Fourth Generation Management

1. Prologue

Fourth Generation Management is intended to make known the work of American guru and consultant Brian Joiner, of whom I am proud to be his disciple and follower of his projects and teachings.

His lessons and descriptions of the problems that afflicted and still afflict companies perfectly describe the inefficiencies and inefficiencies that I saw in my time at numerous important companies in banking, construction, agribusiness, food, health services, and logistics among others.

Despite the time that has elapsed, the old paradigms of administration have not yet been demolished in a multitude of companies, which are seen day after day subjected to the new norms established by international competition. Unfortunately, the ideas and philosophies of Deming, Juran, Taichi Ohno, Ishikawa, and Imai are confined to small circles in the academic world, but few of them are known by those in charge of directing or advising companies.

When a company is not generating profits, loses market share in the hands of other companies, and ends up laying off staff, or permanently closing its doors, the first thing that journalists, economists, unions, and business chambers point to is exchange and monetary policies, the need for subsidies and barriers to imports, and tax pressures. Undoubtedly, the environment in which the company operates is important, but very few or almost no one points to the terrible decisions and business management systems. Nobody wants to take charge of their own disabilities and inefficiencies, it is much better to ask the State for support.

In South America we have seen and experienced state policies that absorbed most of the credit capacity of banking entities, therefore they only took funds from the public, their subsequent placement was guaranteed and it was the State. They should not do marketing to place the funds, nor analyze the client’s ability to pay, since this was the State and it ensured the payment. Revenues were assured and high given the imperative need of the State to finance its growing fiscal deficits and its loss-making companies. Given this context, little concern was made to make management more efficient. The construction companies were governed and still are governed by constant inefficiency, covered, when it comes to public works, by acts of corruption, overpricing, and the lack of quality control of the works. Given these circumstances, it is of little importance for managers to fight against waste and deficiencies. In the same way, each of the companies can be described in the South American context. These companies, these businessmen, and these workers are not trained or prepared to compete internationally, and their survival is only feasible in the context of protectionist policies and submerged in subsidies.

2. Introduction

Many, still in the urgent need to improve the prices of their shares, resort to improving the results at any cost, even exposing themselves to the loss in the quality of their products and services, reducing customer and user satisfaction, or destroying the foundations to compete in the future.

Other companies are only feasible in a protectionist framework, cannot export, and if tariff or para-tariff barriers are lowered they would quickly disappear.

A large number of companies survive despite their inefficiencies within an environment that is favorable to them. As soon as there is the slightest change in exchange rates, their ability to compete is noticeably affected.

Companies have been incorporating to some extent different practices aimed at improving their ability to become more profitable, but they still do not combine the need to be competitive, incorporating various tools and systems, but also integrating these within a philosophy of action.

What is dealt with here is the urgent need to develop better methods to achieve better results. The point is to focus on productivity. Does this word ring a bell? Very few managers and businessmen talk about productivity, productivity with calculations, and a statistic of its evolution over time. For this reason, it is common to hear from them how much the salary of a professional or employee costs in absolute monetary terms and not how much it costs them in relative terms of productivity. Most of the time these low-level entrepreneurs and managers hire low-paid staff with appallingly low levels of productivity.

Has anyone seen periodic reports on the amounts of waste, how it is made up, its evolution over time, and what is planned to reduce, eliminate and prevent it? Most likely, the vast majority will answer that they have not seen it. And without a doubt, if they continue with the traditional way of managing companies, they will not see it in the future either, and perhaps the day will come when they will not continue to see the company standing. An organization is in the market to produce value for consumers and users of its products and services, not to generate waste. However, a notorious number of companies are serial producers of waste, all these are ultimately paid by consumers, by workers with lower salaries, by owners and shareholders with lower income, or by the community with higher taxes destined to support wasteful producers, most often a combination of them. In other words, poor management allows inefficient, highly paid managers to generate large amounts of waste, which are “subsidized” by workers, shareholders, consumers, and the State.

The numerous principles and techniques useful for managers to achieve better results with less waste have begun to form part of the framework of what is called Fourth Generation Management. This managerial approach is the result of the theoretical and practical developments of figures such as W. Edwards Deming, Peter Drucker, Kaoru Ishikawa, Joseph Juran, Taichi Ohno, Walter Shewhart, Kano, Taguchi, Shigeo Shingo, Imai, and Brian Joiner.

3. How good are we? How fast do we improve?

When proceeding to the analysis and diagnosis of a company, the fundamental question is not only to know the results in terms of sales, market share, levels of productivity and quality, or profitability but whether there are improvements and the fundamental question, at what speed about its competitors is doing. Joiner tells us that the most important question is not, are you making progress, but are you making progress fast enough?

Many executives, managers, investors and owners, and even risk analysts, lose sight of the speed at which their main competitors are improving and progressing. Starting from having a certain position in sales volume, they lose sight of the speed at which the sales of their competitors are growing, competitors who, by growing faster, are eating away at their market share. A reduction in market share implies a loss in the ability to set prices and conditions.

Many entrepreneurs of small and medium-sized companies are satisfied with a certain volume of sales and profits, but if their competitors incessantly increase their sales volumes, they will register significant reductions in their costs and therefore will be able to displace those conformist entrepreneurs, which will begin to have as a relevant concern to survive.

Even producing exclusive goods, the speed at which new inventions and models are incorporated compared to that of its competitors will imply being able to continue in the market or having to abandon it.

In a globalized economy, either it improves quickly or sooner or later it is out of the market. Entrepreneurs and managers realize that if they don’t find ways to improve the most important issues at a faster rate, they will soon be outpaced by organizations that do. The question these businessmen and executives ask themselves is: what to do about it? And how to improve more quickly, year after year? The answer to such questions is provided by fourth-generation management.

4. The first three generations

What are we referring to when we talk about Fourth Generation Management? To understand it, we must first know what the three previous generations are. In first-generation management only the owner works, he determines his way of doing things, when and how to do it. But this has a very important level of restriction in terms of the volume of operations. So the owners hire staff to whom they specify what tasks they must do, how to do them, in what time, and in what quantity, this being the second generation management. The increase in the training of new employees makes them adopt another position. They tell the owner “what do you want me to do, how much and for when? And let me take care of carrying it out.” The latter is third-generation management.

We can say that second-generation management presents standardized work methods, while the third-generation emphasizes objectives, which is called management or management by objectives. Management can and in fact, occurs with work standards and that also sets objectives for its personnel or sectors.

The problem is generated when it comes to achieving higher sales, lower costs, faster production times, decreased absenteeism, lower inventories, fewer levels of production defects, and better levels of productivity and customer satisfaction. There are three ways to achieve this type of result:

Improve the system. Through fundamental changes that improve quality, prevent errors, and reduce waste. This way of managing is in line with the philosophy of continuous improvement, especially with the kaizen system.

