SService to NZOQ ervice to NZOQ rrecognised ecognised

Featuring

President’s Annual Report 2014/15

Changes ahead for ISO 9001: 2015 and ISO 14001: 2015

Change leadership and Lean

You too should love lead and lag indicators

LSS: Measure phase explained

Good product, poor delivery

Difference between alignment and integration

Plus more ….

May

201

5

NEW ZEALAND ORGANISATION FOR QUALITY

Dr Nigel Grigg, Dr Nigel Grigg, recipient of an recipient of an

NZOQ Special Service Award NZOQ Special Service Award

Service to NZOQ Service to NZOQ recognised ...recognised ...

2 | Official Magazine of the New Zealand Organisation for Quality – May 2015

ContentsQ board

3 President’s Annual Report 2014/15

3 Dr Nigel Grigg awarded …

4 From the Executive Director

Q grow

5 ISO 9001: 2015 and ISO 14001: 2015 …

7 Change leadership and Lean

Q learn

6 Connecting people with quality

10 Internal Audit: & key differences …

10 Quality Health Safety Environment Manager workshop

20 NZOQ Training Calendar 2015

Q share

12 LSS: The measure phase (FMEA)

14 Quality in healthcare: Part 2–Classifi cation

15 MBWA and Gemba walking …

16 When risk, quality and conventional management …

17 Good product, poor quality

Regular contents

11 Q time

19 Malcolm’s memo

20 New members

In the QWelcome to the May issue of QNewZ, a

publication that is a leader in its fi eld because

its contents inspire quality professionals to learn

more, do more and become more.

This month we are delighted to bring you the fi rst

planning report on the APQO conference to be

held in Rotorua in 2016 (p.4). This is one event

you will not want to miss

With the NZOQ board year having drawn to a close (p. 3) it is timely to

think about your role as a member and the benefi ts membership confers

upon you and your organisation, such as reduced training fees on all

NZOQ courses (p.20) and QNewZ. It is through this publication that we

bring members latest news and views from the world of Quality – each

issue could be described as the equivalent of a mini-congress, only you

don’t have to leave your desk to attend.

With changes ahead for international standards we bring you an update

from Dr Chris Brendon on ISO 9001: 2015 and ISO 14001: 2015. His

article is based on the presentations he made in Auckland and Wellington

during March.

With many organisations looking to implement Lean initiatives, Mel

Thornley continues explaining the Measure phase (p. 12) and we

are delighted to bring to your attention an article from our American

colleague, Chris Hayes who has written about change leadership and

lean (p. 7). We also commend to you articles written by our regular

columnists.

As the nights draw in, and with the frost settling on the lawn this issue of

QNewZ is a great read on a long, cold winter’s night. And let this issue

inspire you to learn more, do more and become more of a quality expert.

Enjoy!

Kind regards

Lyn Nikoloff

QNewZ Staff

Editor: Lyn Nikoloff, Bijoux Publishing Ltd

Sub editor: Ellen Fowles

Typesetting: Philippa Proctor, Pip’s Pre-Press Services

Distribution: NZ Organisation for Quality

email: [email protected]

ISSN: 0111-4158 (Print)

ISSN: 1179-7916 (Online)

NZOQ President

Mel Thornley


NZOQ General Enquiries

Postal address:

NZ Organisation for Quality

PO Box 622

Palmerston North 4440

New Zealand

Physical address:

NZ Organisation for Quality

Level 4

Civic Administration Building

32 The Square

Palmerston North 4410

New Zealand

Telephone +64 6 351 4407

Fax +64 6 351 4408


QNewZ Advertising

We welcome advertising, and rates are available on

request from [email protected]

QNewZ Deadlines for articles and advertising:

June 2015 deadline 1 May 2015

(publication: 1 June 2015)

July 2015 deadline 1 June 2015

(publication: 1 July 2015)

Contributions for QNewZ

QNewZ welcomes contributions for each magazine

but please contact the editor in the fi rst instance at:

[email protected]

Disclaimer: QNewZ is the magazine of the NZOQ and

is produced ten times a year. Opinions expressed in this

publication are those of the various authors and do not

necessarily represent those of the Editor or NZOQ. Websites

referred to in this publication are not necessarily endorsed.

learnnsharengrow

If your actions inspire others

to dream more, learn more, do

more and become more, you are

a leader. John Quincy Adams

Official Magazine of the New Zealand Organisation for Quality – May 2015 | 3

Q board: President, Service award

President’s Annual Report 2014/15With our 2015 NZOQ AGM due to be held as part

of the Northern Branch World Quality Day quality

event on 18th June, we have come once again to

the end of the Board year.

I assumed the presidential mantle from Nigel

Grigg last year – a hard act to follow – but Nigel

is still a very positive mentor to NZOQ activities. I

also acknowledge particularly the very hard work

of my fellow Board members: Mel Thornley, Tony

Stephenson, Abraham Fenn, Virginia Morey and

Jane Cullen.

NZOQ continues to provide a very positive image on

quality matters at various levels. Internationally, we were

represented at Australian Organisation for Quality’s Qualcon,

Asia Network for Quality (ANQ) Congress and the Asia

Pacifi c Quality Organisations (APQO) conferences in 2014.

All were cost-effective attendances in alignment with other

bodies but continue to ensure positive recognition for NZOQ

in international arenas.

Our direct link with the China Association for Quality

continues, with a particular success being regular reprints of

QNewZ articles in their prestigious publication, China Quality.

From APQO we were approved to be the host for the

future APQO conference here in New Zealand in 2016.

Pre-conference planning has commenced and we

acknowledge the assistance of Tourism NZ to date.

Nationally, we have worked hard at providing improved

services – including a full-colour QNewZ from 2015 and

a variety of successful branch events. Northern and

Canterbury branches continue to lead the way but Central

have now commenced a schedule of member events to

be based here in Palmerston North. My thanks go to all the

branch committees and teams who work so very hard to

launch events and engage with our members.

Our education and training has been very

successful with the 2014 year having many

positive students and successful graduates.

This result is on a wider range of training

options including CQA, DipQA as well as our

range of industry-relevant shorter courses and

certifi cations. Work is underway to ensure that our

ongoing programmes retain relevance to various

new quality standards coming on-stream.

Our CQA relationship with the Open Polytechnic

continues with regard to the recognition of CQA by Massey

University as a pathway to study. Our Diploma programme

(DipQA) continues to be the choice of many quality

managers.

Last year (2014) saw our best total income for many years.

While yet to complete the audit process we hope to confi rm

NZOQ’s fi rst surplus since 2010. The Executive Director and

our National Offi ce staff have all worked diligently to contain

costs and increase income opportunities. Our mid-month

Q-zine now goes out to around 9000 subscribers and is a

source of much new business. The very hard work of Tony

Stephenson, Graham Forsman and Tess Stewart needs to be

recognised.

We are not standing still, and as we progress through

2015 improvements will be ongoing – including a ‘leaning’

of National Offi ce processes under Mel’s guidance,

upgrades in our member communication relationships and

enhanced relationships with fellow national and international

organisations.

NZOQ is a member organisation and my most important

acknowledgement is to you all as continuing members of our

organisation.

Dan Forsman

President 2014/2015

Dr Nigel Grigg Awarded NZOQ Special Service AwardDr Nigel Grigg was awarded a Special Service Award at a Central Branch event

in Palmerston North recently, reports NZOQ President (2014/15), Dan Forsman.

In approving the award, the Board of NZOQ cited Nigel’s voluntary contribution

to the work of NZOQ as having been extensive, including: serving as an elected

Board director; serving terms as Vice-President and President; representing

NZOQ in many fora – including international conferences, national symposia and

local events. He has been a regular contributor to QNewZ and Q-zine and has

represented NZOQ for the NZ visits of a number of Chinese quality delegations.

