The Quality Paradox: The Problem with Firefighters

Firefighters trying to save an abandoned conve...

Firefighters in Action: Image via Wikipedia

Everyone admires firefighters.

Whether saving a cat from a high tree, or risking (and sometimes losing) lives battling a forest fire, firefighters universally evoke respect.

The same is true inside the business and organizational world; everybody applauds and cheers for the person or team who comes in to save the day, prevent the business for slipping into disaster or at least preserve what’s left of it, or prevent that favorite customer from leaving.

The problem – and this is no comment on Governor Scott Walker’s and his Koch Brothers supporters battle against unions like the firefighters –  is that in the business world they cost too much. They are used too often.

And if you’re smart, you’ll try to use to use them less too.

There are words and phrases that get lumped together, but that are really not the same. They illustrate the cut-to-the-chase point; cheap and costs less.

Quality – which can have a number of different definitions – can commonly be thought of  “fitness for use. Quality means that the product or service does what is intended to do. Quality is what a product or service costs users if it doesn’t do what it is supposed to do.

Quality costs less. Quality is not cheap. Cheap usually costs more. Costs less does not mean cheap.

Toyota’s folly with car recalls over the past few years – not including cost of good will and cost to consumers in depressed resale values – is estimated to have run the company well over $5.5B and that figure does not include the recall costs incurred since March 2010. Johnson & Johnson, like Toyota a former paragon of quality, has had similar challenges with product recalls. As Ed Silverman, founding editor of Seeking Alpha noted, J & J’s growth has been “mainly in recalls“, not financially. Yesterday J & J announced that the firm’s CEO had his annual performance bonus whacked 45%, primarily due to quality issues at the firm.

David Lawrence, Kaiser’s former CEO, had a mantra which was “Quality costs less.” Why? Lawrence’s conclusion when analysts took a hard look at it, is that investing more money up front in terms of process improvements, systems, hiring and training, etc. resulted in fewer downstream problems. In other words, less firefighting.

James Fitzsimmons at the University of Texas has identified a number dimensions of service quality (lecture PPT docs here). Two of them are reliability (“perform the promised service dependably and accurately” and responsiveness (“Willingness to help customers promptly“). There is a third term Dr. Fitzsimmons uses; service recovery (“satisfying a previously dissatisfied customer and making them a loyal customer.” Three simple Rs; reliability, responsiveness, and recovery.

What’s the catch? Your business cost is less when you operate in reliability mode. Things work they way they are supposed to work. People get what they want. There is an up tick when you move into responsiveness. You devote additional time, attention, and rework to satisfy a need not previously anticipated, or something not built in. There is a huge up tick in cost when you fall into recovery – the space in which firefighters operate. Recovery – which is where Toyota’s $5.5B is being spent – is business hell.

What are the lessons? Investments in reliability pays back in spades. Putting additional time into planning saves money downstream. Spending time and money in things like (Caution: self serving thought incoming) executive coaching with senior new hires so that they start well – avoids incidents like Time CEO Jack Griffin’s firing after 6 months which likely cost plenty in both separation pay and business turmoil. Investment in coaching support for new startup teams and leadership teams does the same thing.

As a business person you are in business to make money. A good way to make money is to avoid spending it for things that don’t add value. Firefighting may be fun. But unless you’re in the firefighting business, it just doesn’t add any value.

Better to invest where you can add value – things that keep you reliable, perhaps responsive, and avoid recovery.

Everyone loves a firefighter in the business and organizational world. You just can’t afford to use them. Far better the boring investments (smart hiring, six sigma process design, backward design thinking, coaching, training, etc.) that costs you some money, and saves you a ton of money in the end.

Life Back West is an occasional set of writings focused on ways people, teams and organizations can be both more effective (doing the right thing) and more efficient (doing the right thing well). More about executive, career and team / leadership coaching services can be found at the “About J. Mike Smith and Back West, Inc.” sidebar or the “Hire Me” tab above. You can also read an online interview with me at WhoHub, as well as participate in my learning community courtesy of KnowledgeCrush.