Total Quality Management: Why it’s even more relevant today than in 1950

By Andrew Gorecki | 25 Jan 2013

Total Quality Management is not widely practiced across the Australian retail sector. However, Retail Directions’ Andrew Gorecki, an advocate for more effective management processes, argues that it could give the retail industry the boost it needs to thrive in the current economic climate.

The mark of a truly effective management method is that it transcends fads and continues to deliver solid results. Total Quality Management (TQM), a scientific approach to managing organisations, is clearly in that category. It revolutionised Japan in the 1950s because it relied on decisions based on facts rather than on opinions. The only price to pay was letting the opinions go and learning to believe the data. Few organisations and few managers in the western countries were prepared to do so, allowing Japan to gain a massive competitive advantage at the time.

Today, matters are even worse. With the emergence of the internet, ever-growing volumes of opinion-based ‘information’ available online completely obfuscate peer-reviewed, factual data. The only positive consequence of this avalanche of pseudo-information is that organisations smart enough to embrace TQM can enjoy even bigger competitive gap, as many of their competitors make decisions based on somebody else’s opinions posted on the internet.

Extraordinary results

US management consultants, led by W. Edwards Deming, first laid down their theories of fact and statistics-based business management methodology in the 1950s. Deming himself taught top tier management in Japan how to improve business processes and when the Japanese diligently worked with Deming’s Management Method (also known as TQM), their gross domestic product (GDP) increased 10 fold between 1970 and 1990. Prior to this, Japanese economy was a basket case, and afterwards it has remained flat.

Imagine what would happen in Australia if our GDP grew from $1,000 billion to $10,000 billion by 2030. But at the current rate of growth we will only get to $1,700 billion; the gap caused by not going for the little ‘extra’ and giving up on the extraordinary, so we can keep our ordinary ways, will be $8 trillion per year.

How to achieve the extraordinary

The power of TQM comes from moving management practice beyond common sense – TQM uses facts, process measurement and statistical assessments, rather than personal opinions, experience-based practices, or arbitrarily set numerical targets. It makes clear distinction between processes and events – it uses different protocols for systemic issues and for incidents. But, most importantly, TQM is not a one-off project – it’s a different management paradigm, an unwavering business-wide dedication to long-term success via structured thinking, continuous improvement and focus on customer satisfaction.

I have the view that one of the key reasons why TQM has not become more widespread in Australian business is that it doesn’t produce instant results typically expected in western culture. You can’t ‘test-drive’ TQM and you can’t expect instant outcomes. With share market-driven businesses, geared around fast growth and short-term performance metrics, TQM doesn’t look like an attractive proposition. Frequent changes at executive level prevent TQM from being deployed too.

Why common sense is no longer sufficient

Stories in the media continually confirm that the world is composed of three sets of people – those who require detailed guidance, those who have common sense and can guide themselves and others, and those who actually understand how the real world operates and achieve remarkable results.  I would argue that the last category comprises no more than one or two percent of the population.

Common sense is obviously important, but not everything can be analysed according to cause-and-effect principle. In the real world not all causes can be identified and some effects are unexpected. Those who understand this are more effective in business and in life. In my assessment one of the reasons why so few people think like this is our culture. Shaped by our 19th century-style education system (developed in Bismarck’s Germany), it is still aimed at creating obedient employees rather than open-minded entrepreneurs. I don’t see any signs of change in this space any time soon.

This is why those who understand and use TQM can gain a distinct competitive advantage.  As it boosted Japan, it can boost your enterprise too. True, a new way of thinking, time, effort and discipline are needed for TQM implementation, but it can result in better employee relationships, improved customer experiences and more robust business decisions. If business operators are prepared to go the extra mile and commit the resources and management focus, TQM will most certainly work for them.

How can you start on this path? Simple: I encourage everyone to get well versed with the original works written by Deming – real eye openers, but don’t expect an easy read. It is a new paradigm.