The Equity in Quality:
Boost the Bottom Line Through Performance

By Dan Coughlin

• The Disney Company re-releases a fifty-year-old animated film, and it makes millions.

• Apple creates a cell phone, and the world holds its breath.

• Toyota makes a hybrid car, and in the era of $4 per gallon gasoline the Prius becomes a legend.

Performance Enhancement or Marketing Splash?  If you only have $10,000 to improve your business, should you pour it into a marketing initiative or a performance initiative? I vote for improving performance every time. The long-term payback will be extraordinary.

The quality you provide to customers is the value they receive from the performance of your products and services.

Quality refers to number of mistakes per million parts in a manufacturing process. It also refers to the refreshing taste of a dessert at a frozen custard stand and the speed with which a pizza is delivered and the friendliness of a hostess at a local restaurant. Your marketing theme will soon be ridiculed if the actual performance doesn’t live up to the promises made.

Quality Builds the Brand: Here’s a phrase-association game. What do you think of when you read the following:

• An amazingly well designed, user-friendly computer…

• Entertainment for all members of the family…

• A cup of coffee so delicious it feels like a reward…

Apple, Disney, and Starbucks first created incredible quality, and then they became known for that quality. Notice: high quality first, great brand second. The brand attracts and keeps lots and lots of great customers, but you can’t successfully advertise what doesn’t exist. The same method for enhancing quality can be used no matter what business you are in.

1. Define the performance business you are in: Disney/Pixar Animation Studio is in the motion and emotion performance business. Their quality is wrapped up in visually appealing and emotionally appealing films. When Pixar’s standard of quality became dramatically greater than that of Disney’s animated films, Disney bought them out and put them in charge.

What performance are customers looking for from you? Do your customers desire you to deliver faster (FedEx), break down less often (Toyota), make the purchasing process easier (Amazon), or deliver breakthrough ideas (IDEO)?

Don’t be married to a certain product, service, or profit margin. Focus on the performance you are expected to deliver. According to the June 11, 2007 issue of BusinessWeek, 3M almost smothered its creativity through Six Sigma. 3M is expected to perform as an innovative company. Potentially ruining that creative culture in exchange for short-term profits was not a good trade off.

2. Identify your current standard: So how are you really performing in the areas that customers expect you to perform in? Go ask your customers a simple question: “In terms of our performance for you, what are we doing really well, what are we average or below average at compared to the competition, and how could we perform better for you?” If you ask fifteen customers that question, you will start to get an idea of your current reality.

Then shop the competition. Study the performance they are delivering. Look at it from the customer’s point of view. Even a subtle idea like having a greeter in a fast food restaurant can be a difference maker. What is the competition doing better than you right now?

3. Focus on only two points: As you work to enhance quality, focus on only two points: the point just ahead of the best performer in the world and the point just ahead of where you are right now. Who is the best performer in the world in your particular area? What makes that organization’s performance better than yours? That is the only point that matters to customers. They want to be with the best of the best.

While keeping the highest standard in the world in mind, focus your efforts on getting to the point just ahead of where you are right now. Each day move forward one step in terms of providing greater quality. And keep moving until you reach the spot just ahead of the best performer in the world.

4. The Tiger Woods Syndrome: There is one danger to be on the look out for. One day you will be the best in the world in your particular performance area. Then what do you do? Tiger Woods and Michael Jordan faced that problem, but instead of looking back at the second best performer they kept their eyes focused on raising their own performance bar.

If you are the best performer in the world, ask yourself one simple question, “How can I make tomorrow better than today in terms of the performance I provide my customers?”

5. Loop back with customers: Customers have a neat way of keeping companies grounded in reality. Just in case you thought about coasting on past performances or a powerful brand, remember that customers don’t care about past performances or great brands. Continue to engage customers in meaningful conversations about the quality they receive from you and what would make it better.

Equity Increases as Quality Rises: Every time you increase your relevant business performance to customers, it’s like putting money in the bank. Customers become more loyal, they purchase more of your products and services, they tell other people about the quality you offer, and they keep coming back for years and years. Quality is the real secret formula for long-term success.

Read other articles and learn more about Dan Coughlin.

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