Is the Pareto Principle Coming Home to Roost?

20 percent of quality pros could be doing 80 percent of the work. The rest? Well...

Published: Wednesday, December 9, 2009 - 05:30

The economy has become a convenient excuse on which to pin the blame for everything—especially job losses. Well, in the case of quality positions, yes… and no.

A sobering thought: Will the Pareto principle (the 80/20 rule) inevitably apply to the quality profession? I think so. It’s time to “connect the dots” for executives regarding the integration of quality improvement into organizational culture. How much longer can we as a quality profession wait?

I did a seminar recently for a state health care agency, and the cuts they had experienced were nothing short of incredible—with quality improvement budgets and personnel bearing the brunt. Think about it, what message does this send to the quality profession about how they’re perceived? Do most executives still see “quality” as an annoying add-on that isn’t needed any more because tough standards with draconian enforcement and old-fashioned individual accountability should do it?

Hey! What about all that statistics and “belt” training I shelled out for?

So what is the quality profession doing to change that perception? They’re adding more tools and creating more fads du jour, promising instant results to attention-deficit executives. Do quality practitioners even recognize that they have to change that perception? From what I’ve seen the last few years, I’m not even so sure that even the American Society for Quality (ASQ) gets it.

Ok… for the 20 percent of you that do get it or are willing to try to change the perception:

The financial meltdown has created a great opportunity; improvement methods may come and go, but the need to improve business performance and the bottom line never goes out of style. Even innovation and growth will eventually create waste and inefficiencies. 

Ron Snee, a respected statistical colleague, claims in a recent Quality Progress article¹ that every organization has a cash cow, and it’s called continuous improvement. Improvement opportunities continually appear and must be addressed for the long-term effectiveness of the organization. A single method does not work for all problems. It’s time to move the focus from “method” (TQM, CQI, Six Sigma, lean, lean Six Sigma, Toyota Production System) to “improvement.”

Snee calls it “holistic improvement:” a system that can successfully create and sustain significant improvements of any type, in any culture, and for any business.

For the remaining 80 percent of you longing for the good ol’ days, they’re gone. There has been too much focus on tactical improvements at the expense of strategic improvements—doing things right as opposed to doing the right things right. The guru vs. guru wars and siloing of quality improvement methods into warring camps must stop. If you wait much longer, you are slowly putting yourselves out of a job. (See “TQM, Six Sigma, Lean and… Data?”)

And 100 percent of us need to remember that people don’t need statistics, they need to solve their problems.

Lessons still not learned

Snee also talks about common mistakes that continue to be made despite what has been learned in the last 30 years:

• Failing to design improvement approaches that require the active involvement of top management
• Focusing on training rather than improvement
• Failing to use top talent to conduct improvement initiatives
• Failing to build the supporting infrastructure, including personnel skilled in improvement and management systems to guide improvement
• Failing to work on the right projects—those that deliver significant bottom-line results
• Failing to plan for sustaining the improvements at the beginning of the initiative

Good data—was, is, and always an issue

Also, getting quality data in the right amount with minimal effort continues and will continue to be a challenge. Data cost money, and it is important to make cost-effective use of data. Important, clearly-defined problems create the atmosphere for well-defined data with the method of analysis thought out well ahead of time. This makes the cost-benefit of the data easier to establish, which makes it easier to obtain support for further data.

What characterizes holistic improvement?

Snee goes further to give seven characteristics of holistic improvement:

• It works in all areas of the business—all functions and all processes.
• It works in all cultures, providing a common language and tool set.
• It can address all measures of performance (quality, cost, delivery, and customer satisfaction).
• It addresses all aspects of process management (process design/redesign, improvement, and control).
• It addresses all types of improvement (streamlining, waste and cycle-time reduction, quality improvement, and process robustness).
• It includes management systems for improvement (plans, goals, budgets, and management reviews).
• It focuses on developing an improvement culture (uses improvement as a leadership development tool).

So, as you plan for next year, take a timeout to assess how far you’ve evolved. Where are you on the following continuum?

1. Connecting the dots. Are you in partnership with your management using some form of a balanced scorecard to translate data into intelligent action at the appropriate level?

• Does your management see quality improvement as the balanced scorecard “learning and growth” strategy that will help the organization execute its strategy?
• Is there an established focus and context and clear results as a rudder to motivate an entrenched culture and prevent it from just coming in, doing what it did yesterday, and going home?"
• Are there only three to five (and no more) strategic initiatives?

2. Critical mass. Would you say that 25 to 30 percent of management is demonstrating more than just a passionate lip service commitment to quality? 

• Do promotions reflect commitment to quality?
• Is there a cultural process focus developing zero tolerance for “blame” and “victim” behavior?
• If not, what are you doing about it?

3. Achieving a quality culture. In observing everyday management culture and meetings:

• Are all employees that have been educated in basic quality improvement tools and philosophy comfortably using its language?
• Is the use of data integrated and statistically based?
• Is immediate personal feedback an integral part of organizational culture if the two preceding points above are not observed?
• Are improvement initiatives given top priority at executive meetings?
• What do schedules, budgets, and meeting agendas telegraph as to values and priorities?

4. Quality as a way of life. Do you routinely observe the following actions in your everyday work? 

• Customer orientation
• Continuous improvement
• Elimination of waste
• Prevention, not detection
• Reduction of variation
• Statistical thinking and use of data
• Adherence to best-known methods
• Use of best available tools
• Respect for people and their knowledge
• Results-based feedback: emotionally intelligent culture

A summary… and a warning

Snee summarizes it well:

“Process variation affects process flow, product quality, and the ability to sustain process performance. Reducing variation must be part of the approach. The bottom line is that improvement can be a very profitable business, with enhanced process performance and customer satisfaction resulting in improved financial results.”

For those of you who would like a practical approach to deeper traditional statistical theory, I highly recommend his book, co-authored with another respected statistical colleague, Roger Hoerl, Statistical Thinking: Improving Business Performance (Duxbury Press, 2001).

I hope this has given you some food for thought as you plan your quality (and job) strategy in 2010. These are the skills that can make you one of the vital 20 percent who will keep their jobs during the next economic crunch. Once again, it is up to the quality profession to be more aggressive in connecting the dots for executives regarding the integration of quality improvement into organizational culture.

Don’t say you haven’t been warned.

Notes

1. Ronald D. Snee.  “Digging the Holistic Approach” (3.4 per Million column).  Quality Progress, October 2009, pp. 52-54.

About The Author

Davis Balestracci

Davis Balestracci is a past chair of ASQ’s statistics division. He has synthesized W. Edwards Deming’s philosophy as Deming intended—as an approach to leadership—in the second edition of Data Sanity (Medical Group Management Association, 2015), with a foreword by Donald Berwick, M.D. Shipped free or as an ebook, Data Sanity offers a new way of thinking using a common organizational language based in process and understanding variation (data sanity), applied to everyday data and management. It also integrates Balestracci’s 20 years of studying organizational psychology into an “improvement as built in” approach as opposed to most current “quality as bolt-on” programs. Balestracci would love to wake up your conferences with his dynamic style and entertaining insights into the places where process, statistics, organizational culture, and quality meet.