Distort the system. Achieve the required results to the detriment of other results. “Do you want lower inventories? No problem!” Inventories disappear as if by magic, but with the risk of great costs in other operations of the organization. In some cases, the system is distorted by the employees to comply with the objectives that have been set for them, and other times they are distorted by the company itself as a system for achieving results. An example of this is often construction companies. They have a signed contract and an established price for the work. When the cost of some raw materials rises, they place other less expensive inputs, thus varying the quality of the work. I’ve even seen it in pet food manufacturers. These foods already had an established formula, well, if the costs varied, the order that was given was “keep costs down”, leading to changes in the quality of the product. In reality, what should be aimed is to analyze the manufacturing process and improve it by eliminating the different types of waste that only generate higher costs.

Distort the numbers. Use creative accounting. “We no longer include that in inventory; It is registered in the books of our supplier.”

Which of these options would you want your employees or the company to use? The first, without a doubt, consists of improving the system. But the vast majority of executives openly confess to witnessing many distortions, whether it is the distortion of the system or the figures. Because? Because from the perspective of the third generation, the employees and the managers themselves are judged and rewarded based on the results. They are rarely given the knowledge and skills to use the first option, often receive poor advice or training to improve a system, and are often evaluated solely based on results, not an improvement. Hence, to achieve the required results, they resort to distorted figures and systems.

Perhaps these days the most resonant case is given by Volkswagen and the emission of pollutants from its vehicles. It all started with the US Environmental Protection Agency (EPA) which discovered that the Volkswagen auto company had manipulated the performance of its cars to make up the figures for polluting emissions downwards. In other words, when the vehicles were put to the test to measure their emissions, they did not give an exact measure of what they polluted. According to the EPA, in real driving circumstances, pollution levels are 40 times higher. What was the fraud? In the abusive use of a test mode that is used precisely to test the operation of cars on static rollers in a workshop. This test mode is not bad by itself and is used by many companies, but Volkswagen manipulated it to fool the Environmental Agency and the California Air Quality Agency. Both organizations carry out their emissions tests by placing the vehicles on rollers in a workshop, and Volkswagen altered the operation of the test mode so that the engine worked in a regime with controlled emissions during the tests. On the road, this control stops working completely. We have in this example a distortion of the system, where before a rule established by the laws and regulations about the maximum levels of gas emissions, those responsible for the company, instead of concentrating on improving the production processes and the products themselves, turned his attention to altering the system to pass the emission tests. This represents a distortion of the system as opposed to an improvement aimed at satisfying legal and consumer requirements.

5. Management from the perspective of the fourth generation

The world lived, lives, and will live through rapid and very profound changes. Currently, in a few years, we contemplate more changes than those that our great-grandparents, grandparents, and parents contemplated in their entire lives. The world has shrunk, and now it is possible to communicate or have news of any event on the other side of the world instantly. Distances have been reduced, and in a short time, it is possible to travel great distances.

The Internet has revolutionized the world of communications and also of information and knowledge. Huge databases are accessible to billions of people. The products and services offered, their quality, and their cost are known in a way that has never been possible before.

The fall of trade barriers and the notable reduction in costs and times in terms of communication, such as transportation, make the globalized economy feasible today.

Companies are no longer witnessing products with long life cycles and a low variety of products and competitors. This context forces companies to have rapid product development processes, as well as to make their production lines efficient to have the capacity to generate a wide variety of products for the market. Here it is clear that it is essential to be faster than competitors if you want to stay alive in the market. Speed ​​to incorporate new products, speed to develop more efficient production methods, speed to conquer the market. Speed ​​to improve staff training. Everything today is speed.

It is in this new environment that directors, managers, and supervisors must fulfill their functions. It is in this context that business managers must make decisions. A world with enormous changes. Today’s changing marketplace demands a transition to a new generation of executives.

Managing from a fourth-generation perspective recognizes the drawbacks of the first three generations and incorporates appropriate methods to overcome them. They avoid the limited capacity of the first generation, the micromanagement of the second, and the distorted numbers and systems of the third. Fourth-generation managers place great importance on results, but they know that they must be achieved by concentrating on system improvement.

Changes in the form of leadership. Changes in what is measured and how it is measured. Changes in working methods. Changes in the way of making decisions. Changes in the way of solving problems. Changes in what is reported and how it is reported. All these changes require a new form of management, being also the result of them.

6. Joiner’s Triangle

Brian Joiner designed a triangle whose three vertices expose the fundamental concepts that make fourth-generation management.

The first of these vertices, which is at the top of the triangle, is quality. But what quality is it talking about? We talk about the quality demanded by consumers and users. It should be understood that the user is the one who defines the quality. The company must be obsessed with pleasing customers and not be content with just freeing them from their immediate problems, but go further to fully understand their present and future needs, to surprise them with products and services that they did not even imagine. In the aforementioned case of Volkswagen, the company left aside the quality objectives demanded by its customers, society, and state agencies.

The following questions should be asked:

• Do we know the quality requirements of the customers?
• Do we know what the needs and desires of customers are?
• What is the level of quality that we are obtaining in terms of products, services, customer service, and contacts with them?
• What are our competitors offering that we are not offering?
• What systems and work methods are in place to ensure and improve quality?
• What are the costs of quality and non-quality?
• How high are the losses generated by failures and reprocessing?

The second vertex, which is at the base of the triangle and supports the achievement of quality, is the scientific method. This points to the need to direct an organization as a system, developing thought centered on processes, basing decisions on information, where the possession and analysis of statistical data occupies a fundamental place, and also knowing the variation in the evolution of the processes and their implications.

In this regard, the following questions should be asked for analysis and search for answers:

• Do the objectives of each area of ​​the company take into account the restrictions and possibilities of the other areas?
• Is there timely, low-cost, and quality information to detect problems and make decisions?
• Is the efficiency of the different company processes regularly analyzed?
• Are there statistics on the various aspects of the organization, both in its commercial, productive, administrative, and logistical aspects, which serve to detect shortcomings, and waste and make better decisions?
• Is the production within the limits specified as normal?
• Do the variations respond to natural factors in the system or to special factors?

The third and last vertex, also placed at the base of the triangle, is the existence of a fully integrated team. This leads to the urgent need to believe in people, treat all members of the organization with respect, trust, and dignity; ensuring that all those related to the company, be they customers, employees, investors, shareholders, suppliers, managers, and the community, always win and not just sometimes.

What should the director or manager of a company ask himself about it?

