Quality As An Effect Means Marketable Value

Comment: This paper was written for a Quality course I took. The instructor challenged us to write creative papers looking at quality in different ways. I choose to write about using Effects Based Outcomes to describe quality as a effect in lieu of a definition.

Abstract: The purpose of this paper is to explore the use of a scientific method to deliver then maintain strategic quality in lieu of an engineered achievement. Engineered solutions include both discrete and perceived quality postures focusing on the production process. This prose argues the use of Effects Based Operations methodology in order to link strategy to quality achieving meaningful outcomes for the organization and the consumer that cannot be achieved in the production process alone. Effects based operations leverage a consumer-centric basis for quality ensuring that the right level of resources is applied for the achievement of the organizational strategy while meeting consumer expectations whether discrete or described as a perception.

Quality as an Effect Means Marketable Value

Discussion: Quality has been a challenge for many organizations to obtain control over and place under reasonable management. Some organizations look at quality as sort of an ethereal ideology, a perception. In these quality organizations  everyone feels the atmosphere of and thinks exceptional quality. For example, everyone strives to meet or exceed the customer expectations or ‘Made in the USA’ means quality or tangible attributes such as weight may translate to quality perceptions. However, expectations are not clearly defined or the location the product is made really does not affect quality or weight is not necessary to achieve quality. Hence, the perceptions of quality. Meanwhile, other organizations travel in the polar opposite direction defining discrete quality and gathering extreme volumes of data to assess the minutest variance in the quality posture. Everyone in this kind of quality organization has assigned quality duties that are identifiable, measurable, and the people are held accountable to the achievement and maintenance of discrete standards. Awards are issued for those who exceed the standards consistently. In the spectrum of quality postures, Figure 1, one extreme is perceived and the other extreme is discrete. Both are definitions being pursued by organizations often with little movement away from one extreme or the other.

Figure 1: The Spectrum of quality postures from 100% perceived to 100% Discrete

The organizational view of quality is often close to the extremes and does not meaningfully or measurably tie organizational strategy to the marketplace view of quality. Yet quality is often considered to be one of the keys to success. The competitive advantage of a company is said to depend on the quality and value of its goods and services, but it has to be proven through ultimate consumer evaluation of the quality (Žnideršić and Marić and Grubor, 2009, p. 170). In traditional terms, quality is a definition, a checkbox item, a measurement, or an intangible look or feel of a product or service exiting out-the-door. This is different than thinking of quality as an effect that warrants a customer to make a purchase.

Quality as an effect means that the end-user reacts to quality that translates to value for the organization such as increased sales, decreased support calls, or increased market penetration. In short, quality as an effect results in competitive advantage for the business and value to the consumer that is deliberate, observed, and measurable. The hypothesis to be explored is if quality can be described as an effect verses a definition then resource-effective quality performance can be achieved that has marketable value. The benefit of such an approach is the deliberate application of the right amount of resources to achieve the expected quality level by the end-user that results in a purchase.

The Body of Works: The body of works regarding quality spans a considerable period. More recent works tended to focus on business models to manage quality in complex circumstances or the introduction of new methods that affect culture. Works regarding Effects Based Operations, EBO, are unique to military operations. Despite EBO emerging well over a decade ago, the works are more recent due to the increased attention to this paradigm.

The business models considered in the body of works include Total Quality Management or TQM; International Standards Organization or ISO-based, and research specific models. Other quality models such as Six Sigma were touched on through elemental practices in the sample body of works. Researchers have looked to business paradigms such as competitive advantage then applied TQM practices with technological innovations to observe how quality is affected. A concept of Business Innovation Capability (BIC) was introduced in order to provide a mechanism that links TQM to innovation. This yielded a competitive advantage for companies who could leverage continuous improvement with continuous innovation (Perdomo-Ortiz and Gonzalez-Benito and Galende, 2009).

Work has also been completed in quality costing benefits of improving performance, quality control, and leveraging competitive advantage. The concern is to accurately cost quality. The researchers determined the need for end-to-end costing systems that provides quality-related financial information and classifications. Researchers provided matrices and formulas to determine costs categories and/or departmental responsibilities (Yang, 2008).

