Quality brings competitive advantage

Defining quality can be an almost impossible task, because quality can mean such different things to different people, and in different situations and cultures.

“I see quality as one of the integral dimensions of a company’s sustainable competitive advantage, SCA. SCA is a set of company assets, attributes, or abilities that are difficult to imitate and that allow a business to be more successful than its competitors over a long period,” says Josu Takala, Professor in Industrial Management and Materials Management at the University of Vaasa.

“Quality is holistic and is connected with a company’s business strategy and management, and increasingly to leadership. The more quickly the operating environment and customer demand change, the more critical the latter becomes,” Takala continues.

Quality thinking is evolving continuously

Takala says quality is not theory but praxis, a very practical thing – and it always has been. Quality thinking can be traced back to medieval Europe, where craftsmen started organizing in guilds with defined quality standards in the late thirteenth century. Hundreds of years later, the Industrial Revolution created a need for new ways of managing quality, and Statistical Process Control and Total Quality Management, among other methods, have since seen daylight.

Today, businesses are increasingly based on advanced technologies, the latest know-how, digitalization and innovativeness, so quality thinking has also evolved. What companies now strive for is a holistic quality culture, characterized by the idea that everyone in an organization should be empowered to take responsibility and make quality decisions. The role of leadership is strongly emphasized.

Quality should be customer-driven

Today, with quality seen as a holistic part of an organization’s total competitive advantage, the customer’s role has become increasingly central.

“It is the customer who defines what quality is. In an age of constant change, a company needs to be capable of moving quickly, often strategically, to meet customers’ changing expectations. Indeed, a company should always be one step ahead of its customers when it comes to identifying future needs,” Takala points out.

It is the customer who defines what quality is.

While a company needs to comprehensively look at its quality, the customer is primarily interested in the fulfillment of their own quality-related needs and demands. Understanding what these are, and how they affect the company’s way of operating, is therefore of crucial importance.

For example, a pulp or paper producer’s quality-related demands on its technology provider may be related to the quality of its own end product; or it may be related to environmental quality or cost-effectiveness. In addition, the quality of know-how plays a more central role as more advanced technologies and Industrial Internet solutions are deployed.

Turning data into quality

Digitalization and the IoT have created access to a vast amount of data concerning machine performance, product quality or customer behavior, for example. This data can be utilized to enhance both product and process quality, and even to detect new, quality-related business opportunities.

“The big challenges here are connected with the quality of the data collected and the data analysis. Data itself is of no value; what is valuable is the ability to analyze it and create insights,” says Takala.

Machine learning and AI technologies are already being utilized today in monitoring and enhancing quality. Machine vision is used to detect variations, and different sensors collect data on single parts of a machine, or on a whole process and its end products. Not only does machine learning enhance the predictability of an infrastructure’s maintenance requirements, it can also alert us to end-product quality-related problems that have yet to occur.

Digitalization and the Industrial Internet also promote the transformation of the relationship between a customer and a supplier into a deep partnership or ecosystem. The quality of know-how, such as data analytics competence, and a deep understanding of the customer’s needs, will thus play an important role in companies’ future quality approaches.

“The transformational leadership style encourages employees to innovate and create new solutions and ways of doing that are necessary for the future success. It builds a winning culture, not only within quality, but throughout the organization.”

In search of an optimal competitive strategy

Various decision-making tools can support a company in choosing its competitive strategy in a changing environment. As an example, Takala mentions the Sand Cone Model, originally introduced by Ferdows and De Meyer.

The Sand Cone Model suggests that although it is possible to trade off competitive capabilities – quality, dependability/flexibility, speed and cost-effectiveness – against each other in the short term, there is a dynamic time-dependent hierarchy between them. This means that building a sustainable competitive advantage requires the trade-off relationship approach to become a cumulative one, in which one capability is built on another.

Originally, the model suggested that companies should develop all four sustainable competitive advantages by following a certain sequence of strategic priorities. The suggested sequence starts with enhancing quality – indeed, Ferdows and De Meyer believe a company’s quality performance is a precondition for all lasting improvements. The next step is to strengthen dependability/flexibility, followed by accelerating speed and finally, optimizing cost-effectiveness. A company can thus benefit from all four dimensions of sustainable competitive advantage without losing any of them, even in demanding market turbulence.

Empowering employees to meet changing customer needs

The right leadership approach can support an individual’s and organization’s capability to change quickly to meet customer requirements.

“The transformational leadership approach is a tool for empowering individuals and organizations to change what they do, and how they do it,” says Takala, who has cooperated with the Finnish Defence Forces and supported them in adopting a transformational leadership style.

Strong quality culture supports employees in making quality decisions.

Transformational leaders encourage each team member’s motivation and positive development, act as a role model and foster an ethical work environment with clear values, priorities and standards. They also build a culture in which all team members are supported in making their own decisions and taking ownership of tasks.

“This leadership style encourages, inspires and motivates employees to innovate, and create new solutions and ways of doing things that are necessary for the organization’s future success. It builds a winning culture, not only within quality, but throughout the organization. ”

Text Sanna Haanpää-Liukko

Photos Tomi Parkkonen