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10:38 pm
January 12, 2011
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The Call For Zero Defects Everywhere

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Word to the wise: Don’t overlook the human factor in this pursuit.

 

The CEO of a global, forward-thinking industrial company is renowned for repeating “Efficiency, Reliability, Safety.” To the uninitiated, these three words seem to express independent operating objectives. Anyone involved in operations management or maintenance, however, knows they are highly correlated and, perhaps, even inextricably intertwined.

Only by acknowledging these kinds of dynamic correlations can managers begin to imagine an optimized state of operations with manageable variables perfectly calibrated to achieve “zero defects.” In truth, “zero defects” is an idealized state of being, with no precedent; however, contemplating the path to zero defects forces us to explore the root cause of imperfections in our processes—an activity that was receiving a great deal of attention throughout large industry in 2010. The unusually high incidence of large-scale industrial accidents in recent years, especially in the oil and gas sector, has prompted corporate boards and management teams to demand institutional commitments to zero-defects processes and procedures. The question we find ourselves asking is whether continuous-improvement processes in pursuit of “zero defects” are enough in themselves to drive efficiency, reliability and safety.

Large-scale, sophisticated industrial enterprises, which represent a small minority of the U.S. industrial base, understand risk correlations so well that independent industrial researchers assign them a special designation. They’re called “Collaborators,” earning their name by correlating the performance of their supply-chain vendors tightly to their own performance metrics. The Collaborator-vendor relationship is unsustainable without continuous-improvement processes that constantly adjust for responses to the marketplace, which are, in turn, constantly informed by the Collaborators’ continuous market-sensing processes.

The designation that researchers assign to those on the other end of the industrial-company spectrum is “Reactors.” Reactors tend to be too overwhelmed by the multi-dimensional variables of large-scale industrial processes to attempt to manage them all at once, or to correlate combinations of managed variables to desired outcomes. Instead, Reactors use independent point solutions to solve problems as they arise, even though these problems may have common origins—problems that are, therefore, highly correlated.

Which kind of company do you think has the greatest chance of approaching zero defects? Which kind of company do you think has the best chance of achieving larger strategic objectives such as lowest unit product cost, highest quality output, lowest spoilage rate and best safety record? Even though the answer is intuitively obvious, we find very few large industrial enterprises actively engaged in correlating a wide range of performance metrics. When it comes to managing production processes, we find that managers fall neatly into one of two camps. Let’s call them the “chaos theorists” and the “faithful.”

The chaos theorists have no vision or faith in a grander scheme in which hewing to the prescribed path leads to a better outcome. They believe operations entails taking risks, that defects are a fact of life, that asset life cycles cannot be materially influenced and that “run to failure” is an immutable law of nature. The faithful believe the opposite. As one customer told us wistfully, “To the (chaos theorists), no argument (for continuous improvement) is sufficient. To the faithful, no argument is required.”

A fascinating paradox
There are few things in life so measurable as an industrial production process. To engineers, such processes should be a feast for trial and error and continuous improvement. Failure modes for all types of machinery can be well defined, accidents can be studied and averted and all processes yield to efficiency improvement. Indeed, continuous improvement presents huge opportunities to build institutional knowledge, competitive advantage and economic opportunity and value. To argue to the contrary is to reject the correlation between value and learning.

Even if these observations were not self-evident, one need look no further than the handful of companies that capture the majority of economic rents in oil and gas, pharmaceuticals, consumer products manufacturing and distribution, and even commercial airlines. The economic winners are not always the biggest, nor the most creative. They are the leaders in continuous process improvement and in how they generate, use and share information—in how they learn and in how they apply learning. With such conspicuous examples of the continuous-improvement pay-off, why are these “faithful” so few, and the “chaos theorists” so prevalent? We find a fascinating paradox in a world largely populated by engineers unable to apply the basic process principles of engineering. Why should this be so?