He has been a constant supporter of the link between NZOQ qualifi cations and

higher-level tertiary study with Massey University. Nigel is a founding holder of the

NZOQ Master Black Belt Certifi cate. He continues to be an advisor, mentor and

expert to our National Offi ce staff, the NZOQ Board and many NZOQ members.


Q board: Exceutive

From the Executive Director

It seems strange talking briefl y about the

end of year as a member of the 2014/15

Board when we have just ended the fi rst

quarter of 2015 – but our fi nancial year

ended on December 31st, writes Tony

Stephenson, Executive Director.

Education and trainingDuring 2014 the National Offi ce went

‘gangbusters’, talking to many people about

training and which resulted in a large number

of completed courses. Their efforts continue

in 2015 with many people looking at both

short and long courses.

Like many businesses there are often long lead times

between ‘interest’ and signing up to do a particular course.

Many companies and candidates are now becoming more

discerning about what they really need in a training package

and – as a consequence – we are becoming very adept at

tailoring training to a specifi c company need, and in many

cases delivering in-house. Two courses that are very popular

as in-house programmes are Internal [Auditing] and Lead

Auditing.

Where you think you need some special advice around

training options and pathways just talk to us fi rst.

ASQ I have been talking to the American Society

for Quality (through their new Pacifi c Region

specialist who is based in New Zealand)

about greater co-operation. I have been the

Country Representative for the past 8 years,

and now that role will change. We have 70

ASQ members in New Zealand.

Board matters

Because there were no additional people

seeking election as a Board Member in this

year’s election there was no election so the

new Board is the same as last year (listed

alphabetically): Jane Cullen, Abraham

Fenn, Dan Forsman, Virginia Morey, Tony Stephenson, Mel

Thornley.

By the time you read this, we will have elected the offi ce

bearers for 2015/16. Please start thinking about what you

can do as a regional and Board member in the future.

The local Branch needs you and there has been a great

resurgence of attendance at meetings in Palmerston North.

There are three events to support this year: WQD in

Auckland on June 18th when the AGM will be held, WQD in

Palmerston North on 22 July and WQD in Christchurch (date

to be confi rmed).

APQO Conference 2016The Asia Pacifi c Quality Conference (APQO) is being held in Rotorua next year (2016) from November 20th to 23rd and your Conference Steering Committee of Abraham Fenn, Tony Stephenson and Virginia Morey are about to sign up the Conference Organiser. This is a key role and takes signifi cant pressure off NZOQ staff and directors so they can concentrate on bringing the best speakers and workshops to you.

We intend this to be a conference with a signifi cant difference around learning outcomes, experiences and networking. With some 22 countries involved, we already have some New Zealand and Australian – as well as other international – specialists signed up as leaders in their fi eld in health care, tourism, hospitality, science and technology, manufacturing, food safety, to name a few of the sectors.

The theme is ‘QuENSH – Quality, Environment, Safety and Health – how can we make it all work?’ It is a timely theme with the new Quality, Health and Safety, as well as Environmental Standards all recently released. Many traditional ‘Quality’ managers have had health and safety as well as environmental roles added to their job responsibilities in recent times.

Your professional membership organisation needs you to support this event – and you need to be there for your professional development points!


Q grow: ISO 9001: 2015

ISO 9001: 2015 & ISO 14001: 2015 — Changes ahead Profound changes are coming with the

new ISO 9001:2015 Quality Management

Systems and ISO 14001:2015 Environmental

Management Systems that will challenge the

current leadership style of most managing

directors and chief executive offi cers of

companies certifi ed to ISO Standards – writes

Dr Chris Brendon, Chairman of the Board of

Directors; Director of Business Development

for DQS Certifi cation AUSNZ Pty Ltd.

From September 2015, Managing Directors and Chief

Executive Offi cers of ISO 9001- and ISO 14001-certifi ed

companies will be required to undertake and demonstrate a

much greater involvement in the implementation, monitoring

and review of the effectiveness of quality management

systems. Under the new Standard, top management is

accountable for the effectiveness of management systems.

The effectiveness is measured by continually achieving

quantifi able results and the achieved tangible outcomes

now matter. It will no longer be suffi cient just to comply with

minimum requirements of the Standard.

How is this different from what we are doing now? The difference is profound, to say the least.

Under the current quality management system Standard,

the business leaders can demonstrate their commitment

by providing or facilitating suffi cient resources, appointing

management representative, delegating responsibilities

and authorities to lower level managers and periodically

participate in the annual management reviews.

For a variety of reasons, in the last 20 years quality

management systems and certifi cation have not been

recognised by executive managers as critical strategic

direction. In too many instances they were seen as

operational and compliance with customer requirement

issues only. Hence, most responsibilities for quality and

associated activities were delegated to lower-levels

managers.

There are always exceptions, however. It has been fi rmly

established throughout the certifi cation process around the

world that Quality Management Systems are not a strategic

tool and consequently are rarely discussed at the Board

level in most organisations.

Whilst continuous improvement requirement was clearly

the intent of the international Standards including ISO

9001, the actual improvement was predominantly limited

to a demonstration of improvement in the management

system. It rarely applied to the achievement of tangible and

measurable results. If Quality Objectives were not met in their

entirety there were no real repercussions, consequences or

penalties for such under-performance. This anomaly alone

has been one of the greatest shortcomings of the ISO 9001

Standard in the past.

Is there growth in ISO 9001 certifi cation? Approximately 1,200,000 companies around the

world are certifi ed to ISO 9001. Although this

represents only about 2% of the total number of

companies around the globe this evolutionary

growth in certifi cation is considered as one of the

most important developments in the last 25 years

for enabling successful global trading.

The organisations and enterprises that are

certifi ed to ISO 9001 without a doubt belong to a very

‘exclusive club’ within the wider global business community.

Many have secured their business success on the back of

quality management system certifi cation.

The whole world is talking about sustainability, global

warming and accountability for protecting the environment.

Although at the Board level, there is more frequent

discussion about environmental sustainability than quality

management, the number of currently ISO 14001-certifi ed

companies around the world (slightly over 300,000) does not

refl ect the gravity of general concern or true reasons and

genuine motivation for achieving global sustainability.

For example, the energy management standard ISO 50001,

whilst seen as possibly benefi cial for reducing the cost to

business, is not yet recognised as a powerful strategic tool

for protecting the environment, reducing the carbon footprint

and minimising pollution. The world business leaders may be

thinking about it but we are defi nitely not there yet.

Why are the new Standards so different?1. Encompasses a ‘high-level structure’

The fi rst profound change in both ISO 9001:2015 and ISO

14001:2015 encompasses a ‘High-Level Structure’ which

will be introduced gradually across the content framework of

most ISO Standards.

This unifi ed High-Level Structure will

enable much easier integration of

multiple Standards and more effi cient

implementation. The structure utilises

common terminology and the same

defi nitions, thus reducing errors in the

interpretation of requirements.

For example, the defi nition of what is

meant by ‘top management’ is defi ned

as: “person or group of people who

directs and controls an organisation

at the highest level.” This defi nition is

exactly the same for ISO 9001:2015

and ISO 14001:2015 Standards.

In the past, there was always confusion as to who is the top

management. Now, the Standard clearly defi nes executives

at the highest level for the scope of business and location

covered by certifi cation. The ‘High-Level Structure’ is defi ned

by Scope, Normative References, Terms and Defi nitions,

“There is a

lot to learn

and much

to do – your

survival is not

compulsory.”

W. Edwards

Deming


Context of the Organisation, Leadership, Planning, Support,

Operation, Performance Evaluation and Improvement.

2. New concepts added

Several new concepts were added into the Standard, e.g. in

ISO 14001:2015 Supply Chain, Value Chain and Product Life

Cycle. Taken together, these three additions are indicative

of broadening of responsibilities for most companies. These

now extend beyond physical and legal boundaries of a

company. The Standard includes all environmental aspects

in the infl uence spectrum of a company stressing the

importance of upstream and entire downstream of the life

cycle for every product and service.

