa fety ty recor reco rds ds and lo low w resis resistance tance to corrosion. business on su▫ Tandem C omputers has based its business perior perior reliabilit reliabilit y. For For comput er users th at fin d dow nt i m e i n t o le le ra ra b le le , l i ke ke t e le le ph ph o n e c o m pa pa n i es es a n d utilities, Tandem Tandem has devised devised a fail-safe fail-safe system: tw o process processors ors w orking in parallel parallel and linked linked by softw softw are that shifts shifts respo responsib nsibility ility betw een een t he tw o if an important compone component n t or or subsystem subsystem fails. fails. The result, resul t, in an industry already w ell-know ell-know n for quality products, has bee been n spectacula spectacula r corporate corporate grow grow th. In In 1984 1984,, after less than 10 years in busin ess, Tandem Tandem ’s ann ual sa les t o pped $500 m il il l i o n . ▫ N o t l o ng ng a g o , N e w Yo rk rk ’s ’s C h e m i c a l B a n k u ppgraded graded its services services for collecting payment s for corpocorporations. M anagers had first conducted a user survey survey i n di di c at at i n g t h a t w h a t c u s t o m e rs rs w a n t e d m o s t w a s rapid response to queries about account status. After it installed installed a computerize computerized d system system to answ er customers’ calls, calls, C hemi hemical, ca l, w hich banking consumers consumers had ranked ranked fourth in qualit y in the industry, industry, jumped to first. ▫ In the piano piano busine business, ss, S Stei teinw nw aayy & Sons has long long been been the quality llead eader er.. Its instruments instruments are know n ffor or their even even voicing voicing (the evennes evennesss of chara characte cterr and tim bre in in each of t he 88 notes on t he keyboard), keyboard), the sweetn sweetnes esss o off t heir heir registe registers rs,, the duration duration o off t heir heir tone, their lo ng lives, and even their fine cabin et w ork. Each piano is built by hand and is distinctive in sound and style. D espite espite these advantages, Steinw Steinw ay rece recently n tly ha hass been been chal challe lenge nged d by Yamaha , a Japanese apanese manufacturer manufacturer t ha hatt has built a strong rep reputation utation for quali quality ty in a relati relative vely l y shor shortt tim e. Yama Yama ha has done ▫
s o b y e m ph ph a s iz iz i n g r el el i a bi bi l it it y a n d c o n fo fo r m a n ce ce , t w o quality dimensions dimensi ons that ar e low low on Stein Steinwa way’s y’s list. list.
Strat Strategic egic Errors
A final word, not about strategic oppo rtunities, but about the worst strategic mistakes. The first is direct confrontation with an industry’s leader. As w it ith h Yama Yama h haa vs. S Stei teinw nw aay, y, it is fa farr pref prefer erable able to nullify th e leader’ leader’ss advant age in a particular niche w hile avoiding the risk risk of retalia retalia tion. Moreover Moreover,, a comm on error error is to intr introd oduce uce dimensions dimensions of quality that are unimportant unimportant t o con conssumers umers.. When When dere deregu gulation lation unlocked the market for residential telephones, a number of ma nufacturers, nufacturers, including AT&T, assumed tha t customers customers equated quality w ith a w ide range range of of expe ns ns iv iv e f ea ea t u re re s. s. Th Th ey ey w e re re s o on o n p ro ro v en en w r on on g. g. Fancy t elephones elephones sold poorly w hile durable, reliable, reliable, and easy-toeasy-to-ope operate rate sets gained gained large ma rket rket sha res. res. Shoddy market research often results in neglect of quality dimensions dimensi ons that ar e critical criti ca l to consumers consumers.. Using outdated surveys, car companies overlooked how im portan portan t reliability reliability and conforman conforman ce w ere ere becoming in the 1970s; i ronically, these companies f a i l e d c o n s u m er er s o n t h e v er y d i m en en s i o n s t h a t w er er e key targets of traditional approaches to quality control. It is often often a m istake to stick with old quality m ea ea-s ur ur es es w h en en t h e ex t er er n a l en v i ro ro n m en en t h a s c h a n ge ge d. d. A major telecommunications company had always evaluated evaluated its quality quality by measuring measuring tim eline eliness— ss—the the amount of time it took to provide a dial tone, to connect