• What is the staff recruitment policy?
• Do you have staff development plans?
• Is the staff qualified based on individual objectives or based on their performance in achieving the objectives of the area and the company?
• Are suppliers selected by price or by total cost, which includes both price and quality, delivery in quantity and opportune times, and payment methods, among others?
• Are the needs and desires of consumers and users taken into account?
• Are customer needs taken into consideration? (Not only from the point of view of quality but of interconnection, delivery times, and collection systems, among others).

Both when diagnosing the progress of the company and when planning the actions to be taken, it is critical and fundamental to take each of these vertices of the triangle into consideration, always taking them together and not in isolation. First and essential is always quality for both external and internal clients, taking into account the quality demanded by them and their needs. From there, meet at least those needs. Manage the organization as a system, concentrating on improving the operation of its processes day by day, providing for such improvements of measurements and statistical records. Integrate in said planning and execution all those linked to the company, so that everyone wins from the common and joint effort.

7. Quality and productivity go together

Many executives and managers still have the paradigm that to achieve higher quality it is necessary to give up productivity. This is the result of the fact that for years it was taught that if you wanted to increase productivity, it was necessary to sacrifice quality and vice versa. In the case of some techniques, such as a more rigorous and frequent inspection, it is true that higher quality costs more, but this is still admissible today given the incorporation of work methodologies such as poka yoke and the jidoka. Many businessmen claim to offer quality, but it is a quality obtained by eliminating defective products at the end of the process, or by proceeding to successive adjustments and reprocessing until reaching the optimal product. Undoubtedly, the quality of such a characteristic is expensive. And it is expensive because the strategy and quality system is inadequate and contrary to quality. Quality is not controlled, it is produced, in such a way that increasing quality leads to a reduction in costs, since there is less scrab, less reprocessing, and greater satisfaction of users and consumers.

Many companies are still managed under old and ineffective paradigms. These companies do not hold all participants in the manufacturing process responsible for quality, but instead hire inspectors or quality managers, who are in charge of measurements, evaluations, and quality management. Today this is not admissible, if a sector participates in a process and produces goods and services, this sector is responsible not only for producing but for doing so with the highest productivity and quality.

Does your company have a Head of Quality Control? Does your company have a sector dedicated to quality?

Another paradigm that is no longer competitive is to select suppliers based on prices, instead of doing so based on their total costs, which include the quality and security of deliveries in time, form, and quantity. What good is it that a supplier’s price is the lowest if it is necessary to buy minimum quantities to access said prices and those quantities force maintenance, insurance, financial and administrative costs to be incurred? What good is a lower price, if the payment conditions stipulate the advance deposit of the sum of money? What good is the lowest price, if the deliveries are not on time or have excessive delivery times for the needs of the company. What good is a low price if quality problems force us not only to reject the inputs, but also to have to return them, not having the necessary material when carrying out the processes, and all the expenses and costs associated with the return procedures? Without counting that the quantities stipulated in the purchase are not met or there are missing parts. However, even today many blindly continue to select by price while neglecting the total cost.

How does your company select suppliers? Do they take into account quality levels, the ability to adapt to needs, just-in-time delivery, and intercommunication costs?

In companies that follow outdated and uncompetitive parameters, emphasis is placed on controlling the quality of inputs and machinery, but they do not proceed to control and improve the quality of their human resources, which are essential when it comes to improving quality. quality and productivity. The management of the fourth generation not only takes into consideration the development of quality but also of human resources, which are the fundamental factor when it comes to generating quality, productivity, innovation, and services.

What criteria are taken into consideration when selecting personnel? Based on what parameters is the staff qualified and rewarded? Are there continuous training plans for staff in terms of quality and productivity?

Another fundamental issue is the lack of participation of the line personnel in detecting the causes of the failures and searching for solutions, something that in modern companies is solved through the participation of the workers in the Quality Control Circles.

Does the staff actively participate individually and as a group in solving quality and productivity problems? Are there Quality Control Circles in the company?

In general, traditional companies suffer from the lack of statistics regarding defects, as well as consumer and user complaints, as well as the factors that originated the defects.

Are there statistics on the number of cases by type of defect, the monetary cost by type of failure, and the causes by type of defect? Of the global causes of defects? Are there statistics on customer complaints? Are monthly reports made based on these statistics for directors and managers?

The traditional company takes the existence of defects as normal, only targeting their solution but not adopting any type of measures for their prevention to avoid their reappearance in the future, which is why the reappearance of defects is constant and regular.

Are the problems and defects repeated? If the defects are repeated, are there improvements in terms of their reduction and severity? Are there training and plans for problem-solving? Are there standardized systems in the company for the solution? of problems? When solving problems, do you go to the root cause of them? Are improvement systems applied? Are improvements standardized? Are there work standards? Are these standards met? compliance in the application of the established standards regularly?

In traditional companies that respond to the old and obsolete management paradigms, more resources are allocated to control than to failure prevention.

How much is spent on control activities and how much on prevention tasks? Is there a management accounting that takes into account the costs of quality and non-quality?

The improvement of the quality not only is not contrary to the improvement in productivity and costs, but it is essential to achieve the latter. Both at the governmental level, as well as at the level of business chambers, at the level of consumer associations, and the companies themselves, every effort must be made to continuously improve quality.

8. Deming chain reaction

Dr. Deming placed a strong emphasis on the great importance of quality when it comes to being competitive. For Deming, quality improvement generates a chain reaction that leads companies to increase their competitive capacity. His teaching reached Japanese companies first, and once they put North American companies in serious trouble, the latter took into account the teachings of the great teacher.

Deming made it clear that an improvement in quality leads to a subsequent reduction in costs, thereby generating an increase in productivity. All of this makes it possible to reduce prices, which allows the market to grow, guaranteeing the permanence of the company in business. Only compliance with all the previous steps in the chain makes it feasible to create more and better jobs. This is something totally forgotten or even unknown to Latin American politicians, whose sole and fundamental response to unemployment is the incessant creation of jobs in public administration .or the delivery of subsidies to companies to create more jobs when in reality these jobs can only be generated with higher quality and productivity in business processes.

As a final result of this process of improvements and increased competitiveness, investors achieve an increase in profitability.

As long as managers cling to the outdated belief that quality and productivity are at odds, they will be unable to accept the principles on which fourth-generation management rests. If we learn to cooperate, if we apply a scientific method, and conceive of the organization as a system, we will have the possibility of pleasing all the stakeholders in the company, offering them better quality, lower costs, less waste, higher productivity, better profitability, and better quality. greater competitive capacity.

9. The organization as a system

The organization as a system is configured by a set of components and processes, which operate jointly and interrelated for the realization of a certain purpose. The purpose must be clear and precise, and be pursued by all components and processes of the organization. In turn, each process and area will have objectives whose realization is necessary to achieve the common objective of the organization. Without a common goal, the members of the organization lack a frame of reference that regulates their actions. They operate individually, like fiefdoms, each following its direction.

