A Systems Thinking approach to deliver 

Innovation and Quality

I've analyzed more than 30 organizations and 300 processes to understand how they respond to the need for ever increasing innovation and quality in their products/services and we benchmarked the results of those approaches.  By mapping the innovation scores against the quality scores for those organizations we see patterns and trends in how some organizations systematically improve their capability.  One of the most striking themes is that high scoring organizations tend to use a Systems Thinking approach and do not differentiate between innovation and quality. 

“Systems thinking is a framework for seeing interrelationships rather than things, for seeing patterns rather than static snapshots. It is a set of general principles spanning fields as diverse as physical and social sciences, engineering and management”. (Peter Senge , The Fifth Discipline)

Systems Thinking is a holistic way of dealing with complexity, uncertainty, risk and opportunity and has been applied over the past few decades to understand a wide range of systems.   We found that organizations that exploit this approach apply some key best practices.

Organizations that use a Systems Thinking approach to deliver innovation and quality tend to:

•   Decide what to do (and why) by first capturing and understanding what is really important to their customers.  They use tools/methods already well known, i.e., Kano, QFD, but they rely mostly on actual conversations with their key customers.  While this may sound obvious and easy we have found this to be one of the most significant gaps between organizations that use a Systems Thinking approach and those that do not.

•   Bring their solutions to life by planning, designing and commercializing new products and services using a fact-based, problem-solving methodology such as Six Sigma DMAIC or DFSS.  Using such approaches to drive quality improvement is well understood, but applying the same structured logic toward driving innovation may seem strange.  High scoring organizations tend to think of solving a problem as being similar to grasping a new opportunity. To them the similarity between improving quality and generating innovation is clear.  Bell Labs realized this years ago as they used same approach to quality improvement as they did to assess innovation opportunities. (Juran Institute’s ‘Quality IMPRO 99’, “Innovation and Quality at Bell Labs”, Bill Robinson)

•   Make sure their solutions work for their customers by setting stretch goals and clear measures toward meeting those expectations. They establish long-term performance goals for customer-valued quality and innovation and regularly measure and assess performance against those key areas.

•   Decide what's next by  building a scoreboard for all to see their progress  and constantly optimize ways of communicating with customers.

Innovation or Quality?

Several months ago I was asked to give a Keynote address at a conference sponsored by a Fortune 500 company that designs complex technology and systems for customers around the world.  They specifically asked me to talk about Systems Architecture Design Tradeoffs.  The title they proposed for my talk was “Innovation or Quality”.

My first reaction was to say “thanks, but I can’t give that talk”.  The notion that one had to choose between innovation or quality was 180 degrees counter with what I believe.  I decided, though, that this was an opportunity to initiate a conversation on the dilemma of Innovation vs. Quality.  After many years of working in industry, consulting and teaching I’ve come to realize that, while the belief that quality is the enemy of innovation (or at least tends to ‘stifle’ it) is not ubiquitous it is also not uncommon.

To my surprise, instead of booing me off the stage when I announced that I changed the title of the talk to Innovation and Quality, there was a strong positive reaction from the audience.  Individually they were telling me that they ‘get it’, even though organizationally they seemed not to.

Driving back home after the conference I started to wonder how the notion of “Innovation or Quality” came to be in the first place.

As a systems designer (for more years than I care to admit) I understand that decisions need to made to choose, i.e., trade off, between features that may otherwise appear to be relatively equal in importance.  I know that if I decide to include extra hardware to add redundancy that will increase the reliability of the system that I will pay a penalty by trading off precious system size, weight and power.  I better be very careful in making a decision like that and prioritize the impacts it will have on the customer.  The perceived tension between quality and innovation is a fundamental dilemma that is significantly different, though. 

It would be a rare company that considered the quality of its products or services not to be very important.   On the other hand, conventional wisdom seems to perceive that a focus on quality is in direct conflict with the speed, creativity and cost efficiency required to produce true innovation.  Too much emphasis on improving quality, many believe, will result in the proverbial ‘world-class buggy whip’.

In contrast, without a sharp focus on providing new products and services that are truly ‘fit for use’ customers may perceive the intended innovation as junk.  It’s ‘cool’, but it doesn’t work.

If Innovation and Quality are the proverbial two sides of the same coin, how do we keep of them in synch, or at least balanced, while the world continually demands more functionality/complexity in the products we use? 

