by Douglas Dawson, Shingo Licensed Affiliate, Leg Up Solutions
We live in a world that is inundated with standards. Though standards are ubiquitous to our existence, they are also necessary. Without standards, safety in automobiles would be arbitrary. Manufactured food would not be as safe as it currently is. Without standards, anyone could market pharmaceutical products on assertions of safety, quality, and efficacy. We understand, accept, and even appreciate standards. But what about the importance of having a standard for organizational excellence?
Regulatory Standards
As mentioned above, there are number of standards from a regulatory perspective. These standards are put in place to protect the public interest. Many of them have come from issues that have arisen, the data for which indicated that with no standard in place the public interest would be negatively impacted.
Note the use of the word “data.” These standards are not arbitrary. Data currently is and most likely was used to create these regulatory standards that are codified in the (U.S.) Code of Federal Regulations. (Other countries have their own regulatory agencies.) It could be, and likely was, argued by various parties of interest that the data was too harsh or not harsh enough. Such arguments led to a mutually (mostly, you cannot please 100% of the people 100% of the time) and acceptable compromise. Regardless of how they came to be, or the emotions involved in getting there, the standards were established.
Certification Standards
The American National Standards Institute (ANSI), a private non-profit organization that oversees the development of voluntary consensus standards for products, services, processes, systems, and personnel in the United States, coordinates U.S. standards with international standards so American products can be used around the world.
It is largely because of ANSI that the electrical outlets in the United States are all the same and that the safety shoes we wear can withstand impact of a certain intensity. Although not regulatory in nature, agencies such as the Occupational Safety Health Administration (OSHA, in the U.S.) rely heavily upon the standards ANSI develops with respect to safety—for the people who daily use safety apparel and devices around the world.
ISO is like ANSI, but with respect to international standards. Less concerned with products, ISO focuses on systems and processes. Most often we think about ISO with respect to Quality Management (ISO 9001) or Supply Chain (ISO 28000). ISO only establishes the standard, whereas independent third-party organizations audit organizations against the standard for which those organizations wish to certify.
Organizations wanting to establish their ability to meet or exceed a standard must first ascribe to the standard, then modify their systems and processes to meet or exceed those standards, and finally be assessed by a qualified independent third party that certifies that they meet the standard. Sometimes it is an iterative process to achieve certification of the standard and then to maintain the standard as it evolves and changes with the emergence of new data.
Achieving and maintaining certification makes the organization more desirable to do business with than competitors in the same space. Not only does certification help ensure reliable and efficient systems, it also provides a competitive edge, which can be a financial boon.
Standard Work
Most organizations understand the value of standard work, though they may not refer to it as such. They have procedures, work instructions, Standard Operating Procedures (SOPs), formulas, recipes, etc. One reason for standard work is that it can be measured. If it can be measured, then organizations can determine to what degree each replication of the work varies from the standard. Control or run charts can be established that enable team members to strive toward and adjust their performance so that output is more congruent with the standard. This, in turn, can drive improvement efforts to reduce cost, increase profit, or both.
Organizational Excellence as a Standard
If we understand standards from a regulatory, certification, or operational sense, why do we not understand and accept that organizational excellence is not something that can be asserted? Why do we not accept that a standard exists by which performance of the enterprise, or individual sites within the enterprise, can be measured?
The simple truth is that it takes a long time to turn a big boat. There are many organizations that appreciate the Shingo Model for its breadth and depth of addressing sustained business results. They send their executives, managers, and team members to Shingo workshops with the intent to educate them and infuse the Shingo Model into their respective cultures. Yet organizations and their leaders do not understand the nature of the Shingo Model and the Shingo Prize as a standard of organizational excellence to which they can compare themselves and be measured.
One reason is that they look at the cost of assessment for the Shingo Prize and see it as something that would be “nice to have.” However, within the same circles, preparing and measuring against regulatory, certification, and work standards is essential to the business. Shouldn’t challenging for the Shingo Prize and being measured against the Shingo Model be a business imperative as well?
I postulate that it is because there is no perceived payback and that it is not mandated like regulatory standards are. It is then perceived as to “nice to have.” This is largely driven by the idea that in business, we think in terms of investment and results, in that sequence. We invest in capital projects. We analyze the costs associated, as well as the assumptions with respect to increased revenue and/or cost savings to be realized from that capital investment. We have an expected time frame in which we expect to recover the cost of the capital expenditure. We launch or install the capital investment and then closely monitor the results, determining incrementally over time whether we are on track to produce or save revenue based on the assumptions when the project was implemented.
Organizational excellence is different because the savings and revenue results are incrementally built and established up front. With operational discipline and through the insight of executives, managers, and team members and their engagement with the Shingo Model over time, organizational excellence ensues. The Shingo Institute has thirty-two years of data showing the significant reductions to cost and contributions to profitability that come through organizations that embrace the Shingo Model. But the results come before the investment is being measured against the Shingo Model. Costs have already been reduced. Revenue and profits have already increased. An assessment for the Shingo Prize, unlike other standards, validates rather than assumes. This is a significant difference from any other standard that organizations are familiar with.
Not until leaders see organizational excellence from this perspective will they truly understand the value of organizational excellence that is honestly and openly placed against a recognized standard, the Shingo Model and the Shingo Prize, to be measured and assessed. Standards are easily understood for regulation, certification, and work. It is time now that standards are recognized for organizational excellence as well.
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