The “Great Job” Fallacy

As someone who’s worked with a few “large” manufacturers (revenues ranging from 50M-500M), I’ve observed a constant that is how different org groups work together to deliver value to their customers. Before Quality Management Systems were “a thing”, organizations discovered best practices through having a customer complaint travel up the org structure, until someone was sick enough of hearing these complaints, that they established a best practice. If the complaints died down, then the corrective action worked and if the complaints did not die down, then maybe it was just something the worker was going to have to permanently deal with.

These inefficiencies were the end result of a couple of things:

  1. No formal oversight in the service/product delivery cycle
  2. Companies who grew too fast
  3. Protected industries

Now I could just summarize all three as competition not rearing it’s ugly head (yet) as it’s obvious to Quality Engineers that if you get it right the first time, you don’t need a QMS to correct (internal or external) services since no inefficiencies exist. But this is unlikely and hence the need to document processes to deliver services.

Before we discuss the “Great Job” fallacy, we’ll do a deep dive of how responsive and flexible organizations come to be by discussing the inefficiencies introduced above. Regarding the first point, this is often the case when a company is delivering parts & services and there’s no active (or passive) feedback mechanism from the customer or its users. This is synonymous to having a closed loop feedback system as compared to an open loop feedback system.

Relating it back to the paragraph just above, imagine having two companies who deliver tires to their customers and they both have the exact business processes and similar cost structure. Assume that one of the companies, decides to invest some money and distribute a survey to their customers and then they use their data to improve their product or even to give better advice as to how customer behaviour (e.g. getting tires rotated or maintaining a certain level of PSI) can lead to increased product performance. This is an example of oversight being created and using the data to improve the product reliability stats. This can provide competitive advantages for companies as it helps them improve internal processes to better suit the needs of their customer. Systematic problem solving has been an industry focus since the 70’s with industry tools ranging from Control Plans, PFMEAs, 8D Problem Solving and PDCA problem solving cycles all being developed.

To the second point, companies that grew too fast, can often have holes in their documentation. It’s a good problem to have since being ahead on the technology curve is usually the root cause for growth. As a result of innovation pushing the limits of the organization to new heights, this gives them a leg up on the competition. However, it’s important to note that this increase in product adoption will only take place until the competition catches up to the new product technology. It’s hoped that the innovative companies were able to cash in on their advances in technology, as catch-up is being played by industry competition. It’s important for innovative companies to document processes so that inefficiencies can be rooted out during a revenue growth phase. It’s hoped that companies who are already large have processes that can appropriately oversee new tech innovation so this block of knowledge is targeted at companies who truly found a new market for their products.

Protected industries do not face competition. This is important to note because this eliminates an incentive for those organizations to reduce their cost structure.

So here’s where we talk about the subject matter of the article, the “Great Job” fallacy. Let’s say your company’s processes could be more thorough and indepth, or they don’t really cover the reality of what a job is presently doing. This can happen as processes mature, process documents need to become live and require updating regularly. The reason for this is that for an auditor or a QA, those documents need to be an accurate representation of what an employee’s labour input is actually being used for. If they’re not periodically updated, then this is impossible. During updates, when gaps are identified, such as a gate process being overseen – this can lead to inefficiencies and the premise of the audit is to drive these inefficiencies into the ground.

For example, let’s say an employee has specific job duties that could cover some customer service aspects as well as some engineering aspects. Now let’s say employee X’s manager thinks he’s spending 75% of this time engineering and the remaining on customer service duties but this is far from reality. Since employee time is a scarce resource (~40 hrs a week) and the primary input into satisfying the needs of his/her manager, it can get neglected in the daily grind of a 9-5. This is what I mean by gate process that gets overseen. The customer service aspect might be taking upwards of 50% of employee X’s time, so it’s the gate between what the manager (& upper mgmt) wants and what the employee is actually doing. The employee can still being doing a “Great Job” but because process flows are ill-defined, it’s difficult for that employee to delegate tasks without going through a ‘learning period’ with whoever they train. Employees who are not especially fond of these ‘learning periods’, might just bite the bullet and inadvertently create that gap between what’s expected and what happens. Over time, this gap between what the employee is actually doing and what the manager needs the employee to do for the organization to succeed, widens. This can rear its ugly head since without a proper organizational QMS, these inefficiencies often go by the wayside. This is an organizational problem that gets overlooked and it’s primarily because of ill defined processes. Proper QMS control can lead to a more flexible organization that better knows its own capabilities and can react better to unexpected events. Knowledge capital can be more effectively reallocated to high priority events, while not affecting the day to day ops of a business.

Economist Moment – Protected Industries

The OPG (Ontario Power Generation) is a prime example of an organization that is completely protected, has no focus on implementing QMS and therefore fails to accurately reallocate their engineering resources. Once a thorough analysis is done of the OPGs processes, I would put money on the “Great Job” fallacy being systemic across the OPG. I only say this because OPG is solely responsible for delivering electricity to the domestic (Ontario) market and costs are going up. When engineering is a key labour input, costs should never go up. Unless it’s a completely unforeseen circumstance that affects global supply chains, costs to engineer a product usually go down over time. OPG has not reinvested profits back into solar or other high capital Green forms of energy either. This is due to non-Engineers creating Energy & Policy decisions for Ontarians without adequate input from Engineers. The Ontario government’s plan to increase the amount of Green Energy was the Green Energy Act of 2007, this led to long term cost commitments that cannot be neglected. It’s equivalent to the 1998 privatisation of the 407 by the Ontario PC party. The Green Energy act has tied the Provincial Government to 25 year contracts with select providers, paying them out upwards of 10x the amount of money, for electricity generated from green energy sources (with rooftop residential receiving the highest payout of 81cents/kWh). I would argue that paying out contracts as large as 100-300k at a 16% interest rate (effectively what the contracts ended up being) was a terrible policy move. Why not just invest in a giant provincially owned solar field? This is why Quality Engineers need to be more included in government. A competent Quality Engineer would’ve flagged the risks of paying out capital projects at a 16% for 25 years.

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Author: gtareguy

Real Estate Investor Raptors fan (don't cry for me this year) Mech Eng Graduate

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