3. Documentation in lieu of quality manual

Another profound change relates to documented information

in lieu of a Quality Manual. The Standard prescribes a

minimum level of documentation and responsibility for

the extent of documentation that resides within each

company, e.g. “documented information determined by the

organisation as being necessary for the effectiveness of the

quality management system”.

4. Executives to provide leadership

Leadership and commitment for management systems

will be a real challenge and may cause lots of heartache

for many executives. This is not because they are not

good business leaders. The challenge for executives

will be to rapidly bridge their lack of detailed knowledge

and understanding of management systems. While there

are always exceptions, very few high-level executives

understand the specifi c requirements of the management

systems in a suffi cient detail.

To provide effective leadership one must have knowledge of

why managements systems are critical for business success

and what is expected from the top management. Most

executives will have diffi culty and may struggle to provide

adequate leadership. Their leadership style and outcomes

will be closely examined and scrutinized in much more detail

than ever before by their ISO certifi cation providers.

What is the message for all Managing Directors and Chief

Executive Offi cers of the certifi ed organisations?

“In order to provide strong leadership and strategic direction

for your business you must acquire detailed knowledge

of management systems and management systems

effectiveness enablers.”

As W. Edwards Deming said a while ago: “There is a lot learn

and much to do – your survival is not compulsory.”

For further information please refer to www.dqs-ul.com.au

Q grow: ISO 9001: 2015

Join the increasing number of quality professionals who are completing the …

Diploma inQuality Assurance

I recommend this programme to all quality, risk management professionals. This course was benefi cial to me. Course guides were always there to help me. A course like this is benefi cial to any quality professional in their career in an existing organisation or to someone who is thinking of changing their current job.

Nandu Raut, graduate 2014

Open enrolment, two-year programme(one year for eligible CQA graduates)

Gain and demonstrate insight and responsiveness to workplace issues.

For further information and to enrol in the Diploma in Quality Assurance please contact Tess Stewart, NZOQ National Offi ce, Tel +64 6 351 4407 or [email protected]


Change leadership and LeanChris Hayes, CEO of Impact

Performance Solutions and LSS

Master Black Belt, writes about what

it takes for Lean transformation in

an organisation to be successful.

I have been practising and coaching

Lean for many years and over that time

I have seen my fair share of successful

Lean transformations. However, I have

seen as many failed attempts at Lean as I have successful

ones.

Why do Lean initiatives fail? Years ago I spent a lot of time studying the process of

organisational change. My undergrad studies in Project

Management and MBA, as well as my days in HR, more

or less forced my interest in the subject. Once the interest

blossomed, and just like my introduction to Lean, I quickly

became a change addict. Being a person that has always

believed in the power of process, I became an instant fan of

some of the best-of-the-best in the fi eld, including change

leadership guru John Kotter from MIT and his 8-step process

for leading change.

More recently I have done informal research of companies

that have implemented Lean and either failed or succeeded

in their attempts. In a nutshell, what I found was that

the critical difference between those companies that

successfully implemented Lean and those who were

unsuccessful was that those who were unsuccessful failed

to understand that lasting change requires a structured

approach to transitioning an organisation and its culture.

Throwing a few really cool tools at the organisation just

doesn’t do it; trust me on this. The tools work and many

companies will tell you that they provide various benefi ts

including increased revenues, resource effi ciencies, and

cost savings. Unfortunately, tools by themselves rarely, if

ever, provide lasting results. To avoid this pitfall, a structured

approach to implementing change leadership is required.

Sustaining lean transformation Now, I have written my fair share of ‘Missing Link’ articles

and presentations and I still believe that every missing link

claimed, really was missing, but it wasn’t until I reread one of

Kotter’s books that I had my moment of clarity. While in the past

I focused on specifi c missing elements of a transformation,

I overlooked the most important missing link: the process

of change leadership and how it supports the drive and

sustainment of an organisation-wide Lean transformation.

In Figure 1, we see a force fi eld analysis of a Lean transfor-

mation. This particular force fi eld analysis was completed

based on work with one of my clients and is indicative of

many other transformation attempts. There are many positive

forces which, if missing, would certainly cause failure, but

even when present do not guarantee success.

What must be developed is a method for resolving the

negative forces on the right while exploiting the positive forces

on the left. The concepts of change leadership do just that.

While there are many good theories in change management

that can be incorporated into this discussion, change

management is not the missing link. Change management

and change leadership are quite different from each other,

likened to the differences between quality control and quality

assurance, respectively.

While change management is something many companies

are good at, it is oftentimes like driving while looking in the

rear-view mirror. We only manage or control the change while

it is happening.

In contrast, Kotter (Forbes, 2011) describes change

leadership in the following way: “Change leadership is much

more associated with putting an engine on the whole change

process and making it go faster, smarter, more effi ciently”.

Let us now take a look at Kotter’s 8-steps to Leadership

Change and how it can be integrated into a successful Lean

transformation.

Kotter’s 8-steps to change Taken one-by-one, each of Kotter’s steps negates one

or more of the negative forces within the previous force

fi eld analysis, leading to a more positively skewed set of

determinants in a Lean transformation.

Creating a sense of urgency will certainly provide buy-in

across the company as each person begins to understand

the “why” behind the transformation of Lean. Ensuring that a

committed team is in place to develop and disseminate the

company’s vision and strategies throughout the organisation

will drive and support meaningful improvements.

Figure 1: Force fi eld analysis

Q grow: Lean

Figure 2: Kotter’s 8 steps to change


Empowering employees to take ownership of their work and

environment by producing quick wins allows for others in

the organisation to understand the power of experimentation

and make time for improvements. Not letting up and creating

a new culture have a cause and effect relationship in which

long-term goals and actions support and build a culture

in which improvements are part of day-to-day functions at

every level of the organisation.

Successful Lean transformations What then does a successful Lean transformation look like

when it incorporates the successful concepts of change

leadership?

Figure 3 shows a cross-reference of Kotter’s 8-step change

process and the 7 key steps in successfully transforming an

organisation using Lean. While I do not keep Kotter’s steps in

the same order, they are dutifully present and accounted for.

Looking at fi gure 3, it is easy to see how a good Lean

transformation process not only includes the change

leadership steps, but also incorporates a full PDCA cycle as

any good Lean transformation should.

Plan and italicSteps 1 through 4 are all part of the Plan phase of the PDCA

cycle.

Step 1 requires that an organisation fi rst develops a

committed team to defi ne the problem(s) / pain(s) that

exist within the organisation and to guide the rest of the

organisation through resolving some of the issues. Problems

/ pains may consist of environmental, competitive or internal

conditions. The use of traditional strategic management tools

such as SWOT (Strengths, Weaknesses, Opportunities and

Threats) analysis may be used.

Using step 1 to understand the current situation of the

company is the only way to properly move on to Step 2,

which is to develop and defi ne the vision and high-level

strategies of the company. The vision and strategies of the

company become the standard with which we align all other

activities and efforts of the organisation.

Step 3 involves using Hoshin Kanri to guide the organisation

in planning the activities and micro-objectives that will

support the organisation in achieving its high-level strategies

and vision. The use of a tool called the X-matrix is typical

in a Hoshin Kanri implantation (see fi gure 4). The power

of the X-matrix is in being able to assist in the planning,

communicating and carrying out of activities in a simple

manner in which anyone in the organisation can participate

and understand.

Step 4 is a carry-on of Step 3 and uses an approach

called ‘catchball’ to engage lower-level supervisors and

employees in reaching company objectives. It is played in

much the same way as the child’s game of the same name

where a manager ‘throws’ the upper-level objective, or

‘catchball’, down to the lower-level supervisor to ‘catch’. The

lower-level supervisor, with the help of their team, develops

strategies and activities that will help support the manager’s

higher-level objectives (which support the company’s vision

and strategies) and ‘tosses’ their ideas back up to the area

manager. The manager and supervisor then play ‘catchball’

until both can agree on the activities and goals at every level

of the organisation that will help the organisation achieve its

vision. Activities and goals at all levels of the organisation

are documented and managed on lower-level support

X-matrices.