Each sector and process has restrictions, to achieve the best functioning of the organizational system it is necessary to recognize which are the same and make decisions based on them. A good example of this is that the sales area does not generate more sales than the area of production can satisfy. Neither can customers be promised delivery times with which production and logistics cannot satisfy. In the same way, the terms of payments to suppliers cannot be less than the payment terms for customers. The only way that this could take place is through the use of financial credits, with the costs that this implies for the organization. At the personal level, the same thing happens, if individual results are rewarded we will have a lack of collaboration among the members of the organization, where each one pays more attention to their benefits as opposed to the benefits of the organization as a whole.

In all the processes of the organization, to achieve the best performance, it is necessary to perfect the system as a whole and not search for the perfection of each component separately.

In this optimal functioning of the system, to be truly competitive requires genuine teamwork from the organization as a whole. Many companies fall into the void due to the lack of teamwork and optimal complementarity within each sector and process, and between sectors and processes.

All sectors must contribute to the quality and productivity of the company. The sales and customer service area must not only have quality in its way of serving customers but must also register complaints due to shortcomings in the products or services of which customers inform it, in such a way that the operational areas that generate the products and services make the pertinent adjustments and corrections.

Does the company have clear objectives and are these known to all its members? Are the objectives of each area or sector compatible with the general objectives of the company? Are the objectives set compatible with the real capabilities of the company? Is there complementarity and support between the various areas of the organization?

Many companies fall into the trap of treating divisions as if they were independent of one another. Imposing limits on each functional area or each business unit, and then trying to improve them separately.

Do the sales and customer service staff take note and record customer complaints for various kinds of product failures? Does the staff make a periodic written report of customer complaints, with details of the products, customers, date, and characteristics of the problems? Do salespeople contribute new ideas to the product development area?

10. Focus on the system

It is always necessary to consider how each element of a system contributes to its success.

A fairly common attitude is centered on believing or pretending that the organization’s problems will disappear if the employees fulfill their obligations more quickly or correctly. This concept of improvement leads us to blame them for the problems.

Making use of relevant information and evaluating it properly has led fourth-generation managers to understand that performance is largely determined by the system in which employees work; In such a way, the policies, processes, procedures, training, equipment, and materials used are the ones that end up affecting the performance of employees and consequently of the organization.

The ability, capacity, and motivation of the individual are important, but the role they play is less than was once attributed. In this way, when problems arise, it is better to first focus attention on other elements of the system: hence the well-known phrase “blame the process, not the person”. We have to ask how did the process allow this to happen, rather than who did the work?

Almost all problems come from the system or process, and not from the worker. In the early 50s of the last century, Joseph Juran discovered that only an average of 20% of production problems were controllable by the employee, therefore the remaining 80% depended on the system and managers were responsible for them. this. Unfortunately, this issue is something unknown and even left aside by businessmen, managers, and even business consultants.

For Juran, for a production problem to be controllable by the employee, meant that the worker:

He had the means to know what he had to do.

He had the means to know what he was doing.

And, he had the means to close the loop between what he did and what he had to do.

Thus, Dr. Juran found that the most important part of the problems was beyond the control of the worker. Therefore, if employees always did their jobs to the best of their ability, only one-fifth of all problems would disappear. The highest percentage of difficulties resides in processes, methods, systems, policies, equipment, and materials, something that only managers can change.

Are the workers informed of the work standards? Have they indicated the objectives that they must meet? Are the achievements systematically and periodically measured, controlled, and reported to the workers? In compliance with the standards audited? Are workers and employees informed of the differences observed between the standards and the recorded facts? Are they provided with training, empowerment, tools, and instruments, to correct problems, avoid their reappearance, and prevent them?

Dr. Deming stated that according to his particular experience, more than 96% of problems can only be solved by managers, which leaves less than 4% in the hands of employees. Does this mean that managers should be held responsible for 80 to 96% of problems? No, accepting it would be tantamount to falling into the same trap again. The instinct to want to blame someone for problems and inconveniences must be overcome. Executives and middle managers alike must examine themselves to find out what compels them to act in certain ways.

Of every 100 failures, the reasons that generated them can be found, on average 20 will be due to faults or errors by the employees, and the remaining eighty will be due to problems with materials and supplies, machine operation, product design, and design of processes, among others. Be that as it may, there will always be a person behind it, be it the one chosen by the supplier, be it the one who does the maintenance and repairs of the machines, be it the one who acquires the machines and tools, or the ones who hire or train the personnel. What it is really about is generating systems that limit, reduce or prevent the generation of failures.

As long as we continue to personalize the difficulties, that is, as long as we limit ourselves to finding out who is to blame, we will continue to have them, because the causes are most likely to be found not in the person but in the system. Blaming employees is an ineffective strategy to achieve improvement, the great opportunities, the greatest advantage, is to improve the system.

11. Correction levels

There are three levels to correct problems. The First Level focuses on correcting the product and sometimes not even correcting it, but only separating it from the good products that will be delivered to customers. It is the most expensive since it involves scrab costs and reprocessing costs. No less pernicious are all failures not detected within the organization, which will end up affecting customers and consumers, and therefore the costs of repair services, customer service, returns, and loss of future sales.

Level 2 focuses on the correctness of the process. This implies improving the process that made the generation of failures or problems feasible. Any device installed to avoid failures is a way of correcting the process, it is also looking for better methods, standardizing them, and training personnel to put them into practice. A very common way to achieve this is through the application of Statistical Process Control, with which it is possible to monitor the operation of the process and proceed to make the necessary corrections.

Level 3 focuses on fixing the system. It involves changing the system that allowed the faulty process to cause the failures or problems. This leads us to think about the root cause of the problems, and therefore act on the real causes that originate them and not on the symptoms.

The challenge in Tier 3 system fixes is locating the causes and then taking action to eliminate them.

When talking about a pernicious system for the organization in its internal processes, we are talking about:

• Lack of a clear objective in the organization.
• Barriers between departments or businesses.
• Administration for rewards and/or punishments when goals are achieved or not.
• Relying on inspection and rework to correct problems rather than adequately prevent them.

Not understanding that providers are part of the system; pitting them against each other through purchases based exclusively on compulsive prices.

Improving systems (Level 3) involves overcoming these harmful and destructive practices.

What are the objectives of the organization? Are these known by all the members?

Is there horizontal communication, or is it done only vertically following the pyramid scheme? Is there freedom and confidence in each area to share problems with the other areas of the organization? Does the sector give priority to the organization as a whole? Is it managed at a fief level?

Are rewards or punishments applied to motivate staff?

