Note: this article is copyrighted by the Association for Quality and Participation 1989. You may download for your own use. If you wish to reprint this article, please call the AQP permissions editor at 513-381-1959. Goal: Total Customer Satisfaction Quality and Participation at Xerox By Paul A. Allaire and Norman E. Rickard - Xerox Corporation It will hardly come as a surprise to the readers of this journal [The Journal for Quality and Participation--SysOp] that American business is locked in a battle for global competitiveness. When many of us graduated from high school, America controlled some 35 percent of the world's economy. Our portion today is about 20 percent. This is a fundamental issue for American society, with enormous impact on our way of life, our standard of living, and our ability to create meaningful employment. The causes are varied and complex. Each of us probably has our own favorite version of what went wrong. Almost all of us have pointed the finger of blame at someone else. We complain about the cost and interference of government regulation; the lack of management leadership; the high cost and the low productivity of the American worker; or some mythical attribute of Japan Incorporated. There is some truth in each of these, but in our judgment, the root cause of our trouble is that we became arrogant and complacent. Because we were on the top of the economic pile, we assumed that it was our birthright. Although we don't like to admit it, in many ways Xerox is a microcosm of what has happened to much of American industry. Many of you remember the first plain paper copier, the Xerox 914. We introduced it in 1959, and it quickly created an entire new industry. Some people have called the 914 the single most successful product ever made. It launched Xerox into an era of feverish growth and success. But with two decades of success, we became complacent and took our eyes off both the customer and the competition. We saw the Japanese coming at the low end of the market, but we didn't take the threat seriously. We went on believing we would always be successful, even as our market share began to shrink. After all, we told ourselves, this was our industry. We created it. We built it. And we owned it. Fortunately, Xerox reacted in time. In the late 1970s, we started to take a good, hard look at what we were doing at Xerox and how we run our business. And we started to take an equally hard look at the competition and how they run their business. We were startled by what we found. One of the first things we realized was that our costs were too high - and not just a little high. In fact, the Japanese were selling their small machines for what it cost us to make ours. We assumed that because the machines were low cost, they were low quality - we were wrong! Then we tried to convince ourselves that they could not be making money. Wrong again! They were profitable. That woke us up in a hurry and we went to work in earnest to begin closing the gaps Challenge Everything Done in the Past We realized that to be a world-class competitor in the 1980s and 1990s, we had to challenge everything we had done in the past. We had to change dramatically - from the way we develop and manufacture our products to the way we market and service them. We've been at that process of changing the corporation for about five years now and although we still have a long way to go, the results are gratifying. Here are a few examples: * We have reduced our average manufacturing costs by over 20 percent, despite inflation. * We have reduced the time it takes to bring new product to market by up to 60 percent. * We substantially improved the quality of our products. * We are perhaps the first American company in an industry targeted by the Japanese to regain market share. And we did it without the aid of tariffs or protection of any kind! We're also proud to tell you that we did it without closing our factories or moving our manufacturing off-shore. We tell you all this not to boast, but to illustrate that there is nothing inherently wrong with American business. We lost our way in the 1970s, but we have found it once again. It's not Magic; It's Involvement. People sometimes ask how we are doing it at Xerox - how we have reversed our slide and begun the long, tough road back. There is no magic formula. We are doing it by involving all of our people - union and non-union alike - in problem solving and quality improvement. The entire management team has a deep and real commitment to employee involvement. Our incentive is a powerful one - survival as a successful business entity. Customers and quality - You've all heard a good deal about quality recently. We define it at Xerox as conforming to customer requirements - pure and simple. It's an axiom of business that's as old as business itself, yet many of us lost sight of it. And when we speak of quality, we mean more than just product quality. We take the view that every person in the company has a customer for the work they do. For many people, the customer is someone inside the company - the person we type reports for or the person to whom we deliver parts. It follows from this view of quality that it must work its way into the entire organization - into manufacturing, sales, service, billing, training, finance and so on. Our quality policy sums up our view quite well. It says: "Xerox is a quality company. Quality is the basic business principle for Xerox. Quality means providing our external and internal customers with innovative products and services that fully satisfy their requirements. Quality improvement is the job of every Xerox employee." A focus on quality and participation - on involving all of our people in satisfying the customer and meeting customer needs - actually drives costs down. That clearly has been our experience at Xerox! Xerox's Quality Principles and Practices The focus on quality that we initiated four years ago was built on some very fundamental assumptions about American workers. The main ones are: * That management