Figure 3: Lean transformation using Kotter’s 8-step change process with 7 key steps for Lean transformation

Q grow: Lean


Do

Step 5 is all about the Do phase of the PDCA cycle.

This phase is often the phase that is most focused on and

jumped to before spending adequate time within the Plan

phase. This mistake can be costly and is one of the most

common errors I see in organisations implementing Lean.

In Step 5, the organisation begins to empower the workforce

to use the tools of Lean to resolve problems identifi ed during

Hoshin Kanri. Future-state Value Stream Maps are developed

and acted upon and kaizen events (small incremental

improvement events) or kaikaku events (radical change

events) are executed.

Quick wins are important here as each successful win

produces the pull for more improvement in other areas and

by other employees within the organisation. This is the step

that everyone likes because success is abundant.

It is important to note however, that without a prioriti-

sation plan for improvements, the Do phase can start

to look a lot like what happens in that game, ‘Whack-A-

Mole’ where anything and everything is a target, and as

soon as one issue or “mole” is eliminated, another one

pops up. Remember that although every improvement is

good, resources are never unlimited and because not all

improvements move the organisation closer to meeting its

goals, they must be prioritised.

Check

While the Do phase typically receives the most focus in

organisations implementing Lean, conversely the Check

phase is most often neglected. This is the second most

common and costly mistake in a good Lean transformation.

Step 6 is where Kotter emphasises celebrating success

while keeping the momentum strong. This step is where

the organisation begins to drive the new behaviours and

practices into the culture, ensuring long-term success.

The successful Lean organisation will develop action-driving

visual controls for the improvements implemented and

implement Gemba walks to monitor performance and

sustainment of improvements. Standard work for Leaders will

be adopted to assure that best practices remain in place no

matter what specifi c person holds each specifi c leadership

position.

As Kotter explains, leadership is invaluable in this step, since

constant effort is needed to keep urgency high and long-term

goals in view. At this stage, it is critical to press harder and

faster than ever before. Be relentless in instituting all the new

changes until the vision is a reality. To do this, you may have

to make modifi cations to systems, structures and policies

that do not fi t well together. You may need to reinvigorate the

process with new projects, themes, and change agents.

Transformation, by nature, is a constantly changing thing that

requires attention, control and agility.

Act

Kotter accurately asserts that culture change comes last, not

fi rst. Culture is composed of behaviours and shared values

within an organisation. Culture change comes only when the

vast majority accepts new traditions created by unyielding

pursuit and successful transformation of the previous Lean

transformation steps.

While cultural development is merely a side-effect of

the accepted behaviours and shared values within an

organisation, it is one of an organisation’s most powerful

forces and can make the difference between a successful

or failed Lean transformation. It is critically important to

determine how to hold on to the new ways of behaving

until they become a part of the culture of the workforce

and are adopted easily by new employees. This can be

accomplished by practising katas (routines that provide

purposeful results like a leader’s standard work), visually

communicating successes, and developing system changes

that support the sustainment of the new practices.

While there is and never will be one best way to succeed

at transforming your organisation using Lean, insuring that

you include proven best practices in change leadership

will surely increase your odds. I wish you good luck on your

Lean journey.

For further information and to comment please contact

[email protected]

ReferenceKotter, J. (2011), Leadership, Forbes, Retrieved January 6, 2014 from http://www.

forbes.com/sites/johnkotter/2011/07/12/change-management-vs-change-

leadership-whats-the-difference/

Figure 4: Hoshin Kanri X-matrix

Q grow: Lean


Q learn: internal Audit, QHSE

Quality Health Safety Environment Manager workshop11 June (Hamilton); 16 July (New Plymouth); 6 August (Palmerston North)

Internal Audit: 7 key differences between auditing and assessment 12 to 13 May (Dunedin); 9 to 10 June (Hamilton);14 to 15 July (New Plymouth)

1. FocusAudit has a compliance focus. When you

need to target organisational improvement

an assessment is better.

2. Prescriptive or notAn audit is prescriptive. For example,

during an audit a question may be asked

to determine whether the daily tool box

meetings are carried out. The audit

checklist contains a list of ‘what’ we are

expecting to fi nd.

3. Pass/Fail or maturityDuring the audit people either comply with the

requirements or they do not – i.e. pass or fail. In contrast,

during an assessment the maturity of the processes are

compared with best practice.

4. 100% score?It is possible to get a perfect 100% score in an audit.

This is because people generally do follow policies and

procedures.

5. Findings The fi ndings from an audit are

non-conformances. An assessment normally

reports on the strengths (i.e. practices that

you should continue to do) and opportunities

for improvement (i.e. where improvements are

needed).

6. Results considered?The results or outcomes of the policies and

procedures are not taken into consideration

during an audit. For example accidents will still

happen in workplaces despite obtaining a 100%

score during previous audits. In contrast 45% of

the total score during an assessment is based on

the outcomes of the organisation’s processes.

7. IntegrationAn audit is confi ned to a particular process or set of

procedures within the audit scope. An assessment

always considers the integration of the process or set of

procedures with other business processes and overall

strategy.

We have listened to the comments from many of you asking

for more tips and hints on how to improve the effectiveness

of your organisation while still maintaining compliance with

the necessary standards required to operate.

The three questions that most often arise are:

How do I target the right process to improve?

How can I conduct more effective audits?

How do I get my senior management to take more

interest in QHSE?

The QHSE Manager course is a hands-on workshop

designed to answer these questions and provide new skills

to enable you to move beyond compliance to continuous

improvement. These skills include learning how to apply

organisational excellence, risk management and measures

to your work. Packaged into just one day, it means that

costs are kept low while causing minimal disruption to your

working week.

For more information and to enrol in the QHSE Manager

workshop please contact Tess Stewart at +64 6 351 4407

or [email protected]

To enrol in NZOQ’s Internal Auditing course please contact Tess Stewart, NZOQ National Offi ce, Tel

+64 6 351 4407 or [email protected]


Q share: Q time

Why I love lead and lag indicators (and you should, too!)

Many of us in the quality, health & safety and

environmental (QHSE) industry report to our

Boards using lag indicators, writes QNewZ

columnist, Craig Thornton.

We tell our Boards how many accidents

occurred over the past month, the hours of lost

time, the number of non-conformances last

month, the number of environmental incidents

year-to-date, workers’ compensation costs, and

so on. We have spreadsheets, logs and folders

simply bursting with this sort of information.

These things are a joy to report – they are easily measured

and counted, and are accurate. They look fantastic in graph

form. They can show month-to-month improvement, medium-

and long-term trends, and can be used to make projections.

Generally speaking, this is the kind of data that Boards ask

for. We are happy to give it to them because it’s so darned

easy. But we are all missing a good half of the puzzle pieces

when we do this.

Lag indicators all show, no delivery Here’s the problem – as their name suggests, lag indicators

look at what has already happened. If you turn off your

critical faculties when you examine

lag indicators, it can look as if your

organisation rarely cares about

QHSE. But in fact, lag indicators can

be collated without your doing even

one single, tiny thing to improve

QHSE in your workplace. You might

have no training in place, no hazard

plans, no safety equipment, and

yet at the end of the month you can

easily generate some attractive-

looking lag indicator data that shows

change over time.

In other words, lag indicators are

barely better than doing nothing.

They report an improvement, but

they do absolutely nothing to make a genuine, actual,

real-life improvement. They can lead to complacency. They

are all show and no delivery.

This is where lead indicators come in.

Lead indicators are active Lead indicators are evidence that you are

actively doing something to improve QHSE in

your organisation, whether it be training, audits or

identifying ergonomic opportunities. Lead indicators

are things you are doing now, which will hopefully

have a positive impact in the future.

Because of this future-focus, lead indicators require

a leap of faith. There is no guarantee that anything

you might put in place will work.