It’s easy to see the results of the explosion of technological innovation that has taken place over the last few decades.   The history of one ubiquitous invention is interesting to observe from this perspective. Since the transistor was invented 60 years ago a constant flow of hundreds of thousands of additional inventions and innovations have resulted in continuous improvements to the transistor to the point where Intel co-founder Gordon Moore observed in his now famous Moore’s Law that innovation will continue such that “the number of transistors on a chip will double approximately every two years”.

The trend that’s reflected in Moore’s law can also be clearly seen in the systems we develop.   Only a few years ago, as an example, there was no software in automobiles.  Today, the typical late model automobile incorporates about 10 million lines of code. Even the latest John Deere tractor “has more lines of software code than a Space Shuttle”.

How, then, can we keep quality at a level that’s commensurate with the increase in functionality that is occurring constantly? Does our Capability to Scale Quality equal our Capability to Scale Functionality? What is the Quality equivalent to Moore’s Law?

While there is also a constant flow of improvements to how innovations are developed, e.g., mico- and nano- technology, Agile development, Model-based design, Open-source, Open-innovation, there hasn’t been significant (and certainly not fundamental) improvement to how we ensure the level of quality needed is achieved.

The good news is that, while innovation and quality may appear to be at best orthogonal, they have more in common than just important attributes of customer expectations.  This can be observed and exploited using a Systems Thinking approach.

Best Practice #2: LURN your Customers' expectations

LURN stands for "Listen, Understand, Respond and Nurture".

Of course, the context is once again the Customer (current and future), as well as the marketplace in general. LURN is a continuous system of methods and actions to be your eyes and ears for your Customers.

LISTEN means to listen to your Customers and hear what they really expect from your products/services. Simply ask them and listen to what they tell you. There are several powerful best practice techniques to help acquire such qualitative feedback, including QFD and Kano Analysis.

Once you know what your Customers want/need you should UNDERSTAND how satisfied they are in meeting those expectations. Satisfaction surveys, interviews, QFD, Customer Segmentation are among the common best practice techniques to gain this feedback.

If there are any gaps between what your Customers expects and their level of satisfaction you need to RESPOND by closing those gaps. Best practice techniques such as Customer-impacting metrics, full-stream process management, issue management, quality improvement methods (e.g., Six Sigma, Lean) could be employed to help close those gaps.

Of course, you should constantly be doing whatever you can to NURTURE the relationship you have with your Customers to continue to earn their trust. There are several best practices techniques and actions to put into place to help. Some are common, such as Customer Service, Executive Sponsor Programs, Account Management and Service Level Agreements. Others, though, are extraordinary such as Customer Radar Screens and Systematic Innovation.

Best Practice #1: Focus on meeting your Customers' expectations

What do your Customers' expect(ations) from your products and services?
How do you know?

Are you sure?

Some of the more common general techniques/methods used to understand what customers' want/need include interviews, surveys, focus groups, Kano Model Analysis, Quality Function Deployment (QFD), RAD/JAD and documented requirements.Other, less common, techniques include statistical and visualization methods.

While all of these approaches have their strengths and weaknesses, each will help give a view of what Customers' expect from products, services and support. A best practice technique to find out what Customers' really expect is simply to ask them and listen to what they tell you ... using qualitative information to understand their desires and then using quantitative data to understand how satisfied they are in meeting those expectations.

Beware that some most desired attributes are unspoken and even unexpected by customers. An interesting aspect of these expectations is that it is not uncommon that Customer's will actually grade these initially as "I do not want that feature", only later to say after using the feature that they "Couldn't live without it!". This is why these type of attributes are often called 'Breakthrough".

A new mindset ...You are being measured against companies inside-and outside-your industry that already provide 'out of this world' experiences

It used to be that all we needed to do to make customers happy was to give them a good working product and good service and support.
Now, it's a lot harder to keep our customers happy.

Now they are looking for great product, great service, great price and great support - among other things.

They expect a Great Experience.

And they assess that experience not only on what you provide and what your competitors provide, but also as well as what others provide. Even companies outside of your industry.As an example, not too long ago I took my family to Disney World. if you have ever been there I think you would agree that they go overboard to make you extremely happy.When we got home from that vacation I found out that I had a problem with my laptop, so I spent the night on the phone with (one of the top computer manufacturer's) technicians - not a good experience. The whole time I was comparing the computer manufacturer with my experience at Disney World. While I realized that was not a 'fair' comparison I couldn't help wondering why if Disney could do it, why couldn't they? And that's how your customers think about you.

It's a very small world.