The human factor
Continuous process improvement is hard. In some ways it runs contrary to the notion of achieving definable objectives, of success as a destination. Continuous improvement implies an unachievable goal, like a horizon forever out of reach. It requires continuous effort and sustained leadership. Continuous improvement also depends on intellectual honesty and accountability. The process can’t improve unless the results—good or bad—are visible and accurate, and the individuals tasked with capturing them are forthcoming. Even where such virtuous behavior can be introduced, it only flourishes in an environment where employees trust managers to use the information to the advantage of the enterprise. In fact, the more we focus on the behaviors required to support continuous-improvement processes, the more we understand continuous improvement as a system of belief based on a basic faith in the ability to drive inefficiency, risk and defects from the system. How often do we find so many virtues concentrated in one place, let alone a workplace?

The obstacle to broad adoption of continuous-improvement processes is human nature. Who embraces work without end? Who really believes that challenging the status quo at work is good for your career? And in how many places is challenging the status quo good for your career? Behaviors and environment are cultural characteristics that are extremely difficult to establish and perpetuate, especially in very large, distributed organizations. Where organizations succeed in establishing trust and belief in a system dedicated to forever asking whether everything can be improved, they rapidly establish positions of outright dominance. There are few more insurmountable competitive advantages than a culture committed to competing against itself, especially when it’s already in the lead.

Virtuous circles (and vicious cycles)
0111cover1The combination of circumstances and personalities required to foster a continuous improvement environment may seem impossibly beyond reach. Yet we know they’re not, because a few very successful companies have achieved leadership positions based almost entirely on continuous process improvement. How do such enterprises achieve culturally driven performance superiority?

The answer begins at the top. “Efficiency, Reliability, Safety” is a statement of belief—a guiding principle. If that’s all the CEO ever says, no one will intentionally stand in the way of any of those words. Thus, the seeds for a certain kind of behavior are planted. Supported by measurement systems and feedback loops, the behaviors may become self-perpetuating, and should they lead to the rewards of success, the behaviors become self-reinforcing. Who leaves a company where success builds on success, where opportunities for improvement and advancement are unbounded and where you can see the impact of your work in the advancement of the company? The answer is “the people you don’t want around.”

Continuous-improvement cultures attract, retain and concentrate talent, and exorcise weak links in a vitally interconnected ecosystem. Where there is always room for improvement, in areas such as “Efficiency, Reliability (and)Safety,” the potential for triggering a virtuous circle of behavior patterns is very real. In contrast, where leaders fail to articulate a system of belief that places the enterprise ahead of the individual, self-preservation creeps in, information-sharing breaks down and learning comes to a halt—the so-called vicious cycle.

Continuous process improvement is more an organic value system than a rigorous process of rules and guidelines. It begins with visionary leadership in pursuit of competitive strategic high ground. It ties every function and activity back to the strategic objective, and finds correlations between variables that inform the systematic removal of inefficiencies and risks. Be it a production process, maintenance strategy or safety standard, the environment encourages challenging the status quo, entrusts employees with advancement of the enterprise and maintains a basic faith and belief in the potential for a better outcome. These are human ideals and behaviors first, and processes second. These qualities and behaviors need cultivating, both through inspired leadership and tolerant, motivated employees. Where these human factors converge, industrial leadership is born, formidable competitors emerge and principles that drive zero defects become
achievable. MT


Burt Hurlock is CEO of Azima DLI, a leading provider of predictive machine condition monitoring and analysis services.

Acknowledgements
The author acknowledges the book Don’t Just Fix It, Improve It! A Journey to the Precision Domain, by Winston P. Ledet, Winston J. Ledet and Sherri M. Abshire for the idea behind the title of this article and related concepts.

About Azima DLI

0111cover2Azima DLI (www.azimadli.com) is a premier provider of predictive machine condition monitoring and analysis services that align with customers’ high standards for reliability, availability and uptime. Azima DLI’s WATCHMAN™ Reliability Services utilize flexible deployment models and proven diagnostic software backed up by strong analytical expertise to deliver sustainable, scalable and cost-effective condition-based maintenance programs. The company’s bundled solutions enable customers to choose comprehensive, proven programs that ensure asset availability and maximize productivity. Azima DLI is headquartered in Woburn, MA, with offices across the U.S. and international representation in Asia-Pacific, Central America, Europe and South America.

For more info, enter 01 at www.MT-freeinfo.com

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