How are quality levels that meet specifications achieved? Is the quality of the products controlled after the processes are finished, separating those that are acceptable from those that are not, for their discarding or reprocessing? Are systems designed to prevent the generation of failures being applied?

When purchasing inputs, goods, or services, is it done taking into account only the price, or is the total cost taken into account?

12. How to make use of leverage points

Every system, no matter how large or small, consists of steps, elements, or components that, when perfected, significantly improve the overall functioning of the system. These leverage points are minor but their effect is very large.

Thinking in terms of leverage points is critical, both from a theoretical and a practical point of view. There are organizations, divisions, departments, and even individuals who delude themselves into thinking they can manage twenty priorities at once. Presumably, these issues take precedence because of their possible impact on the success of the company. However, if you have twenty priorities, you end up having none. Truly successful are those organizations that can focus on one, two, or three of the most important leverage points. For example:

• Most customer complaints concern only a few products or services.
• Budget overruns are due to only a few factors.
• Most of the defects or errors in a process occur only in some of its steps.
• There are a few types of failures that accumulate most of the detected failures.
• Almost all of the revenue comes from a few customers or types of customers.

Thus, one way to identify leverage zones is to isolate the vital points from the rest. For example, it is necessary to determine who the main customers are and which problems explain their dissatisfaction almost entirely. Those points will provide the opportunity for great leverage. In the ’50s of the last century, Dr. Juran made very clear the transcendental importance of this type of thinking in quality improvement, giving it the name of the Pareto Principle. Juran pointed out that this principle applies to a wide variety of situations. He called it the 80/20 rule because according to his observations and tests, approximately 80% of the problems are caused by approximately 20% of the factors. This involves making the difference between the vital few and the trivial many. In other words, a few factors account for most of the problems, cost, waste, or delays, and many other factors account for a minority of them.

To see this at a practical level, it is necessary to build the Pareto Diagram. We are rarely able to immediately solve a complex problem. Usually, we need to focus on one of its elements, and for this, we use the principle and the Pareto graph. In general, we are more likely to succeed by concentrating on reducing the major cause of the problem than by striving to eliminate one of the minor causes.

The idea of ​​focusing on leverage or support points manifests itself in two other ways when we try to improve processes: critical paths and bottlenecks.

The analysis of critical paths allows us to reduce the completion times of a project or process. For this, it is necessary to differentiate the minimum necessary times from those that are not, in such a way that attention must be paid to reducing the minimum times. In this way, not only will time or deadlines be reduced, but also costs.

About bottlenecks, consultant E. Goldratt gave them the name of restrictions. They are those points of a process that limit overall productivity. Thus, to improve total capacity, it is essential to know how to manage the process or processes in light of their bottlenecks. There will always be restrictions in any system, the fundamental question is to recognize their existence, detect them and find a way to eliminate them.

13. Thinking focused on leverage points

Knowing where the leverage points are within the company is imperative when prioritizing short- and long-term strategies. This knowledge allows us to focus on taking and improving the appropriate actions.

Thinking centered on leverage points involves asking questions such as:

• If we were to improve this point, would the number of customers who gladly buy our products or services increase significantly?
• The improvement in this point would contribute decisively to consolidating the loyalty of our current customers.
• Would an alliance with another company to make the most of this opportunity have a profound impact on our ability to work?
• If the market changed in some sensitive aspects, would this affect our most vulnerable area?
• If we improve this, would we make a significant contribution to lowering the total cost structure?
• What are we doing this for?
• Why are we doing it this way?
• What concepts or processes centralize most of the costs?
• Who are the customers on whom most of the benefits are focused?
• In which area do most of our sales focus?
• What products or services do most of our sales focus on?
• For a given type of failure, what are the most important causes?
• What are the failures where most of the quality problems are concentrated?
• What are the failures that generate the most waste?

Oddly enough, most managers and traditional businessmen do not ask themselves these types of questions regularly and systematically, for this reason, their companies suffer from serious inconveniences to be competitive. Not thinking of the organization as a system, and not paying attention to leverage points, leads companies to not require or have information for proper management. How do plan, control, make decisions, and adopt measures, when there is a lack of information and thought focused on organizational systems and processes?

14. The PREA Cycle

In a traditional company or one lacking in competitiveness, no measures are adopted to ensure the proper functioning of the processes, nor the quality of the products generated, in the same way, there are no established measures to ensure the quality of internal information promptly. Nor are control measures or programs usually adopted to detect deviations, inconsistencies, or lack of compliance with standards and specifications. In many cases, although there are controls, they are not carried out systematically or adopting a methodology that ensures the detection of deviations, failures, inconveniences, and difficulties promptly. And if problems are detected, no measures are taken to correct their root cause so that they do not recur in the future.

The PREA Cycle (Plan-Do-Evaluate-Act) must ensure the competitiveness of the company through learning and continuous improvement. When planning, not only the objective, the means, and the action destined to carry out the business processes must be taken into account, but it is also necessary to anticipate that it may not go well, and therefore adopt measures to ensure that this does not happen, and if it does take place, the measures for its immediate correction are already planned. The next step is to carry out the previously planned activities and processes, that is, Carry out what has been planned. For good execution, it is necessary to have properly trained personnel to carry out the planned activities and processes. It is also essential to have proper supervision, for which it is critical to have a motivating capacity. The third step is the Evaluation, which will be carried out continuously by the performers themselves, by the internal recipients of the products, reports, and services, by the areas dedicated to management and budgetary control, and by the internal auditors. The question is how to ensure a good and correct evaluation. And what and to whom to report on the results of the evaluation? Finally, it is necessary with the results of the evaluation, it is necessary to Act, which implies adopting measures to Standardize the processes or adopt corrective measures so that the same deviations and incorrectness are not repeated in the future. In this way, the PREA Cycle ensures learning and continuous improvement in the activities and processes of the organization. The question is how to ensure a good and correct evaluation. And what and to whom to report on the results of the evaluation? Finally, it is necessary with the results of the evaluation, it is necessary to Act, which implies adopting measures to Standardize the processes or adopt corrective measures so that the same deviations and incorrectness are not repeated in the future. In this way, the PREA Cycle ensures learning and continuous improvement in the activities and processes of the organization. The question is how to ensure a good and correct evaluation. And what and to whom to report on the results of the evaluation? Finally, it is necessary with the results of the evaluation, it is necessary to Act, which implies adopting measures to Standardize the processes or adopt corrective measures so that the same deviations and incorrectness are not repeated in the future. In this way, the PREA Cycle ensures learning and continuous improvement in the activities and processes of the organization.

