Probing the Limits: Quality Vs. Short-Term Profits

April 18, 2006
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I think I'm starting to get a better understanding of how to control the negative effects that short-term pressures have on quality and the long-term health of businesses.

Deming's "Second Deadly Disease" was Emphasis on Short-Term Profits. Most quality professionals agree that the common, "just ship it-today" business approach has a negative effect on quality and the long-term health of businesses.

The experience of getting my new, small company off the ground has given me insight on how short-term business pressures affect small businesses-and huge businesses alike.

In my previous jobs with big companies, when I asked a supplier to do something for me, they usually jumped at the chance. I got a rude surprise when I started my own business. Now when I talk to suppliers, it's like that scene out of the movie, "Jerry Maguire," where they scream at me, "show me the money!" Most suppliers don't care that I may someday be a major customer to them that helps their business grow. They want either a big order today, or for me to go away.

My business is too small to place large parts orders. This makes me envious of my larger competitors. They can buy in high-volume and pay half of what I pay for raw materials. It makes it hard for me to produce a high-quality, competitive product when I'm paying twice as much for parts.

Then again, maybe these big companies don't have it so good after all. While I have my suppliers screaming at me, "show me the money!" they have their shareholders screaming at them, "show me the money-right this instant!" Big companies have very little breathing room to take the necessary time to improve and upgrade their products and processes.

Deming explains in "Out of the Crisis," that executives and shareholders get focused on making money. Companies don't make money. Companies make products that they sell to make a profit. When companies focus on trying to make good money instead of good products, they get a short-term focus, quality starts to unravel and then the downhill slide begins.

Realistically speaking, all businesses feel intense short-term pressures to be profitable. I think what matters is understanding that focusing on quality now can significantly alleviate future negative short-term pressures down the road.

Short-term pressures become a business strategy issue. My company is still in its infancy, but I'm trying to make a plan to allow me to produce a high-quality product and have a healthy business long-term. Even though I'm going up against big competitors that buy parts for half my cost, I also know that they are driven by short-term demands from their shareholders and investors. I know this affects their quality because I've seen what they are shipping. I think also, it is safe to assume that their suboptimal quality must have a detrimental effect on employee morale.

Their lacking quality creates an opportunity for me. If I can keep my staff focused on quality, we will have an energized group of employees. We will care because we will be allowed to care. When employees really care, they find ways to work around problems like paying twice as much for parts and still have a much superior product.

Can you take the same approach? What short-term pressures are affecting your business? What can you do to mitigate them as much as possible so you can produce a quality product and take a long-term perspective? How do short-term pressures affect your competitors? How can you leverage their poor quality and weaknesses that stem from short-term pressures to your advantage?

I don't think there is a universal solution, but if you take the perspective that short-term pressures are a problem everyone is dealing with, then you can start making changes. What can you change in your company to lessen the affects short-term pressures have on quality? How can you leverage your competitor's poor quality that comes from short-term pressures they are feeling? Maybe the way you manage negative short-term pressures can become a strategic opportunity to improve and grow your business.

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