Service quality versus product quality has been studied. Researchers sought to answer the questions that differentiate service quality from product quality, how to approach service quality, and sought to define service quality. Researchers argued that the intangibility of services requires a different approach than physical goods. Quality in services is left more to perception. Researchers then make a call for further study into the complexity and concepts of service quality (Radomir and Plăiaş and Nistor, 2012). In another study on service quality, Researchers looked at competitive advantage as it depends on quality and the value of goods and services that ultimately must pass the consumer evaluation of quality. Researchers concluded that consumers buy the benefits of goods and services offered that include information, emotional components, and other customer perceived value created for them. Researchers point to eleven traits of the customer that companies must pursue (Žnideršić and Marić and Grubor, 2009).

Loyalty is affected by quality according to researchers investigating student choices in higher education. Researchers explored peripheral and situational factors determining that in the student and academic staff relationship quality is critical to loyalty. Overall, the educational quality was perceived and loyalty is a barometer of quality and satisfaction (Purgailis and Zaksa, 2012, p. 148).

Effects based research is indicating a need for standards or doctrine in the effects based practice applied to domestic use. “These [EBO] concepts do offer the possibility of altering the somewhat ad hoc approach to coordinating elements of national power practiced by statesmen and military commanders, to make it a standard operational method (Gladman and Archambault, 2011, p. 24).” Researchers are also discussing how EBO unifies an effort. “Such tools will permit commanders at all levels to monitor effects-based planning performed at subordinate levels to assure that it meets the supported commander’s objectives and desired effects (Elder, 2007, p. 16).”

Work has been completed regarding networks and causal effects on quality. Such networks included various types and populations. This theoretical effort saw the number of firms supporting an emerging technology provided the effect of value to the consumer in terms of information, commitment, and competition. The researchers developed a choice model. They were able to demonstrate the survivability of emerging technology is based on user impressions regarding the number of supporting firms and consumer valuation of size, loyalty, and incumbencies. In the final assessment, the researchers determined that strategic alliances supporting a single emerging technology with incumbent status are valuable partners (Wang & Xie, 2011). Quality was a perceived value based on vendor support of the emerging technology.

Emerging markets posed interesting challenges for business and quality. Researchers discovered that emerging markets are culturally influenced regarding product design and features. The key ability is for a company to combine deep insights about the market place in order to strip out excess costs while amplifying the customer’s true value improving margins and growth in emerging markets (Narayanan and Padhi and Williams, 2012).  Quality is not universal and is culturally influenced. 

In conclusion, the body of works indicates a breadth of research to include standing quality management and business practices in order to achieve business outcomes such as competitive advantage, expanded market share, and improved margins based on the degree of quality. One interesting outcome is that quality can be more perception than specified. Researchers point to perceptions in service quality, loyalty, and culture. Emerging technologies are influenced by perceptions of loyalty and widespread support for products or services before markets embrace them. Strategic alliances improve the survivability of a new technology yielding a perception of the quality of service level.

Studies into effect based operations urge to standardize the methodology while acknowledging the collaborative benefits of EBO. The application of the methodology was to military operations with a little exploration into commercial use. 

The body of works was weak on leveraging quality to achieve planned effects in the marketplace through deliberate strategy-to-task methods which EBO delivers,  This was a second thought in much of the research endeavors and/or a nebulous association affecting outcomes. There were calls for end-to-end cost accounting of quality traits. There was no connection between quality and effects based operation paradigms. Thus, a need for research into methods that link desirable effects to strategy that would offer an end-to-end solution for collaborating on quality projects and create quality as an effect.

Background for Current Research: There have been calls to transform the military and to take advantage of new technologies and methods such as EBO. “Dr. David Alberts describes transformation as a ‘process of renewal, an adaptation to the environment’ (Smith, 2002, pp. xxiv-xxv).” Roger Kaufman of Florida State University comments not to assume that which has worked, will work in the future (Kaufman, 2005, p. 10). Industry should adapt and learn from military paradigms as the emergent marketplace is no longer a simple product or service sale. Consumers buy benefits that goods and services offer and this customer perceived offering is what creates value for them (Žnideršić and Marić and Grubor, 2009, p. 171). As companies seek to blend services and products in order to create value-added solutions forming new markets, these changes affect quality that has become an influencer in market performance. Current trends suggest continuous innovation similar to TQM’s continuous improvements that focus management on total quality in order to promote better customer orientation and workplace integration (Perdomo-Ortiz and Gonzalez-Benito and Galende, 2009, p. 5102). In keeping with the trending, companies should leverage strategic objectives in ways to cause desired effects that enhance both the customer and company benefit.

