Tag Archives: cost

Quality vs. Innovation: How Much Structure Do You Need? A SAD Lesson

skodaOne of the things I think about a lot is how to balance the structures provided by quality systems and standards, with the divergent thinking and creativity that’s necessary for innovation and continuous transformation. I’m not the only one thinking about this, it seems! Just this week, Steve Denning published a great article in Forbes entitled “The Management Revolution That’s Already Happening” – that surveys several of the most recent additions to the canon of “popular management” literature.

I have entertained the notion, in the past, that perhaps you can abandon structures in favor of a more laissez-faire organization, where innovation is the only focus. You know, trust the people to maintain an appropriate level of quality, and then give them the freedom to flourish and innovate.

After a totally eye-opening experience last week with a rental car, I’ve changed my mind! Quality systems and standards definitely have a place in any organizational system, if only to educate people within the organization about what the baseline requirements for quality are, and how to achieve them. (Now I’m thinking that our challenge as quality professionals should be to implement our quality systems in a very lean way – that is, set up the minimal amount of standards and structures to achieve our desired goal.)

So what happened? Let me start by saying that it had to do with a very SAD car. I’m being literal here… that was the name of the rental car place in Reykjavik where I made my reservation for a car online before I arrived. I thought I was doing the right thing by supporting the local economy! The web site for the rental car place had a fine interface too, so I had no reason to believe that the business was anything less than legitimate. And besides, in a country that has relatively high standards for quality in general, why would I expect anything less?

I arrived at the airport and started looking for the rental car kiosk, but SAD did not have one. None of the other rental car employees had ever heard of them (things were starting out really well here, you see). I finally found a guy who spoke Icelandic who had heard of them, and he said he’d give them a call on his cell phone. That worked! The SAD cars rep said he’d be over in a few minutes. (Not sure how I ever would have gotten the car without this little burst of serendipity and fortune.)

We were loaded into a van, and driven off into a large, remote-looking office complex just southeast of Keflavik. At the very, very back of the complex, the driver takes us to what looks like an old, abandoned airplane hangar with “SAD” written on the door. He escorts us into the “lobby” area – which is an unfinished wooden box in the front corner of the hangar – where I can see several older cars with their hoods propped open, in various states of repair and disrepair. There are four rusty cars outside

He processes my registration and hands me the keys to a Toyota. We walk outside so he can “check for damages” but to be honest, I couldn’t understand how he could tell what the damages were, since the car had lots of dings AND the paint on the front hood was starting to peel off. I pry the creaky driver’s door out of its default position, and nestle into a stinky mess with dry red nail polish smeared on the console. He tells me that we are not required to bring the car back with any gas, points down the hill and says “the gas station is that way,” and points a slightly different direction and says “Reykjavik is that way.” Apparently, this is the official map that SAD gives its renters.

The first thing I noticed when I turned the car on was the “check engine” light. The next thing I noticed was the “low fuel” light. OK, well, I made my bed – now I’m going to have to lie in it. Holding my breath, I inched out of the parking lot, through the office complex, and over the speed bumps – which caused such an aluminum rattle, I was convinced the engine was going to fall out of the car. Fortunately, the ride to the gas station was downhill, so I actually made it.

Unfortunately, it was a Sunday morning, and there was no one at the gas station – AND the automated payment machine was completely in Icelandic. Somehow, I learned gas station Icelandic REALLY quickly, and discovered that it wouldn’t take my credit card because my credit card doesn’t have a PIN. Through the grace of some deity, the pump spit out a couple of magical liters – enough to get me back to SAD where I told them:

I’m sorry. I can’t do this. I am giving the car back to you. Please take me back to the airport so I can start my trip over again, and pretend this didn’t happen!!

The poor kid who seemed to be the only SAD employee immediately started asking the reasons for my dissatisfaction. It was almost surreal to have to explain to him that I didn’t feel safe in a car with a check engine light that didn’t have enough shock absorbers to cushion from bumps in an office complex. He asked what kind of car I drove, and when I told him I had a reasonably new Honda, he said “oh, well that explains it, your standards just must be higher.” Meanwhile, I’m thinking — my standards here basically revolve around SAFE, CLEAN, and RELIABLE. I don’t consider those “high standards” – I consider them CRITICAL TO QUALITY (CTQ)!

And then came the punch line… “well just so you know, we cannot give you a refund even though you pre-paid for five days of this rental.” I told him I didn’t care, and quite frankly I didn’t – my safety was much more important than losing some money. I’m thankful, though, for consumer protection on credit cards. This will be the first time I use it with utter gratitude.

I made it back to the airport. Budget hooked me up with a fantastic little Skoda Octavia (see picture above). Thanks to the contrast of the SAD car, which was (unfortunately) VERY sad, I had even greater appreciation for this cute little station wagon that was a pleasure to drive.

Disorganization and Changing Your Mind are Both Expensive

NOISERon DuPlain forwarded me an interesting post from November 2008 (via @duanegran, I believe) called How much do websites cost? It’s a great comprehensive overview of the different kinds of web sites that can be built – the spectrum of customization, interactivity, and intent that dictate whether a web site will cost $200 or $2 million. But what really struck me about this article was one tiny little section that talks about value, emphasizing the relationship between quality, waste, and the changeability of human wants, needs, and desires:

2.) A small company site that has 5 to 10 pages describing the products/services offered by the company. $500 to $2,000 depending on how prepared you are, and also on how clear in your own head you are about what you want. Disorganization and changing your mind are both expensive.

Disorganization is expensive because it blocks action. When your house is disorganized, you waste time and energy trying to find stuff. When the processes you use in the workplace are disorganized, time and physical energy can be wasted engaging in non-value-adding activities, and mental and emotional time and energy wasted in unproductive communications. Wasting time and energy can generate short-term real costs (for example, moving parts or products around a factory or supply chain can delay time-to-market while costing more in fuel for transport), long-term real costs (e.g. reinforcing negative behaviors that lead to breakdowns in interpersonal relationships, teamwork, or morale) or opportunity costs.

Changing your mind is expensive for the same reason: it either blocks new action from taking place, or it eliminates the value that could have been added by prior work. A task is not actionable unless you have the 1) resources to do the job, 2) the information and interest to complete it, 3) the skills and capabilities to make it happen, as well as a clear idea of what needs to be done, and 4) an execution environment that supports getting things done. Changing your mind can erode #2 or #3.

To reduce the risk associated with development, and to control the costs of the project, find out:

  • How much do you really know about what you want?
  • What essential elements are you pretty sure you’ll still want or need in 3 months, 6 months, 1 year, 5 years?
  • What parts do you have the resources, information/interest, capabilities/skills/clarity, and execution environment to get done now? (I call this RICE to make it easier to remember)

The lesson: to get higher quality and lower costs (that is, greater value), focus on those parts of a project that are least likely to change and do those first. This is, of course, if you have the luxury to be agile (highly regulated environments may impose restrictions or limits). Then stop – figure out what your experience working on those parts tells you about how you can approach the problem more systematically and effectively– and repeat the cycle until you iterate to the desired solution. This is the essence of applying organizational learning to your day to day tasks.