You are going to have to invest money for training before the

effect of any training can ever be seen in the lag indicators

relating to lost time. You are going to have to spend money

on safety equipment before you will see any change in the

lag indicators relating to personal injury. You are going to

have to spend time on doing audits before you will see any

change in the lag indicators for severity of injuries.

Lag and lead indicators are both neededAs you can see, both lead and lag indicators have their

advantages and their fl aws, which is why it is best practice

to use them both.

If you use lag indicators without lead indicators, it will be

impossible to show how you are going to achieve any

improvements over time.

If you use lead indicators without lag indicators, you could

happily be doing lots of busy-work without being able to

show that you’ve achieved anything worthwhile.

One type of indicator without the other is only half of the

story.

Here’s a challenge for you – if your Board has only ever

asked for lag indicators, at your next meeting present

them with lead indicators as well. Explain why. Raise their

consciousness. Talk about the concept of continuous

improvement and the dangers of complacency. This little bit

of initial discomfort will be worthwhile because in the long

run you will have created a better, more effi cient and safer

organisation.


[email protected]

If your Board

has only ever

asked for lag

indicators,

at your next

meeting

present them

with lead

indicators as

well

One gets a good rating for fi ghting a fi re. The result is visible; can be quantifi ed.

If you do it right the fi rst time, you are invisible. You satisfi ed the requirements. That is

your job. Mess it up, and correct it later, you become a hero. — W. Edwards Deming


Q share: LSS

LSS: The measure phase (FMEA)In my March column I covered sample size calculation

in the measure phase of a Lean Six Sigma project; this

column will explain Failure Modes and Effects Analysis

(FMEA) and how it can be used in the measure phase,

writes QNewZ columnist, Mel Thornley.

Defi ne: Defi ne the project – forming a team with

agreed, clear goals and effective sponsorship.

Measure: Gathering data on current performance.

Analyse: Identifying and quantifying root causes of

current performance.

Improve: Implementing performance improvements.

Control: Achieving predicted benefi ts and project

closure.

Introducing FMEA What is it? The long-winded name, ‘Failure Modes and

Effects Analysis’, creates the illusion of a very technical and

complex method. Even the acronym FMEA is quite long!

Scary names aside, the tool is actually quite straightforward

and can be applied to any design, process or situation

where we need to prioritise the factors that drive failure.

I fi rst came across it whilst working in the aerospace industry

in the 1980s where it was used primarily as an engineering

design tool. I next came across it in the 1990s when I

worked for the BMW Group. Out of all industry sectors, the

automotive gets through more FMEAs per week.

What does it do? FMEA is a risk

management tool that quantifi es

risks and then prioritises them for

action. Sound familiar? Those of you

who have conducted hazard assessments at work will have

applied a similar approach to that of FMEA. We identify a

hazard, establish the risk and assess the controls we have in

place. The FMEA takes the same approach with designs and

processes.

We need to recognise that the earlier we consider what can

go wrong with a design or a process, the lower our failure

costs will be. Figure 1 shows the cost impact of delayed risk

identifi cation and mitigation. If we are improving a process

that has got to the in-service stage without applying risk

reduction at the earlier stages of design then we are likely to

have plenty of room for improvement.

What is the FMEA format? Figure 2 shows a shortened

Process FMEA (or PFMEA). The objective is, for any process

step, to calculate the Risk Priority Number (RPN) which

represents the level of risk in that process step. This can

then be sorted from large to small and prioritised for action.

A large RPN means that we have a high risk of failure.

How to conduct a Process FMEACompleting an FMEA is a process in itself and there are

critical elements that need to be observed if the FMEA is

going to be useful:

Step 1: Form a team

The selection of the team members tasked with carrying out

the FMEA is very important. The team must have a detailed

knowledge of the process involved so that the risks can

be appropriately understood. Including a wildcard team

member can be useful though as the ‘stupid’ questions

are often the ones that ‘experts’ are blind to. If an FMEA is

subsequently reviewed then the same team members should

be used to eliminate variability in the interpretation of risk.

Step 2: Process mapping and design

Understanding how the process fl ow works is essential.

We don’t just download the process map from the standard

operating procedure; we visit the workplace itself, i.e. we

go to the ‘gemba’. Experience indicates that if we have 10

people operating a process there are probably at least 10

variations of how it gets done! Ignoring the reality of this just

wastes time and ignores real risk.

Step 3: Collect customer information and process data

To be able to quantify the risks associated with a process we

Figure 1: Cost impact of delayed risk identifi cation and mitigation Figure 2: Process FMEA


Q share: LSS

need facts. Gather information on customer requirements,

complaints, failure to meet specifi cation, breakdowns,

maintenance issues and any other relevant data. Obtain

drawings and schematics along with procedures and

process capability information. All this will help us when

completing the FMEA.

Step 4: Conduct the FMEA

Column 1 - list of the consecutive process steps: Note: A

process step is where a transformation of a product occurs

or where a customer receives additional information or value.

Inspection is not a process step! Inspection simply tells if a

real process step has been performed correctly. If our FMEA

was focused on an inspection process then that would be

another matter.

Column 2 - ‘Potential Failure Mode’: This is anything that

could go wrong with the process. Here we do not make a

judgement about the likelihood of any particular failure mode

but it is the team that draws the line where it considers a

failure mode unrealistic. For example, the team may decide

that the failure mode of ‘a truck driving through the wall and

squashing the Emergency Department’s printer’ is not worthy

of consideration. Of course another team may consider it an

essential element. The point here is that the team decides

and is then accountable for its decisions.

For each process step there can be several failure modes

so a ‘tree’ format starts to emerge with one step leading to

many outcomes.

Column 3 - ‘Potential Effects of Failure’: This is where

we capture the consequences of the failure mode listed

in column 2. Of course there can be many different

consequences so the one-to-many relationship branches out

again. As with the failure modes we have to be cautiously

sensible about how far we go. If the truck squashes the

printer then it is likely that we can’t print patient information

so that would be a rational effect to consider. However, the

effect of ‘not being able to print off my lottery numbers’ might

be considered by most sane people to be out of scope.

Column 4 - ‘Severity’: Here is where we start to quantify

things. On a scale of 1 to 10 how bad would the effect be?

Scoring a 1 would mean the effect is unnoticeable whilst a

score of 10 would mean it was life threatening.

Column 5 - ‘Potential Causes of Failure’: At this stage

we don’t actually have to be certain as we will gather data

to support or reject these later. And again, for each effect,

there are multiple potential causes. Following our truck

theme above, a potential cause could be ‘the truck driver

was distracted by reading the 12 safety warning signs’. We

can use tools such as Cause & Effect Diagrams (Figure 4) to

identify potential causes of each effect.

Column 6 - ‘Occurrence’: We quantify the likelihood of

the causes we have listed. A score of 1 to 10 is used again

with 1 being highly unlikely (<2 in a billion or once every 6+

years) and 10 being highly likely (>30% or more than once

per day). The actual scoring systems used in FMEA vary

according to topic and industry so look around for suitable

examples for your situation.

Column 7 – ‘Current Process Controls’: This identifi es the

controls that currently exist to stop the failure occurring. The

one-to-many relationship is repeated here and the FMEA

document will be growing in length now. A current process

control could be a sign saying ‘Do not reverse a truck whilst

reading safety manuals’ or a printer in a steel-reinforced

concrete bunker.

Column 8 - ‘Detection’: Here we quantify the effectiveness

of our current controls. A score of 1 would mean that we

are able to spot the problem as it is obvious and therefore

contain it before it becomes an issue. A score of 10 would

mean that our control mechanism is ineffective or not present

and the failure is undetectable.

Column 9 – ‘RPN’: Now that we have completed the hard

work of detailing the process failure modes and effects we

can now calculate the Risk Priority Number (RPN). This is

simply the multiplication of the three numerical columns

calculated for each row on the FMEA. The high numbers are

where we have the highest risk to process performance and

these are our priorities for collecting data and fi xing.

