In the October issue, we announce the winners of this year’s National Housing Quality Awards: gold award recipients DSLD Homes and EYA, and silver award winner French Brothers.
At a recent conference, somebody asked me if there is a downside to quality. Great question. Can a total focus on quality actually hinder a company? My answer: Absolutely!
|Contact Scott Sedam
via e-mail at scott@TRUEN.com
At a recent conference, somebody asked me if there is a downside to quality. Great question. Can a total focus on quality actually hinder a company? My answer: Absolutely! Examples are all around us. One I have seen many times is an overblown focus on “zero defects.” As I am wont to do, let’s first consider a couple of examples outside of housing. The first one is personal.
I was one of those “late bloomers” in high school. I started my junior year at 5 feet, 4 inches and 95 pounds. Eighteen months later I was 6-4, and I eventually tipped the scales at 200-plus pounds. That, along with contact lenses and a mint-condition 1966 Mustang GT, dramatically changed my status on the local scene. Then I went off to a “name” college — one of three kids in my class to go out of state. That’s prestige!
I came back for Christmas break as a freshman and out at the new mall ran into Patty Baumer. She didn’t recognize me at first. Now, Patty was in my mind about the hottest girl ever to grace the halls of my high school. So much so that I never would have thought of asking her out. But that was then. Now, brimming with confidence in my new image and almost-new car, I invited her to accompany me across the state line, where as an 18-year-old you could drink enough 3.2% beer to make you think you could dance.
Patty enthusiastically accepted, instructing me to pick her up at 7. Somewhat in shock, I raced out to my car, having just enough time to run home, shower, change and slap on some English Leather (some of you remember). On the way home, disaster struck. The front U-joint on the Mustang blew apart, dropping the drive shaft, leaving my beautiful steed hobbled at the side of a country road. This was not a quick fix.
Time was slipping away when a neighbor saw me jogging down the road and offered a lift. I was praying that my parents would still be home and there would be a car to borrow. The neighbor dropped me off, and as I rushed toward the house I noticed two cars in the drive-way. In the front was my mom’s very cool, 3-year-old Chevy Malibu. It was already showing rust spots and recently had been smacked on the left rear fender. It wasn’t an SS model, but somehow she ended up with the 396 engine and a decent stereo. It wasn’t perfect, but it would do just fine for Patty.
Behind my mom’s car was my dad’s brand-spanking-new AMC Gremlin. You remember the hideous green one with the fat gold stripes up the side? Three-speed on the column. Yikes! My dad was actually a pretty with-it guy, but he hated cars — and he was cheap. He had been a hot P-51 fighter pilot in the big war, and after he flew those 1,200-horsepower beasts, nothing on the ground interested him. He bought whatever was the best deal. He didn’t care what it looked like or what anyone thought.
In the living room stood my parents, who were about to leave for dinner. As I breathlessly explained my predicament, my dad graciously offered the keys to his Gremlin. “Here,” he said, “take my car. Mom’s is dirty and running a little rough.” I froze. Looking pleadingly toward my mother, I could see her amused look. She understood the problem but wasn’t about to rescue me. I looked my dad right in the eye and said, “Dad, it’s Patty Baumer!” He started to ask what that had to do with anything, but then a knowing look came over him. “You mean that Patty Baumer, the cheerleader? You’ve got a date with her?” Dad had been to enough high school games that he, along with every other 50-year-old man, I’m sure, had noticed her. “I see what you mean,” he said. “Better take the Malibu.” I made it to Patty’s at 7:05, and we had a, well, rather eventful evening. But that’s for another time — this is a story about quality, believe it or not.
I told this tale years ago to a college buddy now with Chrysler but formerly with AMC before the merger. At the time, he was being force-fed the zero-defect philosophy from the Crosby Organization. “That’s a perfect story about the problem with zero defects,” he said. He then made the point in a way I never had considered: “For the market need you presented, a Malibu with 10 defects was infinitely better for the task than a Gremlin with zero defects.”
That was a revelation. It didn’t matter one bit if the Gremlin was perfect. It was not, as Dr. Juran used to say, “fit for use.” If you prefer Dr. Deming, go with “failed to meet customer requirements.” The Gremlin was a dumb, ugly, terminally uncool car. It was clearly not fit for use when it came to Patty Baumer.
A current and painful example of this phenomenon can be seen at my former employer Motorola, one of the first (and well-deserved) winners of the Malcolm Baldrige National Quality Award. Motorola is also a leader in this country in the Six Sigma movement. It was and still is phenomenal at quality production — as close to true zero-defect production as any firm in America.
So what happened? Motorola missed the market — that simple, and that costly. After dominating the cell phone business with more than 80% market share, it was way late on the product everyone wanted. When Nokia went digital, Motorola insisted on perfecting analog. Motorola’s share now has plummeted to less than 30%. Nokia rules. The result was, for the first time in Motorola’s history, massive layoffs and dramatic deflation of its stock price. The company is shellshocked. The lesson? A digital phone with a few defects was greatly preferred over a zero-defect, Six Sigma, technically perfect analog phone.
Does this happen to home builders? Not many have approached anything like Six Sigma, but I have seen people lose sight of the big picture while getting hung up on the number of items on the quality assurance walk. Same thing with suppliers, for that matter. Now, I’m a quality geek. All else being equal, give me zero defects. But in your quest for the perfect house, you’d better not forget to build what the customer really wants. The best example of this that I know is a builder in Toronto, a market comparable to Phoenix and Atlanta in size. This builder is tearing up the market compared with the competition, and there isn’t an observable difference in quality among the top builders. His secret? His stuff is just drop-dead beautiful. His competition’s stuff looks like Salt Lake City in the 1960s. Well-built, but boring beyond belief.
The bottom line is that you have to do both — build the quality in the type of product people want. People will no longer accept pretty if it won’t hold up. But remember, whether it’s houses, cell phones or first dates, zero defects by itself only gets you to the plate. Hitting a home run takes the whole package.