17A. Back to the Opening Case
What evidence of feedforward control can you find in the Sears case?

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Author Notes 17-A: Back to the Opening Case Pagonis had contingency plans and a dedicated disaster operations center. He then made the decision to craft additional contingency plans after September 11. Pagonis also made sure his staff was well trained.

17B. EMC, Call Home
A quiz to see if you're paying attention: Which kind of control is this?

EMC [a Massachusetts data storage company] likes to call it "service and support mind reading." Sensors that are built into its storage systems monitor things such as temperature, vibration, and tiny fluctuations in power, as well as unusual patterns in the way data is being stored and retrieved--over 1,000 diagnostics in all. Every two hours, an EMC system checks its own state of health. If everything is running smoothly, the log file is stored away. If the machine spots something that it doesn't like, it "phones home" to customer service over a line dedicated for that purpose.

Every day, an average of 3,500 calls for help reach EMC's call center in Hopkinton. But it's not people who are calling in to ask for help--it's machines.

Paul C. Judge, "EMC Corporation," Fast Company, no. 47 (June 2001): 144.

Question: Is this feedforward, concurrent, or feedback control? Explain.

Author Notes 17-B: EMC, Call Home The actual monitoring and phoning is concurrent control. Putting such a system in place is feedforward control. Learning from the variances and making changes and improvements is feedback control. I wish my car would call me when it discovered something was wrong. Maybe we're not that far away from that.

17C. Who's in Charge Here?
Avram Miller, high-tech consultant, offers this advice for doing business at Internet speed:

Give up control. Or the illusion of control. Companies no longer determine the success of products and markets--if they ever did. Customers do. Control is an illusion, and the Internet has completely shattered that illusion. Nobody is in charge anymore.

As quoted in Katharine Mieszkowski, "The Power of the Internet Is That You Can Experiment," Fast Company, no. 30 (December 1999): 160.

Questions: What does Miller mean? Does he think managers should throw up their hands and abandon all forms of organizational control? Explain.

Author Notes 17-C: Who's in Charge Here? How much control do you have over your life? No matter how careful you are, something can happen that's completely out of your control that will change your life. In the aftermath of September 11, I realize that even where you feel the safest, the totally unexpected can change things. That illusion of control feels even more real in a business setting. For some reason, it is not acceptable in many business environments to confess to worrying about the accuracy of a forecast, or the effectiveness of an ad campaign, or the probable success of a new product. Instead, everyone acts supremely confident, even if inside they're worried sick. The hardest thing for a top manager to say is "I don't know." Wouldn't it be better if, instead, people acknowledged the things that fall out of their control, and focused more on those parts of the business that can be controlled--such as costs, production labor hours, inventory levels, etc. And when something is really guesswork--admit it and move on.

17D. Back to the Opening Case
Former New York City Mayor Rudolph Giuliani:

If I can give one singular piece of advice, it's to be honest, to be up front, to be in front of the crisis rather than having the crisis drive you.

Interview response on PBS Nightly Business Report, www.nbr.com, January 15, 2002.

Questions: What would Giuliani probably say about Sears's crisis management program? How would you rate the program? Explain.

Author Notes 17-D: Back to the Opening Case Giuliani would probably say that if every company had contingency plans in place the way Sears did, September 11 would have had much less of an impact. For example, suppose the airlines had crisis management programs as well thought out as Sears, what impact would that have had on the transportation crisis in late September 2001? I am extremely impressed by the Sears program--there was more than lip service paid to the concern for possible problems that could affect their systems. Chances are that now a lot of companies are more prepared for possible problems. Chances are also pretty good that now that things have calmed down, a lot of companies have gone back to their previous complacency with only a token effort to be prepared for the next crisis. Which company would you rather be working for?

17E. Do You Take Quality for Granted?
The dramatic improvement in the quality of most products over the past decade or so helped create the new psychology of value. As manufacturers everywhere have improved goods, buyers' expectations have soared. The Japanese call this atarimae hinshitsu, which means "quality taken for granted."

Stratford Sherman, "How to Prosper in the Value Decade," Fortune (November 30, 1992): 91.

Questions: Think of three or four products and/or services you have regularly purchased during the last five years. Has the quality of any of these goods or services gradually improved to the point where you now take for granted certain characteristics that once were in doubt? Which characteristics? What has this done to your expectations for the quality of these same goods or services in the future?

Author Notes 17-E: Do You Take Quality for Granted? One product area that has shown remarkable improvements in quality and features, along with dramatic drops in price, is electronics, particularly computer systems. Today's PC has more power and memory than the minis of only a decade ago. The Intel 486, once the magic system that allowed people to run Windows, has now virtually disappeared from the new computer market, and the original Pentiums are old technology. Let's move to low-tech. Fresh produce only a few years ago was strictly seasonal. Other than apples and bananas, most fruits only appeared for part of the year. Now, melons, berries, peaches, and other summer fruits are available almost year round--and the quality is continually improving. For instance, North America gets much of its fresh oranges and orange juice from Brazil during the off-season. Thanks to locally based hydroponics greenhouses, you can even get almost-real-tasting tomatoes today. Is this process of improving quality and changing expectations new? Not really. Let's consider the automobile. In the 1950s and 1960s, U.S. auto manufacturers used "planned obsolescence" and dramatic year-to-year model changes to snow consumers into believing that cars were less of a durable good than toasters. (Yes, the same people who traded in their cars every one or two years would keep a $20 toaster forever, taking it in for repairs when it broke down.) Then the 1970s energy crisis created an opportunity for the Japanese auto manufacturers. They came to the United States with their quality-improved cars, changing the face of the industry forever.

