Is Quality a "value-added" activity?

Does Quality add value?

When I was researching my posts about Boeing this spring, I ran across several sources who said Boeing had been cutting back Quality activity for years, on the grounds that Quality work was merely "overhead" and not "value-added."* So even though I've touched on this topic once or twice before,** maybe it's useful to review the question again.

It should be no surprise that I think Boeing was wrong to say that Quality doesn't add value, but in a sense they were on to something. There are two fundamental ways in which Quality differs from components like wheels or doors:

1. Quality is not tangible or material. Quality isn't a What, but a How.
2. Quality depends on the user. Quality means getting what you want, and different people want different things. So it's easy to think that Quality isn't objective.

The first point means that there's no container in inventory labelled "Quality." You can't reach in and pull out half a kilogram of Quality to install in one of the engines. Whether you build an airplane with or without Quality, mostly you use the same parts and the same tools. The difference is in how you use them. Do you really need to pay Quality personnel for that? Isn't Quality free? 

Well no, it's not. We've discussed this before. People make mistakes. The way to prevent those mistakes is to put systems in place. The systems will save you money in the long run (because you won't be paying for warranty repair or liability lawsuits), but they still cost you in the salaries of the people who run them. It's just cheaper to pay your Quality personnel a predictable sum now, than it is to pay angry customers and victorious plaintiffs incalculably more at some unexpected time in the future.

The second point is easier to explain with an example. Suppose one of Boeing's airplanes is still around far in the future, and is discovered by a band of scavengers crossing a post-apocalyptic hellscape. They won't care about the precision machining that went into the parts, nor about the multiple fail-safe systems that keep the plane in the air. All that will matter to them is that the airplane can be torn apart for scrap metal. So that precision machining will add no extra level of Quality from the perspective of the scavengers. They won't find Quality anywhere as they rip the plane apart. Doesn't that mean that Quality is subjective? 

Of course not. The answer is that Boeing's actual customers aren't scavengers in a post-apocalyptic hellscape. Boeing's customers are airlines, all of whom want the same thing—namely, to satisfy their own customers. For their part, the airline customers want to get where they are going safe and sound, and more or less on time. In cases like this, where everyone wants the same thing, Quality is absolutely objective. Anything that makes an airplane easier to fly and safer in the air is part of Quality. Anything that makes it more difficult and more dangerous is Wrong, and has to be avoided! 

All the same, I can see how these two points could mislead the Boeing management. When Harry Stonecipher took over Boeing, he avowedly set out to shift the company's focus from engineering to business. But that means that management had to focus on what was tangible and objectively quantifiable: we've all heard the admonition, "You can't manage what you can't measure." And so, ineluctably, the business focus on strict measurables with a visible impact on the bottom line meant that management had no alternative but to pay less attention to Quality.

Boeing is going through a lot of very public troubles right now, so maybe we shouldn't focus on them too relentlessly. Let's look elsewhere. Can we find other areas where Quality—an intangible that relates to customer experience and customer preferences—adds a value that people are willing to pay for?

Yes. Everywhere.

Sometimes it's not quantifiable, but it's still real. There is an old saying in sales, "Don't Sell The Steak, Sell the Sizzle." The point is that—mostly—nobody cares nearly as much about the composition of a product as they care about their experience of it. You can't eat the sizzle, but that's what people pay for. More generally, people pay for experiences that make them happy; the only time that they pay for specific physical components are when they believe that those specific components are necessary to achieve their happiness.*** But their experience, their happiness, is not tangible; and in principle it can change from one customer to another. In other words, customers pay for Quality, and not for things.

It also happens that sometimes people pay for Quality in a way that is very quantifiable! I once had an employee who used to work for a company that made medical implants. And he told me that on his very first day, his boss sat him down to say:

We sell plastic devices that cost us $5. We sell them for $125. The extra $120 pays for Quality! So don't mess it up.

Yes, Quality adds value. Sometimes you can measure it in dollars. Even when you can't, it is absolutely real.  

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* See for example "The last days of the Boeing whistleblower" from Fortune, March 16, 2024 (especially the next-to-last paragraph), or the On Point Podcast from NPR titled "Whistleblowers, an executive shakeup, and the future of Boeing" (especially from about 11:20 to 11:40). 

** See for example the series "Do audits really add value?" in 2021 (parts 1, 2, and 3), and the series on "Parasitic certifications?" in 2022 (parts 1, 2, 3, and 4). Or just search the blog for the phrase "value add."  

*** And sometimes this is obvious. If I drive over a nail that punctures my tire, the only thing that is going to make me happy is a new tire with no holes in it.