does not have all the answers. * That all people have ideas about how their work can be done more effectively. * That people closest to the problems often have the best solutions. * That this almost unlimited source of knowledge and creativity can be tapped through employee involvement. * And that people are willing and eager to share their thoughts and participate in developing solutions to business problems. Those beliefs have paid off handsomely as the examples on following pages illustrate. And they are just the tip of the iceberg. Philip Crosby estimates that the typical, large corporation wastes 20-25 percent of its revenue by not having quality. For Xerox, that's more than two billion dollars ($2,000,000,000) out there which our people can recapture. There is no doubt anymore in anyone's mind that they will capture a major portion of that. We still have a long, long way to go, but we're convinced we can do it. When we look back on where we've been and where we are going and then ask ourselves what advice we would give to others, we come up with four specifics: Senior management has to be committed to change - Without genuine, hands-on commitment, all attempts at quality improvement and employee involvement are doomed to failure. And that commitment must take the form of action, not rhetoric. Our expression for that at Xerox is that managers must "walk like they talk." In other words, their actions must demonstrate they are willing to listen to the ideas of employees; they are sincere in their efforts to change the work environment; and they are serious about their drive toward quality improvement and customer satisfaction. The commitment of union leadership must be every bit as strong as that of management - That certainly has been and still is the case at Xerox. In fact, quality circles were part of our manufacturing operations before we launched a company-wide strategy of quality improvement and employee involvement. Credit for that goes to the strong and enlightened leadership of the union that represents most of our hourly employees - the Amalgamated Clothing and Textile Workers Union. They understand that we must be competitive and that our union workers can provide significant help in that struggle. The Sloan School of Management at Massachusetts Institute of Technology has looked at our experience and summed up its success in one sentence: "the high level of trust built up over the years between labor and management in Xerox was clearly the instrumental factor in the company's success in employee involvement." It takes some initial investments - At Xerox, for example, we have given every woman and man in the corporation six full work days of training in problem solving, quality improvement and team building. For us that means training 100,000 people worldwide. That's an investment of the equivalent of 2,500 man-years. It's a significant investment in both financial and human resources. But we're convinced it's one of the better investments we've ever made. It requires patience and discipline - Our experience has been that results don't come as quickly as we would like. There are some false starts. There are parts of the organization that lag behind others. There are teams that don't initially work on real business problems. There are managers - particularly middle managers - who see employee involvement as a threat. One of the Japanese experts of quality and employee involvement likens the need for patience and discipline to that of a bamboo farmer. Once the bamboo seed is planted, the farmer must water it every day. He does that for four years before the tree breaks ground! But when it finally does, it grows sixty feet in ninety days! That's true also of employee involvement. It takes time. It takes nurturing. And it takes patience. But when it finally takes off, its power is tremendous. We, like in many other American companies, are proving this. It's a very powerful concept that can energize the total organization. As you can probably tell, we have a great deal of confidence in the ability of American business to compete in the global marketplace. We don't subscribe to the conventional wisdom that our foreign competitors are superior. We still have the world's greatest financial resources, industrial capacity and distribution system. And we have one other asset - the American people with their immense resilience, strength and creativity. In the final analysis, that's our secret weapon, and the one that will enable us to maintain our competitive edge. About the Authors: Paul A. Allaire is president and a member of the board of directors of Xerox Corporation. He directs the business products and systems businesses and is a member of the corporate office. He was elected to his present position in 1986. He is also a member of the board of directors of Rank Xerox Limited (United Kingdom), Fuji Xerox Company, Limited (Japan), and Crum and Foster, Inc. In addition to his duties at Xerox, he is a trustee of the National Planning Association and serves as chair of the association's New American Realities Committee. He is also a member of the board of trustees of Carnegie-Mellon University . Mr. Allaire was appointed a charter member of the AQP's Academy in 1988. Norman E. Rickard is a past member of AQP's Board of Directors and a vice president of Xerox where he is responsible for the corporate quality office, which oversees the company-wide effort aimed at developing and sustaining an increased level of quality in every Xerox activity worldwide. Rickard joined Xerox in 1967 as a senior financial analyst. After serving in a variety of key assignments at Rank Xerox Limited, he returned to the US as vice president of planning and control, for the former reprographics manufacturing group in 1978. He joined the corporate staff at its Stamford, Connecticut headquarters in 1981 as director of business effectiveness. Mr. Rickard received a bachelor of arts degree from St. John Fisher College and a master of business administration degree from St. John's University.