A new business insight provided by Roger La Salle, innovation thought leader and pioneer of “Matrix Thinking”™
Innovate or perish?
I am not sure how many times I have related the statistic that whereas in the 1920’s the life expectancy of a public company in the USA was some 65 years, by the 1990’s this had fallen to ten years and today is even less. There is a clear message here of the need for innovation and to be constantly moving your products, services and customers to an ever better place. In short, “Innovate or Perish”!
Is ISO 9000 the answer?
ISO (International Organisation for Standardization) was founded in 1947 with the aim of bringing some international standardisation to manufacturing quality and traceability. Many companies have embraced the teachings of the ISO regime and indeed many suppliers demand that their subcontractors be accredited to this standard as there is little doubt there are benefits to be had, at least in the short term.
Some studies have tried to establish a direct link between improved profits and ISO Certification but such a link in many cases is questionable. Some argue that increased profit improvements had come before adopting ISO and that in fact later ISO adoption simply allowed companies to do business with more major companies that demanded their suppliers be so certified. Indeed, one may argue that this is a positive feedback system guaranteed to ensure that ISO remains firmly embedded in manufacturing worldwide.
Some years ago on Melbourne radio one company started promoting its products as those built to the exacting standards demanded by ISO 9000. I’m sure this advertisement caught the attention of many in the manufacturing sector, probably to the detriment of the advertisers who had either failed to realise what ISO Certification was really about, or was trying to hoodwink an unknowing public. In any case, the advertisement was “pulled” within days as no doubt “those in the know” promptly and no doubt vigorously informed the radio station of the factual error of the claim.
ISO Certification does not dictate that products are best in class; its purpose is to establish system and order, to improve documentation and traceability. In essence it put order into businesses that without it may be otherwise somewhat chaotic. That’s the good news.
So what’s the catch?
A study done by Mike Tushman of Harvard Business School and Mary Benner of the Warton School showed that the adoption of ISO9000 may come with a “sting in the tail”. In the years immediately following ISO implementation business outcomes improved in terms of reduced defects, less waste and rework, improved quality and more repeatability in terms of all processes. Customers, especially the bigger ones, loved this and were eager to see all of their suppliers embrace ISO 9000.
Of course, in the wake of this many others followed suit, or in some cases were pushed into accreditation by their upper tier customers. However, after several year of working with the system and order dictated by ISO, the innovation of these accredited companies collapsed. No longer was there so much free thinking and an ability to step outside the boundary dictates of ISO. The result the study revealed was that within five to seven years at the most, innovation output plummeted as these companies became slaves to the ISO regime and stagnated.
What’s the message?
ISO 9000 accreditation may be necessary and indeed essential, especially if you are a supplier to the majors, but beware its downside. The more system and rigour you bring into your organisation, the greater the need to implement some systematic means of innovation into your business as a cultural part of its DNA.
Innovation Circles need to be established, much along the lines of the famous Japanese Quality Circles established by Edwards Demming in Japan in the 1950’s. Quality Circles that lifted the Japanese manufacturing quality from pure junk to the very best in the world. Innovation Circles are analogues to these famous Quality Circles and once implemented with people properly training in the simple art of “Innovation and Opportunity Capture”, you can ensure your enterprise will not become a victim of the very regime that has made it successful.
Observe what is happening to your business as staff work to ISO. Observe too the possible downward spiral of innovation output. If you see that happening and you are a slave to the upper tier suppliers, as most of the auto industry providers are, or were, you may well be “ISOing” yourself into extinction.