Researchers have revealed that effects impact markets. The Journal of Marketing published a study of emerging technology market acceptance and willingness to purchase. Researchers concluded that the supporting firm base in relation to product valuation, firm types, and customer interactions most influenced the acceptance of the technology and willingness to buy (Wang and Xie, 2011, p. 11). Quality is part of product valuation. In another study on strategic alignment and new product development, researchers concluded that companies must understand the nature of its competitive environment then based on that understanding, implement a suitable set of alignment mechanisms. Their study evidenced that strategic planning and an innovative climate are key drivers of strategic alignment and new product development performance (Acur and Kandemir and Boer, 2012, p. 313). Hence, a linkage from strategy to objectives then to desired markets effects should be the mechanism that manages and monitors progress.

If quality can be described as a market effect verses a definition or ideology then cost effective quality performance can be achieved that has marketable value. An apparent and inherent need exists for organizations to achieve desired effects in a managed manner in order to align to marketable value. Therefore, a proactive organization that can respond to emergent conditions while adding value or find a competitive advantage has the upper hand to the competition whom become reactive to the affects.

Quality as an Effect: The objective is to explore quality as an effect coupled to the market’s quality perception and/or specification. This requires the use of standing business tactics, techniques, and procedures as well as the introduction of new practices into industry that enhance quality pursuits. This paper proposes the use of EBO found in government in what may be deemed benchmarking between sectors rather than companies. EBO operations provide specific guidelines and processes in order to develop a more collaborative means of acting and thinking (Gladman and Archambault, 2011, p. 24).

The first challenge is to determine the strategy then connect measurable organizational value to that strategy. For the purposes of this research the US Military Joint doctrinal approach to strategy will be employed. The strategy is converted into an actionable mission statement that is further refined by the company’s intent and desired end state, Figure 2. Commander’s intent will be renamed company’s intent in order to place the appropriate focus in this paper. The company’s intent is a statement that narrows action and places constraints as well as restraints on the effort. The end state is a statement of the organization’s desired outcome. The end state has an associated measurable value. In the Table 1 example, the organizational value is (1) the market leader, (2) markets larger than 500,000 people, and (3) market quality expectations. Measurement of the organizational value will be discussed in the section Linking Strategy to Effects.

In comparison between the military and company examples, both structure the strategy in similar manners. The company seeks non-belligerent actions, of course, that promotes favorable conditions for the organization and the customers.

Figure 2: Strategy comparison between military and company examples

In conclusion, having clear strategy at the top of an organization is the beginning of establishing a strategy-to-task effort that leads into EBO planning. This approach should lead into the development of actionable objectives and desired quality effects.

Effects Based Operations: Connecting strategy to actionable tasks has been a challenge for most organizations. Effects Based Operations, EBO, is a method for making this linkage between strategy and tasks.

EBO is a methodology of shaping the behavior in the sphere of operations and is not a new concept tracing back for centuries to what good statesmen and generals have always attempted to do (Smith, 2002, pp. 1-2). In this paper, EBO is applied to leverage quality in ways that create meaningful impact to an organization’s competitive advantage and influence the marketplace favorable to the organization.

There has to be an understanding of what composes an effect. The ‘effect’ is nothing more than a behavioral response to stimuli introduced into a system. EBO is akin to the scientific process of experimentation that has a hypothesis, control variables, and a variable under observation. In business, the hypothesis is strategy and objectives. The control variable, in this case, is quality and the variable under observation is the end users’ behavior.

Organizationally, the process begins by establishing a strategy with objectives. MOV must be coupled to this strategy in order to discern the achievement of the strategic end state that has associated objectives and desired effects or outcomes. Each effect has Measures of Effectiveness, MOE. Each Measures of Effectiveness has indicators that are thresholds for decision points and/or triggers that spawn some sort of action or decision by the organization. Decision points cause a redirection of resources either to the effort or to other efforts. Triggers spawn actions that apply resources or initiate predetermined courses of action. The effects based operational framework flows downward to increased resolution while information flows upward in support of the strategy, Figure 3.

