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Are international quality standards (ISO 9000) hurting your business?

Innovate or Perish?

Embracing innovation is paramount in these days of rapidly changing business landscapes and technology development.  The COVID-19 virus, of course, has been a catalyst for great and urgent change.  In fact, some companies have seized the opportunity to create new and better ways of doing business.  One wonders why it has taken this disruption to drive such innovation.  Surely there is a lesson in this for us all?

Indeed innovation is the engine of change and in the absence of innovation even great businesses can fail, Kodak possibly being a poignant example. 

The innovation message is clear but many companies that are required to abide by the stringent reporting regime of ISO 9000 may, in fact, be operating at a disadvantage.

Is ISO 9000 the answer?

ISO (International Organisation for Standardization) was founded in 1947 with the aim of bringing some international standardisation to manufacturing quality and traceability.  Many companies have embraced the teachings of the ISO regime and many suppliers demand their subcontractors be accredited. There is little doubt there are benefits, at least in the short term. 

Some studies have even tried to establish a direct link between improved profits and ISO Certification, but this link in many cases is questionable.  Some argue that increased profit came before adopting ISO. Embracing ISO simply allowed companies to do business with more major companies that demanded their suppliers be so certified.  Indeed it may be argued that this is a positive feedback system guaranteed to ensure the growth of the ISO regime.

Either way, ISO these days remains firmly embedded into manufacturing worldwide.

So what’s the catch?

Studies done by Harvard Business School and others have shown that ISO 9000 may come with a “sting in the tail”.

The research indicated that in the years immediately following ISO implementation business outcomes improved with reduced defects, less waste and rework, improved quality and more repeatability in terms of all processes. Customers, especially the bigger ones, loved this and were eager to see all of their suppliers embrace ISO 9000.

Of course in the wake of this many others followed suit, or were pushed into accreditation by their upper-tier customers. However, after several years of working with the system and order dictated by ISO, the innovation of these accredited companies collapsed.  No longer was there so much free thinking and an ability to step outside the boundaries dictated by ISO.

The study revealed that within five to seven years at the most, innovation output plummeted and businesses stagnated as companies became slaves to the ISO regime.

What’s the message?

ISO9000 accreditation may be necessary and indeed essential, especially if you are a supplier to the majors, but beware its downside.

The more system and rigour you bring to your organisation, the greater the need to implement some systematic means of innovation as a cultural part of your organisations DNA 

“Innovation Circles” need to be established, much along the lines of the famous Japanese Quality Circles established by Edwards Demming in Japan in the 1950s. These Quality Circles are credited with lifting Japanese manufacturing quality from pure junk to the very best in the world. 

What’s the Message?

Embrace “Innovation Circles” of course, but avoid the downside constraints of ISO reporting. 

You can do this by having your “Innovation Circles”, people trained in the art of innovation working in an entirely separate business entity. An entity decoupled from the “mothership and not ISO accredited”.  New initiative, products and ideas can be conceived and tested in this uninhibited space, and only if successful, passed to the “mothership” for commercialization.

Contributing writer: Roger La Salle
Founder of Innovation Traning - Matrix Thinking
https://www.innovationtraining.com.au/
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