Armand V. (“Val”) Feigenbaum’s 1951 book, Total Quality Control, established his credentials as a quality guru; his subsequent contributions to the study of quality improvement in organizational settings helped reshape the way companies conceive of quality management, making him a pivotal figure in the “quality revolution” that swept through Western companies during the 1980s. McKinsey recently spoke with Feigenbaum, the president and CEO of General Systems Company, about how changes in today’s competitive landscape—particularly ever-shortening product-development cycles and globalization—challenge companies to return to first principles of quality management.

The following are excerpts¹:

McKinsey: Would you describe your approach to quality management?

Armand Feigenbaum: Quality assurance is everyone’s job. Improvements in quality lead to improvements throughout the organization. Above all, quality must be understood as a management style, and an infrastructure has to exist that supports both the work quality of the individual and teamwork between departments. Even today, these conditions don’t exist at all companies. Often, there are too many isolated quality initiatives.

DR. ARMAND V. (“VAL”) FEIGENBAUM

Education

Graduated with bachelor’s degree from Union College, Schenectady, New York

Received MS and PhD from Massachusetts Institute of Technology

Career highlights

General Systems Company

• President and CEO (1968–present)
• Cofounder, with his brother Dr. Donald S. Feigenbaum

General Electric

• Director of worldwide manufacturing operations and quality (1958–68)

Fast facts

Author of several books, including Total Quality Control, first published in 1951 by McGraw-Hill; coauthor, with Dr. Donald S. Feigenbaum, of The Power of Management Capital, published in 2003 by McGraw-Hill

Member of National Academy of Engineering of the United States since 1992; founding chairman of board of International Academy for Quality; served 2 terms as president of American Society for Quality and 1 term as chairman of its board of directors

Has received numerous awards for his leadership in the field of quality control, including the Edwards Medal of the American Society for Quality, National Institute for Engineering Management & Systems’ distinguished service award, and Union College’s Founders Medal

A number of awards have been established in his name, including the American Society for Quality’s Feigenbaum Medal to be granted annually for excellence in performance

McKinsey: Why do you think this is so?

Armand Feigenbaum: Some companies have an outdated idea of quality and how to improve it. Managers think of quality as minimizing defects, especially in production. This aspect has long been an entry-level requirement in competition but is no longer enough from a customer perspective. Customers expect to buy products that work perfectly. They evaluate quality based on the value of the entire offer.

There is often a large gap between a company’s quality criteria and those of its customers—especially for car and computer manufacturers. Company statistics may indicate that quality has improved: products have fewer defects and more functions. Meanwhile, however, sales are declining because customer satisfaction has dropped—whether it’s because the service is unsatisfactory, the user’s guide isn’t acceptable, or a spare part can’t be found anymore. Customers increasingly take factors such as annoyance and time wasted into account. Many companies aren’t attuned to this.

McKinsey: Why don’t these messages from customers get through?

Armand Feigenbaum: Many companies don’t understand that new market conditions require extensive changes in management methods. Consider speed. Whereas companies used to be able to secure market leadership for a year through their investments in R&D, today it’s only a few months or weeks. And success in the ever-shortening periods between product launches greatly depends on whether companies can develop quality systems, processes, and technologies that enable shorter development, production, and sales times. Meanwhile, the company must guarantee full functionality of its products and services at market launch. This is also true of digital products such as software. There can no longer be any introduction periods in which the product functions poorly. The user is not an inspector.

McKinsey: What should companies do in response?

Armand Feigenbaum: It’s not particularly complicated—and I’m afraid that’s where the problem lies: the messages seem too trivial for some people. Ask your customers. Don’t assume you know what they want. Talk to them—personally. How many CEOs still meet their customers in person? Have top managers visited customers in the past quarter? The answer is a key indicator of their quality leadership.

Companies must also analyze their processes from the customer’s perspective and determine the costs. Many people have a firm grasp of the costs of various business units such as purchasing or sales, but few know the extent of their quality costs because they don’t account for the relevant indicators. They need to include both the costs that are necessary to ensure quality, as well as those incurred because of a lack of quality—such as lost sales. Unnecessary internal costs caused by poorly organized processes are part of the calculation. For many businesses quality costs defined in these terms can reach 20 percent of revenues, whereas with well-organized companies this amount is only 5 to 10 percent or less. The competitive benefits that improvements here can bring, therefore, are enormous. But this is not “slash and burn.” When done well, these benefits are truly sustainable.

McKinsey: Don’t the tasks you describe become exponentially more complicated as companies grow?

Armand Feigenbaum: The size of a company and its rapid expansion are, generally speaking, not barriers. As long as the structure and the processes are in place, it doesn’t matter how big the company is. General Electric is a good example. The challenge is to constantly align processes over the course of growth—constantly monitoring consumption and provisioning flows, identifying changes in customer wishes that result from expansion into new markets, and recording actual achievements and specifying necessary changes. The principles never change, although you naturally have to adjust your methods to suit a particular culture.