17F. Capitalizing on Customer Impatience and Irritation
So how can you stop wasting your customers' time? A simple process can help you get started. First, map the time your customers spend engaged with you or your product. Focus on finding those "points of impatience" when a little bit of a customer's time wasted causes disproportionate irritation. Consider what a customer's highest expectations are at any given moment during an engagement with you.

Christopher Meyer, "While Customers Wait, Add Value," Harvard Business Review, 79 (July-August 2001): 26.

Questions: How much waiting have you done recently (in line or on the phone) while being served? How did you feel and respond? Aside from reducing the waiting period, what could have been done to reduce the stress and irritation of waiting?

Author Notes 17-F: Capitalizing on Customer Impatience and Irritation I had the misfortune to have cell phone service from MCI Worldcom. When they went bankrupt and stopped providing service, another service provider took over the service, and to keep my cell number, I had to work with them. I called their special 800 number, and it took about an hour on hold to get to a real person. The hour on hold was irritating, but I have a speakerphone in my office so I could listen for the real person and get things done. The truly irritating aspect of the situation was their hold message. Music was playing, but every 2 minutes or so, it was interrupted by a man's voice saying, "We're sorry for the wait, etc." My multitasking brain would hear the voice and think I'd gotten to a real person, and it constantly distracted me from my work. In addition, you couldn't enjoy the music because it was constantly interrupted. This was only the start of a series of problems with the attempted transition that led me to give up my old familiar cell phone number rather than deal with them for another minute. Why didn't they have one of their employees sit on hold for a while? They would have quickly found out how irritating their hold choice was.

17G. The Customers Wanted Green Ketchup
Take ketchup, a staple in 90% of U.S. households. Heinz discovered its 50% market share foundering among core ketchup users: the 6- to 12-year-old kids who Heinz says use 60% more than adults. To spur consumption, Heinz developed EZ Squirt, which sports a shortened bottle made from easy-to-squeeze plastic and needle-shaped nozzle that lets small hands use it to decorate food.

What's with the green?

"We asked kids what else could we do to make ketchup fun. They said it would be cool if we could make it a different color," says Casey Keller, managing director of Heinz ketchup, condiments and sauces. "So we made it green."

Gary Strauss, "Squeezing New from Old," USA Today (January 4, 2001): 2B.

Questions: Figuratively speaking, what is your "green ketchup"? In other words, what changes or improvements would you like to see in the goods and services you buy?

Author Notes 17-G: The Customers Wanted Green Ketchup What changes do I want in my everyday products? I don't know where to start--except NOT with green ketchup. As someone with carpal-tunnel syndrome, I wish containers in general were easier to open. It would be nice if all cereal boxes could be about the same height. As both I and my eyes get older, directions and serial numbers could stand to be in a larger type--14 point, for instance, when there's room. Pop-up lids on pump bottles are my special bane. It seems like I'll never be able to get them turned properly to pump. I could go on and on. How about you?

17H. Taking TQM to Heart
Medtronic pacemakers are implanted in about 250,000 people every year, and the technology has proved remarkably able to evolve with the times. The basic idea is still to supplement the body's electrical system, yet just about everything else about the product has changed. It has shrunk to the size of a small stopwatch--and packs uncanny intelligence, which lets it sense when your heart is doing fine on its own and when it needs help. It can be fully implanted in the body yet does not require major surgery. A surgeon cuts a four-inch slit under the clavicle bone, creating a pocket for the pacemaker. Then an insulated wire with a silicon tip is fed through the subclavian vein to the inner wall of the heart.

Bethany McLean, "How Smart Is Medtronic Really?" Fortune (October 25, 1999): 176.

Question: Why is it appropriate to call TQM a quality-of-life issue, not only for pacemaker patients, but for every one of us?

Author Notes 17-H: Taking TQM to Heart Pacemakers used to be the size of a couple of packs of cards, and having one implanted meant serious surgery. Once implanted, it took complete control of setting the pace for a person's heart. Regularly, further surgeries had to be performed to replace the battery. People wearing pacemakers had to avoid microwave ovens, hence the warning signs in restaurants, because they could disrupt a pacemaker's performance. Improved design and better quality led to superior pacemakers and much more. From something as simple as a VCR that sets its own clock from cable TV, eliminating the blinking 12:00, to something as complex and life influencing as a pacemaker, TQM provides the gift of better product and service quality for all aspects of life.

17I. Which TQM Tool?
Situation: A mutual fund company raised its minimum initial investment from zero to $2,500.

Why? Smaller accounts are just too expensive. "About 41 percent of all our phone calls were from people with account balances of less than $1,000," said a company official.

John Waggoner, "Twentieth Century Plans for Millennium," USA Today (August 11, 1994): 8B.

Question: This line of thinking is best explained by which of the seven basic TQM tools? Explain your reasoning.

Author Notes 17-I: Which TQM Tool? Pareto analysis shows that companies are often involved in non-value-added activities. In this case, the customers who provide the smallest return in terms of dollars take up a disproportionate amount of time in terms of phone calls. By raising the bar for entry to $2,500, the company is in effect eliminating the smallest, and most unsure, investor. The critical question is: Is this the best decision for the company? Although this one analysis alone makes it look like the decision is potentially good, other issues may have an impact. For example, how many of its larger customers started out as smaller ones? By eliminating the small investor now, is the company compromising a feeder system for its customer base? Also, do the new salespeople end up bringing in the bulk of those smaller customers? If so, they stand to lose a critical part of their initial pay opportunities. Even the best analysis system in the world can lead to a bad decision if the decision is made in a vacuum.