How to conquer an Economic Slowdown?
We are in the midst of economic gloom. In India. Across all sectors – construction, manufacturing, services, etc.
The main concern for citizens is jobs. The concern for corporates is a shrinking bottom lines. In many ways they are interrelated.
In this tragic environment, I see an opportunity. But that calls for a drastic change in mindset. …..A graduation from the traditional vertical silo mindset, to a competitive horizontal process mindset. The former is suitable for a shareholder driven strategy, whereas the latter is a customer driven strategy woven into the vertical silos.
Success and Significance
As we all know, success requires a healthy bottom line. This is our focus in vertical silos management..
On the other hand, significance requires that we delight our customers: external; internal; society; Mother Earth. As well as grow the bottom line.
In this economic slowdown, I wish to once again play my broken record titled Cost Of Poor Quality….COPQ, COPQ, COPQ……Please turn the volume full blast!
Consider a hypothetical organization with the following profile:
- Sales: revenue: Rs 1,000 cr
- Capital: investment: Rs 500 cr
- Bottom: line profit: Rs 100 cr
- COPQ: Rs 200 cr.
2022 strategic goal: Double our profit.
Option 1: Double investment; to Double revenue; to Double profit….And pray to God for doubling the customer base.
Option 2: Halve the COPQ by solving the vital few chronic problems. Solving such problems results in quality improvement. This requires no monetary investment. And it does enrich a job profile.
Tata Steel was the first Indian organization to understand COPQ, three decades ago. The pilot projects were localized to the Tubes Division and LD Shop. By 1999, it became the lowest cost steel producer in the world for a couple of product lines. Dr J J Irani captained the change in mindset.
Resistance to Change
In better times, when I asked organizations to make a habit of solving chronic problems, it was considered too time consuming and so they resisted the change.
At a crossroad, pre-liberalization, in 1992, I explained to Dr J M Juran my predicament. He simply responded with: “Pray for the economy to get worse. They will then change”.
Now that our backs are against the wall, organizations should queue up for Qimpro Certified Qualitists to help improve their respective bottom lines.
- Change is the only Constant.
- Why do banks give loans against inventory? Inventory is substantially a COPQ.
- Why is COPQ not reported in the Profit & Loss Statements of organizations.
- Qualitists must make friends with Cost Accountants.
- Dinosaurs and cockroaches co-existed at the start. The dinosaur did not change. RIP. On the other hand, even today, the cockroach adapts to every change!