What Your CEO Wants You To Know

Transcription

1 What Your CEO Wants You To Know Bill Denney Chief Executive Officer Quality Texas Foundation Vice-Chair, Technical Committees Quality Management Division American Society for Quality

2 This Presentation The why of what we call Quality Who cares and what do they expect What is Quality? Why Quality professionals are often on the sidelines? How to sell Quality

3 How Does Senior Management View Quality? Kanban Six Sigma Poke Yoke X-Bar Kaizen Control Chart

4 I want you to prove our Quality program has value.

5 Quality will reduce costs and help improve revenue Mark Davis, CEO EMSI Quality Must Have Economic Impact!!! Why else would you do it?

6 What Is Quality? There is no single definition A management system? A product attribute? A set of tools? A method of continuous improvement? Assessments/audits/inspections? Customer satisfaction? Can an award (Baldrige) define Quality?

7 Quality Is Everywhere

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9 Do CEOs And Senior Managers See A Connection Between Quality And The Bottom Line? ASQ Surveyed 600 executives Do you believe Quality contributes positively to the bottom line? 99% said Yes What is Quality? Resounding answer Quality is, Customer Satisfaction Quality is essentially a product or service attribute if you give the customer what they want, you have Quality and they buy more

10 Back To Senior Managers With Another Question If we define Quality as, an organization-wide, coordinated effort to use Quality techniques and practices to achieve business process improvement, do you think this kind of Quality effort produces a positive financial return? 92% said Yes

11 The Case For Quality Has Been Made Again And Again General Accounting Office Study Companies that adopted quality management practices achieved better employee relations, higher productivity, greater customer satisfaction, increased Market Share, and improved Profitability. Emory University Study, Easton & Jarrell 394 companies Vast majority of studies show positive impact associated with TQM.

12 Kevin Hendricks, William & Mary Vinod Singhal, Georgia Institute of Technology 1,200 different publicly traded firms 600 national, state, local, and industry award winners Companies that employed Focus on customer satisfaction Employee involvement Continuous process improvement Long-term partnerships with suppliers & customers

13 Post Implementation Results

14 Stock Price

15 Foundation For MBNQA Louis Harris Survey 300 CEOs Important Trends & Ratings Globalization (Fair) Knowledge Management (Fair) Cost and Cycle Time (Fair) Supply Chain Management (Fair) Major area needing improvement 3 to 1 Execution of strategies Baldrige Criteria valuable to stimulate improvements in these areas? 79% yes

16 We keep asking the same questions and finding the same answers. We keep rediscovering the value of Quality methods Why?

17 Are CEOs Aware Of Quality Methods? Do They Use Them? Awareness and Usage Percent Aware Use Gap TQM Six Sigma Baldrige ISO Benchmarking

18 Why Aren t They Using Quality Methods And What Do They Expect? They don t learn this in business school They manage based on experience They demand proof that it works More importantly Quality Professionals seldom link Quality To the bottom line To strategy To tactics To cost reduction To Revenue enhancement Executives expect proof of value Money talks

19 CEO and Executive Perspective There Are Two Qualities 1. A product or service Attribute Quality (99%) What we deliver to the customer The customer defines value 2. A management tool Method Quality (92%) What we do internally to deliver the product or service to the customer Method Quality defines how well an enterprise satisfies the performance element of the value proposition for the customer Quality professionals have the knowledge and skills to improve #2 which will impact #1 - which ultimately reduces cost and improves revenue. That s all CEO s care about.

20 Ask Yourself What value do you bring? Are you undervalued, ignored, or overshadowed by other urgent concerns? Do you have the ear of senior leaders in your organization? The fact is, you drive innovation, analyze failures, improve processes, measure operations. You create capacity and reallocate resources. This reduces cost and influences revenue.

