Which Way Forward for Quality in Canada
G U E S T A R T I C L E
This article is a summary of a keynote presentation given by Dan Corbett at the ASQ Canada Conference in Ottawa on September 25, 2017.
Canada is embracing a new era of opportunity in international trade, where the quality of our goods and services, our leadership excellence and organizational innovation will determine success. We have strengths; in technology, in our education systems, in public policy that supports export growth and a growing innovative entrepreneurial spirit to succeed. To take advantage of those strengths requires a renewed national focus on organizational excellence using quality systems. Canada is falling behind Europe and Asia in the use of broad based quality systems and certifications to Excellence criteria. This has to change or else years from now we will look back on this period as a lost opportunity for job growth and economic prosperity. This article explains why Excellence through the use of quality systems must be a pathway to grow international trade opportunities.
In preparing this article I came upon a quote in the Globe and Mail about a young Canadian track athlete, Mohammed Ahmed, who competes in the 10,000 metres category. He just achieved Canada’s best performance in that category “ Honestly one of the things that I am really sick of is ‘best Canadian finish,’ I want to be the best in the world.” That comment captures the challenge and the opportunities for the future of quality in Canada, as good enough in Canada is no longer good enough for international success.
To be successful in a more broad based focus on international business opportunities, we must have a rededication to Excellence based on quality systems. Just stop to think about this: How many world-class Canadian organizations can you name? I know you will probably think of a few, but not many. What we need is many more organizations that can compete internationally especially in Asia and in Europe where the two new free trade agreements are now in place. My concern is that when you look at the current state of quality in Canada we are not improving compared to what is happening in Asia and Europe. In some respects, it seems like Groundhog Day to me when it comes to quality systems and our desire to broaden international trade opportunities outside of the large dependence we now have on the USA.
If you go back thirty years or more the same conversations were being held about Canada’s role on the world stage. There was much focus on the need to build a more diverse economy, to focus on the international opportunities for Canada to do business in Europe and the emerging markets in Asia. The focus at that time was to develop international trade opportunities and to strengthen our national capacity to seize the goodwill and image that Canada had on the world stage. This strategy would have reduced Canada’s trade dependency on the United States and allowed for more diversification.
Also at that time, leaders from business, government and the social sector became very focused on the need to develop quality systems to achieve performance excellence. Quality systems and national excellence frameworks were developed in the mid 1980s & early 1990s because leaders in business and government were concerned about North America losing the competitive edge to other countries, namely Japan. Leaders embraced a focus on quality systems as a foundation for doing business in an ever increasing and more complex international environment. In Canada this lead to the formation of the National Quality Institute and development of the Excellence Framework that provided criteria organizations could embrace to assess their current strengths and improve their performance to achieve world-class levels.
The Canadian approach was similar to what was happening in the USA with the Baldrige criteria and in Europe with the European Framework for Quality Management. The common theme in these Excellence Frameworks was that to sustain improvements and to reach “world class” competitiveness, leadership had to be front and center. This was a different approach to traditional leadership styles and to understanding the difference between quality tools and quality systems. Quality improvement tools had been around for a long time. The idea of a quality system that was inclusive across an organization and driven by leadership and strategy was new. There is a classic quote from the 1990s where W.Edwards Deming was asked to speak to a meeting of Ford executives, who along with all the other manufactures were concerned about the growth of Japanese automobiles in North America.
“ We wanted to talk about quality, improvement tools and which programs work. He wanted to talk to us about management, culture change and senior manager’s vision for the company.”
Back then Deming and others were considered somewhat radical for advocating a new approach to leadership and to engaging the people who did the work in quality improvements. It took some time for leaders to understand that they had to lead quality; that quality was strategic; that quality was the basis for performance improvement; quality was about meeting customer expectations and that employee engagement was a fundamental element to sustaining performance.
Times change. Fast forward to today. There is much focus on the national level from leaders in government and business on developing international business opportunities, however, there is very little discussion on the need for using Excellence Frameworks and quality systems as fundamental to compete internationally. We live in a rapidly changing world. Quick results have become the mantra with a lot of focus on reducing costs and finding ways to innovate. Leaders in all sectors face tremendous pressure to stretch the capacity of the organization to deliver results. Change has become a constant.