For those of us who have been internal auditors, we know what a waste of resources is when audits are carried out and the same problems, errors, and inconveniences are systematically detected, which are reported and reappear in future audits. In other words, the officials to whom the audit reports arrive do not act to adopt measures aimed at avoiding the repetition of the problems. It does not stop always turning around the same failures and problems, which avoid improving the performance and productivity of the organization, generate multiple wastes, and are a reason for demotivation.

Based on the PREA, the continuous improvement process is carried out. Once a product or process has been improved, further improvements are planned, which initiates a new Plan-Do-Evaluate-Act process. PREA is the essence of managerial work: making sure the job gets done today and creating new ways to get it done tomorrow. The manager’s mission is to make sure that both they and the employees plan the precise work that needs to be done, follow the plan, study the results to verify that the goals have been achieved., and then measures are taken to remedy the shortcomings, to understand and not forget the lessons. The efficiency with which the work is carried out and the speed with which they learn to perform the tasks and improve the processes will depend on the frequency, speed, and effectiveness with which we complete the PREA cycle.

The entire PREA cycle is important if rapid improvement is desired. But among all the steps it is the Evaluation that favors rapid learning. If it is omitted, it will be practically impossible to improve. Evaluation is something that few organizations carry out on a regular or adequate basis. On the contrary, they are limited to the Plan and Carrying out steps, and this planning does not usually include Prevention as an action aimed at ensuring the correct functioning of the processes and obtaining correct products and services.

PREA, and the scientific method in general, necessarily requires new ideas about how to make things work better. Without them, improvement cannot be achieved. A fourth-generation organization wants to receive ideas from all over the world, but there are many ways to stifle them. Here are some of the most listened-to:

We’ve never done it like this before!

If it ain’t broke, don’t fix it!

Keep it real!

In our case, it won’t work!

It’s too complicated!

“That is so weird”

“We will never get it approved”

These statements restrict creativity from its origins, deteriorating the ability to learn quickly and, therefore, to improve in a short time. It is necessary and preferable to make employees pay attention to their work, formulate theories, try new ideas, and dare to be creative.

15. Generate Added Value for Clients and Consumers

Fourth Generation Management must focus on customers and consumers, identifying and eliminating from the organization all those jobs that have little meaning or value to them. When excellence value is delivered consistently, customers become loyal “partners”. They always remain faithful and recommend the product or service. Making these objectives feasible implies knowing who the company’s customers are; for this, the first step is to identify the main customers or categories of customers. The next step is to know how the company’s products or services reach customers.

The third step is to recognize which characteristics are most important to the various customers and how each step in the customer chain increases value for the end user.

Detecting and eliminating jobs that do not add value and therefore what the client/consumer is not willing to pay for is essential. In reality, customers live by paying the cost overruns generated by the unproductiveness of the processes, the issue is that when competition increases and competitors are more efficient in managing processes, prices begin to drop and non-competitive companies begin to be marginalized by customers.

16. How do consumers define quality

For customers, “quality” is much more than the mere characteristics of the product or service they receive. They pay close attention to all interactions with the organization. The products and services that are sold are not just physical objects or one-time experiences, but all the services that accompany them, the toll-free technical support number, the guarantees, the sale from needs, reservation services, and billing, among others. In reality, you sell a “bundle” of products and services to the public to satisfy some needs. Poor quality of services associated with a product can drive away buyers just as quickly as if the product itself were bad. On the other hand, if both the service and the product are considered a good value, you will create loyal partners who will be happy to do business with you.

17. Model of customer perceptions according to Kano

According to the Japanese consultant Noriaki Kano, every product or service can have three characteristics. Two must exist yes or yes, the rest may or may not exist, and if it exists it increases the valuation that the customer makes of the product or service.

Necessary characteristics. They are the ones whose presence we take for granted. We expect them to exist, and for this reason, we pay more attention to their absence than to their presence. Thus, their absence bothers us, while their presence is indifferent to us. All the necessary features must be present; in case of any failure, we will be disappointed. Even when all of them are present, our attitude is no more than mere indifference. An example of this in a hotel cafeteria is the existence of sweeteners.

More is better. We will feel disappointed in this category, if a need is not adequately met, on the other hand, the better it is met, the more satisfied we will feel. If it is a product, we can say that the greater the variety of car colors, the better, and the smaller the variety of colors to choose from, the worse it will be. If it is a text translation software, the greater the number of languages ​​incorporated, the better it will be. If it is about services, a difference would be given by the number of hours of attention to the public, or by the amount of health coverage that it covers in the case of being a sanatorium.

Extra details. These types of details pleasantly surprise customers. They fill a need that they didn’t know could be solved or didn’t think anyone would be able to. Because these are unforeseeable situations, there is no negative effect when they are absent, but when they exist they cause positive reactions. Over time, what today is an extra detail becomes a necessary feature or more is better. Not long ago, the existence of Wi-Fi in hotel rooms was an extra detail, now it is being considered as something necessary.

For the directors and managers of a company, it is crucial to know the necessary characteristics and “more is better” that customers demand and to analyze how well each of them is being covered. On the other hand, it is very important to add extra details that can make a difference compared to what competitors offer.

What are the necessary features of your products or services, which are demanded by customers? Are measures taken to ensure compliance? Is its existence controlled or audited? Is customer satisfaction measured by them?

What “more is better” characteristics should your products or services possess? What measures are adopted to ensure maximum customer satisfaction? Are such features inspected or audited? Is customer satisfaction measured by them?

What features can you add to the products or services that are something extra not expected by the customer? Do your products or services today have one or more extra features that differentiate them from those offered by competitors?

When managers and employees understand Kano’s vision, this theory helps improve their understanding of customer needs.

First of all, it helps them to establish priorities in their work. Working to provide the extra detail has little impact if the necessary service or product is being neglected. The bottom line is to get rid of anything that annoys customers or drives them away: it’s almost always unsatisfied required features. Then we will be in a position to focus our attention on the “more is better” features and extra details.

And second, applying this framework should help employees avoid the mistake of assuming that no complaints equal customer satisfaction. Eliminating inconvenience keeps customers from walking away, but it doesn’t, and never will, create happy customers. For the rest, the non-existence of complaints may simply mean that they are not aware of other products or services, not that they are satisfied with the ones that are provided.

One must never lose sight of the fact that external customers are the decisive and conclusive judges of quality. Your positive votes will imply the continuity of the company, your negative votes will imply first a call for attention, then being left out of the market, or with meager survival in benefits and continuity over time.

18. Customer-oriented strategies

A fundamental principle from the perspective of fourth-generation management is that nothing happens in a predictable and sustained way if mechanisms are not instituted to achieve it. Practices and policies, whether explicit or implicit, have a profound effect on the way employees make decisions on a day-to-day basis.

