tirsdag 7. juli 2015

Cost of Quality - part IV (last)

Building a culture for quality

As I said in the previous blog posts, the culture for quality is strongly tied to the implementation of the management system. The implementation of a management system is really about awareness, motivation and involvement for use. “Tough boys don’t read the instructions”, simply said. Hard core project managers snort and fret about processes and procedures and NO-ONE shall come and tell them how to manage and lead their project to success. This type of attitude exist is full degree in many companies and we come up short with our management system when we meet this type of attitude. How can we turn it around?

Well, the management system has to be communicated and sold as an efficient helping tool. Something that each day ensures that you work 10 minutes more efficiently than what you would have done without it. That the idea of “repeatable processes that are repeated gives predictable and consistent results” is within the spinal cord of the organization. That the management system contributes to factual decision making, together with a clear understanding of the risk picture around any assumptions.

When we are building a culture that takes the management system actively in use, and through that creates quality/precision in their deliveries, we need to acknowledge that we are facing a major and heavy change process.
Firstly, this is about communication and leadership. ISO 9000:2000, chapter 2.6 really says it all when it comes to leadership (my comments in italic):


2.6 Role of top management within the quality management system
Through leadership and actions, top management can create an environment (culture) where people are fully involved and in which a quality management system can operate effectively. The quality management principles can be used by top management as the basis of its role, which is as follows:

a) To establish and maintain the quality policy and quality objectives of the organization;
b) To promote the quality policy and quality objectives throughout the organization to increase awareness, motivation and involvement; (these three are equal to implementation, right?)
c) To ensure focus on customer requirements (read “customer” as stakeholder) throughout the organization;
d) To ensure that appropriate processes are implemented to enable requirements of customer and other interested parties to be fulfilled and quality objectives to be achieved;
e) To ensure that an effective and efficient quality management system is established, implemented and maintained to achieve these quality objectives;
f) To ensure the availability of necessary resources;
g) To review the quality management system periodically;
h) To decide on actions regarding the quality policy and quality objectives;
i) To decide on actions for improvement of the quality management system.

Can we get our leaders, the ladies and gentlemen in our Corporate Executive Committees, to take this into their hearts, not just nod and smile, but deeply, truly within the bottom of their consciousness be as engaged, involved, committed to this as me, who am a true “quality aficionado”?

Well, it is actually possible and there are examples out there throughout history about those who have gotten it right. One well known and much published example is, as previously mentioned, Toyota, which is known for their commitment to quality and where this were their number one priority for many years. The culture for quality in Toyota has spread throughout large part of the car manufacturing industry and many books have been written about the subject. It is simple and builds upon healthy principles and fosters a structure and culture for quality. It is a heartfelt wish to deliver with precision every time. Toyota has experienced quality issues in the later years, but that happened after they turned their priority from quality to growth.

Boeing, the airplane maker, implemented Total Quality Management during the big fad in the 90’s. They used the Lean-management principles to systematically avoid waste, as well as streamlining the processes for effect and cost efficiency. The lead concept also contributes by putting into action quality improvement initiatives and reduced costs. Sounds familiar? Isn’t this where we are aiming? I’m not saying we should implement TQM or Lean, but we have to learn from external orientation towards those with success.

To continue with Boeing (this applies to Toyota as well); they have managed to get their people on board. They say it straight; their success is due to “the Boeing people”. But of course, their top management is totally committed – to the degree that their bonus scheme is linked to the criteria from the Malcom Baldridge National Quality Award, which they have won twice! Ask their CEO to talk about quality, or look up their success on the C-17 project, a catastrophe in the making, but successfully turned around using quality- and risk management. 

Their project manager David E. Spong has gotten the credit, and if you want to learn more, ask me to borrow the book “The Making of a World-Class Organization”. I also have a book on the Toyota Way. It is credible that the methodology actually works, isn’t it?

I’d like to end by using a well-known set of principles to tell you how I’ve enabled the creation of a quality culture. I cannot say it too often – top management commitment and leadership is essential for success. ISO has formulated 8 principles that the top management can use to lead their organization towards improved performance. I, personally, am using these as my leadership philosophy, which is for all intent and purposes quality based, it you can remove the word “quality” using just “management” or “leadership” and it is still just as valid. (You can actually do that to most of the ISO9000 series, get good meaning and a forceful set of instrument for any top leader who is not too much fan of “quality management” and “ISO”).

The 8 principles of quality leadership can be used as a means to create a culture for quality. I did this in the latest large investment project I took part in where we ended up with “6 commitments”, who all people in the project relate to as follow-on to the company values.

Then, what are these 8 principles and what do they mean? I do recommend – strongly and if you mean anything about learning more about management systems – to read ISO 9000:2006, just the first small chapters. And when you are at it, read ISO9004:2009 – there is a lot of great learning in it. 

But I’ll go through the 8 principles and say something about what I’m thinking.

The first principle is customer focus. The organization is dependent upon their customers and has to understand current and future needs, meet the needs and strive to exceed their expectations. I’m expanding the term, as do ISO9004, the term customer to be about interested parties, or Stakeholders. We have to be aligned with our stakeholder’s expectations. When we expand the term customer to be stakeholders, it is much clearer on why this is so important. Who are the customers of an oil and gas company? Well, it’s the people and enterprises that buy our energy products. They are important, of course, but far from the only ones who cares about the company or have an opinion about what we do. The stakeholders are individuals and organizations who are actively involved or indirectly affected by the company. Do a small exercise and jot down the stakeholders you can think of from the top of your head. It is a long list, right?

