If you are in a manufacturing, service or distribution business, sooner or later you are likely to be blindsided by a product liability claim or a lawsuit. Our societal values have been eroded to the point where it has become acceptable to avoid responsibility for our actions and, instead, look for someone else to blame for any adversity that befalls us. There are also more than enough attorneys who are hungry for a questionable, but potentially profitable, product-liability suit. In my seven years as an expert witness, I have seen plaintiffs walk away with cash settlements even though their claims defied reason. Some insurance carriers pay off "nuisance" claims to minimize their exposure while they unwittingly encourage unethical people to continue to file frivolous suits.
On the other hand, manufacturers and service providers seldom look objectively at their processes, products and services from the perspective of potential risk. It is not our nature to move 5,000 feet above our company and systematically analyze each step in our business operations, looking for potential opportunities for a consumer to be victimized or injured by our product or services. At best, most organizations grudgingly implement risk-mitigation guidelines from their insurance carriers and consider these measures an imposition and added cost.
There are also a handful of companies that consider risk a usual cost of doing business. In my work as a quality-control engineer and business consultant, I have witnessed company leaders who have checked their conscience at the door and built "acceptable risk" into their business model. They build (or import) products that are of questionable quality, sold at discounted prices to an unsuspecting public, knowing that very few will complain and even fewer will attempt to sue the company. The inevitable lawsuits become just another cost on the balance sheet with no regard to individual or social consequence.
Even more egregious are the handful of business leaders who have contributed to our current financial crisis. They methodically dismissed conscience and potential liability to create personal wealth and power. The eventual consequences of their actions will likely result in some form of organizational negligence legal action, while the major consequence has the effect of destabilizing global economies and further creating distrust of corporate entities.
Right or wrong, once a product liability or organizational negligence lawsuit has been filed, the process is lengthy, expensive and can turn executives and employees into bitter and resentful individuals who may never fiscally or emotionally heal from the process. The root cause of the personal distress is the result of being "blindsided." Most business leaders have never contemplated or anticipated a scenario such as described in a lawsuit complaint and their first reaction is shock, followed immediately by denial and anger. They become so obsessed with remediation and defense that the personal and financial trauma may be irreversible.
There are many costly risk-assessment firms that will come to your company, fill out checklists, and supply you with some very expensive suggestions on how to minimize risk. Most of these schemes are targeted to have their experts work with you over a lengthy contract period to implement remedial programs and train your people in the possible scenarios you should avoid. I was told by another consultant in the financial services world that risk-mitigation in securities firms means opening a new department and hiring new experts to prevent recurrence of some pathological problem. Reactive and remedial solutions are not the long-term answer.
Over 40 years and my work with more than 500 companies, I have found a more robust solution to "risk mitigation." Forensic Business Pathology (FBP) is a set of tools companies can use for "risk avoidance." The tools have long been proven by enlightened business leaders for continual process improvement and proactive quality management. FBP does not require the engagement of an ominous staff of consultants mumbling consultant babble and creating new departments. It does, however, require a paradigm shift that keeps many business leaders from opening themselves to diagnostic examinations that may reveal diseases within their organizations.
The "pathology" metaphor was chosen to prepare us for a diagnostic approach to risk avoidance. FBP proactively performs a structured, holistic assessment of your business similar to how medicine uses a CAT scan to diagnose disease hiding within our bodies. The procedure requires that everyone in the organization subject their methods and processes to clinical examination with the real possibility that there may exist cancerous cells that we would rather not know about, admit to or treat surgically. I have witnessed business executives who would rather have a root canal than go through the process of self examination of long-established business methods that they perceive as being successful, stable and reliable. In fact, I have been dismissed by those who refuse to undergo self-diagnosis believing that the systems they have established are proven by years of implementation to be solid, effective and immune from disease or dysfunction.
To compound denial, most successful business leaders pride themselves as being problem solvers. I have never found one who boasted about being a problem "avoider." I have not read of an award being given to an employee who avoided a major catastrophe that did not happen. In fact, many of the folks who worked on the Y2K computer problem (remember only a handful of years ago?) have been admonished because "nothing happened" on January 1, 2000, and their years of preventive work were dismissed as irrelevant and unnecessary.
The tenets of FBP for risk avoidance are elegantly simple:
* Develop an irrevocable company goal that no critical defect shall ever reach a customer.
* Use quality process improvement tools to map all business processes, their interrelationships and their dependencies.
*Assess each process on its own and assign metrics for effectiveness, quality and reliability.
* Dissect each process until all opportunities for defects or mistakes are identified and understood.
* Objectively improve the processes until they are innately safe, reliable and continually-monitored metrics warn of pending problems before they happen.
* Remove the concepts of defect inspection, rework, punishment and blame from your organization.
* Replace them with individual and organizational accountability for the outcome of everyone's work.
* Continually elicit and scrutinize customer feedback for potential issues and correct them immediately and proactively as a "gift" of valuable information.
While the tenets are simple, their implementation requires uncommon courage by business leaders to assess their business for systemic disease and eradicate it with tenacity and finality. It requires driving any signs of mediocrity from the organization just as you would remove pre-cancerous cells from your body.
There is another dramatic benefit to pro-activity. That is profitability. Just as it is customarily assumed that quality management is an indirect cost, so has risk assessment shared that mythology. Any initial costs to establishing proactive quality and risk avoidance processes are very quickly overcome by the reduction in rework, customer complaints, customer returns, recalls and, inevitably, avoidance of law suits.
We have not learned pro-activity in business school. Our model is minimizing risk rather than avoiding it. The rewards to an FBP-modeled company can be enormous when we replace rework with products and services that are always compliant, when we replace management with leadership, when we replace punishment with accountability and when we no longer need a customer service department.
Tom Taormina of Reno was a quality control engineer at NASA's Mission Control Center for 14 years and was part of the Apollo 13 recovery team and heard the words "Houston, we have a problem" first hand. He has written 10 books on quality and business process improvement. Contact him at 847-7929 or tt@taorminagroup.com.