Why does the FMEA help us in the measure phase?The FMEA approach highlights areas where the process can

fail and as we are interested in collecting data on process

performance as effi ciently and effectively as possible, the

ability to identify priorities for data collection is essential.

In the measure phase we have the use of cause and

effect diagrams, process maps, customer complaints and

performance information which generate enormous lists

of data to collect. All of that will take excessive time and

resources to collect and analyse. The FMEA provides a

mechanism for shortlisting priority data for collection which

in turn lets us manage our time and resources wisely whilst

preparing the ground for root-cause analysis in the analyse

phase.

This is a simplifi ed explanation of what can be a very

detailed topic with many applications. As with many of the

items in the Lean Six Sigma toolkit, the FMEA helps to direct

us closer to the root-causes and the solutions to the problem.

I will be sticking with the measure phase in my next column

where I will be exploring Measurement Systems Analysis

(MSA) and how process management can be undermined

by the way we monitor performance.

For FMEA templates and other useful tools visit the Lean

Six Sigma Forum at www.thornleygroup.co.nz/forum, and to

comment on this article please contact

[email protected]

Figure 3: Cause and effect diagram (Ishikawa diagram)


Q share: Healthcare

Quality in healthcare: Part 2 – ClassificationIn my March column I introduced medical

devices as a whole work-area in our world of

quality assurance and quality systems, writes

QNewZ columnist, Ian Hendra. So let’s begin

by recapping on the main points from that

column.

Recap Part 1: So how does it all work?In a nutshell, in order to sell products legally, a

medical device manufacturer or distributor has to

be able to show that they:

1. are licensed by the regulator in each jurisdiction where

they supply;

2. understand the hazards and risks that their products

expose;

3. have their quality management systems under control

accordingly;

4. know where all their products went so they can recall

them if necessary; and

5. have a system for alerting the regulator about any

product safety problems….

But the degree of diffi culty here depends on the ‘classifi -

cation’ of the products themselves. Classifi cation is a cool

concept that rates products according to risk and requires

very tight controls for the most risky of products.

Licensing of medical devicesMost developed countries regulate the supply of medical

devices to users, whether the users are retail buyers or

healthcare professionals. The controls around licensing vary

from light – as per here in New Zealand – to a mind-numbing

level of bureaucracy, as per the United States. At the

moment, Europe sits in the middle but the PIP scandal

has rocked their confi dence in certifi cation so ‘swords’ are

drawn. The Canadian system is alright – at the moment –

underpinned by excellent service from Health Canada who

are ready and available to offer swift assistance.

With regard to PIP (Poly Implant Prothèse) as mentioned

in the above paragraph, and what goes wrong when a

manufacturer chooses to fl aunt the rules, have a look at the

Wikipedia article about the subject. The regulators in Europe

seem to be blaming the certifi er…what do you think: can

regulation stop deliberate fraud…ever…?

Getting the device registered Hurdle one starts with the regulator asking what

your medical device is and does.

1. Is there a ‘predicate’? Yes.

If you can identify a ‘predicate’ then it’s much

easier. A ‘predicate’ is another device that

could be made by someone else that does

roughly the same kind of thing as yours. If the

regulator accepts your analysis, you’re good

to go…at least as far hurdle two is concerned

anyway. In the US, the process is called ‘510k’

named after the section in 21CFR.860 that

class up the process.

2. Is there a predicate? No.

If you cannot identify a predicate then you have to go

through a whole raft of clinical evaluations to convince

the regulator to register your product. This is not an

easy process, and the regulator will challenge every

assumption and conclusion along the way. In the US, it is

called ‘Pre-Market Approval’.

Classifi cation of medical devicesIn simple terms there are four levels of classifi cation that

stretch to fi ve in some places.

Level 1= Basic, simple, low potential risk, e.g. surgical

instruments, bandages, gloves

Level 2= More sophisticated, high risk, e.g. diagnostic

imaging, contact lenses

Level 3= Technically complex, higher risk, e.g. orthopaedic

implants, dialysis machines

Level 4= Very complex, potentially very dangerous, e.g.

cardiac pacemakers, radiotherapy machines

Table 1 illustrates how classifi cation works in the main

jurisdictions. Class 1 is split into two areas in Europe and

Australia, while in the US there are only three classifi cation

levels.

That’s enough confusion for now; next time we will get into

what you have to do to get the licences…


[email protected]

Table 1: Classifi cation levels in Canada, EU, Australia and USA

Classifi cation level Canada EU Australia US

1 Class I Class I,

Class I (sterile) &

Class I (measuring)

Class I, I (sterile) &

Class I (measuring)

and Class IIaClass I

Class II

Class III

2 Class II Class IIa

3Class III Class IIb

Class IIb

Class III

4Class IV Class III

Active implantable

medical device (AIMD)


Q share: Leadership

MBWA and Gemba walking: Two sides of the same coinI am a believer in the power of

multi-disciplinary studies and how both

individuals and organisations can benefi t from

tapping into concepts found in different fi elds

of study, writes QNewZ columnist, Siham

El-Kafafi .

When I recently came across several articles

differentiating between the concept of

‘Management by Walking Around’ (MBWA) and

‘Gemba Walk’ and how they serve different

purposes within an organisation (and are talked about

separately), my interest was further piqued. In this article

I will be proposing that leaders can utilise both of these

concepts for the greater benefi t by improving employees’

involvement, and that both these concepts can be used as

part of Leader Standard Work (LSW) involvement to create

an organisational lean culture.

Management by walking around‘Management by Walking Around’

(MBWA) was popularised in the 1970s

by Hewlett-Packard who encouraged

managers to get out of their offi ces and

walk around its offi ces and departments

and mingle with employees. The main

aim was take a closer look at what

actually happens on the ground fl oor of

the organisation.

For the MBWA to be successful it should

be impromptu with no previous intentions

or preparations for it to happen.

Nevertheless, this unpreparedness could be a double-edged

sword because its success relies on the leader’s art

of communication. If the leader transmits the notion of

caring, honesty and genuine interest in their employees,

the outcome will be positive and motivate the employees

because they feel their work is being appreciated, they are

involved and not being taken for granted. On the other hand,

if the leader does not master the art of communication, the

intentions could be misconstrued and backfi re because

the employees are feeling ‘checked up on’, watched and/or

hunted down for any mistakes they commit, which defi es the

whole purpose of the MBWA concept.

An 18-month study conducted by Sara Singer and Anita

Tucker which was published on 31 March 2014 in Production

and Operations Management supported the negative

impact of MBWA. The study investigated the implementation

of an MBWA programme which aimed to improve patient

safety in 56 work areas of 20 hospitals. The study’s results

showed decline in performance. Data analysis revealed that

the nurses felt that senior managers spent too much time

walking around analysing problems and too little time solving

them.

Gemba Gemba, as defi ned by Wikipedia, is a

Japanese term meaning ‘the real place’. In the

manufacturing sector it is referred to as ‘genba’,

or the factory fl oor.

From the Lean perspective genba’s aim is to

go to the place where value is created to best

improve ideas. ‘Gemba-walking’ is part of the

Lean management philosophy and it signifi es the

action of seeing the actual process in situ, or the

place where the process happens. This will then lead to a

better understanding of the work through asking questions

and will give the leader a clear idea about the actual actions

taking place in real time.

MBWA or Gemba? One of the main differences between these two concepts lies

is where the decision-making power lies.

Some claim that one of the reasons for the lack of

success of MBWA is due to the power of decision-

making being in the hands of senior management,

excluding the rest of the employees. On the other hand,

Gemba transfers authority from senior management to

the employees involved in the process.

I believe that both concepts can actually support

each other but this depends on the individual leader:

their background, training, belief in empowering their

employees and their leadership style, which all impact

on the whole organisational culture. However, if this can

be done then both concepts can help create a Lean

culture that involves employees in the decision-making

process.