Customers must receive value for the resources they deliver to the company. Value is generated by the company as a whole. Every one of the components of the organization participates and is responsible for the generation of value. Customers belong to everyone, not just vendors or the commercial sector. For vendors to fulfill their role, the production area must generate quality products, at a competitive cost and in the time for which they are required.

The client must stop being a number or a name only to make claims for payment issues, and to become a subject of respect and consideration. How many times have we all felt bastardized by large service companies, for which we are nothing more than subjects to which they aim to sell us services, but when it comes to making claims we count little, not caring in the slightest about our distancing as customers. Among these companies we have the classic telephone companies, and not to mention if it is about cell phones, banks, insurers, among others.

How many times do you bill for services that have not been required? How many times do you incur failures in your services? How many times do they show concern and deference to complaints? For a company in which the areas are not completely integrated, the problems always belong to others. In this way, if the complaint is for a bad product, for the sales area the problem is in the production area, and if the complaint is for bad information at the time of the sale, the problem is in the commercial area. All areas work for the same team, and problems in one area end up affecting the whole. Companies that do not understand this end up losing competitiveness and the ability to survive in the market.

19. Reach a fully integrated team

In soccer teams where the strikers are only interested in scoring goals but little interested in participating in defense, their ability to compete and win is low. But in those teams where everyone complements and collaborates actively, the ability to compete and win is high. In the same way, it happens in companies, there are no responsibilities for the areas only in what has to do directly with their function, but they must collaborate for the best functioning of the whole, only in this way can they compete and win in the hard fight of the market.

For a company, the quality with which the products leave the production process and warehouses must be as important as the quality with which they reach distributors, customers, and consumers. For this reason, a company must be concerned both with its processes and with the processes carried out by the transporting and distributing companies, of their goods and services.

In the new concept of a fully integrated company, there are no sectors in charge and responsible for the quality, others in charge of productivity, and others in sales. Everyone must and is responsible for quality, productivity, and sales. Although there are tasks that are specific to each area of ​​the company, such as accounting, management control, issuance of checks, payment to suppliers, purchase of inputs and hiring of personnel, among others, quality and Productivity are everyone’s responsibility, because everyone does or performs tasks in which they must be more productive, efficient, and meet the requirements or specifications.

Regarding sales, although there is a specific area in charge of carrying them out, all sectors must contribute to generating products and services, improving quality and reducing costs, providing information on customer needs, demands, and complaints, and improving delivery within the stipulated terms, courteously attend to the requirements, complaints, and orders of the clients, and proceed to a correct billing process.

Without a company truly working as a team, it will not be possible to beat the best competitors in terms of service, quality, and price. The survival of the company needs sectors that know not only about external customers but also about internal customers. To improve processes, it is necessary to know the requirements of internal and external customers, in terms of quality, quantity, response times, costs, variety, and security.

20. Have fully integrated staff

If you want to know something about the company take staff members and ask them “Do you like working here?”

From the answers you have and the reasons they give, you will have a clear vision of how the company is managed. The treatment that employees can give to internal and external customers, and the concentration, effort, and dedication that they put into generating value, will depend on how well the company treats the former.

If the company treats its staff with respect and consideration and helps them get things done, it will do the same for customers and the company. On the other hand, if they are blamed for the failures and problems, and treated with contempt and lack of consideration, they will adopt the same behavior towards the clients and the company.

Employees will not be able to give customers and the company the service and products they should if they fear making mistakes, if they are blamed for problems beyond their control, if chaos prevents them from meeting their obligations efficiently, if Decisions depend on the whims of managers rather than based on information and logic, or if numbers are more important than customers. Staff must be convinced that they are an important part of a team whose mission is to serve customers and consumers.

21. Managing in a changing world

Intuitively, we know that nothing happens the same way twice. The cause of this phenomenon is variation. Conditions are constantly changing, the world is full of variations. However, few realize the important role that knowledge of variation plays in effective management. Variation is a kind of fog that reduces visibility, a fog that hides the problems and the real improvements, thus confusing our perception of performance.

One of the first steps of a fourth generation manager would be to find a way to make the problem more visible, that is, to better understand the current situation. Variation is not something mysterious and inaccessible. On the contrary, it has a multitude of signs that offer clues about what is happening, signs that are essential for good direction. Knowledge of variation is an essential element of the scientific method.

These are productivity levels, processing times, delivery times, customer and consumer satisfaction levels, quality levels, tool replacement times, times between breakdowns, times for maintenance work, levels of delinquency, times of collections, fund income levels, sales levels, costs, among many others, are subject to the various rules and therefore must be subject to control, correction, and adjustments. The variations that are generated can be those resulting from common causes or from special causes. All measurements are subject to variation and its causes.

Common causes are those about the system and its regular environment. The ways of hiring personnel, training, motivating, controlling, and remunerating them, the way of acquiring the inputs, verifying their quality, their internal transportation, the type of machinery with which they are available, and the way of carrying out the work maintenance, the ways of arranging the layout and the designs of the products, services and the processes that generate them, all these factors condition a way of working and quality and productivity in the processes, with which they give rise to a series of average values ​​corresponding to a series of measurements which are subject to a greater or less variation. This variation is typical of the operation of the system and within the control limits, they respond to the factors that are specific to the system and its environment.

When the variations escape the so-called control limits statistically, we are dealing with special or exceptional causes. We also have special variations when, despite being within the control limits, the value of the measurements is significantly modified.

If the workers are not well trained to do the work and the processes are not correctly standardized, we will see regular variations due to these problems, and these variations will be due to common causes. But if the inputs received have a high percentage of defects and are placed in the production processes, the problems and variations that this generates will be considered as special causes. If the poor quality of inputs is normal, then the variations will be large and their causes will not be exceptional but rather common, related to lousy purchasing and control policies. The examples given above are linked to quality, productivity, and costs. But all measurements are subject to causes of variations. In the case of sales, common cause factors include weather conditions affecting public mood, order processing delays if an office worker is absent from work due to illness, fluctuations in consumer confidence, and so on. On the other hand, the factors due to special causes could range from a strong increase in costs, or a price war, among others.

Processes that have only common causes are stable or predictable; we could say that they are under statistical control. Processes with special causes are unstable, unpredictable, and are not under statistical control.

In a situation of common causes, there is no such thing as THE CAUSE. It’s just a bunch of little things that one day are embodied in one way and the next day in another way.

Solving problems and improving processes and products requires us to differentiate variations generated by common causes from those generated by special causes. Only from this distinction are we in a position to apply the appropriate measures. To make the controls and analysis feasible, the statistical tool called Statistical Process Control is used, being able to use said tool and methodology for the different processes related to the company, whether it is sales, collections, breakdowns, productivity, costs, failures and defects, customer satisfaction, response times, among many others.