What has not changed is the makeup of our international trade with far too much dependency on our USA neighbor and wishful aspirations about growing export opportunities in Europe and Asia. A recent report prepared for the Toronto Board of Trade on export opportunities for small businesses in the Toronto region points out the dilemma and the opportunities.[i]
The report notes a number of important data points:
- in Ontario about 75% of Ontario’s exports are with the USA.
- only 4 per cent of Canada’s SMEs are exporters, compared to 27 per cent in France, 24 per cent in Japan and 28 per cent in Germany.
- 99 per cent of Canadian businesses are small or medium-size enterprises; the economic activity currently lost to the export participation gap is enormous.
Given the current uncertainty of the future of NAFTA, there is much concern about the impact on business and jobs with such a high level of trade dependency on the USA. The opportunity is here and now to broaden our focus to Europe and Asia. That means a change in business strategy. In reviewing strategy, one gap that leaders should address is that many business organizations in Europe and Asia have adopted their national Excellence Frameworks and using quality systems, such as ISO, as the basis for sustaining performance improvement and customer retention. Not so in Canada. As Canadian SMEs and for that matter large organizations build strategies to grow their export potential then Excellence through quality systems should be seen as a competitive requirement.
Quality has also changed. Today many organizations are using LEAN and Six Sigma and other tools as a way to optimize processes and costs. While that is good, all too often what I have seen is that the push for quick results works in the short term, but not sustained over the longer term. Nothing wrong with using a variety of quality tools, however without a system of quality based on Excellence Frameworks, performance improvements are not sustained. The other issue I see is that the use of quality tools rather than a strategic focus on Excellence gives organizational leaders a way out- in that they see quality assurance as an operational asset which does not need their direct involvement.
Leadership of Excellence mattered thirty years ago and matters now. My view is that there is less evidence that today’s leaders understand their role in how to become a world-class organization using Excellence Frameworks. For instance take a look at data from the International ISO Organization for the number of ISO 9001 registrations in Canada.[ii]
ISO registrations in Canada peaked in 2008, since then there has been a downward trend. The annual report of the ISO organization shows Canada with 10,506 registrations in 2008 and only 6,417 registrations in 2015, decline of 39%; meanwhile Mexico for that period had an increase 49%. The USA for that period had a 2% growth. In 1999 North American organizations held 13.1% of global registrations, in 2016 it was just 3.7% of registrations.
I realize that ISO registrations are only one measure, but it is an indicator. The work that Excellence Canada does to attract organizations to the Canada Awards for Excellence (our equivalent of the USA Baldrige and Europe’s EFQM) is commendable. What is remarkable is that the Awards program and the criteria have continued now for over 30 years. The organizations that take the journey to achieve Excellence have clearly demonstrated improved results and performance. Excellence Canada publishes performance data from these organizations as evidence of the value received from using Excellence criteria. The research also shows that for private sector businesses there is a link between a commitment to Excellence and stock price as Excellence Canada tracks the stock performance for all of the Canada Awards for Excellence (CAE) recipients who are traded on a stock market. Collectively these organizations that have won CAE Awards outperform popular composite indices. [iii]
What makes the difference in those organizations is the leadership commitment and strategic planning that has quality systems as integral to sustained performance improvement. The sad part is that there should be many more organizations using the Canadian Excellence criteria to build sustained improvement. Yes it takes time. Most leaders of Canada Awards organizations talk about the journey, how their organizations have changed, how they personally have changed and how they achieved sustained performance results that come from using a system of quality based on the Excellence criteria. Without such sustained commitment by leaders, their organization would not have stayed the course, as there are too many examples where quality initiatives are not sustained.
The primary reasons are lack of constancy of purpose in leadership or too many changes in leadership causing organizational fatigue and uncertainty about direction and resistance to change. There is ample evidence of what happens in organizations that have hurry up and deliver culture, and not take the time to imbed Excellence as an integral element in organizational culture. The result is a never-ending series of new programs that cause an attitude in employees of “Oh here we go again!” What results is attention deficit disorder at an organizational level, as one program replaces another, or one leader replaces another in the quest for productivity. That is not what will lead Canada to success in growing our international trade opportunities. We have been there before and should have learned the lessons from the past.