Figure 3: Effects Based Operational associations and information flows

The kinds of measures that can be employed are broad based and include both qualitative and quantitative measures. For example, perceived quality and loyalty can serve as a barometer of satisfaction (Purgailisand Zaksa, 2012, p 148). Other measures can center on the cost of quality. Researchers point to a need for a complete costing system that collects quality related financial information and classifies this data. They went on to offer analytical matrix and formulae to calculate costs (Yang, 2008, p. 190). These matrices and formulae require inputs that can be associated with EBO MOEs.

Researchers investigating consumer evaluation of service quality point to eleven traits that lend well to framing and developing EBO MOEs. They are (1) Understanding the customer, (2) Listening to customers, (3) Prepared to serve the customer, (4) Immediately helping the angry customer, (5) Collecting customer information through permissive means, (6) Living up to commitments, (7) Unsolicited referrals from the customer, (8) Responsible for conduct in front of the customer, (9) Being memorable, (10) Offer pleasant surprises to the customer, (11) Establishing long-term relationships with the customer. These are all about consumer satisfaction and loyalty through managed expectations, experience, and quality (Žnideršić and Marić and Grubor, 2009). The management mechanism should be EBO with customer focused MOEs.

Deliberately linking strategy to low level actions and decisions in a manner consistent with EBO should provide stable management that delivers resource effective quality based on market place perceptions.

Linking Strategy to Quality Based Effects: EBO is deliberately structured to link the effects back to the end state. From the end state, the objectives, effects, and measures of effectiveness as well as indicators and triggers can be determined. The end state in Figure 2 is to be the market leader in Latin American communities larger than 500,000 people who enjoy company products meeting market expectations of quality. From this statement the measurable organizational value is (1) to be the market leader, (2) metropolitan markets larger than 500,000 people, and (3) market quality expectations. There has to be an effort to further define market leader and the markets quality expectations. For demonstration purposes the effects based example, Figure 4, will focus on the quality aspects by providing an illustration of possible market quality EBO.

Taking a closer look at the effects based breakdown, the concept notes provide clarification of the organizational desires as connected to strategy. This is an important aspect for the operator to understand the connection to strategy and the organizations desires. Also note the mixture of qualitative and quantitative traits and how qualitative traits are measured in quantitative terms. This is a major value of the EBO practice that provides for a structured approach to managing strategy-to-tasks. Granted, the effects and measures can be biased and relative. With skill and training these issues can be minimized and leveraged to the advantage of the organization.

Figure 4: Strategy to Effects breakdown example

Conclusion: Mapping strategy to effects and then tasks that contribute toward MOV through strategy-to-task management using EBO framework establishes a deliberate methodology to achieve marketable quality and impact organizational value. Organizational value is simply traits such as conservation of resources, expanded profits, and durable competitive advantage.

Managerial Implications: Managing quality as an effect places the organization in control of outcomes to a greater extent than in the past by focusing rationed resources not to exceed market expectations or benefits to be gained. While quality as an effect is one paradigm, a symbiotic paradigm in organizations must be to design the operations to be responsive and fluid to change by adapting to emergent conditions more readily minimizing quality impacts. Quality as an effect requires a deliberate effort in order to achieve the optimal desired results as opposed to ad hoc approaches consuming immense resources without planned achievements. Sage use of limited funding meeting optimal consumer quality expectations strengthens market performance and frees capital for other projects. In using EBO, companies now will have a tool that stabilizes corporate knowledge and operations while applying resource smartly.

Theoretical Implications and Further Research: The challenge in the research and notion of quality as an effect is in finding the balance between the discrete and perceptive thoughts of quality. While theoretically simple this is not achieved in practice with ease. Research needs to be conducted to determine the methods and practices of revealing a markets placement within the spectrum of quality using transparency.

Complexity also has an essential role in EBO as well. Not only are there intended first order effects but also realized second and third order effects. This means that the outcome is far more complex that a simple cause and effect event. The organization is operating in a complex adaptive environment having emergent conditions that must be dealt with quickly. The necessary character qualities of an organization are a low organizational latency, concise decision-making, and rapid adaptability. This requires an operation to be structured in a manner that is permissive of the necessary level of responsiveness. Therefore, not only is the method of linking Strategy-to-task important but also coupling quality as an effect to an organizational structure supportive of EBO. Research is needed to consider how organizational design influences quality. In short, a quality organization must be designed from ground up and research is required to determine the designs that are effective for the different profit models.

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