I was inspired to write this after reading an article in the Wall Street Journal regarding product quality issues at Ford Motor Company. Credit to author Nora Eckert for telling a great story.
So how does the classic, blue-blood American auto-maker who for decades told us “Quality is Job 1” run into so many quality issues? Like most things, it’s complicated. But also like most things, follow the money.
Among other things, it was pointed out that Ford has been trying to launch several new car models at a time. This increases complexity and lowers efficiency because you can’t reuse as many proven parts or designs as you could on an existing model. It also becomes a challenge when they are said to be making “too many last-minute design and engineering changes ahead of a new-vehicle launch, increasing the risk of problems down the line.”
This last part is what makes the risk exponential. They’re making last-minute changes, but they’re not pushing back the launch dates. God forbid a deadline is missed. So they sprint through final production to meet the target launch date only to realize that mistakes were made, or issues weren’t flagged during production because no one wanted to be the one to cause a missed date. There’s too much money on the line; jobs are on the line; reputation is on the line.
This is why I say “targets” get in the way of the goal.
I’m fairly certain that Ford’s goal is to launch new car models that excite car-buyers. They’re hoping to inspire car-enthusiasts and to carve out a share of market in whichever category they’re launching into (SUVs, mid-sized sedans, sports cars, electric vehicles, light-duty trucks, etc.) The goal is to launch a successful new model that’s also profitable. And yet somewhere along the way, other “targets” got in the way that compromised their ability to do that.
Mistakes and quality issues suck billions of dollars from the bottom line.
According to the article, Ford sets aside $1,041 per vehicle to cover potential warranty claims in 2021. And in the chart above we see that 6.82 million Ford vehicles were potentially affected by recalls (more than any other auto-maker). That means, let’s see here, 6.82 million x $1,041… rounding a smidge… ah yes, SEVEN BILLION DOLLARS allocated for recall warranty work. And that’s just recalls. There are plenty of other car issues that can happen to individual cars that don’t trigger a recall but certainly can trigger a warranty claim. Imagine having $7 billion seep out of your company due to quality issues, and how some small incremental improvements might result in massive incremental gains to the positive?
Alright, let’s expand the concept a little bit….
What are some other ways your targets might be getting in the way of your goals?
Have you ever known someone who was trying to lose weight and ended up getting sick because they weren’t eating healthy? Or perhaps a gastric bypass surgery created an infection or an internal response that made him/her incredibly sick. Or my least favorite story… the “lose weight pills” you bought online triggered horrible side effects.
They person’s goal wasn’t just to lose weight. The goal was to get healthy, to look better, to FEEL better. The means to get there was to lose weight. And in the process of hitting a target (for example “I want to lose 50 lbs this year”) the person ends up completely falling short of his or goal of getting healthy and feeling better. They just made themselves sick.
How about someone who was hoping to gain some financial freedom, yet instead of working extra hours or changing their spending habits to squirrel away some savings they end up doing something sketchy for easy money? Crime doesn’t pay, kids. Easy money can lead to hard time.
In most cases, cutting corners to hit short-term targets is the #1 way to blur the lines between “targets” and “goals”. I know it sounds like splitting hairs, but we need to differentiate the two.
Imagine what Ford’s new models would look like if everyone in the organization was empowered to (and not fearful of) slowing down a launch and putting a deadline at risk in order to fix a potential problem correctly. The cost of doing it right will always be less than the cost of fixing things later on.
Hook me up here. What are some other examples where short-sighted targets get in the way of long-term goals? Add your ideas in the comments.
Good article and thank you Derek. And although $7B was allocated for recall warranty work, it doesn’t factor in the costs associated with lost time, productivity, inconvenience, “lost faith” and other factors to the customers/end users.