In the Customer Experience for CEOs blog post, we covered how CEOs can monitor customers’ feedback and complaints. When you receive complaints, do you have a quality management system (QMS) in place to help you fix problems so they don’t recur?
CEOs often resist implementing a QMS for their companies. QMS tends to increase bureaucracy and some find it burdensome. However, the costs associated with the added overhead are worth the investment.
When one of your key clients insists that you become ISO9001 certified to keep their company’s business, you may want to comply.
Business Model or Lean Canvas USP & UVP
Both the Lean Method and the Business Model Canvas tout the importance of having a UVP (Unique Value Proposition) or a USP (Unique Selling Proposition). According to these very popular business modeling techniques, every company should know what value it is bringing to its clients with its products or services. It is not enough to add value, you need to do it in a unique way.
Importance of Unique
What make each company special is what it does different from others. That difference should be an integral component of the business model, made obvious to the buyer through its products, services, delivery, and customer satisfaction.
Many CEOs struggle with differentiating their companies from their competitors. In a growing economy or industry, success may consist of merely showing up -- being at the right time, in the right place and offering a needed service. But, when markets get tight and industries face headwinds, lacking a unique compelling advantage will turn your product or service into a commodity. Price wars may follow, eroding your margins and putting market share at risk. How do you shield your company from being commodified?
Most Companies Struggle With Unique
For many small businesses, a unique selling proposition (USP) is hard to establish or maintain. When you think you are onto something unique, all you have to do is search for it online to find that you have been beaten to the punch.
Assuming you were able to come up with a unique product, process or distribution channel, your competition will likely follow. As soon as you identify something unique, copycats pop up. In a global economy, you will have to compete on uneven fields and terms. So how do you create and maintain a USP and fight commoditization and price erosion?
Small businesses by nature of their size are inherently flexible, nimble and quick to react to customers’ needs. Use these qualities to your advantage when prospecting, selling and servicing your clients.
Adopt a QMS
CEOs of small companies with flat organizations can easily define their value chain. According to Wikipedia, the value chain is a set of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service. Companies should look at every step required and seek to increase the efficiency of the chain. As companies grow and add height to their company pyramid, they build more complex processes. The ability to maintain transparency may not be easy. CEOs need to have meaningful authority over all departments. There is no better way to do that than by instituting a Quality Management System, like ISO 9001, to document, govern, regulate and even digitize their value chain.
What is ISO 9001?
ISO 9001 forces each department to say what it does and does what it says. This communication is directed internally to the company’s staff and externally to its suppliers and customers. ISO 9001 requires your entire company to detail its internal processes and how they interlink with each other and with suppliers and customers. Process descriptions should be thorough, teachable, repeatable and measurable. Most important, they are approved by all division managers that are involved.
Document all your processes
Start by documenting all departmental and interdepartmental processes. Don’t be surprised to learn that there may be many incorrect assumptions. The right department leads should be involved to address false assumptions. All departments need to agree on the specified processes so that they can adopt and execute them.
Train Your Staff
Once your processes are documented and approved by all involved departments, test them and involve staff to apply them. Train your staff on these processes and a group of your staff on how to perform internal QMS audits.
Once everyone is trained, allow QMS to function. The time needed depends on your process cycles, however, a three to six-month period is usually sufficient to see meaningful results.
Perform Periodic Internal Audits
Institute periodic internal audits to verify that your team is properly trained and is delivering according to set expectations. The intent of the audit is not to catch mistakes and point fingers, but to gauge the effectiveness of your processes and the training you have instituted.
Track & Address Non-Conformance
When your auditors discover non-conformance, document and measure their impact, track their frequency and address them. If additional training is warranted, schedule as needed. If corrections to the process are needed, evaluate and recommend them. The goal is to eliminate non-conformance from reoccurring.
Measure Key Quality Indicators
Your Quality Management System does not require your company to meet your industry’s highest quality levels; it only requires you to meet the quality levels that you set for your company. It is important that you set your key quality metrics, and that you find a practical way to measure and track them. For instance, you can track customer satisfaction based on the following criteria: Quality of delivered service, timely delivery of service, and meeting the customer’s budget. One way to measure these is via online surveys distributed to every client after a service is rendered or an order is fulfilled.
Perform Risk Assessments
Hold regular quality management meetings to go over non-conformance, training needs, key quality indicator results, needed changes to your processes or assets, and risk assessments.
Performing and acting on risk assessments will minimize major future disruptions to your business. To perform risk assessments, have an honest evaluation of what could go seriously wrong in your operations that would derail your company and cause it harm.
Identify the following:
- What conditions might your company face?
- What is the likelihood of their occurrence?
- Who will they impact and how?
- What will they cost?
- How can you control and manage them?
Detail your plan to address handling them if they occur and what plans you have to mitigate their chances of occurrence. This is a similar exercise as having disaster recovery and business continuity plans. Management should be trained to execute these plans and handle operations in crisis mode.
Implement Continuous Improvement
For your QMS to be effective in the long term, it should facilitate continuous improvement so that your value chain is constantly augmented. With fast changing technology, the digitization of many industries, increasing customer expectations, and constant competitive forces, companies will need to recognize the need for relentless transformation, the implementation of automation, and the constant need to adapt.
Impact on the Bottom Line
Streamlining operations is where companies can have the most impact in their value chain and on their bottom line. But unless you have a process in place to track your operations step by step, identify critical paths and compare your performance against industry norms, how will you know where you can improve? A Quality Management System will put you on a path towards transforming your operations and products.
Operations take up the lion share of expenses. A Quality Management System like ISO 9001 will require you to document your processes and monitor their implementation. It will also help you to identify areas of improvement, track non-conformance and proactively help reduce and eliminate their reoccurrence. It will detail supplier approvals, training requirements and key quality indicators. With all the activities that ISO requires for documentation and execution, you can generate operational metrics that can help you make decisions on what digital strategies are working, where to institute further automation, where to eliminate waste, and where to enable multitasking. This will surely help crystalize and better articulate your USP.
Every company is unique; it either doesn’t know it yet, or it doesn’t know how to articulate its uniqueness.