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Lessons From Peter Drucker

Quality According to Drucker: It’s Not What You May Think

William Cohen, Ph.D.
Posted: 05/05/2011

Quality is a very necessary and important part of the product or service that you offer: whether the product is an automobile or an airplane, potential candidates for a job, or due diligence accomplished by a consultant, attorney, or accountant prior to an acquisition. Yet too many either don’t understand what quality is for their customer, don’t know how to express it as an advantage, or both. Yet quality and its presentation are very important aspects of any business operation: from human resources to marketing and, of course, engineering. Durability is part of quality. So is speed at which your service is provided, and the other advantages you provide above that aren't offered by your competitors. All of these are examples of quality. Or, are they?

It Ain’t Necessarily So


Drucker wrote without equivocations that quality in a product or service is not what the supplier puts in. It is what the user gets out of it. Users want only what they can use and what gives value to them. I emphasize "to them." Value is as they perceive it, not what the supplier may think. Quality is part of that value. Therefore, it is foolish for the seller to spend money, time, and effort in developing quality as he sees it when the buyer may not see it that way at all. Further, it is equally foolish to promote a durable product that will last forever, products or service that are provided fast, or even one that is 100% reliable if that is not what is desired, or if it is not appreciated as something desirable by the user.

I once worked for a company that made oxygen breathing masks for military aviators. They supplied them to the government in quantities upwards of 40,000 at a time. Many companies tried, but no competitor ever succeeded in getting into this market. It was all because of a single valve used in the oxygen mask. No matter how much "quality" the manufacturer built into the valve, a significant number of valves produced failed to perform as specified during quality testing of production batches. It turned out that testing a percentage of valves off the production line in any batch was meaningless. Competitors developed some pretty "high quality" values made of expensive and exotic materials. They were frequently far more expensive than those made by the company I worked with. Yet unfortunately for them, there were still always a significant number that failed their quality control. Consequently they could never guarantee the valves. Yet my company always had a 100% success rate on the valves in the oxygen masks that were delivered to the customer. What was their secret?

The secret was well-guarded, but it wasn’t complicated and didn’t require a higher quality valve than was the norm. The company I worked with didn’t even have any better success rate in production than its competitors. In fact, in many cases my company’s production success rate may have been worse. But this company realized that the government didn’t care whether or not the valves were consistent in meeting production standards. Quality for the government was whether the valves delivered met quality standards, not whether the company could consistently produce a valve which met certain standards. In fact, our production chief told me that he didn’t think anyone in the world could produce valves in such a way that every single valve in a batch met the quality specifications. Yet, except on very rare occasions, every single valve he turned over to the government easily passed government specifications. How did he do it? The solution was simple, but unheard of. The company didn’t test a percentage of valves in a batch to ensure reliability. They tested every single one of the valves sent to the government for use, be they 40 or 40,000 valves. Those that failed they simply tossed out as waste. This was more expensive than if production could develop a valve which consistently passed the test after production, but it fulfilled the customer’s definition of quality, not the supplier’s, and that was Drucker’s point.

Another Kind of Quality


Now, Drucker was not trying to recommend that suppliers offload poor workmanship or performance because that’s what the user supposedly wants: this is a defense one hears occasionally from publishers, television producers, newscasters, or in other industries as to why "quality" products are no longer provided to the public in that particular industry. Sometimes, quality by itself is nearly impossible to quantify although quantity may be part of quality. A surgeon’s quality can be quantified by number of operations. Except under emergency conditions, proper quantifying certainly isn’t the number of operations performed, but rather the number of operations performed successfully. This a different kind of quality, the quality of performance or productivity, and not quality as a benefit, value, or feature.

Drucker went on to state that while one might quantify, and thus measure, performance or productivity even with knowledge workers, that this is not the problem. The problem is the difficulty in deciding on the task of the job being performed. Look at the wrong task in the product or service, and you get the wrong answer. Drucker then proceeded to demonstrate a prime example: public schools in the inner city.

The Problem of Measuring Quality of Performance and Productivity


Clearly inter city schools are, for the most part, not a success story. However, right next to them in the same areas and under the same conditions of crime and poverty, exist private schools. These are not private schools in the sense of boarding schools or schools catering to the wealthy or the elite. Most are religious schools, and even though parents are not wealthy, they scrape together enough money to send their children or gain scholarship admissions. These students come from the same backgrounds as the students going to the regular inner city schools. Yet while the public schools next door complain of indifferent students, crime, and lack of discipline, the atmosphere in these other schools is the opposite.

According to Drucker, while there were many reasons for the differences between these two classes of schools in the same areas, the primary one is how each defines its tasks. Most inner city schools define their tasks as helping the underprivileged. The private schools defined their tasks as "enabling those who want to learn, to learn." Clearly how tasks are defined influences quality, and this is not only true in these schools but even all levels of education. A professor teaching at a state university once contrasted output, as he saw it at his school versus some of the more prestigious schools in his geographical area. Both offered similar degrees. However, he made an interesting observation. "They teach success," he said. "We teach survival." These differing definitions of one’s tasks are true in providing any product or service, and they affect the observed quality output.

Quality a Condition; Not a Restraint


According to Drucker, work performance means quality for many jobs and therefore also describes the output in quality of product or service produced. Moreover, the quantity of results from these jobs may be quite secondary to their quality. However, this is not so simple. There are other jobs in which both quality and quantity together define performance, and thus task definition. Many sales jobs provide a near perfect example. An unfortunately large number of organizations define mere quantity as a definition of a salesperson’s quality – so many units sold, or such and such level of dollars sales reached. However, even this obvious definition of units defining quality of sales needs to be carefully analyzed.

There is an old story of two tired salesmen seated next to each other on a train ride home after a hard day’s work. After identifying to one another that both are in sales, one asks the other, "How did it go today?" "Not so bad responds the individual questioned. I took wholesale orders for over 12 dozen men’s shirts. How about you?" "I sold two," answers the first salesperson. "Oh too bad," his new friend commiserates, "I’m sure you’ll have a better day tomorrow." "It wasn’t a bad day," responds the salesman whose sales were so few in numbers. "I sell locomotives."

However, even this example doesn’t begin to explain the complexity of quality definition, especially for a sales job. Some very adept salespeople whose dollar and quantity figures may be very satisfactory may fail in the long run by not properly servicing the accounts of sales made, and thereby hurting the company or brand’s good name and losing sales to competitors in the long run. Thus, overlooking the fact that it is far easier and less expensive to obtain sales from established customers than to find and convert prospects into new customers.

Quality Requires Two Different Lens


In summary, Drucker knew that we had to look at quality in a product or service we provide in two ways. One way is through the eyes of our user or customer. Only our customer can define what quality is. We do this by looking not at what we value and consider important, but what our customer considers of value, can use and therefore finds important. Once we get that right, we can proceed to measure performance and productivity in that area. Only in this way we can truly optimize quality, and it is the only way that any of us can claim that we provide quality.

William Cohen, Ph.D.
Posted: 05/05/2011