21 We Have to Prove Value We must align with strategies or specific tactics We have to demonstrate organizational performance improvement that impacts customers and profit If we can t demonstrate what we do (eventually or indirectly) contributes to cost reduction or revenue enhancement we are in trouble

22 What Does Your Company Want To Improve? Strategies-Tactics-Goals- Objectives Share price Market value Revenue Growth rate Earnings per share Net profit margin Price / earnings ratio Return on assets Cost per employee KPI s Provide Value to Customers Grow Top Line Revenue Increase EBITDA Provide A Great Place to Work Create Value for Shareholders Finance and Accounting for Non-Financial Managers, by Weaver and Weston The Essentials of Finance and Accounting for Non-Financial Managers, by Fields

23 ASQ Certified Quality Manager Vs Certified Manager of Quality & Organizational Excellence Financial management (BoK) Read, interpret, and use various finance tools including income statements, balance sheets, product/service cost structures, etc. Manage budgets, calculate return on investments (ROI) or assets (ROA), and use the language of cost/profitability to communicate with senior management.

24 What must we do? What do you bring to the business? CEO wants to know how that impacts market share, revenue, cost, etc.? We must first be business managers before we are quality managers. What are senior executives trying to improve? Change the perception Necessary Evil or Valued Participant

25 ASQ Conference Quality Management Division Survey Asked attendees about their CEO and Senior Management What is the CEO s perception of Quality? Does management think Quality contributes to bottom line? Does the CEO think Quality methods contribute to the bottom line?

26 What did we learn? The message that Quality is an enabler in most organizations is not reaching senior leaders Quality professionals have difficulty framing the discussion on the value of quality with senior leaders and their peers

27 ASQ Conference Quality Management Div Quality is a have-to, not a want-to. Necessary evil. Quality is a cost center, not a profit center. Management does not understand quality management systems. They relate to personnel, safety, and accounting. Quality is not part of management s vocabulary. Quality is not part of the bottom line. There are too many layers to communicate through. Your boss may not know how. No one knows how to draw the line between what we do and the bottom line. Quality just means the customer isn t screaming in his ear.

28 Bad Practices We Have How we shoot ourselves in the foot Lack of business and financial skills Over-focus on techniques Language of Quality is a turnoff Focus narrowly instead of broadly (tactical rather than strategic) Discomfort around senior managers Evasive conservatism Peddle soft benefits We want senior management to understand us and our methods. We try to change them, teach them what we know.

29 How To Sell Quality What s Important Put it in the language of business and executives Make alliances with other managers early Get to the point Forget the Power-Point monologue 1. Why are we doing this? 2. What if we did not do it? 3. What do we expect for outcomes?

30 How To Sell Quality If You Present 10/30 rule present succinctly and know your stuff Be prepared to ride the bull Expect the time to change Make it easy to say yes and hard to say no. Is anyone strongly opposed to? Does anyone feel strongly it isn t worth trying?

31 How To Sell Yourself 1. Translate your value into terms that are meaningful to the audience. 2. Make sure your audience understands what the impact of your work means to the business right now. 3. Be able to make your point across in 30 seconds or less. Remember - no one else is responsible to explain your value. It s your job.

32 How To Sell Quality Use Resources Selling Quality Ideas To Management Quality Progress, May 2006 How To Speak The Language Of Senior Management Quality Progress, May 2003 Learn To Talk Money Quality Progress, May 2004 Show Me Your Value Theresa Seagraves Quality Makes Money Pat Townsend & Joan Gebhardt A Bare Bones Look At The Bottom Line Quality Progress, May 2005 Selling Quality on Growth Rather than Cost Reduction. Quality Management Forum, Winter 2005 The Economic Case For Quality (ASQ)

33 Caution, Bill There s great personal risk in defining Quality Back To The Basic Point There Are Two Quality s 1. A product or service Attribute Quality What we deliver to the customer How the customer defines value 2. A management tool Method Quality What we do internally to deliver the product or service to the customer This is where we live as Quality Professionals

34 Best Tip I Ever Learned Put your name on everything you publish Every document must have Header Date and Page # of # Footer Quality Dept or your name

35 Challenge For Quality Professionals 1. Speak the language of executives Revenue and cost 2. Facilitate the execution of organizational goals Alignment and deployment 3. Focus broadly instead of just narrowly Systems thinking (the organization as a system) Strategic versus tactical 4. Demonstrate value

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37 Thanks For Your Attention Questions?