If a manager asks the right questions based on knowledge of variation, distinguishing between variations due to common causes from those generated by special causes, he will have taken a great step towards taking the most appropriate measures.

22. Strategy to overcome variations due to special causes

Produced an event outside the normal parameters, this variation responds to special causes and therefore it is necessary to adopt a series of measures designed to overcome it if it is detrimental to the company or to find the causes to consolidate the effects if they are positive for it.

The first step is to go to the scene of the events or to take note of all the statistical information that supports you.

The second step is to thoroughly analyze the failure detected in the product or service, check the background in case of collection problems, review the videos of tool changes if there are significant deviations in time, and verify the machines, spare parts, supplies, and maintenance work. maintenance and use of the machine in the case of a higher level of breakdowns, and in the same way for all those variations classified as special.

The third step is to take the necessary actions to overcome the problem.

The fourth step is to find the root cause and how to overcome it. And if it is a beneficial event for the company, once the root cause is known, adopt the measure for its continuity over time.

The fifth and final step is to standardize the measure adopted in the previous step to avoid the recurrence of the same type of problem or to continue achieving better results.

23. Ways to improve a stable process

Brian Joiner proposes three ways of approaching process improvement. On the one hand, he maintains that the variation due to a common cause comes from the interaction of a large number of factors in a process. Identifying which of them causes the most variation can often be a difficult and time-consuming task. In his opinion, in most cases, employees have many ideas about what could work best., but there is a lack of sufficient data to support this or that position, therefore the best way to corroborate it is experimentation. Making good experiments feasible requires, firstly, good ideas to be tested and, secondly, adequate techniques to evaluate and learn from them. What is considered a good idea? The one that is based on a very complete knowledge of the needs of internal and external customers, as well as an exhaustive and systematic knowledge of how the processes work or should work. And what does the ability to evaluate and learn depend on? This depends on how effectively ways of judging test results are planned.

The second method proposed by Brian Joiner is that of stratifying. Stratification helps detect and eliminate variation due to a common cause by revealing patterns in data that point to the source of the problem, by focusing on the right variables to find contradictions that can be studied and explained. To perform the stratification analysis, you need to have information about the conditions related to the data, such as the type of work, day of the week, time, weather, region, equipment, employee, and product. The use of stratification can not only be used to solve problems related to failures and defects but also to improve sales and collections, achieve greater efficiency in processes and reduce costs.

And finally, the method consists of analysis. Applying this method implies studying the different steps of the process, who is involved in it, what machines and inputs are used, and taking total and partial times. With this methodology, the analysis and improvement of work methods are pursued in such a way as to eliminate unnecessary activities or components, combine tasks, carry out activities in parallel, and simplify processes. It is not only very beneficial in reducing failures but also in reducing time, improving productivity and costs. In the analysis, it is essential to focus on the following questions:

• What is done? Why is it done? It is necessary?
• How is it done? Why is it done that way? How else could it be done?
• Where is it done? Why is it done there? Can it be done elsewhere?
• When is made? Why is it done at that time and not at another? Is it possible to do it at another time?
• Who does it? Why is this person doing it and not someone else? What skills and attitudes must be possessed to do the job?

It is also important to apply a succession of at least five why questions, to get to the root cause of the problems or favorable variations. The search for the root cause avoids acting only on the symptoms, reaching the first cause or ultimate reason for the variations.

24. Reengineering and Continuous Improvement

Adapting the company to the new needs of the market and making it fit to compete require profound changes to make it feasible. The changes from scratch that allow the company to have the most suitable processes to face the best competitors are called process reengineering. Many times these reengineerings imply high investments in software and hardware, with everything that means adjusting and training personnel in the use of new computer tools. In these cases, and to achieve success, it is advisable to apply more creativity and the full participation of the staff in the search and application of the best solutions, than to incur re-engineering whose success is not guaranteed. The important thing is to adapt and involve the company in a work philosophy,

Reengineering is just the first step, the company’s processes and activities need a continuous improvement system that prevents both setbacks and degradation over time of the new ways of doing work. Nothing escapes the need for continuous improvement, from the sectors, through the processes and activities, and the products and services, both for internal and external clients.

25. Conclusions

The best way to reach conclusions is to ask yourself, what is new in all this? To which one can reply:

First, the need to focus on the customer, on their current and future needs. Many or all say they comply with it, but at the time of severe analysis, very few companies comply with it.

second. Manage the company focusing on it as a system in which its various components are interrelated and it is necessary to consider this when making decisions and analyzing problems.

third. Think about the company from its processes. View processes as consumers of different types of inputs provided externally or internally, and providers of different types of products or services, either for other business processes or for external customers. Each company process must know what the requirements of its customers are, and they must be clear about their objectives in terms of costs, quality, satisfaction levels, and delivery times.

fourth. The company to be managed must have data and information. The variability of the different processes must be determined and graphed, differentiating between common and special variations.

fifth. Although something that has been insisted on for quite some time now, it is necessary to underline it again, productivity and quality are not opposed, productivity depends on quality. Quality comes first and is the basis of everything.

sixth. Work as a fully integrated team, among the various members, sectors, and processes of the organization, as well as with the processes of its suppliers, distributors, customers, and consumers.

Seventh. Apply the Pareto Rule, the Critical Path, and the Bottleneck, to detect leverage points that allow sensitive and notable improvements in terms of quality, costs, productivity, customer satisfaction, response times, profitability, and inventory turnover, among others.

Focus on improving the system and its processes, rather than distorting records or systems.

The implementation of the PREA wheel in every organization leads to a continuous improvement of its processes and results, avoiding the continuous repetition of errors.

Tenth. Apply the Kano Model to continuously seek to fully satisfy the minimum requirements of customers, consumers, and users, and detect new concepts that allow greater achievements in terms of customer and consumer satisfaction.

26. Bibliography

Fourth Generation Management. Brian L. Joiner. McGraw Hill. 1994.

Optimization of products and industrial processes. Paul Figuera. Management 2000. 2006.

The new economy. W. Edwards Deming. Editorial Diaz de Santos. 1998.

The effective executive. Peter Drucker. South American Editorial. 1999.

Kaizen. The Key to Competitive Advantage. Masaaki Imai. CECSA. 1999.

How to improve profitability and gain competitiveness. D. Brojt. Macchi Editions. 1994.

Integrated Management Control. White Illescas. Editorial Limusa. 1997.

Productivity Management. Joseph Prokopenko. Editorial Limusa. 1997.

Captivate the hearts of customers. Brian Clegg. Prentice Hall. 2000.

Quality. The simultaneous improvement of quality and productivity. John York. Marcombo. 1994.

Kaizen. Mauricio Lefcovich.  www.monografias.com . 2003.