Which brings me to where we are in Canada on the use of quality systems as a key strategy to build national capacity for international success. My view is we are “back to the future” as other countries have developed and improved their national excellence frameworks and expanded the criteria elements to include services, the non-profit sectors and public sectors. My sense is that Europe and Asia are moving ahead of Canada leaving us once again in a catch up mode.
So what to do? We have limited time to turn this situation around to have Excellence through quality systems as a centerpiece for success internationally. This is where quality professionals have a unique opportunity for positive impact. It will require levels of change, personally, organizationally and nationally.
Here are four points to consider.
- Excellence through quality systems should be aligned with national goals. Quality professionals and those who believe in the value of quality systems need to have a serious review of how the current state of Excellence in Canada fits with the national direction.
The Prime Minister has appointed a high powered Advisory Council on Economic Growth that so far has produced two reports which highlight five areas summarized as follows:Think about the Excellence Framework criteria, various quality systems such as ISO and the success that organizations that have achieved the Canada Awards for Excellence and you will quickly come to see that Excellence impacts all five areas identified by the Advisory Council. Given this alignment, now is the time to advocating for Excellence with the Advisory Council, with the Canadian government, with business organizations and institutes?
– unlocking innovation to drive productivity and help new companies scale up more rapidly
– accelerating the building of a highly skilled and resilient Canadian workforce
– unleashing the growth potential of key sectors such as the agfood sector
– positioning Canada more effectively as a central global trading hub
– tapping into our economic potential through broader workforce participation.
- Quality professionals need to work at attracting the attention of senior leaders within their own organizations. That means speaking the language of leaders and assuming the role of being organizational change agents not just technical experts. Think about the quote regarding Deming’s meeting with Ford executives, he spoke the language of leaders. If quality professionals want to have higher impact in their organizations and be recognized for the value that they have within their organizations then quality must be presented not as a set of tools but as a strategic advantage that impacts competitiveness, market share, organizational innovation, shareholder return and employee satisfaction. That means promoting Excellence through quality systems as a way to fulfill strategy in the short term and long term.
- The various quality organizations and quality professionals need to have advocacy strategy for Excellence and quality systems in Canada as the basis for sustained success with international trade. Why not work to have the leaders of organizations in Canada that have achieved success using Excellence Canada Frameworks and le Mouvement quebecois de la qualite Framework, leaders from the various Chapters of ASQ in Canada and the Canadian Society of Quality all work to have a common voice to influence political and organizational leaders on the need to have a Excellence using quality systems as part of a national approach to advantage international trade. That is what happened thirty years ago where leadership played a significant role in developing quality in Canada. That same focus needs to happen again.
- Quality professionals have to become change agents within their own organizations and reach outside their traditional focus to embrace wider organizational issues. For instance there is much focus today on the impact that Artificial Intelligence will have on organizations, especially with supply chain and customer relationships. Quality professionals need to understand those impacts and to have opportunity to influence the design and delivery of AI based processes, as these processes will have a direct affect on quality. That means taking a different approach to quality by building agile systems that can adapt to a rapidly changing world. The challenge becomes how to have such agility while focusing on standards, process control and measurements. That means building collaboration across all the organization structures to capture innovative ideas, to finding practical ways for employee teams to be part of on going quality assessments and improvements and to have voice into strategy and where decisions are made.
There is ample evidence and research that demonstrates the positive impact that comes from a strategic focus on Organizational Excellence using quality systems. However my view is that the number of Canadian organizations that commit to achieving such world-class excellence barely scratches the surface for what we should be doing to be successful in the world of international trade. The reality is we have no choice but to compete on quality, as we are a “big-small” country. We are big in geography, small in population, which makes it that much harder to scale up and to develop world-class business. All the more reason why Organizational Excellence utilizing quality systems must return as a centerpiece of public policy and business strategy.
About the author:
[i] Reference: Priority Export Markets for Toronto Region Industries, a report released by the Toronto Region Board of Trade
[ii] Reference- source data & material from The International Organization for Standardization: ISO Survey
[iii] Reference article by Adam Stoehr, Vice President for Excellence Canada titled “ Excellence Pays Off on the Stock Market Long Term”
Copyright: Title picture is the property of ASQ Ottawa Valley Section and not associated with the original writing.