The second principle is leadership. Leaders establish a unity of purpose and direction of the organization. They create and maintain the internal culture by setting objectives, create policy, ensure infrastructure and resources and make decisions based on data and factual information, empower people with commitment, influence and motivation to improve processes and products as well as plan for avoiding unwanted quality costs.
 Leaders create a culture for quality and are proactive in establishing teams with healthy attitudes regarding HSE, sustainability, risk, commercial mindset and with a focus for solutions. As a leader, you are also a stakeholder, and you are essential in giving room and frames to achieve quality and precision in deliveries and success for your team.

The third principle is about the involvement of people. People at all levels are the essence of an organization and their full involvement enables their abilities to be used for the organization's benefit. The organizations that truly have succeeded in turning from a bad trend to a successful result, as Toyota and Boeing, have succeeded because they have been able to speak “the language of things” with the workers in driving the company forward towards success.
As a leader, you need to ensure that best practice is available, known and used. It means that each person must have a well-defined responsibility and authority described for their role and that all improvement happens by use of existing tools, techniques and methods. The multi-cultural aspect also has to be taken into account, if relevant.

A desired result is achieved more efficiently when activities and related resources are managed as a process. This is the fourth principle. In essence, this means that we establish and relate to a management system by identifying, understand and manage processes that are related to each other. It is about understanding and creating the work processes we want inside and outside of the established process areas. It can be useful to map out a work process for singular tasks (i.e.a plan), but the best is to ensure that we create work processes that are repeatable and can be re-used by others to get similar and consistent results.
The process approach is proving to be best when we are planning tasks to be performed. Who does what when? Use the Plan-do-check-act model in understanding the tasks and identify the correct work process(es) for the task(s) that are to be resolved:
  • What is your input, what is the desired output/outcome and what is the purpose of the process
  • Who owns it, who has responsibility and authority
  • Think life cycle perspective when designing the process
  • Think interfaces and relationships/interrelationships throughout the process
  • What resources/roles have to be involved in creating the desired outcome
  • Make it simple!

At this point, it is also the right time to create measurements for the process, making it possible to evaluate the effect and efficiency of the process at a later stage.

Principle number 5 can be a bit tricky to understand, but the point is that all work processes has to be seen in context as one system. We need to identify, understand and manage interrelated processes as a system to be able to contribute to the organization’s effectiveness and efficiency in achieving its objectives. You need to build a common system in a common structure – because it will give the best effect on achieving your company’s strategy and objectives.
A task is best performed as a set of planned, related and dependent processes that the organization controls through the management system. This means that we speak a common language and has recognizability throughout the system. (Note - ISO9001:2015 propose to take this principle out).

Principle number 6, but central to any management system - Continual improvement of the organization’s overall performance should be a permanent objective of the organization.
Continual improvement means that we use relevant, available, recommended best practice and experiences, use self-assessments, independent reviews, management reviews and internal audits to identify areas for improvement. Continual improvement involves three specific tasks:
  • Communication – in any and all teams it has to be effective communication within the team and with the task owner, stakeholders and relevant suppliers to identify problems and opportunities, solve the problems and explore the opportunities.
  • Corrective actions – just fixing a problem is not enough. It is important to analyze deviations to be able to remove the root cause and through that ensure that we have improved, learned and will avoid similar deviations in the future.
  • Identify and act on opportunities – where the well-known PDCA methodology can be applied (Plan-Do-Check-Act)

Risk management is also about opportunities, as much as threats. Risk management is part of the continual improvement, because we seek experiences, see opportunities and threats and act accordingly. This creates new insight and learning that is transferred back to the processes.
If we again look at PDCA, the last step is “Act” which can be seen as “evaluate results”, where “learning and improving” goes back in loop to “Plan” or to “identify requirements” and indicates through this an active attitude to continual improvement when and if we have found better ways of solving our tasks.

Effective decisions are based on the analysis of data and information, this seventh principle says. I tie this too up against risk management, out of the data we have available and visualizing what is missing and the assumptions made related to the agreed decision criteria. It is important to keep traceability to reports, logging of results and to register quality activities (=record = stating results achieved or providing evidence of activities performed) to see performance and progress. Recording of quality activities is to document all work processes executed, activities and products/deliveries based on requirements and expectations from task owner. In some contexts we’ll be able to use measurements from agreed quality controls, and have good quality assurances on the decision basis, but it is vital that the people executing the task ensures that the full, total and honest basis is in place to ensure good factual decisions.

The eight and last principle says something about that the organization and its suppliers are inter-dependent and a mutually beneficial relationship enhances the ability of both to create value.
We shall and need to follow-up our suppliers to be able to be secure that they deliver in accordance with our requirements and needs and our ordered scope of work. The degree of follow-up has to depend on the risk level and the size of the procurement – an order of ball point pens have significantly less risk than an EPC contract on an investment project. Nevertheless, a mutuality in the cooperation between us and our suppliers leads to creating more value for both parties.
We stand for a responsible and adjusted risk based follow-up, using quality control activities such as audits and other examinations, we are open about risk and provide clear and open communication lines also to bring forward improvements for all parties.

Closing remarks
To wrap up, handling your quality cost is about creating a structure and culture for quality, ensuring simplification and really learn from where we go wrong. It is my belief that if we manage this, we will see it on the bottom line in our economical results. Good luck and thanks for reading.

ISO 55000-series
ISO 9000-series
ISO 9004
Being the quality culture executive, leaflet by Philip B. Crosby
Toyota Culture, Liker Hoseus
Effektive prosesser, presentation
OGP-IPIECA Guidance Document, OGP report 453, Operating Management System Framework and OMS in Practice
Organisatorisk læring, sluttrapport fra delprosjektet “Organisatorisk læring”, Delleveranse til prosjektet “Oppføling av Gullfaks C – 06”, Internal Statoil report
The Statoil book
ISO/TR 10013:2001 Guidelines for quality management system documentation
Project management success with CMMI, James Persse

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