How Proactive Quotient™ Drives Profit
How much does measurement cost? How much does not measuring cost? The act of measuring is debated both actively and passively throughout business. We know that certain measurement is critical to business whether like the bottom line, defect management, complaints, even lost opportunities provide key insights. What if there is a metric to define how proactive v. reactive your company culture is, would that be useful? Is it math or attitude measuring…or both?
It makes no difference if you are manufacturing a product or providing a service the only way to know how good you are doing, and how much better or worse you become is measurement. No one said it was going to be easy, no one said it was going to be fun, but just for the heck of it let’s throw one more measurement into the bag that might be key driving your bottom line measurement, called a Proactive Quotient™. This measure analyzes the number of defects or errors your process catches before customer delivery compared to the ones discovered post-delivery.
While we can create examples using math assessing any business in terms of proactive or reactive culture is also a soft measure, one of attitude. Quality nerds often talk themselves blue in the face suggesting that anything can be measured. How useful is the measurement, how hard is it to collect, analyze, how predictive, how accurate, how inclusive? These are factors that influence whether a measurement is used or not.
The Proactive Quotient™ offers a comparison between internal and externally discovered defects. Manufacturers know to measure defects in the process but service organizations woefully undervalue this effort. For both paradigms there are numbers to assess. Let’s suppose a company produces 1,000 items, or, a service provider has 1,000 tasks accumulated in delivering work. Company A finds 5 defects prior to customer receipt and discovers 30 defects from end users. Company B discovers 25 internal rejects and 10 end user issues for their 1,000 activities.
How much of this answer is in math and how much is in culture? A standard defect measure would tell you that Company A has a .03% defect rate while Company B has a .01% rate and that more internal QC should yield less end defects an obvious goal. Where it gets interesting is assessing the self-correcting processes and their value. Assuming similar process conditions Company A “caught” 20 more defects before they got out. They were more proactive it would seem. Dividing internal defects by external defects would give a 2.5 measurement compared to a .16 for the less proactive.
There is certainly a rub here. The objective of defect measurement is to capture error rates and translate them into continuous process improvement to reduce the errors in the process whether that is machining a part or creating a proposal. Still, it is a snapshot to assess whether your emphasis is on getting things “out the door” or making sure things going out are correct. Can there be a cost to process management? You bet! Can there be a far greater cost to fixing problems after they are past your door? Let us count the ways; reviews, reputation, retrieval, replacement, recycling, reworking…a lot of nasty-expensive “re” words.
Perhaps the greatest promoter of Reactive culture is success. Fixing problems, improving can quickly devolve into a belief that you’ve got it right and no longer have to “look” as hard. If it was clear why you got it wrong then sure, you can fix it and trust the improvement. However, all business manufacturing and service providing is fluid. New players, new requirements, new conditions all create change and change creates variation and variation is the breeding ground for errors and defects.
Being Proactive rather than Reactive in the end is less about using an intricate mathematical algorithm than it is a cultural trait to assess. How dedicated is your company to making sure there are no problems rather than how dedicated you are to making it right when problems get out? Measurement tells us the truth about where we are and how we change but Attitude gives Leadership the foundation of culture. Take a good look at how proactive you and your business are compared to how much time you spend reacting to situation. Whether it is a sales proposal or a stamping a micro-widget having the right attitude about your processes, being vigilantly proactive, can have the real numbers that matter grow and go ca-ching!
©2019 MyEureka Solutions LLC. For help with your PROACTIVE CULTURE or other BUSINESS THERAPY insights contact or follow Tom @TomFoxTrainer, on LinkedIn or at www.myeurekasolutions.com/thoughts. His recent book: Business Therapy: Ideas and Inspirations To Help Build Sales, Leadership, Management, and Personal Performance is available on Amazon.