More on Kano Analysis

Below are some references for more information about Kano Analysis, or the Theory of Attractive Quality:


http://www.isixsigma.com/dictionary/Kano_Analysis-263.htm

http://en.wikipedia.org/wiki/Kano_model


APPLYING THE KANO METHODOLOGY TO MEET CUSTOMER REQUIREMENTS:
NASA’ S MICROGRAVITY SCIENCE PROGRAM
MARK C. LEE, NASA HEADQUARTERS
QMJ 97 4, no. 3

Integration of Kano's Model Into QFD for Multiple Product DesignSireli, Y.; Kauffmann, P.; Ozan, E.Engineering Management, IEEE Transactions onVolume 54, Issue 2, May 2007 Page(s):380 - 390

http://innovationandqualitysolutions.com/


Kano, Noriaki, Nobuhiku Seraku, Fumio Takahashi, and
Shin-ichi Tsuji. 1984. Attractive quality and must-be
quality (1982). Summary of paper presented at Nippon
QC Gakka, 12th annual meeting.


IDENTIFICATION OF CUSTOMER ATTRACTIVE AND
MUST-BE REQUIREMENTS USING A MODIFIED
KANO’S METHOD: GUIDELINES AND CASE STUDY
Gérson Tontini
ASQ’s 54th Annual Quality Congress Proceedings

Typical Call Center ‘Quality’ Measures

Typical Call Center ‘Quality’ Measures and Goals



• Average speed of answer: <10 seconds
• Abandoned call rate: <2%
• Busy rate: <1%
• Queue wait time: <60 seconds
• On hold wait time: <10 seconds
• First Call Length: <5 minutes
• First call resolution: >90%, no transfers
• Calls monitored: >10 calls per month per CSR
• …


But, are these Good Enough?
What do you Customers’ REALLY Expect? … How do you know?

Kano Analysis

Kano Analysis, or the Theory of Attractive Quality (Kano et al 1984) is a powerful method to listen to customers and hear what they really expect from products/services.

The approach is based on the assumption that all customers, including ourselves as consumers, classify all features (or attributes) of a product/service into one of five categories:

1) Threshold Attributes

2) Performance Attributes

3) Excitement Attributes

4) More is Worse Attributes

5) Does not Matter Attributes

Performance attributes are those for which more is generally better, and will improve
customer satisfaction. Conversely, an absent or weak performance attribute reduces
customer satisfaction. Of the needs customers identify, most will fall into this category.
The price for which customer is willing to pay for a product is closely tied to
performance attributes.

Threshold (or basic) attributes are the expected attributes or “musts” of a product, and do not provide an opportunity for product differentiation.
Increasing the performance of these attributes provides diminishing returns in terms of customer satisfaction, however the absence or poor performance of these attributes results in
extreme customer dissatisfaction.

More is Worse attributes speaks for itself. Here the more there is of something, say smell, the worse the Customer satisfaction will be.

Similarly, Does not Matter attributes are features that the Customer could not care less about.

Excitement attributes are unspoken and unexpected by customers but can result in high
customer satisfaction, however their absence does not lead to dissatisfaction.

An interesting aspect of Excitement attributes is that it is not uncommon that Customer's will actually grade these initially as "I do not want that feature", only latter to say after using the feature that they "Couldn't live without it!".
This is why these type of attributes are often called 'Breakthrough".

Systematically Deliver the Best Customer Experience

In order to Systematically Deliver the Best Customer Experience
we need to …

1. LURN your Customers’ expectations
2. Set stretch goals and clear measures toward meeting those expectations
3. Establish clear, frequent and consistent communications from senior leaders
4. Use clearly presented data and information to drive decisions & results
5. Apply proven methods and tools for improving
6. Build a Management System, Organization and Culture that have an unrelenting focus on meeting your Customers’ expectations

Listening to the Voice of the Customer

Some of the more common general techniques/methods used to understand what customer's want/need include:

• Interviews
• Surveys
• Focus Groups
• Kano Model Analysis
• Quality Function Deployment (QFD)
• RAD/JAD
• Documented Requirements

Other, less common, techniques include:

• Bayesian decision analysis
• Uncertainty methods
• Design of Experiments
• Meta data analysis
• Visualization Methods
• Other statistical Methods

While all of these approaches have their strengths and weaknesses, they each will help give a view of what Customers' expect from products, services and support.

I believe that the best way to find out what Customers' really expect is simply to ask them and listen to what they tell you ... using qualitative information to understand their desires and then using quantitative data to understand how satisfied they they are in meeting those expectations.