Doing well what comes naturally - Total Quality Management

Nation's Business, Sept, 1992 by Michael Barrier

For small firms, quality management can mean remembering what helped them grow.

Nine years ago, when Larry Denny decided to draw up a quality-management program for Den-Con, his Oklahoma City firm, he wasn't taking on a terrific burden.

What his program really amounted to, Denny says, was "the documentation of what we already had under way." He says he "described in detail the very precise flow of everything we were doing, and why we were doing it."

That document of perhaps 30 pages has grown about 10 times as thick since 1983, "but we don't do things a lot differently," Denny says. Instead, his small company, which manufactures oil-drilling equipment, has defined ever more precisely how it does well what it does. Denny's systematic attention to quality permitted his small firm to survive, and then to thrive, despite the drop in world oil prices in the 1980s and the resulting drop in drilling.

Denny had only three or four employees when he drew up his first quality program (he now has 13). Such tiny firms must practice what amounts to Total Quality Management, even if they do not give it that label. The essentials of TQM--among them, an intense focus on the customer, constant communication among the people in the business, an unflagging awareness of anything that might signal a problem--are vital not just to the success but to the very survival of the smallest businesses.

When success comes and survival is no longer the immediate issue, a company's growth can weaken its commitment to quality management. What is most convenient or efficient internally can start to seem more important than what's best for the customer. Internal communication can break down as the number of employees grows.

Thanks to the momentum built up when it was small, the business may grow and prosper for years, but eventually sales lag or customer complaints rise. It's at this stage that many large and medium-size companies turn to formal Total Quality Management programs, in a frequently successful--but often painful--effort to recapture the spark that helped make them big in the first place.

But what if they had never lost that spark? What if they had grown large practicing the same kind of TQM that came to them naturally when they were small?

As Patrick L. Townsend, a quality consultant and co-author with Joan E. Gebhardt of Quality in Action (John Wiley & Sons), puts it: "The principles are the same," whether the company is large or small; "the trick is to apply them consciously."

Larry Denny's Den-Con is a case in point. So successful has he been at using his quality program to withstand the energy industry's economic reverses that Den-Con was designated a 1992 Blue Chip Enterprise for Oklahoma in the national competition sponsored by Connecticut Mutual Life Insurance Co., the U.S. Chamber of Commerce, and Nation's Business (see the story on Page 36).

Denny started his business in California in 1975 and moved it to Oklahoma City in 1981. After many years of working for larger companies, he says, "there were a lot of things I wanted to do with my own company."

He started with a strong bias in favor of prevention--a central tenet of the quality movement. For example, he knew that he didn't want to heat-treat the castings for his products himself; he wanted to buy castings that were heat-treated and ready to use, even though they would be more expensive. That way, there wouldn't be any question, if cracks or other defects showed up in the castings, that they were the foundry's responsibility.

By establishing such ground rules at the start, Denny didn't eliminate all problems--but he did prevent many chronic problems that would have been inevitable otherwise.

Den-Con makes pipe-handling tools--in particular, devices that grip pipe as it's being put down into a hole--of a kind that are common throughout the industry. A reputation for high quality can be tremendously important to a company that makes such products--specially if it's a small firm like Den-Con. "Small companies in our industry are given no tolerance for error," Denny says.

When he entered the international marketplace, he recalls, he was trying to sell to multinational drilling contractors, in competition with a much larger company. Better delivery and lower prices alone wouldn't be enough; he had to find some way to make Den-Con credible despite its size. Den-Con's quality program "allowed us to go out to the industry and show people, when they questioned our credibility, that we knew what we were doing," he says.

Although most of Denny's customers are much larger companies, most of his suppliers are small enough that he's an important customer to them. He has cultivated relationships with them of the kind that are typical of TQM companies. "We've made no secret of the fact that everybody is constantly being evaluated," he says. "There are a lot of shops out there that want the work. On the other hand, we're loyal." Den-Con has been working with its principal foundry, for example, since 1981.