The Multiplier Effect of Personal Accountability of Digital Transformation
What is Total Quality Management?
I’m really excited about this article, so I’m just going to jump right in. Total Quality Management (TQM) is an operational philosophy that focuses exclusively on customer satisfaction and continuous improvement. It was first introduced by American Engineer W. Edwards Deming who used his technical expertise to found management consultancy theory rooted in system processes. His logic was that each organisation is made up of a system of interrelated processes where the individual components are the people of that organisation. It was initially developed in manufacturing operations as a way of producing better quality goods, faster, and at a lower cost. In fact, it is widely credited as the central pillar of Japan’s economic recovery post-WWII. Despite its initial roots in manufacturing it has since been adopted as a management tool used for optimising business culture.
The way Total Quality Management works in manufacturing is that each individual takes full ownership of the quality of their contribution to the manufacturing process. It is their responsibility to continuously develop and refine the way that they work to enhance their contribution. Taking this same approach, it was considered, why does the same not apply to every employee in every organisation?
The Multiplier Effect
The idea is that you generate a multiplier effect of improvement across the organisation. Dusting off my economics knowledge, the multiplier effect in economics occurs when an injection of government or fiscal spending results in an increase in gross domestic product or economic output that is greater than the value of the initial injection. A simple example, with the Olympics just behind us, let’s use that. The government invests billions in improving communication infrastructure, transportation infrastructure, and the games supplies millions with jobs. That infrastructure is permanent, it’s here to stay, society benefits from it long after the Olympics is over. Following a simple example, each of those individuals who earn a wage during the Olympics go and spend more at the supermarket than they did before, that leads to an injection of revenue into that supermarket who has to supply more goods, resulting in an injection into the supplier who has to buy more lorries to supply the increase in demand, which increases the demand for lorry parts and so on and so forth. In other words, that initial first injection has had widespread benefit many times greater than the value of the initial injection - it’s multiplied.
The same can be said for TQM within an organisation. If I become more efficient at my job, I rely less on the people who support me so they have more time to focus on things they didn’t have time to work on before. The result, incremental change or innovation at the individual level results in a huge proportional development at the organisational level. Depending on the value of the multiplier a small increase at the individual level could have a huge effect worth potentially millions in output and revenue.
How does it apply to the philosophy of Continuous Improvement?
I have long spoken about digital transformation being a mindset and a process rather than an end goal that is achieved. The reason why it is a process and not a goal is because what classifies as transformative today won’t be classed as transformative in ten years time. When Apple released the first iPhone, it was transformative. But it’s useless by today’s standards, the only way that it stayed relevant was through continuous improvement. Total Quality Management has this philosophy of continuous improvement baked right in, which makes it not just relevant to digital transformation but almost a non-negotiable. In previous articles I have written about digital transformation as a process rather than an end goal, and in exactly the same way as the iPhone, if organisations don’t look to continuously build on the initial foundations they put in place, that initial advantage won’t last very long.
How do you transition to this operating model?
It’s all well and good right, and if I’ve done a good enough job, it should be more than clear by now how Total Quality Management can benefit digital transformation. But how do you go away and actually start applying it?
There’s no single way of adopting TQM because quality is subjective. Therefore, it relies on top-management to communicate with the rest of the organisation what quality means to them. Take going out for a meal as an example. A high quality meal to you might simply mean that the food tastes good. To someone else, a high quality meal means how well dressed the restaurant staff are, how clean the cutlery is, how well paired their drink is to the meal.
To succeed, top-management needs to put it’s full weight behind it and make it a strategic objective. They might start with reviewing the current state of affairs. How far away is the organisation from maximising its potential? Running with the dinner analogy, is the food really tasty but the service lazy, the waiters unfriendly, could they be providing a better experience?
It’s important that quality becomes one of the core values of the organisation and a key factor that dictates everything from how performance is measured all the way to whether a person is hired or not. If they’re the chef producing the meal, they’re not just measured on the number of dishes they can churn out per hour but instead the performance is more weighted towards quality; top-management would prefer a chef that produces 5 perfect dishes per hour than 20 mediocre dishes.
Management will also need to implement consistent process reviews to encourage new ideas or the maturation of existing ideas. The idea will be to create a forum where individuals feel safe to expose their ideas without fear of judgement or ridicule. A great example is 20% time that was introduced by Google. Individuals within the company are encouraged to spend 20% of their professional time working on their own ideas. The idea behind it is to stimulate creativity and innovation but essentially what is happening is the same benefits of TQM are being introduced just manually. But what this shows us is the success you can have if you adopt that philosophy. Google is one of the most innovative companies in the world and a large number of their big ticket ideas came from 20% time developments. If Google are artificially introducing it, surely it’s clear that it’s a no-brainer to aim for the organic approach?
For fear of sounding like a broken recording but I feel it can’t be reinforced enough, digital transformation is a process not an end goal. Organisations might make a large upfront technological investment that initially sets them apart, but it’s never long before that advantage is competed away. The key to long term success is continuous improvement and in my eyes there’s no better way of improving than if each individual within the organisation holds themselves personally accountable for the advancement of their role in the business. So many people sleepwalk through life, doing the same job day in day out, getting frustrated by the same inefficiencies or manual tasks. Imagine what any organisation could be capable of if it inspired a culture of proactively eliminating that frustration, the value of the multiplier effect doesn’t have to be very big to see huge organisational growth. But most importantly, imagine the increase in quality of life and job satisfaction for each of the employees who personally grew and matured their role within the business.