The Psychology of Quality and More

The Final Frontier

~ David Straker ~

The product battlefield | Quality and costs | Business models | It’s the people, stoopid! | A massive waste | The manic fear | The rise of psychology | Mind in the workplace | Bringing it all together | The final frontier

Businesses know all about competition, at the very least from an experiential viewpoint. Ask any businessperson about competitors and they will throw their hands up in horror at the unfairness of it all. Large companies that outspend small companies. Far-Eastern companies where employee costs are a fraction of those in the West. Cartels and tacit oligopolies that sew up channels and block new entrants.

The battlefields of competition have stretched around the globalized world and back into beleaguered corporations, where the battlefront has spread from products and marketplaces back inside the company to costs and business models. In the desperate fight for survival and competitive advantage, sacred cows have been slaughtered and burned.

Yet there is one last frontier which pioneers have been exploring for many years, and which many others have studiously ignored. For those companies which can crack the deep nut of human psychology, there are many benefits to be gained.

The product battlefield

The battleground of competition for many years was in the laboratories and design shops where superior products were developed by legions of mysterious boffins and nerds. If you could dream of a great idea and then build it, then you had a fair chance that they would come in their droves. The product battles have continued to rage to this day, although constantly escalating competition means that success is not as predictable as perhaps it once was.

Many contributions have been made to sharpen this domain. New approaches to creativity and invention have been introduced, from Synectics to TRIZ. The notion of core competencies has been developed to cluster the full range of abilities on which product skills are based. And the seeking after key talent has continued, although perhaps not with at the frenetic pace of the technology bubble of the 1990s.

Quality and costs

With the ‘Japanese Invasion’ of the 1970s and the global quality movements that  followed, the focus moved through product quality to internal cost, and none more so than in the latest incarnation of Six Sigma, where the statistics of Shewart and Deming are taken to new heights. The simple and alluring premise is that if you can measure and hence drive out unnecessary costs, then the savings will go straight to the bottom line.

Some companies have made great strides in this domain, although the report card is mixed at best and controversy still rages over the real cost of quality. With regular reports of 70% or more of such programmes failing to give a fair return on their significant investment, there is clearly further improvement to be made in the house of improvement.

Business models

The Japanese approach also brought with it the Deming Prize, which inspired the Baldrige and EFQM models and awards and, by implication, the design of the business. The dot-com boom reflected in the extreme this thinking of business models as competitive advantage and, although some succeeded, many were simply wishful thinking.

Strategic innovation continues, despite regular declarations that strategy is dead. Fortunately, we know better now.

If we cease to think about how we run our businesses and how we think about strategy, then the dismal result will no doubt be a steady loop back around to the beginning.

It’s the people, stoopid!

Perhaps it has been trumpeted less, but there has also been a third battlefield that started long ago and is now building to a more visible crescendo. This last frontier of competition is in the dimension of human thought, feelings and behaviour. From the humanist writers such as Maslow and MacGregor that every MBA knows, we have long been educated in the importance of the human side of the enterprise, yet only more recently are there signs of a wavefront building in this area.

The competition for customers has been growing for a long time, with the more traditional sales and marketing developing through areas such as branding, loyalty and customer relationship management. The move to get inside customers’ heads, both to discover unfulfilled needs and to inject new ones, continues its onward march, despite a long line of protests that stretch from Vance Packard to Naomi Klein.

People are endlessly important within the company, from the talent in the research lab to the customer-facing people who communicate the brand every day. Perhaps more important still are the managers and leaders, whose decision competence and clarity of communication are essential to keep the wheels of the business turning in the right direction.

A massive waste

In terms of costs to the business, people-related waste is probably greater than many other costs put together. Just consider the number of meetings where nothing happens, or the demotivated people and their ideas that never saw the light of day. The scope for business improvement around people is massive.
In fact many of the problems in other competitive domains are also related to people. The ability to invent is not only about brain power, but also the creative climate we build. Change programmes fail regularly due to lack of commitment in the right places and limited interpersonal skills of people working to create the changes. Even business models that assume people are selfish and have limited motivations end up in self-fulfilling prophesies.

