Changing the CTQ (Critical To Quality)

Wonder if you've heard or read about CTQ.  It is a critical part of six sigma jargon and you are unlikely to find anyone who is familiar with six sigma and is not aware of this term.  It's short for Critical To Quality.  However, few people outside the esoteric world of six sigma have heard about this term.  And that's a pity.

For, any executive who is serious about operational excellence, is handicapped if s/he is not using this concept in some shape or form.  CTQs are the internal critical quality parameters that relate to the requirements of the customer. CTQ is the quality, for which customer pays. It links internal processes to the requirements or needs of the customer. They are not the same as CTCs (Critical to Customer), though the two are often confused.  CTCs are what is important to the customer; CTQs are what’s important to the quality of the process or service to ensure the things that are important to the customer are delivered without fail.  For instance, the sound made by closing a car door might be a CTC, while the dimensional tolerances and cushioning needed to produce those conditions are CTQs for the auto maker.  (http://www.isixsigma.com/dictionary/critical-to-quality-ctq/).  In Six Sigma, a quality function deployment (QFD) or CTQ tree is used to map the CTQs to the CTCs.

  Of course, this post is not intended to be a primer for CTQ.  You will find plenty of that on various six sigma websites.  Rather, the idea is highlight and open up for discussion the power of the CTQ in our search for Operations Excellence.  As I said above, CTQ is often used to identify the changes that need to be made in a process to meet customer requirements better, faster, cheaper.  It is typically treated as relatively static -- unless of course customer requirements themselves change.  That's plain vanilla.

I believe, however, the power of the concept is released -- and better realized -- when it is treated dynamically.  What I mean is that Operations Executives need to take the C more literally.  In a dynamic / fast moving environment, whether on the factory floor or in an office, operations tend to lag and lead on different factors resulting in higher variability in output.  For example, after an attack of employee attrition, when the floor is manned by newbies, certain types of errors may be seen more often.  Alternatively, when a different brand of input / raw material is used in a process, it may have an unintended impact on the output.  Such factors are then required to be managed more closely and, possibly, other changes made in the process, other inputs or even in customer expectations to restore normalcy, or stabilize the process.

In such situations, it is highly recommended that the CTQs be revisited.  Yes, the CTC has not changed.  But the change in inputs or their sources has impacted output and unless the focus of operations is shifs, it is not possible to bring the process back on track.  It is in such circumstances that one needs to consider a change in CTQs -- even though the customers or their CTCs have not changed. 

Another opportunity to change your CTQ occurs when you want to move from customer satisfaction to customer delight.  Assume you have already accomplished customer satisfaction and are now looking to delight your customers with new features or a richer experience (which, the customer may not have specifically required).  It would be best to revisit your CTQs at this stage; this time, along with identifying the new feature as a CTC.

I believe this is what justifies using the term "critical". The specific dictionary meaning I would pick for this term in this context would be "of or forming a crisis; crucial; decisive: a critical operation" and "urgently needed: critical medical supplies".  The point is that changed circumstances have made something else critical today.  To bring the same process focus on to the impact of such change, it is important to identify its impact on the output, customer satisfaction and identify different CTQs to focus on. 

Of course, the job does not end with identifying the new CTQ.  What it does is to focus organizational energy on the new CTQ, which gets measured, highlighted and worked upon.  Going back to the example of newbies on the floor, changing the CTQ to, say, "compliance with internal guidelines", will enable a sharper focus on measuring variance vis-a-vis compliance guidelines and enable introduction of re-training, poka-yokes, huddles and the like to ensure the process reverts to normalcy.

To sum up, CTQs work best when they are revisited occasionally -- especially when there are other changes in inputs or suppliers, or when Management decides on adding higher value to the output.

-- Sri
SigMax-e

Customer Service and Brand Promise

I recently experienced a different kind of customer service.  This was at a popular Italian restaurant called Zachary's Chicago Pizza in Berkeley, CA.  The place is known for its ‘Chicago-style deep dish pizza’.  It was not a big restaurant; just one big hall with a parapet wall running all along the side, leaving a narrow lane for customers to reach the cashier’s counter in the far corner.  The same counter serves as the take-out and payment point.

We were asked to wait some 20 minutes.  There were others in line and we fell in line too.  There was no waiting room as such and the waiting customers just hung around in the narrow lane, squeezing themselves against the wall every time someone had to pass by.  Pretty inconvenient, if you ask me.  But the customers did not seem to mind – and importantly, nobody walked away.  They just hung around or stepped outside if they wanted a smoke.