a call, or to be connected to an oper operator. ator. On these m easure easuress it perf performed ormed w ell. ell. More sophistisophisticated market m arket surveys, sur veys, conducted con ducted in anticipation anticipation of the industry’ industry’ss dere deregul gulation, ation, found t ha hatt consumers consumers w ere ere n not ot really really concerne concerned d about call connection connection time; consumers assumed that this would be more or less less accep acceptable. They w ere ere more concerne concerned d w ith the cl claarity rity of transmission transmission and t he degre degreee of stat ic on the line. On t hese measures, measures, the company found it w aass w ell ell behind behind its competitors. competitors. In aan n in ind dustry ustry like semiconductor semiconductor manufacturin manufacturingg equipm ent, Japanese m achin es generally generally require less less setset-up up time; they bre break ak dow dow n les lesss often often aand nd have few few HARVARD HARVARD BUSINESS REVIE REVIEW W
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problem problem s m eeting th eir specified specified perform perform ance levels. These are precisely precisely the t rait s desired desired by m ost bu yers. Still, U.S. equipment equipment can d o more. As one U .S. .S. plant plan t ma nager put put it: ‘‘Our equipment is m ore advanced, b ut ut Ja pa pa n es es e e q ui ui pm pm e n t i s m o r e d ev ev el el o pe pe d. d. ’’’’ Quality measures may be inadequate in less obvious w ays. Some So me measures measures are are too limi limited; ted; they t hey fai faill to capture aspects aspects of quality that are im impo portant rtant for competitive competitive succes success. s. Singapor Singaporee In Inte ternationa r nationall AirAirlines, a carrier w ith a reputat ion for excellent excellent service, saw its market share decline decline in the early early 198 1980s 0s.. The company dismissed quality problems problems a s the cause of its diffi difficcultie ultiess because because data da ta on service service complaints compla ints show ed steady im provement during th e period. period. On ly later, later, after SIA SIA so sollicite icited d consumer consumer resp response onses, s, did m ana gers gers see see the w eakness of th eir form er m easures. Relative decline decliness in service service had indeed indeed been been respo responnsible for the loss of market share. Com plaint counts had failed to register register problems problems because because the prop proporortion of pa passe ssenge ngers rs w ho w rote complaint complaint letters w as small—they small—they were primarily primarily Europ Europeans eans and U .S. .S. citi-
zens rat her th an Asians, Asians, the largest percenta percenta ge of SIA passengers. SIA also had failed to capture data about its competitors’ competitors’ servic servicee impro improvements. vemen ts. The pervasiveness pervasiveness of these errors errors is difficult to d et et e rm rm i n e. e. A ne ne cd cd o t a l e vi vi de de nc nc e s ug ug ge ges t s t h a t m a n y U . S . c o m p a ni n i es es l a ck ck h a rd rd d a t a a n d a r e t h u s m o r e vulnerab vulnerable le than they need need be. be. One survey survey found that 65% of executives thought that con sum ers could readily readil y name— name—w w it ithout hout help help— —a good goo d quality brand brand in a big-ticket category like major home appliances. But w hen the question w as actually pose posed d to consum ers, only 16%cou ld nam e a brand for sm sm all appliances, ances, and only only 23% 23% ffor or large large appl appliance iances. s. Are Are U .S. executives that ill-informed about consumers’ perceptions ceptions?? The answ er is not likel likelyy to be reassur reassuring ing.. M a n a ge g e rs rs h a v e t o s t o p t h i n k in in g a b o u t q u a l it it y merely as a narrow narrow effort effort to gain control of the proproduction process, process, and start thinking m ore rigorously rigorously about consumers’ needs needs and pre prefer ference ences. s. Qualit y is not sim ply a problem problem to be solved; it is a competit ive opp opportunity.
D O N O T C O P Y 6
6. C onsumer Netw ork, Inc., Brand Bran d Q uali ty Perce Per ception ptions s (Philadelphia: C onsum er Netw ork, August 1983) 1983),, p. 17 ad 50–51. HARVARD HARVARD BU SINESS SINESS REVIE REVIEW W
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