The manic fear

Although much has been done around people, there is a great deal more scope for creating significant competitive advantage through a deeper understanding of what makes us tick, and in addressing the problems that beset our mental functioning.

What has prevented many of us from looking deeper into the mirror is the historical horror we have inherited of anything do to with mental dysfunction. Any problems exposed would quickly lead to shunning and worse, so we brush our neuroses under the carpet, colluding with others to make such things undiscussable.

Still seen by many as ‘soft stuff’, the domain of human psychology is viewed with suspicion and fear and many managers are still in denial about its potential. Yet its day is coming.

The rise of psychology

All around us is rising evidence of the next revolution, where those who dig deepest into the human mind will improve their products, decrease their costs, and design organisations where people happily contribute to their fullest extent.
The psychological barrier is already crumbling, as a look at the numbers of students studying the subject shows. Thirty years ago, psychology was an obscure subject studied by dropouts and doctors. Twenty years ago, psychology was a niche subject. Ten years ago it was being studied by those who could see its place in the future order. Now it is a mainstream subject, and as technology graduates struggle to find placements, those who can work at the human coalface have many choices before them.

Mind in the workplace

Psychology has also reached the workplace, and organisational psychologists can be found in many leading companies. Even the deeper elements such as social anthropology may be found in some places.

Emotion in the workplace used to be faced with vehement denial, but it is beginning to become a legitimate topic. Subjects such as Emotional Intelligence are being used as an integral part of assessments for leadership and management positions. Gender, racial and other differences are being treated with more concern and the emotions therein have achieved greater legitimacy.

Cognitive dysfunction is also being recognized and treated rather than being punished. Counselling is more acceptable than it once was and you may even find people sent to anger management classes rather than immediate dismissal for their outbursts.

Although few executives have their own therapists, a surprising number have the next best thing – a personal coach, many of whom have either formal psychological backgrounds or have studied popular topics such as NLP. ‘Coaching’ is an acceptable metaphor from sports domains, but the underlying subject is clear: the mental functioning of the manager being coached.

Bringing it all together

Towards the end of his long working life, W. Edwards Deming was working on the principle of ‘profound knowledge’, although many of his acolytes did not seem to hear what the grand old man had to say. His basic thesis was that for success in business, we need a deep understanding of three things that interact on many levels: variation, systems and psychology. He expounded the virtues of variation for much of his life, and his lessons now inform SPC and Six Sigma. Systems has been taken up particularly in MIT and popularised by Peter Senge. And psychology, as above, is at last reaching the mainstream.

Competitive advantage comes not just from one approach or another but, as Deming indicated, from a deepening understanding of multiple domains and the applied combinations that that can be derived from this knowledge.

The final frontier

The final frontier is a closer hurdle for some companies than many others. When they leap that last obstacle, the way will then be clear to create a deep and profound difference that gives them a sustainable advantage. What shape those companies will take is not fully clear, but some of the effects of people who have gained a deeper understanding of themselves and other people might be predicted. In particular, a deeper understanding of one another will lead to transparency and trust that cuts through interpersonal transaction costs.
Understanding and resolution of interpersonal differences also leads to greater happiness, and a happier, more understanding workplace will more energetic, focused and productive. Happiness itself will thus be viewed not with suspicion but as a metric of success.

The last frontier is out there. Competitive advantage awaits. Business success awaits. The only question now is who will cross the line and who will be left behind.

References

Chris Argyris, On Organizational Learning, Blackwell Publishing, Oxford, 1992

W. Edwards Deming, Out of the Crisis, Cambridge University Press, 1992

Gary Hamel and C. K. Prahalad, Competing for the Future, Harvard Business School Press, 1994

Naomi Klein, No Logo, Flamingo, 2000

Douglas MacGregor, The Human Side of the Enterprise, McGraw-Hill, 1960

Peter Senge, The Fifth Discipline, Century Business, 1990

Vance Packard, The Hidden Persuaders, Longmans, 1957

David Straker and Graham Rawlinson, How to Invent (Almost) Anything, Spiro Press, 2002