Soon a waiter turned up and introduced himself (“Hi! I’m Joe, I will be your waiter today.”)  He then apologized for the delay and told us that the pizzas normally take 20 minutes to cook and that if we did not mind, we could place our order right away.  We agreed (again like everyone else!) and he promptly handed us a menu each, saying we could order drinks mean time.  We did that too.  The drinks came in a few minutes and, in what seemed to be reasonable time, the waiter appeared and informed us that our table was now ready.  Of course, our order arrived almost as soon as we sat down.  The food was good and we had a good time. 

Compare this with the more typical scenario.  You arrive early or find a long line.  Waiter greets and tells you it will take 20 minutes and asks you to be seated.  There normally is a small sitting place reserved for such situations.  You sit down.  Perhaps the waiter gives you a menu to help you occupy yourself, perhaps not.  You wait for 20 minutes making a call or twiddling your thumbs.  Your turn comes… and so on.

Service Rating

You will agree, Zachary’s did a couple of things differently:
•    Was not too concerned about the inconvenience to waiting customers
•    Focused on optimizing customers’ time by taking their order right there
•    Improved his own turnover by reducing customers’ time at the table – by eliminating time taken to settle down and selecting from the menu
•    Increased working space by eliminating the unproductive ‘waiting area’; instead adding to capacity by substituting it with dinner tables.

Certainly not what most customer service experts and consultants would advise.  So what’s the secret?

To my mind, it really boils down to brand perception.  I think, as Steve Jobs showed us so often, if the brand perception is right, customers don’t seem to mind inconvenience.  In fact, they are willing to go through a lot of it!

Of course, building that kind of brand is not easy!  It needs excellence in an area of the customer experience that matters even more to the customer.  What Jobs and Zachary are telling us from very different industries is that if you have a deep understanding of customers’ real needs (especially unexpressed, or even unknown) and are able to deliver on those needs significantly better than competition, customer’s do not mind inconvenience.

Wait a minute… I suspect it’s even worse.  What Jobs has done is to make the ‘inconvenience’ part of the overall experience.  The exasperation of the typical wait has been converted to the excitement of waiting for that ‘cool gadget’; so it’s cool to sleep on the street to be among the first to own an iPad2!

While not with as much pizzazz (sic), Zachary too achieved similar results.  It make’s no bones about the possible wait.  Here’s a prominent notice it puts up on its website:

There are some preconditions to be able to pull this off, though…
1.    You need to make sure you deliver on the core promise extremely well,
2.    You need to consciously build the brand and make the ‘inconvenience’ a part of the excitement of owning the brand,
3.    The ‘inconvenience’ needs to be carefully managed.  The customer should perceive it as a natural consequence of the popularity of the brand.

 Of course, to make real sense the ‘inconvenience’ should also yield some critical benefit to the business, whether in terms of costs or additional revenue. 

How best, and to what extent, you can leverage the brand to inconvenience the customer and how you benefit from it is the tricky part.  You are the lucky one in a million, if you are able to achieve it intuitively.  For the rest of us who have to look for a tool, I would recommend beginning by mapping the customer experience end to end and then brainstorm on each component to identify areas for delighting and areas for ‘inconveniencing’.

Brand Promise

What would be some inconveniences that could be engineered into some other products and services?

1.    A consultant who is so busy, he is not available for weeks or months, but his advice is so valuable, customers are happy to put up with it.  Think Ram Charan
2.    Patients waiting for hours in the waiting room of a trusted neighborhood doctor (primary physician).
3.    Customers willingly viewing boring repeated commercials for seeing their favorite program on TV…

One way to look at it is to think of convenience as part of the overall value proposition, just like functionality, price, package, access or pride.  By providing one of these values in “delightful” proportions to the customer, you can please other stake holders (e.g., share holders or employees) by shaving off a few points in other values.





- Sri Vadrevu
SigMax-e Consulting

Staying with Operations Excellence...

The last time we were here, I said, "The surprising thing about execution is that it is very, very simple. Any one can do it.  And that is the problem! It is very, very boring."  So how does one handle this situation? 
The first - and simplest - is when an 'activist board' takes control to decide whether the company needs an 'Operational CEO' or a "Visionary CEO" (yes, they are different people).  They then go about hiring the right kind of CEO.  The Operational guy does not get bored with the execution stuff.  S/he revels in it.  They love going to the shop floor, getting involved, meeting the people there, motivating them with coffee or beer.  They pour over reports and ask questions.  They are thinking next quarter, next product launch - and if they really need some visionary thinking, they call in McKinsey - or is it Bain? - whoever.