Furthermore, David Mann from Lean Consulting posited that

effective Lean culture can be created through the Leader

Standard Work such that a leader needs to observe standard

work at each station, update performance tracking of each

process, monitor the start and stop times of the process and

train operators as needed. I believe this can be achieved

through a combination of MBWA and Gemba-walking to

visually highlight the expected versus the actual work. Such

a combination of both concepts reinforces the leader’s

respect for their employees, standardises work processes

and spreads the Lean culture throughout the whole

organisation.

Accordingly, organisations that aspire to have a Lean culture

should see MBWA and Gemba-walking as the two sides of

the same coin.


selkafafi @gmail.com

ReferencesMann, D. (2015). David Mann Lean Consulting: Building Lean Cultures. Retrieved

from www.dmannlean.com on 7.4.2015

Wikipedia (2015). Gemba. Retrieved from http://en.m.wikipedia.org/wiki/Gemba on

7.4.2015

Organisations

that aspire to

have a Lean

culture should

see MBWA and

Gemba-walking

as the two sides

of the same

coin.


Q share: Systems thinking

When risk, quality and conventional management practice collide…

W. Edwards Deming wrote, “Quality is

everyone’s responsibility” and I agree, writes

QNewZ columnist, Sarah Benjamin.

ISO are in the fi fth stage of a six-part revision of

their 9001 Standard. Two of the reasons for doing

this are to build in more of a process approach to

the Standard (rather than a procedural approach,

as I understand it) and to place greater emphasis

of ‘risk-based thinking’. The intention of these

changes is to help organisations prevent

undesirable outcomes. This is very admirable in their intent

and sounds very rational and achievable, but will it work?

Quality and risk linked

ISO saw its birth in the munitions factories during WWII

where the intent was to prevent accidents in the workplace

(explosions, often!) through insistence on procedures

being thoroughly documented and independently checked.

This also ensured quality of output against specifi cation.

Therefore it became an approach that relies on independent

verifi cation of procedures which are typically translated into

the workplace as control of the work through procedure,

specifi cations and audit.

Quality should be designed into the work such that

independent review or concern should not be

necessary, while simultaneously designing out

risk. Therefore the two are inextricably linked:

quality should be built in, not enforced through

a series of ‘inspections’ and ‘hand slaps’ at the

end of a process; risk, understood and genuinely

mitigated, should be designed out.

I have observed in many organisations that risk

typically becomes an exercise in adherence.

Adherence to the standard, procedure or

best practice, and often relegated to a poorly

understood tick box for the front line.

Are we certain that standards, procedures or

best practice guides work for us? How do we

know? How applicable are they really to what

we need to do for the customer? And to what extent is it

inhibiting our ability to absorb the variety which will be hitting

us at the front end of our service delivery?

The method by which we actually understand this is, in my

opinion, typically sadly lacking.

Ask the frontline about service delivery Quality thinking, or risk-based thinking, in my view, will

only prove truly effective when we begin to understand it

in an entirely different way to conventional methods. This is

because it requires a different way of thinking about the work

and those who do the work.

Rather than ‘control’ output, we should aim to continuously

improve it by reducing the variation within. For

this to be successful we all have to be involved

and understand and design for the variation

which our customers bring to the front line. Often

people may essentially want the same thing,

but its delivery needs to vary. Is this true of your

organisation? If you don’t know then go to the

front line, ask them what gets in the way. If they

have to circumvent the system to make it work,

in any way, then that undermines quality and

potentially increases your risk.

Ask your staff if they understand the steps within the

process they are working in; whether they understand

the requirements within it; or what might be needed and

provided in order for the service to be delivered.

How well can they talk in operational terms about quality and

risk? What measures and data do they have in place to help

them understand on a daily basis and how often do they see

their managers in the work with them helping them to solve

these problems?

Knowledge mitigates risk The only thing I have ever found that mitigates risk is

knowledge. But not just of the perceived risk or of the

risks that might generally be associated with

the type of work, process or industry we may

be working within. We should be looking for a

comprehensive data-based understanding of

our own processes, how well they work today, in

reality, and then understand risk in actual terms.

This will enable us to understand the magnitude

of risk (or not) in our own processes.

Often risk mitigation is based largely on

the experience of others, best practice,

benchmarking, industry standards and so on,

without ever really understanding it in relation to

this organisation.

In a typically hierarchical organisation this

happens away from the front line, with process

decisions and changes ‘cascaded’ through to operations

with little or no context or understanding. And this tends to

produce a re-working of the design when it hits the front line,

for a variety of different reasons.

It may not make sense and is seen to simply slow up work,

so we circumvent it or turn it off. This is particularly likely

if we are also monitored and (heaven forbid) incentivised

through achievement of output.

Alternatively, it remains part of the process but is simply

another step to go through without thought, attention or

understanding and no opportunity to further improve upon it.

This is the tick box exercise every time we ‘do one’.

continued on page 18

“If you can’t

describe what

you are doing

as a process,

you don’t

know what

you’re doing.”

W. Edwards

Deming


continued on page 18

Q share: Processes

Good product, poor delivery

Traditionally, quality focused on the quality

of the product. However, my thinking on

this was fi rst challenged when I heard Tom

Peters talk on service quality back in the

eighties, writes QNewZ columnist, Russell

Veitch.

Peters pointed out that the cost of materials

in most things we buy is a small proportion of

the total cost of the product, and that service

delivery was a signifi cant contributor to

customer perception of quality. This was about the same time

‘quality’ started to include a consideration of the delivery of

a service, albeit trying to apply manufacturing jargon and

thinking.

Case study: Time share I recently experienced an episode which I am sure you

will be able to relate to, involving a phone call inviting me

to attend a ‘no-obligation free’ presentation on holiday

opportunities with the promise of a free holiday in America.

It later occurred to me that this was a good example of a

‘good’ product let down by poor service delivery.

‘Time Share’ is a topic that often brings a negative response

from people. Whilst it is not for everyone, I believe there are

many merits to it and I am going to suggest that it is the

delivery of the product that is the problem, not necessarily

the product itself. It is a process that has a number of basic

fl aws.

In telling this story I am keeping in mind two of the quality

principles:

1. Consider work as a process

2. Establish mutually benefi cial relationships with suppliers.

1. Core processes as value chains

From the work of Michael Porter I believe Core processes

are better treated as Value Chains.

Core processes are fi ne if the

whole Value Chain lies within

the one business, but it is now

far more common for the total

delivery process to extend

across a number of separate

businesses, suppliers and

contractors. Ultimately the

customer is only interested in

the value proposition.

Sometimes governments and

bureaucracies focus exclusively

on the process and not the

Value Chain which too often

leaves the ultimate customer

shaking their head in wonderment at how such a poor

outcome resulted.

I like to use Swim Lane Flow Charts (or Deployment Flow

Charts) to represent these complex processes involving

a number of contributors. I have found that within each

swim lane the fl ow of tasks and the consistency of

outcome is usually good. It is when the process

fl ow crosses from one swim lane to another that

problems seem to arise and the sight of the

common goal is hidden or even lost by local goals

and other considerations. This can be due to

different cultures and different management styles.

2. Relationship building

The initial process usually starts with some form

of prospecting to engage potential customers,

be it through purchasing databases of likely

customers, canvassing interested people at travel shows

and seminars, or even cold-calling by telemarketing

companies.

This usually involves enticement with an offer of

something that is relatively cheap to provide but is

seen as valuable to the potential customer. Images of

idyllic locations: white sands, blue water and a lifestyle

of the rich and famous, playing on the promise that

this is obligation-free and worth a great deal of money.

The prime aim of this process is to advance to the next

process.

This is followed by an engagement process where

an agent establishes a personal relationship with the

customer, a ‘friend’ you could trust. Whilst it has not yet

been raised, we all know what is coming next, even

though we said we would not buy the package. First,

your ‘friend’ acquaints you with the enticing positive

aspects of the package. Then an offer is fi nally made, the

magnitude of which is usually a shock. But this is quickly

followed up with a special offer for you, and only you, and

only today. This is a standard sales process that ends

either with a sale or moving on to the next process.