What if the Board decides they want a "Visionary CEO"?  Well this guy comes up with a new vision, is hopefully charismatic and manages to rally the troops around their vision.  Should the time come for execution, he hires a Chief Operations Officer.

But then a few CEOs manage to do both, i.e., the vision thing as well as getting hands dirty.  How do these people do it? 
Great companies like GE have developed a mantra for this.  They use two broad tools:

1. Dashboards
2. Calendars

Dashboards are standard reporting formats, typically graphic.  They tell the operations story visually and do not take a lot of pages.  They come in slides, instead.  The page layout and orientation shifts from portrait to landscape.  You see less text and more bullets, arrows, graphs, pictures and colors.  You think visually.  This brings the detail more in tune with the visionary's bias for the visual.

Dashboards are not easy though.  They take a lot of time to design.  Even more, to bring to shape.  The CEO needs to sit with her team and be able to identify the vital few metrics s/he wants to track.  They need to be few and yet comprehensive enough.  A Balanced Score Card kind of approach is very helpful here.  It then takes a smart six sigma kind of person to design the actual dashboard templates.  The scene then moves to IT to come up with a system to generate the required data and massage it to fit the template on a periodic basis. 
The good news is that this can be done. 

Calendars.  This is the "Financial Year" kind of rhythm, you find in the Finance Departments of most multinationals.  "If its September, its time for Budget Blues", "February is Performance Review month", etc.  You set up a detailed, enterprise-wide process for key functions and ensure it works like clockwork. 
The idea is to eliminate the 'clutter' of unplanned work taking over your day.  (You never succeed 100%, but you can still do a good job). 
So, there are cycles for all key processes.  The work for them starts on a particular date every year and concludes on a particular day every year - typically by way of a presentation to the CEO or to the Board.  This enables this CEO to stay on top of operational issues, while focusing all the time in-between to his vision thing.

I bet there are more.  Can't think of them right now, though!  If you can, please add here.

Sri

www.sigmax-e.com

"Operations Excellence"

Nice buzz word, that! Never fails to capture the interest of the CEO! Every one seeks Ops Excellence. However, most managers have no clue on how to achieve it. The real reason is, they haven't really explored its meaning in detail. A quick search for the definition of the term on Google reveals thousands of pages and as many approaches! One model I liked took the Malcolm Baldrige National Quality Award as a reference point. That is definitely a good place to start. However, the award considers over a thousand points - way too much for the business we meet with every day. (I have not yet begun consulting with the CEOs of the Fortune-100). To me Ops Excellence has two elements:

• Satisfactorily meeting the requirements of ALL stake holders
• Continuous improvement.

That's it!

So, who are our stake holders?

I think of four:

1. Share Holder
2. Customer
3. Employee
4. Community

Not necessarily in that order. The priority depends on where you are messing up!
I would recommend most businesses should start with this simple model and move forward.

The next question is: "what does each of these stake holders want?"

Often, they know what they want. Sometimes we have to tell them. Let’s start with areas where the stake holder knows what s/he wants. We then check the data to see if we are able to give them what they want. If yes, we go beyond toward 'delighting' them. If not, we identify the gaps and plug away.

Looks simple enough, but this is where the gap between knowledge and execution widens. Up to this point, most business leaders have no difficulty. In fact they know the gaps intuitively. The challenge lies in the next steps.

Most CEOs have not listed out the gaps explicitly. Those who have done that, lack the ability to strategically prioritize them. And finally, even assuming they (or a consultant) did manage to prioritize well; few know how to pursue the chosen priorities simultaneously.

At this point, managers need several skill sets / tools:

1. Ability to identify, measure and set KPIs for each area that stake holders are interested in
2. A performance management process that tracks and measures all round performance
3. A methodology for initiating and establishing a continuous improvement culture, and
4. A determined and consistent management focus on monitoring the process… call this execution.

Items 1 to 3 can be bought. Item 4 cannot be bought and cannot be delegated. It is THE JOB of leadership. This is also the most common point of failure.
The surprising thing about execution is that it is very, very simple. Any one can do it.
And that is the problem! It is very, very boring. It does not challenge your intelligence. It does not get you in to the front pages.
No wonder most leaders hate to do this. They either delegate this or else do it in an inconsistent manner. No wonder Ops Excellence fails.
In upcoming posts, we will look at how some great companies manage to do this…. And how smaller businesses can aspire to learn and practice this.

Sri

www.sigmax-e.com