The next process involves passing you on to a ‘senior’

person, often looking highly offi cial, who has greater

authority to make you an even better offer. At this stage

of the process we fi nd the second decision box where

we either sign up or opt out. If we sign up we are passed

onto another process with an accounting-type person

(with little animation) who completes the paper work and

fi nancials.

Opting out leads us through another process where there

are no ‘friends’ and a disinterested person begrudgingly

gives us the keys to the resort for a week.

Discontinuity in the value chainI believe this is an example of ‘Discontinuity in the Value

Chain’ resulting from a lack of continuity throughout the

process. Each of the individual processes of this Value Chain

is well-drilled and followed with very clear outputs that are

certainly measurable in process terms, such as conversion

rate or success rate.

Mostly though, the aim of each process is to get the

customer to the next process, and that is what I think they

are rewarded on, irrespective of the achievement of the

ultimate value proposition. And this is not an uncommon

problem with long Value Chains involving physically separate

In the modern

world of

business…the

management

of the Value

Chain is

perhaps more

diffi cult than it

has ever been.


Q share

processes that in practice are not aligned in their fi nal

outcomes. The outsourcing of processes and the use of

sub-contractors, which is common in many industries, only

exacerbates this.

It takes great leadership and clarity of purpose to overcome

these problems. Purely seeing the next person in the

process (internal customer) as the customer in this instance

can lead to this discontinuity. Leadership and a clear vision

are required to ensure the whole Value Chain is directed to

the ultimate customer and that whilst effi ciencies can be

obtained by addressing the needs of internal customers

(which is very important) they should never subsume the

needs of the ultimate customer.

In the modern world of business where Value Chains traverse

many suppliers, sub-contractors, countries and regulations,

the management of the Value Chain is perhaps more diffi cult

than it has ever been.

Disclaimer: The author of this column is a happy owner

of a time-share scheme where all the contributors to the

Value Chain belong to the one company which seems to be

focused on the needs of the customer. Perhaps I am biased

or just lucky.

For further information or to comment please contact

[email protected]

continued from page 17

If instruction has been poor or unclear to those on the

receiving end – which often happens in conventional training

methods – then we are never really quite sure how well these

things have been operationalised. How many times have

you heard people say “everyone is doing things differently,

there’s no consistency”?

No wonder processes end up bigger than Ben Hur; the front

line gets confused with what to focus on, or how, and largely

ignore ‘it’ if’ it’ is just ‘getting in the way’, and so checking

and inspection increases, yet we still have errors. Only now

we also have a whole level of operational risk built in by our

design and management of the very thing we were looking to

avoid in the fi rst place.

Everyone is involved in process design W. Edwards Deming wrote: “If you can't describe what you

are doing as a process, you don't know what you're doing.”

This means that in order to be successful in designing quality

in and risk out, the entire process must be understood, and

conscious thought and consideration be part of every step

for everyone involved.

How many managers can truly say that this is the state of

front-line working? Or that their own knowledge of the ‘what

and why’ of operations is to that degree?

We continue to spend huge amounts of time and energy

worrying about, waiting for and trying to design out risk, and

wanting quality to increase. But as Taiichi Ohno taught us

with his Toyota Production System, in order to really achieve

what we profess we want from such things, we have to

re-think our approach and application in the workplace.

Risk assurance and quality management have been talked

about for years, often with no signifi cant change or impact.

When we at Vanguard surveyed members of ISO in the

‘90s, most reported that they had achieved little more than

15% of the benefi ts claimed to be achievable, and indeed

many reported an increase in time spent on paperwork and

bureaucracy in their newly-devised processes. While the

processes passed the audit, dissatisfaction was created for

customers. Most of the members surveyed admitted that

they became accredited simply because it was expected by

the industry. I suspect little has changed.

We will not know the impact of the revised ISO for a while yet,

but my concern is that it will just rework the same problems,

rather than design them out.

Isn’t it about time to re-think quality and risk – not just revise

it?


[email protected]

continued from page 16

Quality means … We invited our Central Branch members to tell us what Quality means in twenty words or fewer:

• Consistency, continuous improvement, knowing what the customer wants

• A product/service that consistently meets the needs and requirements of the user/customer

• The product/service is: effi cient; appropriate/customer focused; effective; equitable, accessible; and not a mini!

• Customer satisfaction; meeting expectations; meeting requirements of regulations


Q malcolm’s memo

Alignment and integration

There is a four-stage progression (from

unconscious incompetence to unconscious

competence) often observed in both personal

and organisational learning. We begin not

knowing what we don’t know, and by acquiring

new skills and new knowledge, end with an

advanced level of competence that doesn't

have to be thought about, writes QNewZ

columnist, Malcolm Macpherson.

Most systems of organisational assessment

mirror this progression – from ad hoc fl ying by the seat of

the pants, to high levels of refl ection and self-awareness.

If you are Baldrige-familiar you will recognise this from the

process category scoring guidelines. As organisations

become more complex, and more interdependent, and as

success depends increasingly on the ability to learn and

adapt – to create or survive disruptive forces – integration

and alignment become mission-critical.

So it is important to know what we mean by the two terms,

and to know what ‘good’ looks like.

1. Alignment

Alignment has been defi ned as evidence of all activities

pointing in the same direction.

An organisation is aligned when:

• all staff have a shared purpose;

• priorities are simple and clear – efforts and resources that

move toward the mission always get precedence; and

• there is ‘mission to metrics’ line of sight, and everyone

understands how their day-to-day

work delivers the organisation’s

mission.

Alignment is supported by continuous

communication, which can include

management by walking around,

face-to-face contact with all employees;

regular meetings; print, intranet

and internet, and by incentives and

promotions.

2. Integration

Integration can be defi ned as all

participants rowing in unison.

Tests of integration include all work units using the same

‘language’, measuring activities and outputs against the

same set of KPIs, and sharing learning and knowledge.

Integration occurs when multiple entities behave

as if they were a single entity in pursuit of the

same goal.

In a recent slide deck1 Mark Moon, Head of the

Department of Marketing and Supply Chain

Management at the University of Tennessee,

Knoxville, set out to provide a rubric (a set of

scoring guidelines) for testing integration.

According to Moon there are three dimensions of

integration:

1. Process – systematic actions that achieve organisational

goals

2. Structure – in the organisation-chart sense, evident

through reporting relationships

3. Culture – an organisation-specifi c way of thinking,

behaving, or working. Cultures that inhibit integration are

those where functions distrust other functions.

Moon’s test for integration – effectively an integration audit –

maps subdivisions of his three dimensions against four levels

of maturity – from stage 1 (worst in class) to stage 4 (best

practice).

The resulting 14 by 4 matrix is a comprehensive

measurement tool, which will also identify opportunities for

improvement. It examines business integration in a holistic

way:

• By expanding the conversation beyond process

conformance, and examining the underlying barriers to

true integration

• By focusing on structure, and most importantly, on

culture.

It provides a roadmap for change: the fi nal report serves as

a blueprint that identifi es priorities and articulates specifi c

corrective actions.

The key insight is that industry-best integration is not just

a demanding goal; it is the most demanding of goals. An

advanced level of competence that doesn't have to be

thought about is not easily achieved.

If you are wondering about how your organisation stacks

up, go to Moon’s source document and apply the test (or

email me and I’ll send you my 8-page version).


[email protected]

Industry-best

integration

is not just a

demanding

goal; it is

the most

demanding

of goals

1 www.slideshare.net/AlyssaVallie/from-sop-to-true-business-integration

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CERTIFICATE in QUALITY ASSURANCE – refer Open Polytechnic enrolment dates

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22 September Christchurch08 October Hawkes Bay 05 November Auckland

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BUSINESS SUSTAINABILITY (Manager)13 August Auckland24 September Christchurch

YELLOW BELT LEAN SIX SIGMA

13 – 14 May Wellington17 – 18 June Christchurch23 – 24 September Auckland

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